Session 5 Sales Organization

8/9/2019 Session 5 Sales Organization

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Session 5

Organizing the Sales Effort

Sales team deploymentSales force size


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Sales Organization

Need for sales organization

Defines the lines of authority

All necessary activities are assigned andperformance is monitored

Establishes the lines of communications Provides coordination and balance

Economizes on managers time (span of control)

Development of specialists for various roles

Defines career path


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Defining the objectives of building a

sales organization ( qualitative andquantitative)

What activities must be performed and in whatvolume? What will be the cost involved?

Grouping activities into positions (jobdescription)

Decide on hierarchy, authority & relationships

Assigning personnel to the positions(coordination and control)

Check for provision for growth, flexibility and

control


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Factors influencingstructure

Product and service-related factors

Organization-related factors

Marketing Mix-related factors Competitive factors

Past Practice

Use of technology


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Source: Adapted from William L. Cron and Michael Levy, Sales ManagementPerformance Evaluation: A Residual Income Perspective, Journal of Personal Selling &Sales Management 7 (August 1987), pp. 5766.

Generic business strategies and their implications for thesales force

Porters Typology

Business Strategies Sales Force Implications

Low-cost Supplier Large customers, prospectsSell on price

Significant order-taking responsibilities

Differentiation Sell non-price benefits

High-quality serviceLow price-sensitivity customers

Niche (or focus) Expert in target market operations andopportunities

Non-price benefits


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Key questions to be answered beforestructuring the sales team?

Own sales team or outsourcing theselling function?

Degree of centralization in the

company? Kind of structure?

How should the specialization be

utilized? How to handle major national

accounts?


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Outsourcing Considerations

Economic Criteria

Control

Transactions costs Strategic Flexibility


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Cost comparison between a company salesforce and outsourced selling


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Sales Organization ConceptsSales Organization Concepts

Centralization

Degree to which importantdecisions and tasks areperformed at higher levelsin the managementhierarchy


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Span of Control vs ManagementSpan of Control vs Management

LevelsLevels

Span of Control

Flat Sales Organization Managem

entL

eve

ls

District

Sales Manager

District

Sales Manager

District

Sales Manager

District

Sales Manager

District

Sales Manager

National

Sales Manager

Span of Control

Tall Sales Organization

M

anagementLeve

lsDistrict

Sales Manager

District

Sales Manager

District

Sales Manager

District

Sales Manager

District

Sales Manager

District

Sales Manager

Regional

Sales Manager

Regional

Sales Manager

National

Sales Manager

District


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managersmanagement levels +

Span of Control

span of control =

4-11


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Reduced one-to-onecommunication due to

larger # of

subordinates Managements may be

less effective,

negating cost savings

Larger Span of Control

Greater control/responsivenessdue to fewer

managementlayers

Lower admincosts


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Span of Control

Reduce span of control when:

Sales task is complex

Profit impact of each salespersonsperformance is high

Salespeople are fresh, inexperiencedand require close supervision

Also, at higher levels in the organization


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Division and Specialization ofLabor

Line organization Vertical

Chain of command runs from chief salesexecutive down through levels of

subordinates Each subordinate responsible to one

person


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Division and Specialization ofLabor

Line and staff organization Several sales management activities assigned to

separate specialists

VP Sales

Director of

Sales Training

Director of

Distributor

Relations

Director of

Sales Promotion


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Line vs Staff PositionsLine vs Staff Positions

Sales Training Manager


Salespeople

District Sales Manager

Regional Sales Manager

National Sales Manager


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Sales Organization ConceptsSales Organization Concepts

Salesforce SpecializationContinuum

GENERALISTSGENERALISTS

All selling activities

and all products to

all customers

SPECIALISTSSPECIALISTS

Certain selling activities

for certain products

for certain customersSome specialization

of selling activities,

products, and/or

customers


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Selling SituationSelling Situation

ContingenciesContingencies Consideration of Specialization Empirical support for the notion that:

A generalized salesforce should be used when sellingeffort is more important than selling skill

A specialized salesforce should be used when sellingskill is more important than selling effort

Consideration of EnvironmentalCharacteristics, Task Characteristics, andPerformance Objectives

Consideration of Customer Needs andProduct Complexity


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Selling SituationSelling SituationContingenciesContingencies

Customer and ProductDeterminants of SalesforceSpecialization

Customer Needs Similar

Customer Needs Different

Simple

Product

Offering

Complex

Range of

ProductsGeography-Driven

Specialization

Product-Driven

Specialization

Market-

Driven

Specialization

Product + Market-

Driven

Specialization


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Geographic SalesGeographic Sales

