FSU Head Supply Chain Management and Marketing Discussion

Regardless of its format and structure, a good proposal explains what a project or
course of action will involve, how much it will cost, and how the recipient and his or her
organization will benefit.
MEMO
TO:
Robert Mendoza, Vice President of Marketing
FROM: Binh Phan, National Sales Manager BP
DATE: September 14, 2020
SUBJECT: Major accounts sales problems
The first para
graph verifies
who requested
the report, when
it was requested,
and who wrote it.
As you requested on August 20, this report outlines the results of my investigation into the
recent slowdown in sales to major accounts and the accompanying rise in sales and
service-related complaints from some of our largest customers.
Over the last four quarters, major account sales dropped 12%, whereas overall sales
were up 7%. During the same time, we’ve all noticed an increase in both formal and
informal complaints from larger customers regarding how confusing and complicated it
has become to do business with us.
The second para
graph highlights
the serious nature
of the problem.
My investigation started with in-depth discussions with the four regional sales managers,
first as a group and then individually. The tension I felt in the initial meeting eventually
bubbled to the surface during my meetings with each manager. Staff members in each
region are convinced that other regions are booking orders they don’t deserve, with one
region doing all the legwork only to see another region get the sale, the commission, and
the quota credit
This section
explains how the
information used
in the analysis
was collected.
I followed up these formal discussions by talking informally and exchanging email with sev-
eral sales representatives from each region. Virtually everyone who is involved with our
major national accounts has a story to share. No one is happy with the situation, and I sense
that some reps are walking away from major customers because the process is so frustrating.
The decline in sales to our major national customers and the increase in their complaints
stem from two problems: (1) sales force organization and (2) commission policy.
ORGANIZATIONAL PROBLEMS
When we divided the national sales force into four geographical regions last year, the idea
was to focus our sales efforts and clarify responsibilities for each prospective and current
customer. The regional managers have gotten to know their market territories very well,
and sales have increased beyond even our most optimistic projections.
Organizational
problems are the
first 2″ in Phan’s
2+2 – 4 approach.
Phan describes
the first problem
and explains how
it occurred, with
out blaming any
one personally.
However, while solving one problem, we have created another. In the past 12 to 18 months,
several regional customers have grown to national status, and a few retailers have taken
on (or expressed interest in) our products. As a result, a significant portion of both
current sales and future opportunities lies with these large national accounts.
I uncovered more than a dozen cases in which sales representatives from two or more
regions found themselves competing with each other by pursuing the same customers
from different locations. Moreover, the complaints from our major accounts about
(continued)
Figure 12.10 Analytical Report Focusing on Logical Arguments
As national sales manager of a New Hampshire sporting goods company, Binh Phan was concerned about
his company’s ability to sell to its largest customers. His boss, the vice president of marketing, shared these
concerns and asked Phan to analyze the situation and recommend a solution. In this troubleshooting report,
his main idea is that the company should establish separate sales teams for these major accounts, rather
than continuing to service them through the company’s four regional divisions. However, Phan knew his plan
would be controversial because it required a big change in the company’s organization and in the way sales
reps are paid. His thinking had to be clear and easy to follow, so he focused on logical argumentation.
380 PART 4 Preparing Reports and Presentations
2
overlapping or nonexistent account coverage are a direct result of the regional organization. In
some cases, customers aren’t sure which of our representatives they’re supposed to call with
problems and orders. In other cases, no one has been in contact with them for several months.
Phan brings the
first problem to life
by complementing
the general descrip-
tion with a specific
example.
Commission problems
are the second “2” in
Phan’s 2 + 2 = 4
approach.
In discussing the
second problem,
he simplifies the
reader’s task by
maintaining a par
allel structure: a
general description
followed by a spe-
cific example.
For example, having retail outlets across the lower tier of the country, AmeriSport received pitches
from reps out of our West, South, and East regions. Because our regional offices have a lot of nego-
tiating freedom, the three were offering different prices. But all AmeriSport buying decisions were
made at the Tampa headquarters, so all we did was confuse the customer. The irony of the current
organization is that were often giving our weakest selling and support efforts to the largest cus-
tomers in the country.
COMMISSION PROBLEMS
The regional organization problems are compounded by the way we assign commissions and quota
credit. Salespeople in one region can invest a lot of time in pursuing a sale, only to have the
customer place the order in another region. So some sales rep in the second region ends up with
the commission on a sale that was partly or even entirely earned by someone in the first region.
Therefore, sales reps sometimes don’t pursue leads in their regions, thinking that a rep in another
region will get the commission
For example, Athletic Express, with outlets in 35 states spread across all four regions, finally got so
frustrated with us that the company president called our headquarters. Athletic Express has been
trying to place a large order for tennis and golf accessories, but none of our local reps seem
interested in paying attention. I spoke with the rep responsible for Nashvile, where the company is
headquartered, and asked her why she wasn’t working the account more actively. Her explanation
was that last time she got involved with Athletic Express, the order was actually placed from their
LA.regional office, and she didn’t get any commission after more than two weeks of selling time.
RECOMMENDATIONS
He explains how
his recommenda-
tion (a new organ-
izational structure)
will solve both
problems.
He acknowledges
that the recom-
mended solution
does create a tem-
porary compensa-
tion problem but
expresses confi-
dence that a solu-
tion to that can be
worked out.
Our sales organization should reflect the nature of our customer base. To accomplish that goal,
we need a group of reps who are free to pursue accounts across regional borders and who are
compensated fairly for their work. The most sensible answer is to establish a national account group.
Any customers whose operations place them in more than one region would automatically be
assigned to the national group.
In addition to solving the problem of competing sales efforts, the new structure will also largely
eliminate the commission-splitting problem because regional reps will no longer invest time in pros-
pects assigned to the national accounts team. However, we will need to find a fair way to compensate
regional reps who are losing long-term customers to the national team. Some of these reps have
invested years in developing customer relationships that will continue to yield sales well into the
future, and everyone I talked to agrees that reps in these cases should receive some sort of
compensation. Such a transition commission would also motivate the regional reps to help ensure
a smooth transition from one sales group to the other. The exact nature of this compensation would
need to be worked out with the various sales managers.
Phan concludes the
2+2 = 4 approach:
organizational
problems + commission
problems = the need for
a new sales structure.
3
SUMMARY
The regional sales organization is effective at the regional and local levels but not at the national
level. We should establish a national accounts group to handle sales that cross regional bound-
aries. Then we’l have one set of reps who are focused on the local and regional levels and
another set who are pursuing national accounts.
To compensate regional reps who lose accounts to the national team, we will need to devise some
sort of payment to reward them for the years of work invested in such accounts. This can be
discussed with the sales managers once the new structure is in place.
– The summary concisely
restates both the problem
and the recommended
solution
Figure 12.10 Analytical Report Focusing on Logical Arguments (Continued)

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