Sales Force Management

*

4

Organizing the

Sales Effort

4-*

Organize Around Customers

• Historical
• Product-centered
• Expertise in features and functions
• Today
• Customer-centered
• Expertise in business issues
• Sales resources deployed to provide best service to best customers

Source: HR Chally Group (2009),

4-*

• Identify purposes of sales organization
• Understand different horizontal organizational structures of a sales force.
• Outline major issues in key account and team selling.
• Discuss key vertical structure issues in sales organizations.
• Identify important issues in starting a new sales force from the ground up.

4-*

Importance of Sales Organization Decisions

• Organizing activities, sales force management are major parts of strategic sales planning
• Managers becoming more proactive in restructuring
• Strong corporate vision, effective strategic market planning are closely linked with how an organization is structured, interacts with its customers

4-*

Purposes of Sales Organization

• Divide and arrange activities so the firm can benefit from specialization of labor
• Provide for stability and continuity in firm’s selling efforts
• Provide for coordination of activities assigned to sales force and to departments in the firm

4-*

Division and Specialization of Labor

• Increase productivity - specialists can become proficient at assigned tasks
• Divide required selling activities to gain maximum benefits within the sales force

4-*

Division and Specialization of Labor

• Line organization
• Vertical
• Chain of command runs from chief sales executive down through levels of subordinates
• Each subordinate responsible to one person

VP Sales

Director of U.S. Sales

Regional Mgr. for NE US

District Mgr. for Massachusetts

4-*

Division and Specialization of Labor

• Line and staff organization
• Vertical (most common)
• Several sales management activities assigned to separate specialists

VP Sales

Director of

Sales Training

Director of

Distributor

Relations

Director of

Sales Promotion

4-*

Stability and Continuity

• Organize activities without regard to talents of current employees
• People can be trained to fill positions
• Same activities will be carried out even if designated individuals receive promotions or leave

4-*

Coordination and Integration

• As an organization divides tasks among specialists, they become more difficult to integrate
• Sales force activities must be integrated with customer needs
• Selling activities must be coordinated with other departments
• Tasks must be integrated among specialized units

4-*

Sales Organization Structure

• Horizontal – divides selling activities among sales force
• Vertical – assigns authority for specific sales management activities

4-*

Horizontal Structure

• Company sales force or outside agents?
• Number and arrangement of sales force?
• Product, customer, or functional assignments?
• Responsibility for national accounts?
• Foreign market sales and marketing?

4-*

Horizontal Structure Options

Outside Agents

Company Sales Force

Geographic

Co-Marketing

Product

Nat’l Key

Accounts

Market/

Customer Type

Team Selling

Selling

Function

Selling

Centers

Matrix

Organizations

Telemarketing

4-*

4-*

Outsourcing the Sales Force

• Types of agents
• Manufacturer’s representatives
• Sell part of the output of their principals
• Take neither ownership nor physical possession of goods
• Cover specific territory and specialize in limited range of complementary products
• Selling agents
• Do not take title or possession of the goods they sell
• Compensated by commissions
• Broad authority to modify prices and terms of sale
• Actively shape manufacturer’s promotional and sales programs

4-*

4.1

Six C’s of finding the

right rep

• Compatible lines
• Compatible territories
• Compatible customers
• Credibility of the rep
• Capabilities
• Credits

4-*

Outsourcing Considerations

• Economic Criteria
• Control
• Transactions costs
• Strategic Flexibility

4-*

4.2

Cost comparison

between a company

sales force and

independent agents

4-*

Geographic Organization

• Simplest and most common method
• Individual salespeople assigned to separate geographic territories
• Responsible for performing all activities necessary to sell all products

4-*

• Does not provide benefits associated with specialization of labor

Geographic Organization

• Lowest costs
• Travel time and expenses minimized
• Sales administration and overhead costs kept low

4-*

4.3

Geographic sales organization

4-*

• Duplication of effort

Product Organization

Separate sales force for each product (or category) in the line

• Salespeople master effective selling methods for single or related products
• Closer alignment of sales and production
• Sales management controls allocation of selling effort across the line

4-*

4.4

Sales force organized by product type

4-*

• Possible higher selling and administrative costs
• Duplication of effort

Customer Type/Market Organization

Natural extension of marketing concept and strategy of market segmentation

• Better understanding of customer needs
• Increased familiarity with certain businesses
• Increased control over allocation of selling effort

4-*

4.5

Sales force organized by customer type

4-*

Selling Function Organization

Salespeople specialize in performing different selling functions – e.g. prospecting and developing new accounts versus maintaining and servicing existing customers

• Customer objections to switch to maintenance salesperson
• Feelings of rivalry between the sales force

• Skills matched to sales function
• Developmental salespeople often a successful alternative

4-*

Telemarketing

• Form of organization by selling function
• Qualifying potential new accounts
• Servicing existing accounts quickly
• Seeking repeat purchases from existing accounts that cannot be covered efficiently in person
• Providing quick communication of newsworthy developments

4-*

National and Key Accounts

• Separate corporate division/sales force
• Deliver high-level customer service to attract and maintain large and important customers
• Key account sales execs
• Business managers capable of managing key accounts
• Customize products and services
• Plan and implement key account business plans

4-*

Team Selling

• Integrates functional specialists with customer relationship specialists
• ID team structure that meets customer needs
• Benefits
• Customer questions answered faster
• Customers can speak directly with desired specialist

4-*

Other Team Selling Structures

• Selling center brings together individuals from around the organization to help salesperson
• Matrix organization employs direct-reporting salespeople who support internal consultants with specialized expertise
• Multi level selling – sales team consists of personnel from various managerial levels who call on their counterparts in the buying organization

4-*

Co-Marketing Alliances

• Develop marketing and sales programs to sell integrated systems directly to the ultimate customer

4-*

Logistical Alliances and Computerized Ordering

• Customer point of view -
• Convenient
• Flexible
• Less time consuming
• How will computerized reorder systems change the role of the sales force?

4-*

Vertical Structure Issues

Span of Control

Managerial Levels

4-*

4-*

managers

management levels +

Span of Control

span of control =

4-*

4-*

Larger Span of Control

• Reduced one-to-one communication due to larger # of subordinates
• Managements may be less effective, negating cost savings

• Greater control/ responsiveness due to fewer management layers
• Lower admin costs

4-*

Span of Control

• Reduce span of control when:
• Sales task is complex
• Profit impact of each salesperson’s performance is high
• Salespeople are well paid and professional
• Also, at higher levels in the organization

4-*

Managerial Decision Levels

• How much, where should the managerial authority lie?
• Hiring, firing, evaluation

4-*

Managerial Decision Levels

Importance of decision =

Managerial decision level

Sales force pay =

Managerial decision level

Complex selling tasks =

Managerial decision level

4-*

4-*

Managerial Selling Responsibilities

• Managers often active in sales to key accounts
• Organizations value their selling skills
• Managers value commissions, contact with marketplace
• Drawback – some managers neglect managerial responsibilities

4-*

Impact of New Technologies

• May change vertical structure
• Productivity enhancement through CRM systems

4-*

4.6

Line and staff sales organization

4-*

New Sales Force Startup Building Blocks

4-*

Provide

support

Avoid

compensation

snafus

Go to the press

Leverage existing strengths

Appoint an expansion team

Start with a strategy

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Mark W. Johnston | Greg W. Marshall