Term Paper on "Sales Management Summarize the Case. Pergault"

Quoted Instructions for "Sales Management Summarize the Case. Pergault" Assignment:

Prepare a 1,050-1,400-word case study analysis of Case G.W. Pergault, Inc. (The case is located below) Based on this analysis, explain how technology can enhance an organization’s selling functions and customer relationship management (CRM) techniques. Be sure to address the following:

Summarize the case.

Formulate answers to questions 1 and 2 at the conclusion of the case.

Describe the importance of customer relationship management (CRM) to sales management.

Identify different types of technology that the organization in your case study could use to enhance their selling functions and CRM techniques.

C AS E 1 – 1 G. W. PERGAULT, INC.

Salespeople Feeling Threatened by the

Company Website

Ken Sutton, sales manager for G. W. Pergault, directly oversees 15 salespeople who serve clients in and around Milwaukee, Wisconsin. He is currently in a tough spot. The new president of the company, Celia Fiorni, has a vision for e-commerce that Sutton’s salespeople strongly oppose. Sutton feels caught in the middle—between his boss and his subordinates. Fiorni had become president of G. W. Pergault just six months ago. Her previous job was CEO/president of a very successful—but relatively small—technology firm that sold computer hardware

to consumers. Fiorni is an enthusiastic, charismatic leader who has brought a fresh outside

perspective to G. W. Pergault. Given her background in the computer industry, Celia Fiorni is, not surprisingly, a fervent believer in new technology. Her first task was to spend over $20 million updating G. W. Pergault’s website. With this accomplished, her next goal is to move a much larger percentage of the reps’ sales to the company website. Further, she feels that company’s

salespeople should take the lead role in encouraging and training their customers to order

products through the website.

G. W. Pergault is an established $4.2 billion supplier of maintenance, repair, and operations

(MRO) products. The company sells pipe fittings lightbulbs, ladders, and literally hundreds of thousands of other MRO products to business customers throughout North America. Established in 1952, G. W. Pergault traditionally has sold these products through its extensive mail-order catalog, which has grown to over 4,000 pages. In 1997, the catalog was put online. Although they have increased each year since, online sales are still dwarfed by catalog sales. The business customers that buy the company’s products vary greatly in size. Most are relatively small accounts that purchase supplies directly through either the paper catalog or the website without ever seeing or talking to a G. W. Pergault salesperson. Even though these smaller businesses represent about 80 percent of the customers, the aggregate sales generated from them is

still only about 20 percent of G. W. Pergault’s total sales. Alternatively, the remaining 20 percent of the customers tend to be much larger accounts. The sales generated from these bigger customers represent about 80 percent of G. W. Pergault’s total sales. These are the customers that are regularly called upon and serviced by G. W. Pergault’s sales force. These sales reps personally process the vast majority of orders from their customers. Celia Fiorni, however, believes that it is highly inefficient for these customers to order all their products through salespeople. First, it is needlessly time-consuming and keeps salespeople from their more important creative-selling activities. Second, it is costly. She feels that G. W. Pergault could save hundreds of thousands of dollars by insisting that existing customers reorder their supplies

through the website. The savings, she says, will stem primarily from eliminating steps in the

ordering process.

Currently, the ordering process starts as the G. W. Pergault sales rep personally meets with a

purchasing agent from the customer firm. The sales rep writes up the order by hand as the purchasing agent makes his requests. After the meeting, the rep submits the order to G. W.

Pergault—usually by fax. A member of G. W. Pergault’s data-entry clerical staff receives the form,

and enters the information into the system for delivery. The order is packaged and shipped, usually within three business days from when it was made. The new company website, of course, provides an interface that allows customers to complete their own order, which then is directly

entered into the system as soon as the customer clicks on the Submit button. This allows for quick order processing, saving at least one day in delivery time. In addition, it significantly reduces the chance of order-entry error by either the salesperson or the data-entry clerk. As Fiorni says, “It’s a no-brainer. By ordering through the website, customers will not only get their supplies sooner, they can be much more assured that they will get exactly what they asked for.”

Spiro−Stanton−Rich:

Management of a Sales

Force, 11th Edition

I. Introduction to Sales

Force Management

1. The Field of Sales Force

Management

© The McGraw−Hill

Companies, 2004

30 PART 1 Introduction to Sales Force Management

Ken Sutton could see the logic in his new president’s thinking. A recent customer satisfaction

survey revealed that mistakes are made in about 1 out of every 20 orders that come in through salespeople. He feels that this error rate is much too high. Further, he believes that his sales reps are not even close to reaching the full potential for his market in and around Milwaukee. “The reps spend too much time taking orders, and not enough time explaining to customers how our other products can meet their needs,” he says. At the same time, his reps have expressed

strong opposition to the plan. In fact, his top rep for the past two years had just called him yesterday. In a somewhat angry tone, the rep told him what he thought of the new president: “Fiorni doesn’t understand that selling is about building personal relationships, and you can’t have a relationship with a website. Customers buy from G. W. Pergault not just because they like our products but also because they like me. I’m sorry, but I refuse to tell my best customers, ‘I’m too busy to take your order. Go surf the Internet.’ ” Other reps have told Sutton that customers

who had tried the new website did not like it. Some of the complaints were that it was too glitzy with too many distracting graphics. “We don’t care about the bells and whistles; we just want to buy supplies in a convenient and quick way,” said one purchasing agent. “It’s so much easier to just meet with our rep and tell her what we want. Frankly, the website is too complicated and confusing.” Sutton thinks that customers might be less confused if their sales reps would do a better job of showing them how to use the website. After all, G. W. Pergault offers more than 500,000 different products, which can be overwhelming to sort through. Sutton believes that some of his reps may have trouble finding specific products on the website. He also acknowledges that G. W. Pergault has not made much of an effort to train its own sales

force on the ins and outs of ordering online through the company website. There are two other key issues that help explain why the sales force is so strongly opposed to the president’s new vision. Ken Sutton believes these are the most critical reasons for the objections. First, over half of the typical salesperson’s compensation is earned through commission. When customers buy through the website, reps don’t earn any commission. Why would a sales rep convince a customer to do something that reduces the rep’s pay? Second, many of the reps feel that the website is a threat to their future with the company—even though Fiorni is on record saying that she does not want to eliminate the sales force. In a recent company address, she said, “G. W. Pergault needs more—not fewer—people selling. We simply need a shift of focus toward selling new products to our best customers. We also need sales to focus on opening new accounts.” Nevertheless, some reps feel that this initiative is the first step to a pink slip. Next week, Fiorni is scheduled to come to Milwaukee and talk to Sutton and his reps. She understands that her plan has not been well received by sales. G.W. Pergault reps from all around the country feel the same way that Sutton’s reps do. In fact, Fiorni will be visiting various sales groups from

around the country to try to get a better idea of why there is such resistance. Sutton believes his new boss is a reasonable person, and he is looking forward to her visit.

Through telephone conversations, he gets the sense that she will listen to his advice on the matter—but he is not sure exactly where he stands. All he knows is that Fiorni’s e-commerce goal will not be achieved without salesperson buy-in, and that the salespeople are not buying the plan in its current form.

Questions:

1. What advice should sales manager Ken Sutton give to his company president, Celia Fiorni, in

order to improve her e-commerce plan and make it successful?

2. What should Ken Sutton do to make his salespeople more accepting of the new initiative?