Module 4

Sales Organization Structure and Salesforce Deployment

Sales Organization Concepts

Specialization
Degree to which salespeople and sales managers concentrate on specific sales or sales-support activities, specific products, and/or specific customers.

Sales Organization Concepts

Salesforce Specialization Continuum

GENERALISTS All selling activities and all products to all customers

Some specialization of selling activities, products, and/or customers

SPECIALISTS Certain selling activities for certain products for certain customers
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Sales Organization Concepts

Centralization
Degree to which important decisions and tasks are performed at higher levels in the management hierarchy.

Span of Control vs. Management Levels

Flat Sales Organization
National Sales Manager

Management Levels

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

Span of Control Tall Sales Organization

National Sales Manager

Management Levels

Regional Sales Manager

Regional Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District District Sales Manager

Span of Control

Line vs Staff Positions

National Sales Manager

Sales Training Manager

Regional Sales Manager Sales Training Manager District Sales Manager

Salespeople
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Generalization Centralization Tall Organizations

Specialization Decentralization Flat Organizations

Selling Situations that Affect Specialization Decisions

Selling Effort vs. Selling Skill Environmental Characteristics High uncertainty Low uncertainty Customer Needs and Product Complexity

Selling Situation Contingencies

Customer and Product Determinants of Salesforce Specialization
Customer Needs Different Product/MarketMarketDriven Driven Specialization Specialization GeographyDriven Specialization ProductDriven Specialization

Simple Product Offering

Complex Range of Products

Customer Needs Similar

Geographic Sales Organization

National Sales Manager
Sales Training Mgr Eastern Regional Sales Mgr Zone Sales Mgrs (4) District Sales Mgrs (20) Salespeople (100) Western Regional Sales Mgr Zone Sales Mgrs (4) District Sales Mgrs (20) Salespeople (100)
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Product Sales Organization

National Sales Manager

Office Equipment Sales Mgr

Office Supplies Mgr

District Sales Mgrs (10)

District Sales Mgrs (10)

Salespeople (100)

Salespeople (100)
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Market Sales Organization

National Sales Manager

Commercial Accounts Sales Mgr Government Account Sales Mgr

Sales Training Manager

District Sales Mgrs (10)

Zone Sales Mgrs (4) District Sales Mgrs (25)

Salespeople (50)

Salespeople (50)

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Functional Sales Organization

National Sales Manager

Field Sales Manager

Telemarketing Sales Manager

Regional Sales Managers (4)

District Sales Managers (2)

District Sales Managers (16)

Salespeople (40)

Salespeople (160)
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Major Accounts
Large accounts Complex needs

National Accounts Global Accounts

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Sales Organization Structures

Major Account Options
Develop Major Account Salesforce

Assign Major Accounts to Sales Managers Assign Major Accounts to Salespeople along with Other Accounts
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Comparison of Sales Organization Structures

Organizational Structure
Geographic

Advantages

Disadvantages
Limited Specialization Lack of Management Control Over Product or Customer Emphasis High Cost Geographic Duplication Customer Duplication

Product

Market

Functional

Low Cost No Geographic Duplication No Customer Duplication Fewer Management Levels Salespeople Become Experts In Product Attributes and Applications Management Control over Selling Effort Allocated to Products Salespeople Develop Better Understanding of Unique Customer Needs Management Control Over Selling Effort Allocated to Different Markets Efficiency in Performing Selling Activities

High Cost Geographic Duplication

Geographic Duplication Customer Duplication 16 Need for Coordination

Hybrid Sales Organization Structure

National Sales Manager

Commercial Accts Sales Mgr

Major Accts Sales Mgr Regular Accts Sales Mgr

Government Accts Sales Mgr

Office Equipt Sales Mgr Office Supplies Sales Mgr

Field Sales Mgr

Telemarketing Sales Mgr

Western Sales Mgr

Eastern Sales Mgr

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Salesforce Deployment
Allocating selling effort Determining salesforce size Designing territories

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Interrelatedness of Salesforce Deployment Decisions

Allocation of Selling Effort How much selling effort is needed to cover accounts and prospects adequately so that sales and profit objectives will be achieved? How many salespeople are required to provide the desired amount of selling effort? How should territories be designed and salespeople assigned to territories to ensure proper coverage of accounts and to provide each salesperson with a reasonable 19 opportunity for success?

Salesforce Size

Territory Design

Allocation of Selling Effort

Analytical Approaches
Single Factor Model Portfolio Models Decision Models

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Allocation of Selling Effort

Single Factor Models
Easy to develop and use/low analytical rigor Accounts classified into categories based on one factor, such as market potential All accounts in the same category are assigned the same number of sales calls Effort allocation decisions are based on the analysis of only one factor and differences among accounts in the same category are not considered in assigning sales call coverage
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Allocation of Selling Effort

Single Factor Model Example
Market Potential Average Sales Calls to Categories an Account Next Year

A B C D

32 24 16 8

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Allocation of Selling Effort

Portfolio Models
Account Opportunity Competitive Position

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Allocation of Selling Effort

Portfolio Model Segments and Strategies
Competitive Position Strong Weak Account Opportunity Low High Segment 1 Segment 2

Segment 3 Segment 4

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Allocation of Selling Effort

Decision Models
Simple Basic Concept - to allocate sales calls to accounts that promise the highest sales return from the sales calls Optimal number of calls in terms of sales or profit maximization

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Sales Force Size

Key Considerations
Sales Productivity Ratio of sales generated to selling effort employed Salesforce Turnover Costly Manage pipeline

Cost

Sales
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Sales Force Size

Analytical Tools
Breakdown Approach Sales Force Size = Forecasted Sales Average Sales per Salesperson

Assumes an Accurate Sales Forecast Advantage Easy to use Disadvantages Conceptually weak; sales determine sales
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Sales Force Size

Analytical Tools
Breakdown Approach Forecasted Sales Average Sales per Salesperson

Sales Force Size =

= $50,000,000 / $2,000,000 = 25 salespeople

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Sales Force Size

Analytical Tools
Workload Approach

# of Salespeople =

Total Selling Effort Needed

Avg Selling Effort per Salesperson

Integrates the salesforce size with account effort allocation strategies Advantages Easy to develop Sound conceptually
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Sales Force Size

Analytical Tools
Workload Approach

# of Salespeople =

Total Selling Effort Needed

Avg Selling Effort per Salesperson

37,500 sales calls needed

=
=

500 annual sales calls per salesperson

75 salespeople

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Sales Force Size

Analytical Tools
Incremental Approach Optimal # of Salespeople is where: Marginal Profit from Added Salesperson = Marginal Cost of That Salesperson Advantage Quantifies the important relationships between salesforce size, sales, and costs Disadvantages Difficult to develop Requires historical data
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Designing Territories
Territory - consists of whatever specific accounts are assigned to a specific salesperson Work unit for a salesperson

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Territory Design Procedure

Select Planning and Control Unit

Analyze Planning and Control Unit Opportunity

Form Initial Territories

Assess Territory Workload

Finalize Territory Design

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Assigning Salespeople to Territories Farmers or Hunters

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Using Technology
Software to automate the process Design potential territories Print maps Compare opportunity and work load Easy to make changes Sales Territory Configurator Tactician TerrAlign
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"People" Considerations

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