Post on 29-May-2018
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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
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
Sales Training Manager
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
National Sales Manager
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Product Sales OrganizationProduct Sales Organization
Salespeople (100)
District Sales Manager (10)
Office Equipment Sales Manager
Salespeople (100)
District Sales Manager (10)
Office Supplies Manager
National Sales 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
Sales Training Manager
Salespeople (50)
Dsitrict Sales Managers (25)
Zone Sales Managers (4)
Commercial Accounts Sales Manager
Salespeople (50)
District Sales Managers (10)
Government Account Sales Manager
National 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
National 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