Tài liệu Improving sales management of personal & homecare business unit of connell brothers company

UNIVERSITY OF International School of Business ---------------------------------- PHAM NGOC ANH THU IMPROVING SALES MANAGEMENT OF PERSONAL & HOMECARE BUSINESS UNIT OF CONNELL BROTHERS COMPANY ID: 22140048 MASTER OF BUSINESS ADMINISTRATOR SUPERVISOR: Phd. TRAN HA MINH QUAN Ho Chi Minh City – Year 2016 Table of Contents Introduction .............................................................................................................................. 1 Situation analysis ...................................................................................................................... 5 Problem identification ......................................................................................................... 7 Causes and effects tree ........................................................................................................ 9 Problem definition ........................................................................................................... 11 Problem existences ............................................................................................................ 11 Causes of the central problem ................................................................................................ 12 Alternative Solution ............................................................................................................... 26 Conclusion ............................................................................................................................... 37 Appendix 1:Questions and transcript of interview section 1 ................................................. 37 Appendix 2 :Questions and transcript of interview section 2 ................................................ 38 Appendix 3: Questions of interview section 3 ........................................................................ 39 Appendix 4: Sales process ...................................................................................................... 40 Appendix 5: KPI Evaluation form ......................................................................................... 42 Appendix 5-1: KPI Evaluation form ...................................................................................... 43 Appendix 6: Job description of Business Manager of Brenntag Company .......................... 45 Appendix 7: Questions and answers of customers about Sales manager’s………………… 47 Appendix 8: Questions and answer of suppliers ................................................................... 48 References................................................................................................................................ 49 EXECUTIVE SUMMARY Connell Brothers Vietnam is one of the leading specialty chemical and ingredients distributors in the country by representing leading global suppliers and serving customer needs for raw material in a wide variety of industrial and regulated industries. Personal & Homecare department (PnHC) which is the fourth business unit of Connell Bros has played an important role in the development of company. PnHC team grew business average 25% to 35% annually by high experienced sales team. However, after replacing sales team leader (business unit manager), sales team is unmotivated, stressful by overload of working. Both sales attitude and salesforce have been changed, so business result drop behind budget. It is very necessary to point out causes that affect business to improve sales team performance in order to achieve sales target of company. This research will identify causes and outline the reason why sales result decreased in the first half of year 2016. Then, we can suggest appropriate solution to improve PnHC business. Introduction Connell Brothers is originally founded its first office in Vietnam before 1975. Due to the U.S. trade embargo i mposed in 1975, the company was compelled to postpone its operations in Vietnam. When the embargo was lifted in 1993, Connell Brothers was one of the first U.S.-based distributors to return Vietnam market and opened representative office. Today, Connell Brothers Vietnam is fully licensed to operate as a full service distributor with two offices in Ho Chi Minh and Hanoi. Connell Brothers Vietnam is one of the leading specialty chemical and ingredients distributors in the country by representing leading global suppliers and serving customer needs for raw material in a wide variety of industrial and regulated industries. With concepts of being the best technical consultants and guiding marketing trend in business development, Connell Brothers Vietnam is a trusted partner of both suppliers and customers. Personal & Homecare depart ment (PnHC) which is the fourth business unit of Connell Bros has played an i mportant role in the development of company. Not only succeeding in supplying chemical for multinational companies, but also succeeding in supplying chemical for local companies, P&HC is one of leading companies contributing into the success of Vietnam brand like X-men shampoo, Enchentuer, Romano, My Hao, Net, Lix, Lavox, Kanac, etc. By flexible strategies, Connell Brothers has changed business policies to adapt customer requirement and market needs. Changing from representative office to limited company, Connell Brothers Company (CBC) has expanded ability of supplying for varied customers with its own warehouse, effective supply chain system and flexible payment term. Industry development has created not only opportunities but also threats for multinational chemical distributors like CBC. CBC has met high competition with both multinational companies and local companies. CBC has not been a monopoly company in supplying some special products anymore. Customers nowadays have multiple choices in many distributors that they feel satisfied. Consequently, the problem is that CBC should 1 analyze its own weakness in sales management to improve competition ability in personal & homecare chemical market. Personal & Homecare business Overview of personal & homecare market Market is dominated by multinational companies like P&G, Unilever, Kao, Rohto due to the satisfaction with foreign brands and attractive advertisement of most Vietnamese customers. Meanwhile, local companies follow marketing trend that multinational players