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Valley Winery

Introduction

Valley Winery was founded in 1933 has grown to be the largest domestic producer of wine in the
United States. The brand has multiple product lines that include both low-price, consistent-
quality wines and also low-grade wines and wine coolers. Valley Winery has had a hard time
retaining its sales force and despite the short-term increase in sales, it is not a sustainable
growth. The company started only with $7500 investment and at the end of prohibition it has
become the leading producer of low priced , consistent-quality wines producers and
manufacturers and tagged as the best managed and most innovative in the market.

Paul Waller is recently hired as a sales manager for the San Francisco regions chain division for
the Valley winery products and despite having very good sales the high turnover ratio that is
100% is a major impediment in the future prospects of the company. Waller has a major task
ahead regarding the better planning and organizing of the sales force activities of Valley Winery
and its prospective operations among the region. The companys success was due to two factors

Producing wines consistently at high quality and lower prices.


Sales force using a push strategy.

Qualitative & Quantitative Facts

Valley winery founded in 1933


Largest domestic producer in the US. Market share 40%
Growth attributed to High quality wines & low prices
Sales exceeded $1.5 billion (2009)
push aggressive selling strategy
Distribution done through nationwide distributors.
Valley owns 50 % of the distribution
Three sales groups responsible for making sales.
The career type (the liquor and bars)
the restaurants and resorts
chain division
Recruitment from universities 10 to 15 new sales reps a year.
10 hires from the job search web sites.
15 to 20 reps from the local employment agencies
Large portions of the hires are college graduates who had no experience or training

Exhibit Analysis:

The organization structure has changed too often 3 times in one year, from product to customer
type organization.

Sales Force Organized by product type:

The product categories were too broad i.e; Vintage and premium.
There was improper categorization of the Wines
Sales Rep practiced team selling
It should have recognized which product required more sales effort rather than giving all
brands the same amount of sales effort, Duplication of effort led to higher sales cost.
There were too many sales rep for one product type; team selling
This model has a huge cost disadvantage if you dont have a diverse product line

Sales Force Organized by Customer type:

Only one sales manager for 2 different key accounts, there should be two and he/she
should report to the General sales manager
There is no need for the Area sales manager, because his/her jobs are taken care off by the
district sales manager, structre not done right hence job not done right
Sales people calling on the same key account (duplication of effort) can lead to higher
selling expense
Quota Vs. actual sales Figures:

QUOTA TARGET
300

250

200

Quota 150

100

50

0
J F M A M J J A S O N D J F M A M J J A S

Months

Cool Valley FC Santo Rey Valley Wines

ACTUAL ACHIEVED
300

250

200

150

100

50

0
J F M A M J J A S O N D J F M A M J J A S

Months

Cool Valley FC Santo Rey Valley Wines


After studying the trends in sales quota and the quotas achieved we can see:

The quotas are too high, to be achieved, thus may lead to demotivation in sales rep, and
maybe the reason of the high turnover
Every year the quotas are under achieved
It seems the quotas are simple set on previous years quotas without taking into
consideration the actual achieved quota and using that to set the next years quota.
Sales forecast are overstated
Santo Rey and Valley wines have very uneven distribution of quota, there are months
when the quota is 0, indicated by the sharp dip
Santo Rey had 3 terminations in 2 years
All accounts had at least 1 termination in one fiscal year
Its hard to tell with the dipping curves and high peaks whether the selling effort is to be
increased or decreased, considering the uneven quota setting for both Santo Rey and
valley wines

Problems/Issues

Severe turnover (100% a year, 50 sales rep hired each year)


Sales reps practicing unethical behavior.
o relocated competitive displays and spray hairsprays on competitors
merchandise
Competitive spirit disliked by others
No mentoring by district managers
Winery management encouraged sales reps to lie
Marvs current manager advised him to stretch his estimates because it is the only
way he can meet his numbers each month
Dissatisfaction amongst employees due to poor treatment by district managers
o Murphy said that hed get calls late at night from his district manager 2-3
times a week to check his progress
The use of 6 local employment agencies, with fees of approximately $3,000 per hired
individual, was expensive
Too much of an emphasis on youth and physical attributes
Flannings said nobody, nobody ever meets quota
Symptoms
High turnover rate

The turnover rate is high over the past several years but the contradictory factors are that rate is
doubling every year and still the number of employees remain constant, moreover the working
experience of an average employee is around 7 months which clearly tells that company is
aggressively hiring the sales people. And total of approximately 50 sales persons are replaced
every year.

