Post on 21-Dec-2015
description
Sales Management: Shaping Future Sales Leaders
Organization of the Organization of the Sales ForceSales Force
Organization of The Sales Force
Basic Management Function of Arranging Basic Management Function of Arranging The Firm’s Sales Activities The Firm’s Sales Activities
Tasks of The Sales Organization
1.Maintenance of order in achieving sales force goals/objectives
2.Assignment of specific tasks and responsibilities
3.Integration and coordination with other elements of the firm
How a Firm’s Goals Affect the Design of Its Sales Force
Organization of sales force is driven by strategic goals
Organizational sales structures serve a number of purposes that include
1. Serving buyers effectively in ways they want to be served
2. Operating efficiently and effectively as measured by cost and customer satisfaction
The Size of the Sales Force
BreakdownBreakdown MethodMethod
WorkloadWorkload MethodMethod
The Size of the Sales Force
WorkloadWorkload MethodMethod
Compute total sales call workload Determine amount of work performed by
each rep Factor in additional work responsibilities
The Size of the Sales Force
BreakdownBreakdown MethodMethod
- - Divide forecasted sales revenue by average sales dollars per salesperson
Step 1 – Compute total number of calls to current customersCategory Number of Accounts Calls/year Total Calls A 100 48 4800 B 300 24 7200 C 500 12 6000
-------- Total Calls28000
Step 2 – Compute total calls made per salesperson Salesperson will average 10 calls per day 10Salesperson will work in the field 6 days 6Salesperson will work 45 weeks a year 45 10 x 6 x 45 = 2700 calls/year
Workload - Basis
Step 3 – Compute total number of salespersons
Total sales calls to existence accounts 28000Sales calls made per salesperson 2700
Adjust for other work load factors
15% time to call prospects and 10% to provide after sales service = 25%
Workload - Basis
Developing A Sales Organization
Developing A Sales Organization
1.Formal & informal organization
2.Horizontal & vertical
3.Centralized & decentralized
4.The line and staff components of the organization
Developing A Sales Organization
Formal and informal organizations - Formal and informal organizations - every firm has a formal & an informal organization.
The formal organization is a creation of management
CEO CEO
NSMNSM
RSMRSM
ASMASM
SalespersonSalesperson
Informal organization is developed from the social relationships existing with in the formal organization structure.
Developing A Sales Organization
Informal organization
Communication pattern formed from the social relationship existing with in the formal organization
Salesperson ASM RSM NSM CEO
Manager Marketing distribution Manager NSM Manager AccountsManager Marketing distribution Manager NSM Manager Accounts
Developing A Sales Organization
Vertical Sales Organization
Several level of management, all reporting upward to the next level
CEO
NS
RSM
ASM
FS
SR
Developing A Sales Organization
Horizontal Sales Organization
Number of management level is small and number of manager at particular level is large
Chief Sales Executive
District Sales Manager District Sales Manager District Sales ManagerDistrict Sales Manager District Sales Manager District Sales Manager District Sales ManagerDistrict Sales Manager Karachi Multan Lahore IslamabadKarachi Multan Lahore Islamabad
Developing A Sales Organization
CentralizedCentralized
Responsibility and authority are concentrated
at higher level of management
DecentralizedDecentralized Delegated to lower levels of management
- Structure is ineffective unless the assignment of decision making to lower levels of sales management is accompanied by a complete authority to carry out the decision.
Developing A Sales Organization
Line and Staff Marketing OrganizationLine and Staff Marketing Organization
A line function is a primary organizational activity and staff function is a supporting organizational activity.
In a marketing organization selling function is the line component.
