The Office Supplies and Services (OSSCO) Company distributed business products including office furniture and supplies, drafting and engineering supplies, and business forms. It also offered drafting, engineering design, and printing services. Sales were $260 million. While OSSCO’s sales manager, Bob Brown, had been pleased with the performance of the sales force in terms of product sales, he felt that they had neglected the sale of OSSCO’s services. The service end of the business was not contributing its share to overall company profit. Because Brown felt that the drafting, engineering, and printing services differentiated OSSCO from its competitors, he set a goal of doubling revenues from the sale of services for the next fiscal year. The competitors were mostly small suppliers who did not offer the same services as OSSCO.
The printing services ranged from letterheads and business cards to silk screening and lithography. Drafting services were connected with decoration. The full-time designers, employed by the furniture department, visited customers’ premises and drew layout plans. Customers were able to visualize the end result and could make changes before incurring actual expenses. Business offices, banks, schools, and colleges were among the customers serviced.
OSSCO was headquartered in St. Louis and operated in several surrounding states. The area outside St. Louis was split into sixteen territories, with a subsidiary distribution center in each. OSSCO had six distribution center locations in the St. Louis area besides the central office. Fifty-five percent of the company’s sales came from the St. Louis territory.
Each territory maintained its own sales force, which was supervised by the subsidiary center manager. Sales personnel were classified as general line or retail. Hiring was done by the combined efforts of the sales manager and the field trainer. New sales personnel were recruited from local areas through newspaper advertising. Once prospective sales personnel successfully completed the interview and testing procedures, they went through a six-week training program, which consisted of supervised work in each of the company’s departments. Then each trainee was assigned to the field for six months to work under guidance of the field trainer. New recruits were paid salaries during training.
After completing training, new personnel became general-line salespersons and received straight commissions with drawing accounts. Each individual was assigned a section of the subsidiary distribution center’s territory and assumed responsibility for selling all products and services in that territory. All general-line sales personnel were supervised closely by the center manager, who maintained a list of the active accounts for each salesperson. Each salesperson was required to call on each account at least once each week. To monitor performance, the manager reviewed call reports daily. Call reports listed all sales calls made and the dollar volume of products and services sold. The daily call report also specified the number of cold calls made on potential customers. (See Exhibit 1 for the job description for general-line sales personnel.) Each salesperson’s performance was evaluated monthly, relative to the assigned quota. Quotas varied each month according to sales fluctuations. Monthly sales meetings were conducted and meeting schedules prepared one year in advance. (Exhibit 2 illustrates a typical series of monthly sales meetings.)
EXHIBIT 1 Job Description
PURPOSE: To establish the rights and obligations that a salesperson has in connection with a listed account.
EFFECTIVE DATE: January 1. This supersedes and cancels all prior bulletins on this subject.
PROCEDURE: A listed account is a customer or a potential customer of Office Supplies and Services Company who is assigned to an outside representative of OSSCO for special solicitation of sales.
- When assigned to an outside person for solicitation, the outside person then receives certain special privileges applicable only to
the assigned account. They are:
a. The privilege of selling the account all our lines.
b. Receiving full and all commissions on sales to the account except sales made
- In our 60 Lindbergh distribution centers, or any Service Center, where no commission is paid to salesperson listing the account.
- On the 221 Ivy Furniture Floor by inside personnel, either by phone or personal appearance, where the commission will be split equally between the salesperson and the inside p ersonnel.
- When prior agreement has been arranged between department manager and salesperson for less than full commission to be paid on a specific sales transaction.
- In return for the privileges granted under an account listing program the outside program agrees to certain requirements which are as follows:
- To contact the account by prescribed solicitation at least once a week.
- To treat as a listed account each separate buying department of an organization or a customer and contact them as required above.
- To treat as a separate buying entity each department of city, county, state, and federal government agencies, which have the authority to purchase or requisition merchandise.
- To prepare and keep current an accurate listing of the accounts showing the correct name, address, etc., and to work out a definite schedule of calls.
- To call on the accounts as scheduled on a regular daily basis and to prepare each day an accurate report of the day’s work. Such a report to be submitted each evening before the close of business.
- To present continuously to all buying departments of the listed account the advantages of each of our individual departments.
Despite the control procedures for monitoring sales performance, the central office sales manager had had little success in stimulating the sale of OSSCO services. Sales to direct commercial accounts, constituting 80 percent of all sales, were regarded as the most logical market for printing, engineering, and drafting services. However, sales results indicated lack of selling effort with respect to the aforementioned services. While Bob Brown recognized that a salesperson was motivated to sell those items that could most readily be turned into commission dollars, he insisted that by selling OSSCO’s drafting, engineering design, and printing services, product sales would increase, almost automatically. Brown said, “We offer drafting and engineering design services so the customers can be provided with a comprehensive design plan for office renovation. Our service people will look at the customer’s location and show exactly what we envisage in terms of making the office space more attractive and functional. A salesperson who takes the time to show the customer the benefits of these services will find it easy to sell a lot more than an occasional desk and file cabinet.”
Regarding special incentive programs to push OSSCO services, the sales manager stated further, “We’ve run a number of month-long sales contests on specific products with pretty good success. Contest incentives have included cash prizes, merchandise, and travel. All contests have always been judged on the basis of dollar sales volume. But I haven’t been able to think of a way to apply that kind of incentive to services for a couple of reasons. Perhaps the most important is that it’s tough to get the store managers pumped up about services because they don’t have much to do with them. And the salespeople themselves are very product oriented. They know that they can spend a certain amount of time and sell a particular dollar volume of a specific product. Selling services requires a lot more time, patience, and expertise and you really don’t know what that effort is going to net in terms of dollars.”
Brown had talked with a number of management people at OSSCO, but so far, this had not resulted in any concrete suggestions for stimulating sales of the services. His inclination was to have a contest, although others at OSSCO did not agree. He was not convinced that a contest was the only solution; yet, it was all he could come up with for now. It was time to do something, but Brown was not sure just what.
Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.