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Page 1: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Organisation and Structure of Sales Activities and controlling

sales output

McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

Lecture

By: Rahat Kazmi

This lecture was prepared for BTEC Business Studies Level 4, but can also be useful for other business studies students, Sales Managers, Sales Team Leaders and Supervisors

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Page 2: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Organize Around Customers

ã Historicalã Product-centered ã Expertise in features and functions

ã Todayã Customer-centeredã Expertise in business issuesã Sales resources deployed to provide

best service to best customersSource: HR Chally Group (2007), The Chally World Class Excellence Research Report: The Route to the Summit. Dayton, OH: HR Chally Group.

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Page 3: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

ã Identify purposes of sales organizationã Understand different horizontal

organizational structures of a sales force.

ã Outline major issues in key account and team selling.

ã Discuss key vertical structure issues in sales organizations.

ã Identify important issues in starting a new sales force from the ground up.

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Page 4: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Purposes of Sales Organization

ã Divide and arrange activities so the firm can benefit from specialization of labor

ã Provide for stability and continuity in firm’s selling efforts

ã Provide for coordination of activities assigned to sales force and to departments in the firm

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Page 5: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Division and Specialization of Labor

ã Increase productivity - specialists can become proficient at assigned tasks

ã Divide required selling activities to gain maximum benefits within the sales force

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Page 6: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Division and Specialization of Laborã Line organization

ã Verticalã Chain of command runs from chief sales

executive down through levels of subordinates

ã Each subordinate responsible to one personVP Sales

Director of UK. Sales

Regional Mgr. for England

District Mgr. for Wandsworth

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Page 7: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Division and Specialization of Labor

ã Line and staff organizationã Vertical (most common)ã Several sales management activities assigned

to separate specialists

VP Sales

Director of Sales Training

Director of DistributorRelations

Director of Sales

Promotion

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Page 8: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Stability and Continuityã Organize activities without

regard to talents of current employees

ã People can be trained to fill positions

ã Same activities will be carried out even if designated individuals receive promotions or leave

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Page 9: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Sales Organization Structure

ã Horizontal – divides selling activities among sales force

ã Vertical – assigns authority for specific sales management activities

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Page 10: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Which Sales Structure Should You Have?

ã https://www.youtube.com/watch?v=fmqNAwAjz-g

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Page 11: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Horizontal Structure Options

Outside Agents

Company Sales Force

Geographic

Co-Marketing

Product

Nat’l KeyAccounts

Market/Customer Type Team Selling Selling

Function

SellingCenters

MatrixOrganizations

OR

Telemarketing

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Page 12: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Outsourcing the Sales Forceã Types of agents

ã Manufacturer’s representativesã Sell part of the output of their principalsã Take neither ownership nor physical

possession of goodsã Cover specific territory and specialize in

limited range of complementary productsã Selling agents

ã Do not take title or possession of the goods they sell

ã Compensated by commissionsã Broad authority to modify prices and terms

of saleã Actively shape manufacturer’s promotional

and sales programs

HorizontalStructureOptions

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Page 13: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Six C’s of findingthe right rep

HorizontalStructureOptions Source: Dan Hanover, “Independents Day,” Sales & Marketing

Management, April 2000, pp. 65–68.

1. Compatible lines2. Compatible territories3. Compatible customers4. Credibility of the rep

5. Capabilities6. Credits

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Page 14: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Outsourcing Considerations

ã Economic Criteriaã Controlã Transactions costsã Strategic Flexibility

HorizontalStructureOptions

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Page 15: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Geographic Organization

ã Simplest and most common method

ã Individual salespeople assigned to separate geographic territories

ã Responsible for performing all activities necessary to sell all products

HorizontalStructureOptions

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Page 16: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

ã Does not provide benefits associated with specialization of labor

Geographic Organization

HorizontalStructureOptions

ã Lowest costsã Travel time and

expenses minimized

ã Sales administration and overhead costs kept low

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Page 17: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Geographic sales organization

HorizontalStructureOptions

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Page 18: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

ã Duplication of effort

Product Organization

HorizontalStructureOptions

ã Salespeople master effective selling methods for single or related products

ã Closer alignment of sales and production

ã Sales management controls allocation of selling effort across the line

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

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Page 19: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Sales force organized by product typeHorizontalStructureOptions