Advertising, marketing research, sales training, and distributor relations are considered as staff roles
Developing A Sales Organization
Line Marketing OrganizationLine Marketing Organization
Vice President for sales
General Sales Manager
Regional Sales Manager N
Regional Sales Manager C
Regional Sales Manager S
Developing A Sales Organization
Line and Staff Marketing OrganizationLine and Staff Marketing Organization
Vice President for Marketing
General Sales Manager
Regional Sales Manager N
Regional Sales Manager C
Regional Sales Manager S
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Sales Training Sales Analyst Sales Planning Distribution Manager
Marketing Research
Advertising
Best way to design a sales structure is toBest way to design a sales structure is to Determine sales activities that must be performed
to reach goals Create sales structure that affords highest levels
of service to buyers at lowest overall cost
Select, train and manage reps and managers to become experts in their assigned duties
Basic Types of Sales Organization
Geographic Sales Structure
Sales Structures Geographic Specialization Customer Specialization Product Specialization
Geographical, Product and Market Structures
MarketSales Structure
Reps assigned to particular customers or industries Reps learn more about customer’s specific business
needs and offers customized solutions
ProductSales Structure
Sales activities organized around related product lines or manufacturing divisions
Interacts with buyers as specialists
GeographicalSales Structure
Depends on physical boundaries to organize sales force with customer accounts
Interacts with buyers as generalists
Geographical Sales Structure
PROs
Relatively easy to design
Minimizes duplication of effort
Ensures a specific salesperson is assigned to each customer
Sales calls more efficiently scheduled
Territory can be divided or combined to respond to market conditions
CONs
Work best when product line is simple
Can be inefficient
6/4/2015
Geographic-Based Structure
Geographical, Product and Market Structures
MarketSales Structure
Reps assigned to particular customers or industries Reps learn more about customer’s specific business
needs and offers customized solutions
ProductSales Structure
Sales activities organized around related product lines or manufacturing divisions
Interacts with buyers as specialists
GeographicalSales Structure
Depends on physical boundaries to organize sales force with customer accounts
Interacts with buyers as generalists
Product Sales Structure
Limitation: can be confusing for buyerLimitation: can be confusing for buyer
1. Called on same accounts/customer2. Had little knowledge of each other’s products3. Did not cooperate by providing leads and info
to each another4. Buyer/customer confusion
Basic Types of Sales Organization
Product Specialization Product Specialization
General Sales Manager
Sales Manager Product C
Sales Manager Product B
Sales Manager Product A
Geographical, Product, and Market/customer Structures
Customer/marketSales Structure
Reps assigned to particular customers or industries Reps learn more about customer’s specific business
needs and offers customized solutions
ProductSales Structure
Sales activities organized around related product lines or manufacturing divisions
Interacts with buyers as specialists
GeographicalSales Structure
Depends on physical boundaries to organize sales force with customer accounts
Interacts with buyers as generalists
Customer/market-Based Structure
PROs
Effective strategy when a seller wants to penetrate a new market
Allows selling firm to vary allocation of sales efforts to specific customers or industries by adding to or reducing the number of salespersons slotted in one area to another
Permits firm to offer specialized training and develop individualized sales approaches and applications by industry
CONs
Selling expenses are higher than for geographic-based structure
Multiple reps calling on same client/geography
Buyer confusion
Duplication of effort
Higher expenses
Basic Types of Sales Organization
Customer Specialization Customer Specialization By type of IndustryBy type of Industry
General Sales Manager
Sales Manager Electronics
Mkt
Sales Manager Military Mkt
Sales Manager Computer Mkt
Market-Based Structure
Basic Types of Sales Organization
Customer SpecializationCustomer Specialization By Distribution Channel By Distribution Channel
General Sales Manager
Sales Manager Exports
Domestic Sales Manager
Basic Types of Sales Organization
Customer Specialization Customer Specialization By General type of Customers By General type of Customers
General Sales Manager
Sales Manager Institutions
Sales Manager Small Business
Sales Manager Major
Accounts
Key Accounts
Key Accounts:
- customers that are large in terms of sales revenue and profitability and strategically important for the future of the firm
80/20 Rule:
- 80% of a firm’s total business and profits are derived from 20% of its customers
Large, strategic accounts require higher levels of service and deeper buyer-seller relationships
Key Account Structures
Use Existing Force
Sales force structure is simplified
All accounts are managed under a single organizational structure
CONs
Reps may take short-term view
