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Organizing the Modern Sales Force

Sales & Distribution Management Marketing 3345

Importance of Sales Organization Decisions




 

Organizing the activities and management of the sales force forms a major part of strategic sales planning Managers are becoming more proactive in restructuring A strong corporate vision and effective strategic market planning are closely linked with how the organization is structured and how it interacts with its customers

Purposes of Sales Organization




Activities should be divided and arranged in such a way the firm can benefit from the specialization of labor. The organizational structures should provide for stability and continuity in the firms selling efforts. The structure should provide for the coordination of activities assigned to different persons in the sales force and different departments in the firm.

Division and Specialization of Labor




Increase productivity - each specialist can concentrate efforts and become more proficient at the assigned task Divide required selling activities to gain maximum benefits of specialization within the sales force Line organization - vertical organization, chain of command runs from the chief sales executive down through levels of subordinates

Division and Specialization of Labor


 Line

and staff most common design  Concerns




What specific functions should be assigned to staff? How can staff activities be integrated with line sales manager activities? Should staff activities be performed in-house inor outsourced to independent contractors?

Organize for Stability and Continuity




Organize activities without regard to the talents or preferences of current employees. People can be trained or recruited to fill positions. The same activities will be carried out at the same positions within the firm even if designated individuals receive promotions or leave.

Coordination and Integration




The more an organization divides tasks among specialists, the more difficult integrating those tasks becomes. Issues:


Sales force activities must be integrated with customer needs. Selling activities must be coordinated with other departments. Tasks must be integrated.

Selling Agent Decision and Product Life Cycle


Disengagement Decision Re-engagement Decision
Manufacturer Re-employs Rep firm to lower fixed sales costs

Decline

Introduction

Outsourcing the Sales Force


 Manufacturers


Representatives

intermediaries who sell part of the output of their principals. Take neither ownership nor physical possession of the goods they sell. Cover a specific territory and specialize in a limited range of complementary products.

Outsourcing the Sales Force


 Advantages
 

of Manufacturers Reps

Many established contacts and prospects Familiarity with the technical nature and applications of specialized products The ability to keep expenses low by spreading selling costs They appear as a variable cost item on their principals income statement

Outsourcing the Sales Force


      

Six Cs of finding the right Mnfr Rep Compatible lines Compatible territories Compatible customers Credibility of the rep Capabilities Credits

Outsourcing the Sales Force


 Selling


Agents

Intermediaries who do not take title or possession of the goods they sell Compensated by commissions from their principals Have broad authority by their principals to modify prices and terms of sale Actively shape the manufacturers promotional and sales programs

Considerations for Outsourcing the Sales Force


 Economic  Control  Transactions

Criteria

costs  Strategic Flexibility

Considerations for Outsourcing: BreakBreak-even

Common Bases for Structuring the Sales Effort


 Geographic

organization  Product organization  Organization by customer type or markets  Organization by selling function

Geographic Organization


Simplest and most common method Individual salespeople assigned to separate geographic territories Each salesperson is responsible for performing all activities necessary to sell all the products

Geographic Organization
  

Advantages Tends to achieve lowest costs Travel time and expenses are minimized. Sales administration and overhead costs are kept low.

Disadvantages It does not provide any benefits associated with the specialization of labor.

Geographic Organization

Product Organization
A separate sales force for each product (or category) in the line.


Advantages Individual salespeople master effective selling methods for single or related products. Closer alignment of sales and production possible. Sales management controls the allocation of the selling effort across the line.

Disadvantages Duplication of effort.

Product Organization

Organizing by Customer Type or Markets


Organizing a sales force by customer type is a natural extension of the marketing concept and a strategy of market segmentation.
 

Advantages Better understanding of customer needs Increased familiarity with certain businesses Increased control over the allocation of the selling effort

Disadvantages Possible higher selling and administrative costs Duplication of effort

Organizing by Customer Type or Markets

Organizing by Selling Function

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

Role of Telemarketing
  

Prospecting for and qualifying potential new accounts Servicing existing accounts quickly when unexpected problems arise Seeking repeat purchases from existing accounts that cannot be covered efficiently in person Gaining quicker communication of newsworthy developments

Doing the Math on Account Management


Field Rep
     

Telemarketing 25 1624 6500 1.2 $15 $117,000

Sales calls per day Sales calls per quarter Sales calls per year Salespeople required Cost per sales call Cost per year

5 325 1300 6.5 $250 $1,998,750

EVOLUTION OF SELLING METHODS - OLD


Stage in Selling Process
Prospect/ Qualify
Face-toFace Selling (FTF)

Present/ Close

Service/ Reorder

Large

FTF

FTF

Account Size

Medium

FTF

FTF

FTF

Small

FTF

FTF

TM

EVOLUTION OF SELLING METHODS - NEW


Stage in Selling Process
Prospect/ Qualify
National Account Management (NAM)

Present/ Close

Service/ Reorder

Large

NAM

NAM

Account Size

Medium

Telemarketing (TM)

FTF

FTF & TM

Small

TM

TM

TM

National and Key Accounts


 Organizational

approach to deliver customer service necessary to attract and maintain large and important customers. execs must be able to . . .

 Sales


 

be business managers capable of managing key accounts customize products and services plan and implement key account business plans

Organizing for National and Key Accounts




Assign key accounts to top sales executives Create separate corporate division Create a separate sales force to handle major accounts

Team Selling
 Team

selling integrates functional specialists with customer relationship specialists.  Benefits include:
 

Questions answered faster People with similar interests speak directly with one another

Team Selling
A

selling center brings together individuals from around the organization matrix organization employs directdirectreporting salespeople who support internal consultants with specialized expertise

A

Alternative Organizations


Multi level selling sales team consists of personnel from various managerial levels who call on their counterparts in the buying organization CoCo-Marketing Alliances develop marketing and sales programs to sell integrated systems directly to the ultimate customer

Logistical Alliances and Computerized Ordering


 From
  

the customer point of view, computerized ordering is


Convenient, Flexible and Less time consuming

 How

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

Vertical Structure of Sales Organizations




Key questions:  How many levels of sales managers should there be?


How many people should each manager supervise? (span of control)

Vertical Sales Organization


 Generally,

span of control should be smaller and number of levels of managers larger when:
 

The sales task is complex The profit impact of each salespersons performance is high The salespeople in the organization are well paid and professional

Vertical Sales Organization




Span of control should be smaller at higher levels in the sales organization Other issues:  How much authority should each manager be given?  At what level of sales management should authority for different decisions lay?

Building Blocks for New Sales Force Startup


      

Start with a strategy Appoint an expansion team Leverage existing strengths Go to the press Avoid compensation snafus Provide support Sales managers assigned to create a new sales force should employ best practices

Key Terms
         

division and specialization of labor line organization line and staff organization outsourcing the sales force manufacturers representatives selling agents transaction cost analysis (TCA) geographic organization product organization organization by customer type

organization

by selling

function telemarketing national or key accounts team selling selling center matrix organization multilevel selling co-marketing alliances logistical alliances span of control