Sales Management 6Sales Management 6

Sales OrganizationSales Organization

Purpose of Sales OrganizationPurpose of Sales Organization

Divide and coordinate activities so that the Divide and coordinate activities so that the group can accomplish objectives better than group can accomplish objectives better than if acting as individuals.if acting as individuals.

– Specialization of LaborSpecialization of Labor– Stability and ContinuityStability and Continuity– Coordination and IntegrationCoordination and Integration

Goals Goals Structure Structure

Specialization of LaborSpecialization of Labor

Concentrate: Become more proficient at Concentrate: Become more proficient at one thing.one thing.

Assign tasks according to ability.Assign tasks according to ability.

Line/Staff organization is most common.Line/Staff organization is most common.

Stability and ContinuityStability and Continuity

You can organize around activities, not You can organize around activities, not around individuals.around individuals.

The organization survives the individuals The organization survives the individuals within it.within it.

Coordination and IntegrationCoordination and Integration

Activities of the sales force must be Activities of the sales force must be integrated with customer needs and integrated with customer needs and concerns.concerns.

Selling activities must be coordinated with Selling activities must be coordinated with other departments: other departments: production, product production, product

development, logistics, financedevelopment, logistics, finance.. Selling tasks among specialists must be Selling tasks among specialists must be

coordinated.coordinated.

Internal: Horizontal StructureInternal: Horizontal Structure

GeographyGeography: : States/Regions, Downtown/SuburbanStates/Regions, Downtown/Suburban

Product TypeProduct Type: : Yard Equipment vs. Power ToolsYard Equipment vs. Power Tools

Customer TypeCustomer Type: : Industrial/Consumer, Industrial/Consumer, Hospitals/Schools, Wholesalers/RetailersHospitals/Schools, Wholesalers/Retailers

Selling FunctionSelling Function: : Prospecting, presenting, servicingProspecting, presenting, servicing

Geography: Urban/Suburban; City/Region/State

Product Type: Lawn Equipment/Power Tools

Customer Type: Industrial/Consumer; Institutions;Wholesale/Retail

Selling Function: Prospecting, Presenting, Closing

Geographic OrganizationGeographic Organization Simplest and most common formSimplest and most common form Each salesperson handles Each salesperson handles allall sales sales

functions in the territory.functions in the territory. Advantages:Advantages:

– Cheaper: travel, managementCheaper: travel, management– One point of contact for customerOne point of contact for customer

Disadvantages:Disadvantages:– No division/specialization of laborNo division/specialization of labor– Salespeople focus on products/customers Salespeople focus on products/customers

that benefits themselves.that benefits themselves.

Product OrientationProduct Orientation Used primarily by firms with large and diverse Used primarily by firms with large and diverse

product lines, and firms with highly technical product lines, and firms with highly technical products.products.

AdvantagesAdvantages::– Familiarity with technology and applicationsFamiliarity with technology and applications– Can lead to closer coordination with productionCan lead to closer coordination with production– Better control: can allocate across company lines.Better control: can allocate across company lines.

DisadvantagesDisadvantages::– Duplication of effort Duplication of effort higher selling costs higher selling costs– Need more coordinationNeed more coordination– Multiple contact people for customersMultiple contact people for customers

Customer/Market OrganizationCustomer/Market Organization

AdvantagesAdvantages::– Better understanding of customers’ needsBetter understanding of customers’ needs

– Can be trained to sell to particular customers (e.g. Can be trained to sell to particular customers (e.g. Hospitals vs. Schools)Hospitals vs. Schools)

– Can gain insight into product applications, Can gain insight into product applications, innovations, new productsinnovations, new products

– Managers can vary sales force size to marketManagers can vary sales force size to market

DisadvantagesDisadvantages::– Higher selling expensesHigher selling expenses

– Large customers can have multiple sales contactsLarge customers can have multiple sales contacts

Selling Function OrganizationSelling Function Organization Acquiring new customers (development Acquiring new customers (development

specialists) vs. maintaining and servicing specialists) vs. maintaining and servicing existing customersexisting customers

Telemarketing: Inside/Outside SalesTelemarketing: Inside/Outside Sales– Prospecting/Qualifying: turn leads overProspecting/Qualifying: turn leads over

– Servicing problems quickly: hotlinesServicing problems quickly: hotlines

– Seeking repeat sales: especially small & remote Seeking repeat sales: especially small & remote customerscustomers

– Quicker communication on noteworthy Quicker communication on noteworthy developments (new products, promotions, etc.)developments (new products, promotions, etc.)