created due to their shortage of advertising budget. They have built effective distribution channel all over countries, especially in the west or remote places where multinational co mpanies skipped by high distribution investment. However, west places are potential markets that multinational companies changed their distribution strategy. Table 1 and 2 shows increasing significant market share number of personal and homecare. It proves this is a potential market that local companies should invest more. Table 1: Personal care market share (Euromonitor international 2015) 2 Table 2: Ho mecare market share (Euromonitor international 2015) Products 2011 2012 2013 2014 Aircare 361 402 439 467 Bleach 61 71 82 92 DWL 1,418 1,631 1,905 2,181 Home insecticides 608 707 809 905 Laundry 12,359 14,739 17,209 19,608 Polishes 144 164 183 206 Surface care 1,117 1,284 1,508 1,747 Toilet care 339 395 470 549 Total 16,409 19,395 22,607 25,757 Personal & homecare of CBC: P&HC is the fourth position in Connell Brothers Company. Its sales revenue increases 15% annually by developing new suppliers, new customers and new products. PnHC divides customers into two segmentation as personal care and salon & homecare. For personal care seg ment, it supplies chemical for bath shower, shampoo skincare, cosmetics, etc. For salon & homecare segment, it supplies chemical for haircare salon channel and households. With its customer division, sales team can well focus on their knowledge and technical service. Its sales revenue has increased from $1,7mil US to $4.4mil US after dividing into two segments for 4 years. YTD 2015 46% 54% Personal care Salon & homecare Figure 1: Sales revenue in 2015 3 With the economic growth of Vietnam, multinational distributors and local distributors have founded to meet market needs. Chemical supply source is not monopoly by some foreign distributors like CBC. Customers can buy from local distributors with longer payment term, or i mport directly from suppliers having or not having representative in Vietnam. Consequently, CBC has difficulties not only with co mpetitors but also suppliers that they are working with to sustain stably. 4 Situation Analysis Sales force is very costly and effective in achieving certain marketing objectives. The purpose of the sales force is to produce sales revenue and this involves the art of personal selling. Hence, sales process management must give careful thought to designing and managing its personal-selling resources effectively and long term. Sales process management include in recruitment, training program, salesforce supervision, evaluation, resource back-up plan, suppliers management, etc. Moreover, Connell Brothers is a B2B model in chemical industry business so the role of sales manager in leading sales force how to promote new products is very i mportant. Besides that, motivation and incentives policy are also two elements affecting sales performance. Frederick Herxberg1 said that the best way to motivate someone is to organize the job so that provides feedback and challenge that satisfy the person’s “ higher level” needs for things like accomplishment and recognition- means doing the job intrinsically motivating. Sales management, motivation, incentives are necessary factors for sustainable developing of sales force, especially sales spirit. Go through business review of the first half year and sales performance, I summarized current symptoms as following: Symptoms Sales of the first half year 2016 drops 12% compared to year 2015 while sales normally increases from 2011 to 2015. Personal and homecare usually achieve company’s budget higher 10% each year. However, sales result decreased in the first half of year. The reason comes fro m internal and external condition: - External condition: • Market demand drop: market dropped demand due to economy difficulties, disasters affecting beauty needs. 5 • High co mpetition: Many new suppliers from China and India enter market to invest and develop their products competing with popular supplier by co mpetitive price strategy. Consequently, current suppliers have to work with customers directly to maintain their business instead of selling through distributors like Connell Brothers company. Moreover, many local chemical traders open business in personal and homecare segment due to potential business. Comparing to multinational distributors like CBC, local trader has flexible sales policy which customer especially big customers prefer to buy from them. - Internal condition: • Unstable salesforce and sales leader: after resignation of business unit manager (BUM), sales team still grow business 35% versus budget by the effort of high experience and long serving sales team. Ms. Loan has been working with CBC for 7 years and brought ½ profit for business depart ment. She managed sales team temporarily and achieved result higher than budget. However, company didn’t promote her to BUM position officially because she doesn’t have leadership experience. New Human resource manager who hasn’t had experience in chemical industry changed job specification of a BUM by recruiting new sales leader without chemical background and chemical industry market experience to lead a strong team as PnHC. As PnHC is a strong team with high experience sales team, company recruited a person who have leadership skill to support them forward, but don’t need to well understand to guide sales team; especially new BUM isn’t necessary to learn chemical knowledge, market orientation in 2 years. Sales team have to do more reports for both BUM, company and suppliers. When they have issues, manager cannot give the effective solution fast. When sales team face difficulties in dealing price, pressures on developing unworkable products fro m suppliers, BUM cannot help them while sales team have to explain and suggest solution to him. Sales team feel overloaded with job and lose dynamic to develop new products. 