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File: Ch03, Chapter 3: Sales Opportunity Management

True/False

1. Cold canvassing is a common method of prospecting in consultative type of selling.

Ans: False
Response: See page 90

2. In a consultative selling situation, cold canvassing often wastes a lot of the


salesperson’s time.

Ans: True
Response: See page 90

3. Trade shows are generally not very effective in generating good sales leads.

Ans: False
Response: See page 90

4. Prospects are considered a qualified lead when it is established that they have both a
need for the product and the authority to buy the product.

Ans: False
Response: See page 92

5. The minimum size customer that a salesperson should call on is closely related to the
cost of making a sales call.

Ans: True
Response: See page 93

6. Corporate marketing executives are usually in the best position to determine the
minimum size customer on which the sales force should be calling.

Ans: False
Response: See page 93, 34

7. Direct selling expenses are those associated with selling a product directly to the
final user of the product.

Ans: False
Response: See page 93

8. Although important for evaluating current customers, calculating a breakeven sales


volume is not necessary when prospecting for new customers.

Ans: False
Response: See page 94

9. The minimum size customer that a salesperson should call on is directly related to
the number of employees the customer employs.

Ans: False
Response: See page 94

10. Break-even sales volume is the sales volume necessary to cover all direct selling
expenses.

Ans: True
Response: See page 94

11. Break-even sales volume analysis is as important when prospecting for new
customers as it is when serving existing customers.

Ans: True
Response: See page 94
12. It is not necessary to calculate the minimum account size when a sale is assured.

Ans: False
Response: See page 93, 94

13. Research has shown that direct selling costs as a percentage of sales remain fairly
constant between industries.

Ans: False
Response: See page 93

14. Research has shown that the number of calls required to close a sale is about the
same regardless of the type of product or service being sold.

Ans: False
Response: See page 93, 94

15. Sales force costs as a percent of sales are generally about the same across most
industries.

Ans: False
Response: See page 94

16. A customer far below the breakeven sales volume may be a good candidate for
servicing via phone calls, rather than face-to-face sales calls.

Ans: True
Response: See page 94

17. A salesperson is well advised to provide the same level of service (e.g., number of
sales calls) to all accounts in an effort to increase sales volume.

Ans: False
Response: See page 94
18. The same sales effort and time should be given to each customer since each
customer should be considered important.

Ans: False
Response: See page 94

19. In itself, breakeven analysis does not decide the optimal time allocation between
prospecting and servicing accounts.

Ans: False
Response: See page 94

20. The easiest and most widely used model for allocating salespeople's time is the
multiple factor model.

Ans: True
Response: See page 95

21. The ABC account classification procedure typically considers multiple factors when
determining customer value.

Ans: False
Response: See page 96

22. Portfolio models evaluate account attractiveness based on both account opportunity
and competitive position.

Ans: True
Response: See page 96, 97

23. According to the portfolio model of effort allocation, salespeople should spend most
of their time calling on new prospects.

Ans: True
Response: See page 96, 97

24. A sales response function shows the relationship between the number of sales calls
on a customer and the resulting sales volume at each sales call level.

Ans: False
Response: See page 97, 98

25. A sales response function can only be derived from complex mathematical functions
developed from customer surveys.

Ans: True
Response: See page 97, 98

26. A sales response function generally indicates that a salesperson can always
increase the sales volume of an account by calling on it more often.

Ans: False
Response: See page 97, 98

27. Sales process models such as the Sales Funnel are best suited for salespeople
selling big-ticket items (e.g., computers), where prospecting for new sales opportunities
is important.

Ans: False
Response: See page 100

28. According to the Sales Funnel model, a "qualified" selling situation is one in which
all the buying influences have been contacted.

Ans: True
Response: See page 100

29. According to the Sales Funnel model, a salesperson should give first priority to
identifying “unqualified opportunities.”

Ans: False
Response: See page 100

30. According to the Sales Funnel model, salespeople should first concentrate on their
"best few" opportunities, then the "qualified" opportunities, and lastly the "unqualified"
opportunities.

Ans: False
Response: See page 100

31. Recent studies indicate that salespeople spend the majority of their time
prospecting, selling to customers, and on customer service calls.

Ans: False
Response: See page 103

32. The integration of new technology, such as computers, into the sales force has
actually decreased the amount of time salespeople have for selling.