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Page 20: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

ã Possible higher selling and administrative costs

ã Duplication of effort

Customer Type/Market Organization

HorizontalStructureOptions

ã Better understanding of customer needs

ã Increased familiarity with certain businesses

ã Increased control over allocation of selling effort

Natural extension of marketing concept and strategy of market segmentation

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Page 21: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Sales force organized by customer typeHorizontal

StructureOptions

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Page 22: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

ã Customer objections to switch to maintenance salesperson

ã Feelings of rivalry between the sales force

Selling Function Organization

HorizontalStructureOptions

ã Skills matched to sales function

ã Developmental salespeople often a successful alternative

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

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Page 23: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Telemarketing

ã Form of organization by selling function

ã Qualifying potential new accountsã Servicing existing accounts quicklyã Seeking repeat purchases from

existing accounts that cannot be covered efficiently in person

ã Providing quick communication of newsworthy developmentsHorizontal

StructureOptions

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Page 24: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Telemarketing

https://www.youtube.com/watch?v=O6gt-WDvlhA

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Page 25: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Database Capabilities and Telemarketing

HorizontalStructureOptions

Source: Ken Spralling, “Centex Houses Ranks Highest in Customer Satisfaction in 10 major: U.S. Markets, According to Independent Study,” www.investors.com, September 14, 2005; Alicia Orr, “Predicting a Need,” Target Marketing, February 2001, pp. 62–64.

DatabaseDatabaseAnalysisSoftware

TelemarketingCustomized

DirectMail

Collects/provides information

Formulates prospecting solutions –matches homeowners against other data to qualify customers, predict interest; generates prospect universe

Prequalifies prospects, can transfer to salesperson to close sale

Follows-up with prospects not ready to buy, provides response vehicles (web address, toll-free #)

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Page 26: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

National and Key Accountsã Separate corporate division/sales

forceã Deliver high-level customer service

to attract and maintain large and important customers

ã Key account sales execsã Business managers capable of

managing key accountsã Customize products and servicesã Plan and implement key account

business plansHorizontalStructureOptions

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Page 27: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Team Sellingã Integrates functional specialists

with customer relationship specialists

ã ID team structure that meets customer needs

ã Benefitsã Customer questions answered fasterã Customers can speak directly with

desired specialistHorizontalStructureOptions

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Page 28: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Other Team Selling Structuresã Selling center brings together

individuals from around the organization to help salesperson

ã Matrix organization employs direct-reporting salespeople who support internal consultants with specialized expertise

ã Multi level selling – sales team consists of personnel from various managerial levels who call on their counterparts in the buying organization

HorizontalStructureOptions

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Page 29: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Co-Marketing Alliances

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

HorizontalStructureOptions

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Page 30: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Logistical Alliances and Computerized Ordering

ã Customer point of view -ã Convenient ã Flexible ã Less time consuming

ã How will computerized reorder systems change the role of the sales force?

HorizontalStructureOptions

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Page 31: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Vertical Structure Issues

Span of Control

Managerial Levels

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Page 32: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

ã Reduced one-to-one communication due to larger # of subordinates

ã Managements may be less effective, negating cost savings

Larger Span of Control

ã Greater control/ responsiveness due to fewer management layers

ã Lower admin costs

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Page 33: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Span of Control

ã Reduce span of control when:ã Sales task is complexã Profit impact of each

salesperson’s performance is high

ã Salespeople are well paid and professional

ã Also, at higher levels in the organization

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Page 34: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Managerial Decision Levelsã How much, where should the

managerial authority lie?ã Hiring, firing, evaluation

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Page 35: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Managerial Decision Levels

Importance of decision = Managerial decision level

Sales force pay = Managerial decision level

Complex selling tasks = Managerial decision level

4-35

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Page 36: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Managerial Selling Responsibilities

ã Managers often active in sales to key accounts

ã Organizations value their selling skills

ã Managers value commissions, contact with marketplace

ã Drawback – some managers neglect managerial responsibilities

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Page 37: Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

4.6

Line and staff sales organization

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