3.2 Hanover-Bates Chemical Corporation - Case Study Example

?Case 3.2 Hanover-Bates Chemical Corporation Through the use of Sprague’s exhibits, one can see the performance levels of the North East district in comparison to the other six districts in sales and gross profit quota performances, selling expenses by district, and district specific contribution to corporate administrative expenses and profits. Shown in the exhibits, district 3, which is the North East district in question, is lower in sales quota than Districts 1 and 2 by 345,000 and 150,000, respectively. District 1 exceeded their sales quota by 39,000 while District 3 was below quota by 366,000. This led to a difference in gross profit quotas versus actual profit quotas of $331,500 below for District 3, while District 1 was above their actual profit quota by $55,500. In respect to district selling expenses, District 3 was higher than Districts 1 and 2 in the areas of district office expenses, manager salary, and district manager expenses. This left District 1 at a profit of $1,800,876 versus District 3 at $1,305,959, a difference of nearly $500,000. In looking at a different angle of sales a profit performance, District 3 and District 7 were compared side by side, as District 7 was the most highly revered district in Hanover-Bates. District 7 outperformed district 3 in gross profits in their “B” category of accounts, which are their medium-sized accounts that generate only $11,000 to $19,999 each year in sales. Despite the fact that this is the only facet of the three account categories that District 7 outperformed District 3, District 7 still had higher gross profits than District 3 by $106,500. This is the reason that Sprague was hired on to Hanover-Bates, to utilize his skills in sales and profit analyses to improve the performance of District 3 through reallocation of sales. District 3’s performance was very poor in comparison to the others, and as such needed to be assessed. Either the basic reasons for this poor performance was due to misallocated efforts from that district from customers or the product lines itself that was being sold. Although Hanover-Bates does not produce chemicals, it is important for their customer base to see a variable in the quality of the products that they are buying from Hanover-Bates versus their competition. The lack of performance of District 3 versus other districts is the sales representative’s lack of knowledge, motivation, or both. Most of their sales representatives had previously worked for a customer of Hanover-Bates and did not have a college education. This could most assuredly be a major cause of the lack of sales in the company, as the representatives simply did not have the proper education to pursue sales with the right language, persuasion and vigor for success. This could seriously affect Hanover-Bates’ ability to prospect further into different sectors and affect the closing of new sales for the company. This leaves the sales staff with a lack of competence, confidence, communication skills and understanding of Hanover-Bates’ organizational strategies for sales and growth. Given that most of the sales representatives in the company are also older and fairly experienced, they may feel that they have the skills and repertoire that are required to succeed in sales for Hanover-Bates, and thus are unmotivated to learn new approaches to the sales media. The North East district’s sales and performance are due to the lack of college-educated individuals with the proper knowledge and skills of a new and ever changing market place. They also are in great need of implementation and training in the newly developed sales program created by the national sales manager. It the sales representatives were able to undergo further training and implementation of his program, Hanover-Bates and its customers alike would be of benefit. In this new sales program, Hanover-Bates sales volumes for each account would be higher, thus selling costs would decrease. These higher sales volumes would be justification for a sales representative spending more time on a particular account, thus able to pursue it and acquire more knowledge in the particular account’s business. This would allow the sales representative to be better able to provide the customer with improved technical assistance as well as improve selling of products to the customer. Through the implementation of this new sales program, Hanover-Bates would be able to sell a full like of products, which would in turn create a greater strength for the company in respect to competition. Given that Hanover-Bates has a high level of competition because of the perceived lack of product variation, the company must implement stronger sales teams and marketing programs throughout the industry to remain competitive. Being able to sell a full line of products will allow Hanover-Bates to be stronger than their competition through greater customer service and products. This will help to reduce the chances of losing an account to another chemical-plating company, as there is such a minimal difference in product quality, they must institute better, smarter, more