Sales Force management

The Valley Winery

Written Analysis of Case

Submitted by
MBA III C 22/1/2014

Faizan Khalid Gul Abbas Muaz Moin Sheikh Zaighum Gondal Zunair Ahmed

Introduction
Paul Waller is recently hired as a sales manager for the San Francisco regions chain division for the Valley winery products and despite having very good sales the high turnover ratio that is 100% is a major impediment in the future prospects of the company. Waller has a major task ahead regarding the better planning and organizing of the sales force activities of Valley Winery and its prospective operations among the region.

Philosophy and strategy

Valley Winery was founded in 1933 after the prohibition and has grown to be the largest domestic producer of wine in the United States. The brand has multiple product lines that include both low-price, consistent-quality wines and also low-grade wines and wine coolers. Valley Winery has had a hard time retaining its sales force and despite the short-term increase in sales, it is not a sustainable growth. The company started only with $7500 investment and at the end of prohibition it has become the leading producer of low priced , consistent-quality wines producers and manufacturers and tagged as the best managed and most innovative in the market. The companys success can be traced to two factors Producing wines consistently at high quality and lower prices Sales force using a push strategy

Distribution system
Valley Wine has very wide distribution system. Distribution is done mainly through nationwide distributors located mostly in the metropolitan areas. The Valley owns 50 % of the distribution mostly that are larger and profitable accounts. However, there is no evidence that Valley Winery is targeting the smaller account, but one of the products do cater the niche also. Valley field representative call on non-company liquor and beer wholesalers across the country to place orders and mostly uses major account system with reps calling on the headquarters of large chain stores. The Valley works on the principle of forward integrations that is it has its own

distributors in the market. And there are three sales groups that are responsible for making sales. The career type, the liquor and bars sales, the restaurants and resorts sales teams and chain division. The chain division is the major source of most of the sales of the company.

Facts and figures

Valley Winery has struggled to retain its sales force and has a nearly 100% turnover. There are 50 sales representatives in the San Francisco but approximately 50 new sales representatives are hired each year. The average time a sales representative is with the company is seven months. Valley Winery recruits 10 to 15 new sales reps from area universities, 10 hires from local newspaper advertisements and online job postings, and 15 to 20 representatives are hired through the use of six local employment agencies. The employees hired through the employment agencies cost the Winery approximately $3,000 per individual. It is also figured that recruiting and training each representative cost the company $30,000 per year. Pat Waller, the sales manager for the San Francisco regi ons chain division, figures that these costs do not include the opportunity costs associated with retaining an employee. Such as the time it takes to build rapport with clients and the time it takes for the new hires to develop their strategies. An issue that could be causing this turnover could be the use of the company to gain experience and move on to a higher paying job or a job that pays based on commission. Large portions of the hires are college graduates who are getting their first jobs and have no experience or training.

Symptoms to the Problem High turnover rate

The turnover rate is high over the past several years but the contradictory factors are that rate is doubling every year and still the number of employees remain constant, moreover the working experience of an average employee is around 7 months which clearly tells that company is aggressively hiring the sales people. And total of approximately 50 sales persons are replaced every year.

Poor Hiring Mechanism

Top management places too much of an emphasis on youth and physical attributes. Sales representatives of Valley Winery should be groomed and well kept. However, youthfulness and physical attributes should not outweigh qualifications for the job at hand. Looks are important but qualifications and experience would not be overlooked. Moreover there are no tests included in hiring a sales individual. There should be balance between the academic, aptitude/willingness and the hardworking blend among the potential candidates. Moreover Valley Winery is dealing in the hyper competitive market, the market know how should be a foremost criteria for the selection of the candidate, instead of physical and youth characteristics. In short the criteria for the recruitments are very subjective and there is inadequate assessment by the responsible sales manager and district manager, under which the candidate has to perform. No aptitude tests No background checks Noninvolvement of direct supervisors in recruitment

No coaching and lack of motivation ( Leader runs from the top )

There is lack of job representation and lack of motivation and encouragement. The motivation of the sales force is so low that they think that the district managers are no more that the baby sitters. No right schedule is being released by the management, there is no sales management planning in the organization. The leadership runs from the top. The employees just want to make sales without having concern about the company in that they work. Moreover the uncertain night calls and long distance travels for the reps and frequent changes in the sales organizational structure has made problem even worse. Some of the other problems identified are as follow: Poor Forecasting of number of sales person Poor Territory design Lack of supervision of the salesperson attitude, motivation and ethics

No professional training provided Lack of vision Lack of career development

Core problem ABSENCE OF PROPER SALES PLANNING STRUCUTRE AND IMBALANCE, UNATTAINABLE, DIFFICULT, NON ACCURATE QUOTA STRUCUTE.
The following problem is the main problem that leads to the low motivation of the sales staff and aided with no proper trainings and improper recruitment procedures eventually results in high turnover, the company seeks to have a short term approach rather than long term approach

Recommendations
Emphasize more on supportive leadership

Restructure the quotas

Sales people have a finite amount of selling capacity. Customers and prospects have coverage requirements. The correct assignment of customers and prospects to members of the sales force can improve sales performance without any incremental cost. Understanding the potential of each territory can help companies match the best opportunities to the most capable sales people. So it is recommended to make quotas that are achievable and yet challenging.

Change Hiring Mechanism

Top management places too much of an emphasis on youth and physical attributes. Sales representatives of Valley Winery should be groomed and well kept. However, youthfulness and

physical attributes should not outweigh qualifications for the job at hand. Looks are important but qualifications and experience would not be overlooked. There should be balance between the academic, aptitude/willingness and the hardworking blend among the potential candidates. Moreover Valley Winery is dealing in the hyper competitive market, the market know how should be a foremost criteria for the selection of the candidate There should be aptitude tests Background checks Direct supervisors should involve in recruitment

Conclusion
Territory Design focuses on fairly distributing revenue potential to sales reps, properly determining the most appropriate territory design criteria, and matching territory workload to sales rep capacity.

Optimized workload balance which enhances sales responsiveness Reduction in travel time and expenses Lower sales force turnover due to higher sales force morale Proper integration of acquired sales forces Built in adaptability due to market shifts and new product launches

Improved departmentalization and sales force structure Proper ethical training and knowledge workshops