The Sales Organization

Variations in Selling Organizational StructureMarketing 3345

FundamentalPrinciplesSales ForceSpecializationSales ForceAlternativesSales ForceSizeEmergingIssues

Fundamental Organization Principles Unity of CommandEach person should report to only one boss. A clear and unbroken chain of command should link every person in an organization with someone a level higher. Stability and ContinuityActivities should be assigned without regard for the talents and preferences of current employees. Coordination and Activities of salespeople should be Integrationintegrated with customer needs, coordinated with activities of other departments, and coordinated with tasks of all salespeople.

Geographical Sales OrganizationConnecticutand RhodeIslandMaineVermontNew YorkMassachusettsNew YorkNortheastDistrictSales ManagerCentralRegionalSales ManagerNewJerseyPennsy-lvaniaDelawareDistrict ofColumbiaVirginiaMarylandMid-AtlanticDistrictSales ManagerEasternRegionalSales ManagerNorthCarolinaSouthCarolinaGeorgiaAlabamaMississippiFloridaSouthernDistrictSales ManagerWesternRegionalSales ManagerNationalSales Manager

Organization:Geographical OrganizationsAdvantagesTends to achieve lowest costsTravel time and expenses are minimizedSales Administration and overhead costs are kept lowDisadvantagesIt does not provide any benefits associated with specialization of labor

Product Specialized Sales ForceNortheastDistrictSales ManagerDictationEquipmentSalespersonTypewriterSalespersonMinicomputerSalespersonProgrammableCalculatorSalespersonCopierSalespersonLargeComputerSalespersonMid-AtlanticDistrictSales ManagerSouthernDistrictSales ManagerEasternRegionalSales ManagerNationalSales Manager

Organization:Product SpecializationAdvantagesAllows focusing of sales effortExpertise developed in limited number of productsDisadvantagesMore expensive to operateMay result in duplication of sales calls to clients

Customer Specialized Sales ForceNationalAccountsManagerNortheastDistrictSales ManagerSalespersonfor Educational InstitutionsSalespersonfor ManufacturersSalespersonfor RetailCustomersSalespersonfor GovernmentAgenciesSalespersonfor WholesaleCustomersSalespersonfor BankCustomersMid-AtlanticDistrictSales ManagerSouthernDistrictSales ManagerEasternRegionalSales ManagerManagerofExport SalesNationalSales Manager

Organization: Customer Specialization

AdvantagesConsistent with market driven strategySalespeople become customer expertsDisadvantagesMore expensive

Functional SpecializationAccount Executives(salespeople)Industry SalesManagersSystems reps(technical support)SystemsManagerMarketAdministration(training and installation)AdministrativeManagerDivision MarketingManager

Organization:Functional SpecializationFocus on phases in customer relationship:Initial salesFollow-up technical support and servicePromotion efforts specialist

WHO ARE STRATEGIC ACCOUNTS?WHEN A CUSTOMER PURCHASES A SIGNIFICANT VOLUME AND EXHIBITS ONE OR A COMBINATION OF THE FOLLOWING:MULTIPLE PEOPLE ARE INVOLVED IN THE BUYING PROCESSPURCHASING IS CENTRALIZEDTHE CUSTOMER DESRIES A LONG-TERM, COOPERATIVE WORKING RELATIONSHIPTHE CUSTOMER EXPECTS SPECIALIZED ATTENTION AND SERVICE

OrganizationStrategic Account Organization AlternativesExisting Sales Force - Low risk; little change Management Sell National Accounts -- keeps management close to customerSeparate Sales Force -- more aggressive; more expensive; alternative to sales management for promotion for sales staffSales Teams - use when selling process is complex

BENEFITS OF STRATEGIC ACCOUNTMARKETING30%74%74%83%91%Increased sale tonational accounts

Increased profitsfrom nationalaccounts

Increased marketshare

Improved customercommunications

Improved customercoordination

Survey Results: Strategic Account Management37%37%26%Provide no training for strategic account managersDifferent training for strategic account managersNo difference in training for strategic account managers or other sales staff37%26%37%Are training programs for the strategic account manager different?