– Feed-in via targeted advertising, direct mail, toll-Feed-in via targeted advertising, direct mail, toll-free lines, web pagesfree lines, web pages

National/Key Accounts INational/Key Accounts IRules of Thumb: 10% of customers can lead Rules of Thumb: 10% of customers can lead

to 50% of sales; 20% can lead to 80%.to 50% of sales; 20% can lead to 80%.

Salesperson must be a business manager:Salesperson must be a business manager:

– Be able to customize products/servicesBe able to customize products/services– Knowledgeable about strategic objectivesKnowledgeable about strategic objectives– Can build and implement a business planCan build and implement a business plan

National/Key Accounts IINational/Key Accounts II

Major account management has Major account management has dual goalsdual goals::– Making salesMaking sales

– Developing long term relationships with major Developing long term relationships with major customerscustomers

Larger share of customer leads to larger profit.Larger share of customer leads to larger profit. But: But:

– Major accounts often need detailed and sophisticated Major accounts often need detailed and sophisticated treatment.treatment.

– Need more experienced, expert salespeople with greater Need more experienced, expert salespeople with greater authority. Commission may lead to conflict.authority. Commission may lead to conflict.

National/Key Accounts IIINational/Key Accounts III

Assign key accounts to top sales executivesAssign key accounts to top sales executives

Create separate corporate divisionCreate separate corporate division

Create separate sales forceCreate separate sales force

National/Key Accounts IVNational/Key Accounts IV

Smaller firms don’t have resources for Smaller firms don’t have resources for separate division or sales forces.separate division or sales forces.

They have relatively few major accountsThey have relatively few major accounts Salesperson must be high enough in the Salesperson must be high enough in the

organization to make/influence decisions.organization to make/influence decisions. Takes time from managerial Takes time from managerial

responsibilities.responsibilities.

National/Key Accounts VNational/Key Accounts V

When few customers account for a large When few customers account for a large percentage of sales: can coordinate percentage of sales: can coordinate manufacturing, logistics, marketing and manufacturing, logistics, marketing and sales.sales.

But there is often a duplication of efforts But there is often a duplication of efforts and added sales expenses.and added sales expenses.

National/Key Accounts VINational/Key Accounts VI Treat major account executives like:Treat major account executives like:

– Regional sales managersRegional sales managers

– District managersDistrict managers

– Vice presidentsVice presidents

AdvantagesAdvantages::– Know customer better, can service betterKnow customer better, can service better

– Often viewed as promotion, can assign best peopleOften viewed as promotion, can assign best people

DisadvantagesDisadvantages: : – Duplication of effortDuplication of effort

– ExpenseExpense

Team SellingTeam Selling

Response to more complex relationship Response to more complex relationship with customer: Stronger knowledge, with customer: Stronger knowledge, better servicebetter service

Get different expertise from multiple Get different expertise from multiple organizational functionsorganizational functions

High costs: time and personnelHigh costs: time and personnel

Complicated: coordination, motivation, Complicated: coordination, motivation, compensationcompensation

Multi-level SellingMulti-level Selling

Teams call on corresponding management Teams call on corresponding management levels at the customer’s office.levels at the customer’s office.– VP to VPVP to VP– Engineer to EngineerEngineer to Engineer– Technician to TechnicianTechnician to Technician

Co-Marketing AlliancesCo-Marketing Alliances

Teams from multiple organizations work Teams from multiple organizations work together to sell complex products or together to sell complex products or systems.systems.

