HANOVER-BATES CHEMICAL

CORPORATION

Introduction
Producer of Processing
Chemicals
Four Plants
Los Angeles, Houston,
Chicago and New Jersey

Product Line

SPX
ZBX
CBX
NBX
CHX
BUX

Materials
Industrial
fasteners
Industrial
Components
Miscellaneous
Items
Quality Control

Broad Range
of Suppliers

Qualitative Facts

Quantitative Facts
Performance

Sales Reps

District Sales
Managers

Sales reach $35.83 million in

2007
Strong Balance Sheet

40 in seven districts
Salaries
Fringe Benefits
Commissions

Salaries
Bonuses

Accounts and Call Frequency

A accounts
(Major Accounts)
B accounts
(Medium
Accounts)
C accounts
(Small Accounts)

$20,000 or
more in
yearly Sales
Two calls per
month
$11,000 to
$19,999 in
yearly sales
One call per
month
Less than
$11,000 in
yearly Sales
One call
every two

PROBLEMS

 Performanc
e Index 93%

3rd highest in
sales but
worst in
profits

sales quotas
Not Met

Performanc
e Index
84%

Underutilizatio
n of resources

Gross Profit
Quotas Not
Met

Mismanagemen
t in Selling
Eforts

Lost sales
on
potential
Accounts

Growth is
selling
expense

Less
Educated
sales staf

Under experienced
Employee promoted into
hostile environment VS 34
+ years experience

Growth in profits were

rendered by almost equal
increase in expenses with
increase in sales.

% Change in sales is
9% VS % change in
selling expense 5%
but %age change in
total expenses is 7%
so?

Created Fuss by not

communicating
Appropriately

Managing
Boss

CORE PROBLEM
James Sprague =no sales
background =whole
territory to increase
sales with increasing
profits (A big Challenge)

Previous manager allowed sales

staff to run independently without
performance metrics,
assuming that individual salesman
would make the best decision on
the optimal product mix for
each client.

EXHIBIT ANALYSIS

INCOME STATEMENT ANALYSIS

120

100

Sales
Gross Profit
Administrative Expense
Selling expenses
Pretax Profit
Taxes
Net Profit

80

Axis Title

60

40

20

0
2003

2004

2005
Year

2006

2007

Performance Index
120
100
80
60

Performanc
e

Performance
40
20
0
District

SALES PERFORMANCE (PER REP)

1200000
1000000
800000
Sales Quota/Rep
Actual Sales/Rep

600000
Sales 400000
200000
0
District

Gross Profit Comparison with Quota

450000
400000
350000
300000
250000
200000
Gross Profit
150000
100000
50000
0

Gross Profit
Quota/Rep

GROSS PROFITABILITY COMPARISON

140
120
100
Performance
Gross profitability
performance index

80
60
Performance
40
20
0
District

SALES EXPENSE CONCENTRATION

120%
100%
80%
60%
40%
20%
0%

Total Sales Expense

Sales Rep Salaries/Total Selling
Expense
Sales Commisssion/Total
Selling Expense
S.Rep.Ex/TSE
District Office Ex./TSE
D.M.E/TSE
Sales Support/TSE

Expenses to Sales
120
100
80
Axis Title 60
40
20
0

Sales
%GP/Sale
%S.E/Sales

Percentage of Gross Profit to Sales

50
40
39
37

44
43
39

30 32
20
10

0
North East

North-Central

Category A
Category B
Category C

RATIO ANALYSIS
ACCOUNT PENETRATION RATIO

District
A
B
C
Northea
0.59 0.55 0.49
st
North
0.70 0.64 0.44
Central

LOSS ACCOUNT RATIO

This ratio indicates how well salesperson
maintains active accounts

District

Northeast

0.41

0.45

0.51

North
Central

0.30

0.36

0.56

SALES PER ACCOUNT RATIO

THIS RATIO INDICATES SALESPERSON SUCCESS PER ACCOUNT AVERAGELY.

District

Northeast

25896 12007

3882

North
Central

26821 14027

4486

RECOMMENDATIONS

Improving
Districts profit
performance
Use bottom-up
approach, comp
plan adjustment
& training

Profit and productivity in mind

Sales force morale held in high regard.
Changes in sales methods and
philosophy are needed

Sprague must apologize to Carver

Giving Carver a more important role
and implementing a mentoring
system.
The bottom up approach will help
to improve employee morale by
showing them that they are a
valuable part of the company
whose opinions are vital to the

Northeast
district as
profitable as
possible.
Northeast
district
should use
district 7 as
a guide

Sprague has to let Carver know that

he meant no ofense by his previous
critique
Carver has the potential to be a
precious asset in motivating the
troops and leading the sales force
through the re-structuring and
training that is needed throughout
District 3.
North-Central district is doing more
while spending less.
Get constant feedback from the sales
force
A point system will be utilized to place
an added emphasis on selling
products with high margins.
A negotiation training program to
prepare the sales force for this new