Sales Organization Structure

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Sales Organization Structure Sales Force
Deployment

• Module Four

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Sales Organization Structure
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Sales Organization Concepts

• Specialization
• The degree to which individuals perform some of
  the required tasks to the exclusion of others.
  Individuals can become experts on certain tasks,
  leading to better performance for the entire
  organization.
• Centralization
• The degree two which important decisions and
  tasks performed at higher levels in the
  management hierarchy. Centralized structures
  place authority and responsibility at higher
  management levels.

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Sales Force Specialization Continuum
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Span of Control vs. Management Levels
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Span of Control vs. Management Levels
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Line vs. Staff Positions
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Selling Situations
Selling-Situation Factors Organizational Options
Organizational Structure
Environmental Characteristics
Task Performance
Performance Objective
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Geographic Sales Organization
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Product Sales Organization
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Market Sales Organization
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Functional Sales Organization
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Sales Organization StructuresMajor Accounts
Options
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Comparison of Sales Organization Structures
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Comparison of Sales Organization Structures
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Hybrid Sales Organization Structure
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Sales Force Deployment
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1. How much selling effort is needed to cover
   accounts and prospects adequately so that sales
   and profit objectives will be achieved?
2. How many salespeople are required to provide the
   desired amount of selling effort?
3. How should territories be designed to ensure
   proper coverage of accounts and to provide each
   salesperson with a reasonable opportunity for
   success?

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Interrelatedness ofSales Force Deployment
Decisions
How much selling effort is needed to cover
accounts and prospects adequately so that sales
and profit objectives will be achieved?
Allocation of Selling Effort
Sales Force Size
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 opportunity for
success?
Territory Design
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Allocation of Selling EffortAnalytical Approaches
Single Factor Models
Portfolio Models
Decision Models
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Allocation of Selling EffortSingle Factor Models

• Accounts classified into categories based on one
  factor, such as volume 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 EffortSingle Factor Model
Example
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Allocation of Selling EffortPortfolio Models

• Accounts are grouped by specific criteria to
  determine their value to the firm ie.
• Account (Growth) Opportunity - an accounts need
  for and ability to purchase the firms products
• Competitive (Advantage) Position - the strength
  of the relationship between the firm and an
  account

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Allocation of Selling EffortDecision 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 Volume Growth
• Anticipated increases
• Sales Productivity
• The ratio of sales to selling costs
• Sales Force Turnover
• Should be anticipated

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Sales Force Size Analytical Tools

• The Breakdown Approach
• Is used to determine the number of salespeople
  needed to generate a forecasted level of
  sales.
• It is weak conceptually.
• The concept underlying the calculations is that
  sales determine the number of salespeople
  needed putting the cart before the horse.

Salesforce size Forecasted sales / Average
sales / person
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Sales Force Size Analytical Tools

• The Workload Approach
• Determines how much selling effort is needed to
  adequately cover the firms market.
• Then the number of salespeople required to
  provide this amount of selling effort is
  calculated.
• This approach relatively simple to develop and
  is sound conceptually.

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Sales Force Size Analytical Tools

• The Incremental Approach
• Its basic concept is to compare the marginal
  profits and marginal costs associated with each
  incremental salesperson.
• The major advantage of this approach is that it
  quantifies the important relationships between
  salesforce size, sales, and costs.
• However, the incremental method is difficult to
  develop, and it cannot be used for new sales
  forces where historical data and accurate
  judgments are not possible.

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Designing Territories

• Territories consist of whatever specific accounts
  are assigned to a specific salesperson. The
  territory can be viewed as the work unit for a
  salesperson.
• Territory Considerations
• Trading areas
• Present effort
• Recommended effort

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DESIGNING TERRITORIES

• EXTREMELY RARE
• Most often territories evolve
• with market development volume,
• And are revised / adjusted
• on an ongoing basis.

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DESIGN GOALS

• EQUALITY OF SALES
• WORKLOAD
• GROWTH POTENTIAL

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SIX DESIGN STEPS

• Select a control element for territory boundaries
  / size.
• Determine location potential of customers.
• Determine basic territories
• Assign sales people to territories.
• Establish territorial coverage plans for sales
  reps.
• Monitor sales cost of sales on an ongoing
  basis.

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STEP ONE

• TERRITORIAL SIZE (miles covered)
• Boundaries (usually political or geographical)
• BASED ON
• REGION (WESTERN CANADA)
• PROVINCE (BC)
• CITY / COUNTRY (PRINCE GEORGE / VANDERHOOF,
  QUESNEL, ETC.)

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STEP TWO

• Determine the location of potential customers
  from
• phone book
• Mailing lists
• route riding

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STEP THREE

• TO DETERMINE BASIC TERRITORIES USE EITHER
• BUILD UP METHOD
• Establish individual performance parameters
  (workload capacity of calls per day x of
  days), frequency / miles, account types a, b or
  c, length of call.
• Draw out individual territory boundaries
• Adjust as needed

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STEP THREE

• BREAKDOWN METHOD
• Determine total market sales potential
• Establish individual territories
• Can use a market index x total sales potential,
  should use hands on territory analysis as
  territories are rarely sufficiently uniform
• Estimate sales volume per person and draw
  boundaries.
• Adjust as needed

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STEP FOUR

• Assigning sales people to territories
• Need to match personality of the SR to the
  personality of the territory (ie.
  miles, account type, culture, etc.)
• Can be a management tool
• Beginner territories
• Penal territories
• Plum territories
• Territory adjustment need is ongoing

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STEP FOUR continued

• Set performance norms that flag when the need
  becomes critical.
• Territory can boom far out pace sales
  (Alberta) / can shrink / dry up (Nfld.)
• Claim jumping territory / account overlap
• Consequence of revising territories
• People dont like change it means more work /
  less return.
• The change needs to be sold
• Compensation format may need adjustment

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STEP FIVE

• Territory coverage
• The plan of how the territory is to be serviced
• Call sequence / frequency, routing
• Sales management should only do the initial
  set up
• Assigned rep should submit modifications with as
  their territory knowledge develops.
• Managements role is to set performance standards
  e.G. Calls per day, etc.
• Need to factor in account merchandising,
  prospecting.

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STEP SIX

• Monitor sales
• Cost of sales on an ongoing basis.

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Sales Organization Structure Sales Force
Deployment

• A dynamic management undertaking
• that must be constantly
• assessed and fine tuned
• to ensure the ideal balance
• between profitability
• and the development of
• continued sales growth.