Capitalize on each member’s competencies Capitalize on each member’s competencies (technical knowledge, sales force)(technical knowledge, sales force)

Starbuck’s Board of DirectorsStarbuck’s Board of Directors Howard Schultz

Starbucks Corporationchairman

Jim DonaldStarbucks Corporationpresident and chief executive officer

Barbara BassGerson Bakar Foundationpresident

Howard BeharStarbucks Corporationdirector

William (Bill) BradleyAllen & Company LLCmanaging director

Mellody HobsonAriel Capital Management, LLCAriel Mutual Fundspresident

Olden LeePepsiCo, Inc.retired executive

James Shennan, Jr.Trinity Venturesgeneral partner emeritus

Javier TeruelColgate - Palmolive Companyvice chairman

Myron Ullman, IIIJ.C. Penney Company, Inc.chairman and chief executive officer

Craig WeatherupPepsi-Cola Companyretired chief executive officer

Logistical Alliances and Logistical Alliances and Computerized OrderingComputerized Ordering

Direct and often automatic reordering Direct and often automatic reordering (e.g. EDI)(e.g. EDI)

Easier for customerEasier for customer

Creates structurally tied relationshipCreates structurally tied relationship

Frees sales force up to sell to new Frees sales force up to sell to new customers, or new products to existing customers, or new products to existing customers.customers.

Global Sales StructureGlobal Sales Structure

Same basic issues: Same basic issues: – Own sales force vs. agentOwn sales force vs. agent– If own people, what structure?If own people, what structure?

Decision factors more complicated due to Decision factors more complicated due to distance, customs, legal/political distance, customs, legal/political considerations.considerations.

Vertical Structure IVertical Structure I

Should Sales be integrated within the Should Sales be integrated within the Marketing Department as it seems to be in Marketing Department as it seems to be in over ¾ of companies responding to survey?over ¾ of companies responding to survey?

Should it be a separate unit as it is in about Should it be a separate unit as it is in about 20% of the responding companies?20% of the responding companies?

Vertical Structure IIVertical Structure II Number of Management Levels vs. Span Number of Management Levels vs. Span

of Controlof Control– How many levels to have?How many levels to have?– How many people should each manager How many people should each manager

supervise?supervise?

– Fewer levels Fewer levels » Facilitates communicationFacilitates communication

» Lowers administrative costsLowers administrative costs

» Lowers quality: less effectiveness and Lowers quality: less effectiveness and productivityproductivity

Vertical Structure IIIVertical Structure III

Reduce span of control if:Reduce span of control if:

– Sales task is complexSales task is complex

– Profit impact of each salesperson’s Profit impact of each salesperson’s performance is highperformance is high

– Salespeople are well paid and professionalSalespeople are well paid and professional

Vertical Structure IVVertical Structure IV Where should authority reside?Where should authority reside?

– Hiring, Firing, EvaluationHiring, Firing, Evaluation

Selling and Managerial Responsibilities?Selling and Managerial Responsibilities?– Most spend about 1/3 of time on sales (vs. mgmt)Most spend about 1/3 of time on sales (vs. mgmt)

– They want commission rewardsThey want commission rewards

– Usually needed on key accounts, especially for their Usually needed on key accounts, especially for their sales abilitysales ability

Should Sales Manager control sales-related Should Sales Manager control sales-related activities?activities?– Installation, maintenance, order processing, deliveryInstallation, maintenance, order processing, delivery

– Usually not credit: conflict and awkwardUsually not credit: conflict and awkward

Vertical Structure VVertical Structure V

Technology may change sales management Technology may change sales management issues as much as it has sales person issues. issues as much as it has sales person issues. Cell phones, computers, etc.Cell phones, computers, etc.

Quality time?Quality time?

Staff Support vs. OutsourcingStaff Support vs. Outsourcing– Specialized knowledgeSpecialized knowledge– Most common: recruiting, training, sales Most common: recruiting, training, sales

analysis (Research?)analysis (Research?)