6 • Low new business development performance: The characteristic of personal and homecare industry is that manufacturers focus on researching new products or developing current products in quarter 1, 2; and process to order chemicals to produce in quarter 3 and 4. Hence, salespeople have to work with customers closely to follow up new projects in the racing with many competitors to achieve new business development target in quarter 1 and 2. However, sales team doesn’t create a significant number of projects as prior year because they are not dynamic to research, consult and follow up customers well. The number of project pipeline declines in the first half year while it should have been increased to get sales in the 4th quarter. Lab service team also don’t have projects because sales team don’t bring many projects for them to work. Problem identification The method of this project is interviewing sales team & laboratory team of Personal care depart ment, salesperson & sales manager of food depart ment for comparison, sales manager of competitors as following: Purpose of No Name Position Department 1 Pham Mai Vy Technical Sales Executive Personal & Homecare - To discuss with 2 Nguyen Thi Minh Tram Technical Sales Executive Personal & Homecare sales team about 3 Vo Thi Kim Loan interviewing their job and their Technical Segment Manager Personal & Homecare expectation to identify problem. - To discuss about 4 Dang Thi Tram Oanh Lab service Executive Personal & Homecare working process with sales team to 7 compare sales team’s idea - To discuss about 5 Nguyen Chinh Thanh Senior Sales Executive Food his job, expectation, his sales leader - To discuss about 6 Hoang To Nga Business Unit Manager Construction her job, point of view - To discuss about Personal & Homecare/ 7 Lam Hue Linh Sales Executive sales process, Brenntag policy of competitor Table 3: The list of interviewees Interview is divided into 3 sections to discuss and identify real problem: - Section 1: interview sales team & lab team of personal & homecare business unit to identify problems - Section 2:interview sales team to discuss deeply about key problems identified in section 1 - Section 3: discuss with co mpetitors and any member of other department about problems to check if their companies also have the same situation. Interview questions and transcripts are shown in Appendix 1 to show discussion with interviewees. According to the result of interview in section 1, the key problem of sales team is work overload. Sales team told that they have to do not only to achieve sales target but also do so much paperwork like price negotiation, purchasing, delivery, controlling inventory following debt and reports to business unit manager, regional manager, suppliers. They have to work to finish requirement in KPI such as i mplementing forecast well, achieve business 8 budget of department in both growth of current products and development of new products. Salespeople have to do paperwork a lot, so they do not have time to read documents, research to find new marketing concept, new products to introduce customers. Long serving salespeople handle key accounts, and they feel stressed due to complicated working process of company while sales manager cannot help them solve difficulties. They told that company offer incentives lower than competitors’ in the market such as Brenntag, DKSH while they must do harder. It seems that co mpany doesn’t motivate their contribution even long serving time at CBC. Hence, they want to find better job that don’t make them stressed. After identifying problems in section 1, continue to interview in section 2 to discuss with sales people about work overload and criticize causes of problem. Causes and effects tree According to the result of interviewing in section 2, I form an initial cause and effect diagram as following to criticize causes of problems. From the cause and effect diagram, we can see low sales performance issue comes fro m working overload problem of sales team. Problem comes fro m 2 main aspects: internal condition and external condition. Figure 2: Cause and effect tree 9 Market demand drop Suppliers prefer to do business directly External condition Many new suppliers enter market High competition Many local distributors enter market BUM is lack of sales management skill Ineffective sales management Lack of out-put based control Lack of behavior -based control Low salesperson innovativeness Low new business performance Low sales performance Lack of knowledgebased control Ineffective key account management BUM is lack of necessary industry experience Lost business Conflict between sales team and BUM Ineffective supplier management Salesperson resigned Internal condition Information is depended on sales team Work overload of sale team Complicated sales process Strict sales policy Lack of intrinsic motivation Sales team are 11 disappointed Sales drop 12% Problem definition Fatima Salam 4 defined work overload as “ psychological stressor which is peril to an employee when an employee has ample of task to do and has too little time (Claessens et al 2004) frequently attributed as one of the job stressor (Robinson & Griffiths2005)”. Expressed in a simple way, work overload is situation that employee has too much work to do with too little time but higher target than they require. Luanne Kelchner10 stated signs of work over load such as lower productivity, work quality decrease, absenteeism and tardiness, negativity and health problems. The attitude of overloaded workers changes that includes a lack of motivation, emotional outbursts, negativity, irritability, and a change in work habits. Problem existences The purpose of interviewing in section 2 is confirming the existence of central problem work overload by discussing deeply with 3 members of sales team (Ms. Loan, Ms. Tram and Ms. Vy) about work overload that make low performance. The list of interview questions based on measurement of sale developed by Thomas (1981) and result from section 1 are following: 1. Does your job needs to do so much paper work? Can you skip paper process to do faster? 2. Can you share work with other persons in your team or supply chain? 3. Do you often have to work over time? How often do you work over time? 4. When do you feel stressed? Does your manager help you to release workload? 5. Do all sales person have the same over workload? 6. Do you think your job used to be interesting than now? Do you think that salespeople of other company have to work hard like you? The interview questions and answer transcript are explained detailed in Appendix 2 11 Causes of the central problem Basing on problem definition and interview result, all salesperson confirm 2 causes of work overload are internal and external condition.  