OrganizationOrganization


Salespeople (100)

District Sales Managers (20)

Zone Sales Manager (4)

Eastern Regional Sales Manager

Salespeople (100)

District Sales Manager (20)

Zone Sales Manager (4)

Western Regional Sales Manager



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Product Sales OrganizationProduct Sales Organization

Salespeople (100)


Office Equipment Sales Manager

Salespeople (100)


Office Supplies Manager



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Advantages / disadvantages

Helps to developproductcompetence

Better coordinationbetween sales &production

Very important ifcompany sellstailored products /solutions

Allocation of moreselling resources tomore crucialproducts is possible

Duplication of effort Higher selling

expense More management

personnel required Confusion at thecustomers ends

Opportunity tocustomers to play

one sales personagainst another


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Market Sales OrganizationMarket Sales Organization

Broad Market Specialization

Consumers and/or Industrial

Specific Industry Specialization

Government agencies, educational institutions,

distributors, and retailers, OEMs


Salespeople (50)

Dsitrict Sales Managers (25)

Zone Sales Managers (4)

Commercial Accounts Sales Manager

Salespeople (50)

District Sales Managers (10)

Government Account Sales Manager



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Advantages / disadvantages

Natural extension of themarketing concept

Better understanding eachcustomers specific needs /procedures / persons

Possibility of discoveringideas for new products

Customizing the marketingprograms to suit specificcustomer group

Allocation of more sellingresources to more crucialmarkets is possible

Overlap of geographicalcoverage

Higher selling expense

More managementpersonnel required

Confusion at thecustomers ends if thesame company hasseparate divisions indifferent industries

Opportunity tocustomers to play onesales person againstanother


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Comparison ofComparison ofSales Organization StructuresSales Organization Structures

OrganizationalStructure Advantages Disadvantages

Geographic Low CostNo Geographic Duplication

No Customer Duplication

Fewer Management Levels

Limited Specialization

Lack of Management Control Over

Product or Customer Emphasis

Products

Product Salespeople Become Experts in

Product Attributes and

Applications

Management Control over

Selling Effort Allocated to

High Cost

Geographic Duplication

Customer Duplication

Market Salespeople Develop Better

Understanding of Unique

Customer Needs

Management Control Over

Selling Effort Allocated to

Different Markets

High Cost

Geographic Duplication


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Hybrid Sales OrganizationHybrid Sales Organization

StructureStructure

Major Accounts

Sales Manager

Western

Sales Manager

Eastern

Sales Manager

FieldSales Manager

TelemarketingSales Manager

Regular Accounts

Sales Manager

Commercial Accounts Sales Manager

Office Equipment

Sales Manager

Office Supplies

Sales Manager

Government Accounts Sales Manager



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Role of telemarketing

Prospecting & qualifying potential newaccounts

Permission for personal meeting

Servicing existing account quickly ( suchas technical assistance hotlines)

Seeking repeat purchases from existing

customers Spreading awareness quickly about a new

product / promotion


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Sales OrganizationSales Organization

Structures selling to majorStructures selling to major

accountsaccountsIdentify Major/Key Accounts

Complexity of Account

SimpleComplex

Large

Small

SizeofAccount

Large

Account

Regular

Account

Complex

Account

Key

Account


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Key Account Management

Deliver high-level customer service toattract and maintain large and importantcustomers

Key account sales execs

Business managers capable of managing keyaccounts

Customize products and services Plan and implement key account business

plans

Alternatives for Major


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Alternatives for MajorAccounts

Major accounts / customers are called by

various names like key accounts, corporateaccounts, house accounts

They make up a large share of a firms salesvolume and profits

Firms use the following alternativeapproaches to deal effectively with them

Create a position of major / nationalaccount manager

Use existing territory sales managers

Create a separate division

Create a separate salesforce


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Sales OrganizationSales Organization

StructuresStructuresMajor Account Options

Assign Major Accounts to Salespeople

along with Other Accounts

Assign Major Accounts to

Sales Managers

DevelopMajor Account Salesforce


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Team Selling

Integrates functional specialists withcustomer relationship specialists

Ideal team structure that meets customer

needs Benefits

Customer questions answered faster

Customers can speak directly with desired

specialistExamples Projects, Industrial selling,

Software development, Advertising agencies

Session 5 Sales Organization

Documents

Transcript of Session 5 Sales Organization