Ans: False
Response: See page 103, 104

33. According to survey results, most firms fail to offer their salespeople training in time
management.

Ans: False
Response: See page 103, 104

34. Customer Lifetime Value (CLB) uses an estimate of a customer’s future sales.

Ans: True
Response: See page 102
35. Customer Lifetime Value (CLV) is not a forward looking determining market
performance.

Ans: True
Response: See page 102

36. Customer Lifetime Value (CLV) is used by some companies to allocate their
marketing and sales force resources.

Ans: True
Response: See page 102

37. According to salespeople, telephone interruptions are considered to be the most


common time waster.

Ans: True
Response: See page 103

38. Personal growth opportunities are frequently characterized as activities with high
personal importance, but low apparent urgency.

Ans: True
Response: See page 103

39. The biggest time wasters for most people are activities/events that have high
apparent urgency, but are low in personal importance.

Ans: True
Response: See page 103

Multiple Choice Questions

40. Paths for increasing the value of a firm’s customer base include which of the
following?
a. acquiring new customers
b. reducing the turnover of existing customers
c. charging higher prices
d. both a and b above are true
e. all the above are true.

Ans: d
Response: See page 89

40. A customer demographic that might be used in building a prospect profile might
include:

a. geographic location
b. size of business
c. purchasing preference of customer
d. only a and b are correct
e. a, b, and c are all correct

Ans: d
Response: See page 90

41. Examples of demographics that might be used in building prospect profiles include
all of the following except:

a. size of business.
b. type of equipment currently in use.
c. geographic distance from shipping point.
d. customer buying preferences.

Ans: d
Response: See page 90

42. Methods of locating prospects include all of the following except:

a. searching on the internet.


b. using directories.
c. conducting logistic analysis.
d. trade shows.
Ans: c
Response: See page 90

43. If you are new to the territory and want to find out who are possible prospects for
your line of latte machines, the best source with the most leads would be:

a. the Thomas Register of American Manufacturers.


b. the Yellow Pages.
c. the Survey of Industrial Purchasing Power.
d. the local newspaper.
e. all of the above.

Ans: a
Response: See page 91

44. A good example of a directory for business-to-business selling would be:

a. the Fortune 500 listing.


b. the Associated Almanac.
c. the Businessweek Industrial Index.
d. the Thomas Register of American Manufacturers.

Ans: d
Response: See page 91

45. In order for a prospect to be a qualified lead a salesperson must gather information
about whether the prospect has:

a. a genuine need for the product or service.


b. the buying authority to purchase the product or service.
c. the financial resources to purchase the product or service.
d. only a and b above are true.
e. a, b, and c above are all true.

Ans: e
Response: See page 91

46. The first step in determining the minimum customer size on which the sales force
should call is to calculate the:

a. cost per sales call.


b. the growth potential of the customer.
c. sales promotion budget needed.
d. cost of product development.
e. gather the customer’s past sales record.

Ans: a
Response: See page 92, 93

47. Which of the following is not considered when calculating the minimum sized
customer on which to call:

a. direct selling costs.


b. the average number of sales calls required to close the sale.
c. the cost structure of the selling company.
d. the growth rate of the customer.

Ans: d
Response: See page 93

Given the following information:

Compensation - $90,000 Direct Communications - $5,000


Automobile - $7,000 Meals & entertainment - $6,000
Overhead - $12,000 Promotional materials - $10,000
Calls per day - 5 Profit margin - 10%
Net selling days - 200

48. The average cost per call is:

a. $111.00
b. $113.00
c. $118.00
d. $130.00
e. none of the above are correct.

Ans: c
Response: See page 93
49. Calculating cost-per-call is an important step in addressing the minimum customer
size issue. Cost per call is a function of:

a. the number of calls made per day.


b. a salesperson's direct selling expenses.
c. gross margin.
d. both a and b.
e. all of the above.

Ans: d
Response: See page 93, 94

Given the following information:

Compensation - $55,000 Communications - $3,000


Automobile - $7,000 Meals & entertainment - $9,500
Overhead - $12,000 Promotional materials - $2,000
Calls per day - 3 Profit margin - 10%
Net selling days - 200

50. The average cost per call is:

a. $124.17
b. $127.50
c. $147.50
d. $114.75
e. $144.17

Ans: b
Response: See page 93, 94

Given the following information:

Compensation - $90,000 Direct Communications - $5,000


Automobile - $7,000 Meals & entertainment - $6,000
Overhead - $12,000 Promotional materials - $10,000
Calls per day - 5 Profit margin - 10%
Net selling days – 200 Number of calls to close – 4 calls
Direct sales costs - 4%

51. The average cost per call is:


f. $1,800
g. $4,720
h. $11,800
i. $47,200
j. None of the above are correct.