Poor Hiring Mechanism

There are no tests included in hiring a sales individual. There should be balance between the
academic, aptitude/willingness and the hardworking blend among the potential candidates.
Moreover Valley Winery is dealing in the hyper competitive market, the market know how
should be a foremost criteria for the selection of the candidate, instead of the individuals
motivation and desire to join the job. In short the criteria for the recruitments are very subjective
and there is inadequate assessment by the responsible sales manager and district manager, under
which the candidate has to perform.

a) No aptitude tests
b) No background checks
c) Noninvolvement of direct supervisors in recruitment

No coaching and lack of motivation

There is lack of job representation and lack of motivation and encouragement. No right schedule
is being released by the management, there is no sales management planning in the organization.
The leadership runs from the top. The employees just want to make sales without having concern
about the company in that they work. Moreover the uncertain night calls and long distance
travels for the reps and frequent changes in the sales organizational structure has made problem
even worse.

Some of the other problems identified are as follow:


a) Poor Forecasting of number of sales person
b) Poor Territory design
c) Lack of supervision of the salesperson attitude, motivation and ethics
d) No professional training provided
e) Lack of vision
f) Lack of career development

Core problem

Absence of Proper Sales Planning Structure Lead to Unattainable, Difficult, Un-realistic


Quotas.

The following problem is the main problem that leads to the low motivation of the sales staff and
aided with no proper trainings and improper recruitment procedures eventually results in high
turnover, the company seeks to have a short term approach rather than long term approach.

Recommendations

In order for the management of Valley Winery to decrease the high turnover, they need to rethink
their selling strategy. The must promote a healthy and competitive way in selling their products
using advertisement and so on than using such unethical skill like spraying hair spray to the
competitor product. With an ethical working environment, the employee will feel better and
happy to work at the company.

Restructure the quotas

Sales people have a finite amount of selling capacity. Customers and prospects have coverage
requirements. The correct assignment of customers and prospects to members of the sales force
can improve sales performance without any incremental cost. Understanding the potential of
each territory can help companies match the best opportunities to the most capable sales people.
So it is recommended to make quotas that are achievable and yet challenging.

Change Hiring Mechanism

There should be balance between the academic, aptitude/willingness and the hardworking blend
among the potential candidates. Moreover Valley Winery is dealing in the hyper competitive
marketz, the market know how should be a foremost criteria for the selection of the candidate

There should be aptitude tests

Background checks

Direct supervisors should involve in recruitment

Conclusion

For the conclusion, it is crucial for the top management to promote a healthy working
environment such as encouraging good selling strategy, encouraging honest and good conduct
while selling and redesign it recruitment and selection process in order to find employees with a
sense of loyal and good characteristic that are well prepared and ready to faces all chal lenges in
the industry of selling wine and liquor.

From the problem that causes by lack of real sales goals, the way to prevent the problem is to
make a simple transaction to make it more understandable. Then, the transaction must can be
measurable that make the amount are properly recorded. The goal must achieve the benchmark to
get the acceptable quotas for the sales representative. Plus, it must get the realistic goal and it
must base on time that required.
Territory Design focuses on fairly distributing revenue potential to sales reps, properly
determining the most appropriate territory design criteria, and matching territory workload to
sales rep capacity.

Optimized workload balance which enhances sales responsiveness

Reduction in travel time and expenses

Lower sales force turnover due to higher sales force morale

Proper integration of acquired sales forces

Built in adaptability due to market shifts and new product launches

Improved departmentalization and sales force structure

Proper ethical training and knowledge workshops