Impact on Technology on Sales

Impact on Technology on Sales Case Study

Summarization of Case Study Having automated the online ordering process by first creating an electronic catalog which is linked to ordering workflows, G. W. Pergault is starting to see the cost benefits of having an e-commerce strategy that works. The newly-arrived CEO Celia Fiorni has not only automated the online ordering workflow, but also spent $20M in revamping and redesigning the entire company website, in addition to automating 4,000 pages of the company's catalog to make its products available online as well. Analysis of sales for the $4.2B supplier or Maintenance, Repair and Overhaul (MRO) products shows that 80% of the customers generate only 20% of the sales, while 20% of the largest customers generate 80% of the sales. The average order size of 80% of the customers is significantly smaller, most likely more frequent, and often not as nearly customized as the orders from the larger customers. As a result of these three factors, the company has seen these smaller customers take advantage of the online ordering applications that are part of the new website. The new CEO, Celia Fiorni, wants to also see the remaining 20% of customers who are 80% of total revenue, also move to online ordering. She has asked the Sales teams to launch this initiative to the company's largest customers, who collectively account for over $3B of the company's total revenue. Understandably, the sales managers who are responsible for these top 20% of customers are resisting, and rightly so. Their concerns are first from a relationship standpoint, as having a customer who buys in that much quantity needs personal assistance in tracking orders, managing pricing, and all manner of services issues. There is also the fear of being replaced by online initiatives, and also the major resistance concerning losing commissions on those sales placed online. Taken together, these factors are leading to a high level of resistance in the company to rolling out the online ordering application to the top 20% of customers at G. W. Pergault. Questions at the end of the case study 1. What advice should sales manager Ken Sutton give to his company president, Celia Fiorni, in order to improve her e-commerce plan and make it successful?

The new CEO fails to recognize several critical dynamics at play within the sales force, foremost being the sales managers' strong level of loyalty and commitment to their customers' satisfaction, and second, how the years of service these sales managers have had with large accounts have translated into financial security for themselves. The greater the level of service to these key accounts, the greater percentage of MRO spending both G. W. Pergault and the sales managers will receive, and many sales managers have no doubt worked for years with these accounts. Asking them tell these accounts to order only on the Web through an online ordering system is like asking the sales managers to walk away from one of the most major commitments they have made in their professional lives. In addition to that critical dynamic of account ownership, it makes the most sense to put the most seasoned and highly trained members of the sales force on those accounts that are the most profitable. There is also the fact that in these larger accounts the purchasing decisions are more complex, require a greater breadth of support across the product lines, and are often project-based in scope. All of these reasons underscore the need for personalized service. What Ken Sutton needs to do is to explain to the new CEO that online ordering works best for low-margin, high-volume orders, precisely the kind of orders 80% of customers are ordering online today. He needs to further explain that in order to maintain the top 20% of accounts significant face- time is needed, and the customers aren't just interested in transactions, they want service as well. In fact many of the top 20% of customers are most likely using the products purchased from G. W. Pergault to complete their own MRO projects internally as well. In addition, given the volume and complexity of orders, many times these top 20% of customers also require extensive pricing and product exception handling, all tasks that require personalized service. Going to a purely automated approach for this top 20% of customers is in fact inviting competitors willing to invest in personal relationships to invade and take market share in these key accounts away from the company. If G. W. Pergault does not manage these top accounts with personalized service, their competitors will. Ken Sutton needs to define a private portal approach to give customers the opportunity to complete common online tasks like smaller orders, tracking shipments and returns, stock balancing, and a series of other tasks, yet the portal needs to be positioned as a sales tool to help the sales managers in the accounts. These portals need to be considered as tools to increase customer satisfaction, not drop the cost per transaction. Finally, ken Sutton needs to tell the CEO, that in addition to all these factors, the sales managers have no sense of ownership around this new initiative, and that in defining service portals for each customers, the sales managers