Reps may not understand broader, overall needs of key accounts
Assign Execs
Assigning sales and marketing executives to manage key accounts makes sense for smaller firms that cannot afford separate sales effort
CONs
Can take a lot of time, leaving less time for other duties, like managing sales force
Create Separate
Create separate sales structures to serve most important customers
Integrates marketing and sales for key accounts under one organizational structure
CONs
Establishing distinct sales channels for major acc’ts is more costly
Duplication of effort Financial viability if key
acc’ts lost
Adding Independent Sales Reps to the Sales Structure
Ownership Do not take ownership of the product
Commission Receive commission for all sales they make within
an assigned geographical territory
Clients Sell on behalf of mfgs or other sellers in territories
where no company sales force is present
Inventory Do not maintain an inventory
Sales Traditionally sells several related, noncompeting
product lines
Use of Sales Agents
Common for manufacturers to use sales agents when entering new territories with low or unknown sales volumes Selling costs (commissions) incurred only
when product or service is sold
Advantages An “in-place” or existing sales force Established buyer relationships Little (or no) fixed costs Experienced sales personnel Lower costs per sales call Long-term stability in the territory
Use of Sales Agents
Tendency for mfgs to take credit for positive sales outcomes and assign blame for negative outcomes
Disadvantages Seller may not receive equal time for their products
Agents blamed for shifting sales call focus to another product line when buyer’s need is not easily identified
Agents criticized for not opening new accounts, not following up on leads, representing too many mfgs, and communicating poorly with the firms they represent
Company Salesperson or Sales Agent?
Salesperson When it’s important to control
sales effort, product or related technology is new, buyers need high level of service
Company exerts greater control over sales force efforts
Greater control over who is hired
Sales agent When potential sales
revenue is low in a territory When revenue will take
years to become substantial When qualified sales agents
already operate in the area When it’s not feasible for
company sales force to cover entire market
Relations With Other Departments
Key Concern of Sales Manager Key Concern of Sales Manager
Relation with other departments
As per marketing concept, all business activities should be coordinated to satisfy customer need
Sales department is the key link, so coordinating the sales effort with other departments is absolutely essential
Relations With Other Departments
Two types of departments sales MUST have good working relationship
1.Connected with marketing activities, advertising, marketing research, sales promotion, product management
2.Non marketing functions such as HR, manufacturing and finance
Top management - responsible for departmental coordination
A thorough understanding of other departments’ functions, and how these relates to the sales efforts, is required
Coordination may be achieved through policies, written communications, meetings and similar formal management activities
Successful coordination between departments often involve informal communications as well
Relation with other marketing function
Marketing mix
Combination of the various techniques used to satisfy customers needs and to stimulate sales
Coordination between various elements of the marketing mix is essential
Most companies try to achieve this by requiring the heads of all marketing , including sales to report to a top marketing executive
Special organizational structure such as product management are also used to coordinate sales with other marketing functions
Relations With Other Departments
Relation with other marketing function
Advertising Relation between sales and advertising are of special concern
Both form of promotion have the same purpose – to inform the public and persuade people to buy
Sales manager must aware of the advertising department’s plans and activity, so that sales activity can be complemented
Advertising – A good source of sales lead
Salespeople can provide feedback on advertising
Relations With Other Departments
Relations With Other
Relation with Non marketing Departments
Research and Development Most companies have R&D department
May be a separate staff department or responsibility may be assigned to production or marketing
Primary responsibility or function is to perform basic research and engineering activity needed to develop new products and improve existing
Sales department can assist R&D efforts in two primary ways
1. Salespeople are excellent sources of new product and product modification
2.Salespeople have valuable insight into whether or not a new product will meet customer need
Relation with Non marketing DepartmentsRelation with Non marketing Departments
Research and DevelopmentResearch and Development Relationship is crucial in high-tech firms
Field sales managers find themselves dealing with many tasks
Issues, as how headquarter staff should interact with field sales management, final customers and whether sales people should be trained on each product technology?
