BBMK - 61510121 - HP - Cso
BBMK - 61510121 - HP - Cso
BBMK - 61510121 - HP - Cso
As a result, any large account requires a long gestation period and often involves activities which
do not directly result in revenue generation. This was not possible with the current focus on
meeting sales quotas, which in turn resulted from HP treating its sales force as a cost center.
On the positive side, a focus on cost necessarily kept the sales force lean. However, as detailed in
the case, any pressure on costs also put pressure on reduction of sales force numbers and
consequently demoralized a number of employees who felt under stress.
Diaz also brought in training programs designed to de-emphasize the traditional focus on HP
product capabilities and specifications in favor of teaching sales people how to evaluate customer
requirements and suggest ways as to how HP could address them.
The approach helped HP to gain expertise on domains and serve institutional customers more
effectively. As the case points out, customers felt that HP Sales Reps were now more
knowledgeable about the businesses they serve, rather than only focus on the unit sales that they
were going to make. Additionally, HP could also use the specialization of its sales force to create
a competitive advantage for itself and create entry barriers for competition.
At the same time, the focus on extreme customer service led to customers to use the HP sales force
as an extension of their problem solving unit, thus placing unnecessary burden on their time and
capacity. Due to the focus on revenue, sales people were not evaluating accounts and instead
closing sales as and when they were available. The high conversion rate was a function of the large
number of repeat purchases that was happening and did not allow HP to get into the innovation
product space. A potential reason for this would be that the sales force in their narrow focus on
conversion, were liaising with a SPOC, the IT department, instead of developing multiple contacts
in a buying organization. This was not optimal for HP, as the customer was moving to consolidate
the Repurchase vendor base, in order to pressurize vendors on cost and drive prices down. Finally,
the change met with significant resistance from pockets of sales people, who saw themselves as
losing power over their regional fiefdoms. Also, smaller customers, who were used to receiving a
high level of personal service from HP reps, resented being relegated to channel partners.
Suggestions
-
Redesign sales KPIs ad align incentives to overall account profitability margins, rather than
revenue growth
Create a separate team to handle innovation engagements. This team could be an adjunct
to the regular team and would focus on meeting and understanding motivations for the
business to acquire an HP solution.