persuasive and helpful sales representatives. In order to remedy the situation that is plaguing Hanover-Bates’ District 7, they should implement additional training of their sales staff. According to Alen Majer, the mission of a salesperson is to discover what the customer wants by asking the most pertinent questions. This additional knowledge of the client base will only increase sales, boost confidence in the sales staff and allow them to create more thoughtful and energetic approaches. The national sales manager of Hanover-Bates instituted a call-frequency guideline for their sales team. It was widely known that Sprague’s predecessor was more reluctant to comply and motivate staff than to support and encourage them. Therefore, Sprague can further implement the additional sales training of staff to implement greater call frequency. Using the suggestions of Majer (2001), by knowing more about new and potential clients will only boost confidence and allow them to be more knowledgeable of their clients’ businesses. This will allow them to be able to make more adept suggestions and more sales for Hanover-Bates. Along with additional training for existing sales staff, increasing the number of college-educated employees in the realm of business will also boost sales in District 7, as well as other districts. This will improve Hanover-Bates overall footprint in a very competitive economy. An increase of knowledge of the product lines that Hanover-Bates carries is crucial to their sales increases. Given that they trade on the over-the-counter market, they need to improve on their public perception of quality differences of their products over their competition. Hanover-Bates would also likely benefit from the institution of more sales staff, or with the sales staff in place, once they have increased their training, increase their pay once the additional training has proved itself. It will take some time for the numbers to come up, as sales data does not change overnight. A slight increase in commission would likely boost motivation for the salesmen, increasing customer base. If Hanover-Bates found that a salesperson was underperforming, unwilling or unable, that person should be let go. Any salesman that is underperforming or stagnant in his efforts is a bane to the advancement of the company. In the same vein as Sprague being appointed sales manager over Hank Carver, by releasing underperforming sales staff and hiring new, young, college-educated staff, Hanover-Bates would be faced with fewer uncertainties in the future by doing this. New, college-educated employees are coming in at the bottom level, would likely not be paid as highly to start as the seasoned employees, but would not require the additional training some of the current sales staff may need. This is a great option for Hanover-Bates improvement of sales and stature in their chosen market. In addition, an increase in the number of sales calls to their accounts would likely create more sales and more efficiency in the company overall. By Hanover-Bates’ increase in sales staff knowledge, instituting a call guide for them along with increased numbers of calls will boost sales. Currently, the company only calls their A accounts twice per month, B accounts once per month and C accounts once every two months. By adding one to two phone calls to each account per month will not only boost sales, but also possibly make each account holder feel more important to Hanover-Bates. Instead of the company potentially running out of or low on a given product, increased communication on the part of Hanover-Bates will increase their sales capabilities. By taking that initiative, even the smaller accounts will likely feel as important as the bigger accounts by an additional phone call. This is a very simple, cost-effective way to increase sales quota through increased customer service. In regards to Hank Carver, he should not be handled with kid gloves. Hanover-Bates should come forth and be totally honest and forthcoming with the reasons for their choosing of Sprague over him as the district sales manager. The national sales manager needs to speak to Carver directly, not through a memorandum or other letter, and explain the situation of Hanover-Bates to him. The national sales manager does not need to and should not explain the sales issues plaguing the company that Carver is not privy to. However, Carver should be told that the reason for his being overlooked was because of his retirement age coming up in three years. Carver should also be told that Hanover-Bates was not prepared to deal with this same situation again in three years, because it is simply an unreasonable task to undertake. Carver should be encouraged to stay on with Hanover-Bates, to fulfill his retirement and perhaps, with an increase in pay, assist Sprague to ensure that Hanover-Bates sales staff improves and sales for District 7 increase. Works Cited Case 3.2 Hanover-Bates Chemical Corporation. Evaluation and Control of the Sales Program. P. 444 - 448. Print. Majer, Alen. “Sales Tip #31: Ask More Questions.” The Science and Art of Selling. 2 September, 2010. Web. 18 April, 2011. Read More