Ans: e
Response: See page 93, 94

52. A viable approach to addressing the problem of customers who are too small to
order generate enough sales volume to exceed the break-even sales volume is:

a. to increase prices to these customers.


b. to decrease the number of calls made on these customers.
c. to have brokers call on these customers.
d. only a and b above are viable.
e. a, b, and c are all viable.

Ans: e
Response: See page 93

53. Which of the following are methods for determining time allocation?

a. single factor.
b. ABC approach.
c. portfolio.
d. sales funnel.
e. all are allocation methods.

Ans: e
Response: See page 95

54. The ABC account classification system is:

a. an example of a single factor model.


b. an alphabetical portfolio method of time allocation.
c. a method to rank customers by their geographic location.
d. both a and c.
e. both b and c.
Ans: a
Response: See page 96

55. Portfolio models offer several benefits that single factor models do not. Which of the
following is not one of those benefits?

a. the identification of important customer relationship issues


b. the isolation of information gaps
c. a lower cost method of analysis
d. setting priorities for customer data collection and analysis
e. both a and b above.

Ans: c
Response: See page 96

56. Although portfolio models offer several benefits over single factor models, a problem
that still remains is:

a. only one characteristic is used to classify accounts.


b. the lack of an optimal solution to the allocation of sales calls.
c. a lack of priorities for customer data collection and analysis.
d. it does not promote forward-focused thinking by the sales team.
e. none of the above.

Ans: b
Response: See page 96, 97

57. A sales response function depicts the relationship between the number of sales calls
and which of the following?

a. sales volume
b. customer receptiveness
c. gross margin
d. the number of additional sales calls needed to close the sale
e. profitability

Ans: a
Response: See page 97, 98
58. After reaching the optimal number of sales calls, the sales response function tends
to illustrate which of the following sales response dynamics?

a. increasing marginal returns.


b. decreasing marginal returns.
c. increasing sales levels.
d. decreasing sales levels.
e. none of the above.

Ans: b
Response: See page 97, 98

59. The Sales Funnel model identifies the best few opportunities as those in which:

a. the financial buyer has given his/her approval to the project.


b. all the buying influences have been contacted and their needs identified.
c. the purchasing department has recommended the firm's selling proposal to the
other buying influences.
d. all of the above.

Ans: b
Response: See page 99, 100

60. Dramatic differences in the profitable of customers purchasing a similar dollar


volume may be caused by:

a. the mix of products they purchase.


b. the price discounts taken.
c. “forward buying” by the customer.
d. both a and b above.
e. all of the above.

Ans: e
Response: See page 100

61. It is not at all unusual for a company to find there is between a ______________
difference in the profitability of customers who purchase a similar quantity of product.
a. 10-25%
b. 25-50%
c. 50-75%
d. 75-100%

Ans: c
Response: See page 101

62. Which of the following is included when calculating Customer Lifetime Value?

a. a discount rate
b. future product purchases
c. the average contribution margin from purchases
d. none of the above
e. all of the above

Ans: c
Response: See page 101, 102

63. As a performance metric Customer Lifetime Value (CLV) is:?

a. based on historical sales.


b. is consistent with a transactional sales perspective.
c. forward or future oriented.
d. is based on the next year’s sales forecast.

Ans: c
Response: See page 101, 102

64. According to recent surveys, the average salesperson spends approximately what
amount of time waiting and traveling?

e. 10%
f. 20%
g. 30%
h. 50%

Ans: c
Response: See page 102, 103
65. Which of the following is the greatest time waster according to salespeople?

a. unclear communication
b. meetings
c. telephone interruptions
d. procrastination

Ans: c
Response: See page 103

66. A key aspect of managing time effectively is:

a. to increase effort in daily activities.


b. to switch often between several tasks.
c. not to limit what you can accomplish ("never say no").
d. to recognize and control time-wasters.
e. all of the above.

Ans: d
Response: See page 103