To solve these problems, high-tech companies have developed “account control concept” authority and responsibility for handling each account rests with field sales management
Product specialist accompany salespeople when specific product knowledge is needed
Relations With Other Departments
Relation with productionRelation with production Function is to prepare the product for sale
Production department’s concerns are minimizing cost through standardization, long & continuous production run, long production lead time
Sales executive want many types of products, frequent product changes, customer’s special order & short production lead time
Best way is JOINT PLANNING
Relations With Other Departments
Relations with HRRelations with HR Responsible for the people, or human resources
The unique aspects of managing people who sell often lead to conflict s between sales and human resource manager
HR do not understand the problems involved in managing people who are located away from the home office.
Sales managers/departments themselves handle the more complex tasks of selecting , training, developing & evaluating their own personnel.
However, sales manager often need to consult HR for guidance for rapidly changing issues, health and safety. A sales manager would be unwise not to take advice from expert
Relations With Other Departments
Relation with Finance – Three major areasRelation with Finance – Three major areas Budgeting
- Sales department provides short and long range sales estimates as - Sales department provides short and long range sales estimates as the basis of financial planning & budgetingthe basis of financial planning & budgeting
Cost control
- Accounting specialist can assist sales managers in their efforts to - Accounting specialist can assist sales managers in their efforts to control costs, by providing data for selling cost analysis control costs, by providing data for selling cost analysis
Credit
- Credit plans are major concerns for sales as well as finance. Sales - Credit plans are major concerns for sales as well as finance. Sales executive should have input into establishing credit policies. Sales executive should have input into establishing credit policies. Sales people can also provide current credit status information people can also provide current credit status information
Relations With Other Departments
Major Trends in Sales Organizations
Changing Trend Traditional forms of sales organization have changed their approachTraditional forms of sales organization have changed their approach
In search of new and better ways to serve their marketsIn search of new and better ways to serve their markets
For Consumer goods & service companies, the new approaches For Consumer goods & service companies, the new approaches involve product manager form of organizationinvolve product manager form of organization
Industrial manufacturer are looking closely at strategies that will help Industrial manufacturer are looking closely at strategies that will help them adapt to change buying behavior and develop more specialized them adapt to change buying behavior and develop more specialized sales forcesales force
For many companies, the major challenge is change from a For many companies, the major challenge is change from a
““Product” To “Customer Driven Orientation” Product” To “Customer Driven Orientation”
Major Trends in Sales Organizations
Telemarketing - Use of telecommunication technology in personal Use of telecommunication technology in personal sellingselling
Direct Marketing
An emerging form of promotion and distribution that combines element An emerging form of promotion and distribution that combines element of advertising and personal sellingof advertising and personal selling
Approach that bypasses intermediaries to deliver goods and services Approach that bypasses intermediaries to deliver goods and services directly from seller to buyerdirectly from seller to buyer
Greatest strength of direct marketing is its ability to deliver individual Greatest strength of direct marketing is its ability to deliver individual selling message to specific prospects or customers with affordable selling message to specific prospects or customers with affordable cost.cost.
Development/maintenance of customer data base is the key Development/maintenance of customer data base is the key
Major Trends in Sales Organizations
Telemarketing Job Types
1. Account manager - 1. Account manager - Accounts responsibility, Post sales service, Accounts responsibility, Post sales service, Order taking, Problem solvingOrder taking, Problem solving
2. Prospector -2. Prospector - Prospecting Prospecting
3. Backup - 3. Backup - Field sales supportField sales support
4. Customer relation specialist - 4. Customer relation specialist - information transfer, complaints, information transfer, complaints, conducting research, promotion inquiries, customer serviceconducting research, promotion inquiries, customer service
Inbound Telemarketing - Potential customer contacts the selling companyPotential customer contacts the selling company
Outbound Telemarketing - Selling companies contact the prospect and cus- Selling companies contact the prospect and customerstomers
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