Internal condition: 1. Sales management: Connell Brothers is a distributor company who brings innovation, solution, marketing concept to customers. Consequently, sales management process is an important point deciding business success. Sales management includes in training sales force, supervising sales force, team meeting schedule, supplier management and key account management. Training sales force: The purpose of training is to improve the overall competence of sales team by modifying soft skills, widening knowledge about company or major in order to make them satisfied with job to increase working efficiency. John F.Tanner 9 stated that organizations utilize sales training because they see a number of benefits from this investment: their salespeople are more knowledgeable about their firm’s products and services, the markets than salespeople who haven’t been trained. Chris Noonan 2 also concluded “ if skills are to be increased, performance improved, and individuals to adapt changing market conditions and work environments”. With good training, a salesperson is more likely to maximize her performance, earn more money, and have greater career mobility. Especially, new salespersons must be trained correctly about company orientation, products and sales process to catch up work conveniently. P&HC does not have introduction presentation about business unit situation, suppliers, products, lab achievements, etc. Thus, new comers meet difficulties in making familiar with job, sometimes they feel stressed and confused because of high volume workload. New comers 12 normally take three to four months to be familiar with working because of complicated process and high volume workload. However, work still continue smoothly because old salesperson handover key accounts and new sales person have time to learn by themselves. Supervising sales force: Sales force has three key resources to manage: time, company, himself or hersel f. An efficient salesperson recognizes the importance of good time management not only to achieve his organizational unit but also to finish other company requirement. The sales manager should get presentation of how time is normally used from salesperson to create awareness of where time is going during working day and help him focus on more productive use of time to achieve sales target. For new sales person, manager should supervise to perform new tasks by observing and then offering suggestions for improving their performance if needed. Chris Noonan 2 showed that a good salesperson should have good plan about following works so that sales manager can well manage and help him succeed: - Prospecting for new customers - Journey planning - Appointment scheduling - Travel plans - Longer-term account planning - Call objectives - Sales presentation strategies - Preparing sales aids - Post-call evaluation and future planning. 13 Moreover, communication between salesperson and customers or office should be also managed logically by arranging customer appointment, customer visit plan, implement official works such ad debt following, sales contract, order following, etc. However, BUM doesn’t manage sales team by weekly meeting, sales plan even though he is a new sales manager. Conversely, he requests sales team to send report for him before meeting 1 or 2 days so that he can submit to higher level. He doesn’t care about what salespeople do, but salespeople have to solve problem or explain any issues with General Director in each monthly meeting because he doesn’t know what salespeople are doing. He doesn’t have good working plan with employees. When he wants to know any information, he will request employees to join meeting with him immediately, while salespeople should have working plan in short term or long team, especially B2B. The way of disarranged working makes sales team uncom fortable because they have their own schedule. Managing sales force Managing a sales force involves planning, analysis, and organizing. Managing sales force requires the sales manager to be skilled in several areas including: setting objectives, organizing the task necessary to achieve them, motivating the sales force and problem solving. Sales manager should also ensure sales force have incentives to do jobs well, when needed, they should take corrective action with management to meet initial objectives. Sales meetings are normally organized periodically, often monthly, amongst sales team with common interests or issues to address. The purpose of sales meeting are: - Problem resolution: identify and evaluate alternative options - Instruction: impart new information data, training, etc. - Motivation: encouragement, improvement ideas, exchange experience and ideas 14 - Exploration: of new ideas to improve productivity. BUM doesn’t request to weekly or monthly meeting to discuss problems, difficulties of sales team so that he can help them solve problem or each team’s member can share their ideas, contribution. Key account management: Key account management is an important thing in sales management activities because sales manager should focus on key customers who bring main profit to business team. Iain A. Davis 7 stated that “ key Account Management (KAM) is also referred to as Strategic Account Management (SAM) which is a systematic supplier process for managing strategically-important business-to-business relationships.” KAM is also considered to be a development from Relationship Marketing, because it involves collaborative ways of working with key customers rather than traditional transactional practices. Chris Noonan2 stated that “ key account manager must be an efficient and effective communicator both with the customers and internally within the selling organization with a strong ability to influence senior managers”. The sales manager should select suitable persons to ful fill the job function and have good relationship with key customers. However, sales manager should also divide customers fairly so that each salesperson have opportunity to work with various customers and can develop himself. John F Tanner JR 9 stated that sales managers should understand business relationships to devise strategies and direct their customers to move profitable customers or key accounts in deeper relationship. Key account managers should have a deep understanding of the customer's value chain, but they will still need the help of technical experts to analyze it and identify how the company can add value to it. 15