Survey Results: Strategic Account Management

Yes

No

No Response

29%3%68%Do your strategic account managers carry an assigned sales quota?29%3%68%

Survey Results: Strategic Account ManagementNo formal authority over others in the sales organizationSales team reports directly to the strategic account managerMay assemble temporary virtual sales teams that report directly to the strategic account managerNo Response24%22%47%Do strategic account managers have formal authority over the rest of the sales organization?7%47%24%7%22%

Survey Results: Strategic Account ManagementHow do you measure the success of a strategic account program?Sales volumeCustomer satisfactionProfitabilityVolume of recurring revenue streamIncremental orders from existing accountsNumber of customer with strategic account agreements Number of transactions/ordersNumber of products shipped80%53%45%29%22%11% 6% 6%

Table 8-2: Ranking of Customers Wants198019902000

Contact with outside salesperson 1 3 8Frequency and speed of delivery 2 1 2Price 3 2 4Range of Available Products 4 5 3Capable inside salesperson 5 4 1

SCOPE OF TELEMARKETINGS ROLECustomer Service Prospecting and Lead Qualification Sales Support Advertising and Promotion

Doing the Math on Account Management Field Rep Telemarketing

Sales calls per day 5 25Sales calls per quarter 325 1624Sales calls per year 1300 6500Salespeople required6.5 1.2Cost per sales call $250 $15Cost per year $1,998,750 $117,000

MAJOR BENEFITS OF TELEMARKETING Percent of Respondents

CUSTOMER BENEFIT65.2%Speed of communication to customer21.5Timeliness of contact14.2Ease/Convenience to customer10.8Customer relations10.2Frequency of contact 8.5

COST EFFECTIVE43.7DIRECT CONTROL 1.4MARKETING RESEARCH 4.8PROVIDE TECHNICAL SUPPORT 1.1

Organization: TelemarketingAdvantagesLow cost per sales callProfitably serve small to medium customersSpeed/time saving of telephone orderingChallengesAcceptance by field salespeopleHiring, motivating & retaining good telemarketers

Five Years Ago

Today

Five Years from NowTelemarketersAverage Number per Company21.9928.1136.49Five years Ago

Today

Five years from Now59.6653.0741.64Field SalespeopleAverage Number per Company+27.9%+29.9%+27.5%+12.5%Source: Geri Gantman, Exclusive Survey, Business Marketing, (September, 2007), p. 64. 353 companies in survey.PROJECTED GROWTH IN SALESPEOPLEAND TELEMARKETERS

Stage in Selling ProcessProspect/ Present/ Service/Qualify Close ReorderAccountSizeLarge

Medium

SmallEVOLUTION OF SELLING METHODSOLD

Stage in Selling ProcessProspect/ Present/ Service/Qualify Close ReorderAccountSizeLarge

Medium

SmallEVOLUTION OF SELLING METHODSNEW

Total Costs of Independent Agents vs. Own Sales ForceIndependentagentsOwn sales forceBreak-evensalesTotal selling costsSales volume

HIRING INDEPENDENT AGENTS DEVELOPING THE IDEAL AGENT PROFILE1.Define the ideal market focus.2.Identify compatible principles.3.Specify the necessary technical background.

LOCATING AGENTS:Rep. DirectoriesCustomer ReferencesCompatible ManufacturesReferences from Current AgentsTrade Shows

Six Cs of Finding the Right Mnfr RepCompatible LinesCompatible TerritoriesCompatible CustomersCredibility of the RepCapabilitiesCredit WorthinessHIRING INDEPENDENT AGENTS DEVELOPING THE IDEAL AGENT PROFILE

IntroductionDisengagement DecisionRe-engagement DecisionManufacturer Re-employs Rep firm to lower fixed sales costsAgent Decision and the Product Life Cycle

Re - OrganizationEvaluating Organizational StructureFinancial performance -- must consider BOTH costs and revenuesAdaptabilityExternal- InternalNew competitors - Company goalsChanging technology - Management philosophyModification to channel - Production capabilitiessystems - Technical resources Industry life cycle Integration -- subunits of sales org must work in harmony

*5*1**3*1*3*1*4*1*5**8*****10******18