The Sales Organization

1
The Sales Organization

• Variations in Selling Organizational Structure

Marketing 3345
2
Fundamental Principles
Sales Force Specialization
Sales Force Alternatives
Sales Force Size
Emerging Issues
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Fundamental Organization Principles
Unity of Command Each person should report to
only one boss. A clear and unbroken chain
of command should link every person in
an organization with someone a level
higher. Stability and Continuity Activitie
s should be assigned without regard for the
talents and preferences of current
employees. Coordination and Activities of
salespeople should be Integration integrated
with customer needs, coordinated with
activities of other departments, and
coordinated with tasks of all salespeople.
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Geographical Sales Organization
National
Sales Manager
Central
Eastern
Western
Regional
Regional
Regional
Sales Manager
Sales Manager
Sales Manager
Northeast
Mid-Atlantic
Southern
District
District
District
Sales Manager
Sales Manager
Sales Manager
Connecticut
New
South
Pennsy- lvania
North
Maine
and Rhode
Jersey
Carolina
Carolina
Island
District of
Vermont
New York
Delaware
Georgia
Alabama
Columbia
Massach usetts
New York
Virginia
Maryland
Florida
Mississippi
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OrganizationGeographical Organizations

• 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
  specialization of labor

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Product Specialized Sales Force
National
Sales Manager
Eastern
Regional
Sales Manager
Northeast
Mid-Atlantic
Southern
District
District
District
Sales Manager
Sales Manager
Sales Manager
Dictation
Typewriter
Minicomputer
Programmable
Copier
Large
Equipment
Salesperson
Salesperson
Calculator
Salesperson
Computer
Salesperson
Salesperson
Salesperson
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OrganizationProduct Specialization

• Advantages
• Allows focusing of sales effort
• Expertise developed in limited number of products
• Disadvantages
• More expensive to operate
• May result in duplication of sales calls to
  clients

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Customer Specialized Sales Force
National
Sales Manager
National
Eastern
Manager
Accounts
Regional
of
Manager
Sales Manager
Export Sales
Northeast
Mid-Atlantic
Southern
District
District
District
Sales Manager
Sales Manager
Sales Manager
Salesperson
Salesperson
Salesperson
Salesperson
for Bank
for Retail
for Government
for Educational Institutions
Customers
Customers
Agencies
Salesperson
Salesperson
for Manufacturers
for Wholesale
Customers
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Organization Customer Specialization

• Advantages
• Consistent with market driven strategy
• Salespeople become customer experts
• Disadvantages
• More expensive

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Functional Specialization
Division Marketing
Manager
Industry Sales
Systems
Administrative
Managers
Manager
Manager
Account Executives
Systems reps
Market
(salespeople)
(technical support)
Administration
(training and installation)
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OrganizationFunctional Specialization

• Focus on phases in customer relationship
• Initial sales
• Follow-up technical support and service
• Promotion efforts specialist

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WHO ARE STRATEGIC ACCOUNTS?

• WHEN A CUSTOMER PURCHASES A SIGNIFICANT VOLUME
  AND EXHIBITS ONE OR A COMBINATION OF THE
  FOLLOWING
• MULTIPLE PEOPLE ARE INVOLVED IN THE BUYING
  PROCESS
• PURCHASING IS CENTRALIZED
• THE CUSTOMER DESRIES A LONG-TERM, COOPERATIVE
  WORKING RELATIONSHIP
• THE CUSTOMER EXPECTS SPECIALIZED ATTENTION AND
  SERVICE

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Organization

• Strategic Account Organization Alternatives
• Existing Sales Force - Low risk little change
• Management Sell National Accounts -- keeps
  management close to customer
• Separate Sales Force -- more aggressive more
  expensive alternative to sales management for
  promotion for sales staff
• Sales Teams - use when selling process is complex

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BENEFITS OF STRATEGIC ACCOUNTMARKETING
Increased sale to national accounts Increased
profits from national accounts Increased
market share Improved customer communications Im
proved customer coordination
91
83
74
74
30
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Survey Results Strategic Account Management
Are training programs for the strategic account
manager different?
Provide no training for strategic account
managers Different training for strategic account
managers No difference in training for strategic
account managers or other sales staff
37
26
37
37
37
26
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Survey Results Strategic Account Management
Do your strategic account managers carry an
assigned sales quota?
Yes No No Response
68
29
29
68
3
3
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Survey Results Strategic Account Management
Do strategic account managers have formal
authority over the rest of the sales organization?
No formal authority over others in the sales
organization Sales team reports directly to the
strategic account manager May assemble temporary
virtual sales teams that report directly to the
strategic account manager No Response
47
7
47
24
24
22
22
7
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Survey Results Strategic Account Management
How do you measure the success of a strategic
account program?
80
Sales volume Customer satisfaction Profitability V
olume of recurring revenue stream Incremental
orders from existing accounts Number of customer
with strategic account agreements Number of
transactions/orders Number of products shipped
53
45
29
22
11
6
6
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Table 8-2 Ranking of Customers Wants
1980 1990 2000 Contact with outside
salesperson 1 3 8 Frequency and speed
of delivery 2 1 2 Price 3
2 4 Range of Available Products 4 5
3 Capable inside salesperson 5 4 1
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SCOPE OF TELEMARKETINGS ROLE

• Customer Service
• Prospecting and Lead Qualification
• Sales Support
• Advertising and Promotion

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Doing the Math on Account Management
Field Rep Telemarketing Sales
calls per day 5 25 Sales calls per
quarter 325 1624 Sales
calls per year 1300
6500 Salespeople required 6.5
1.2 Cost per sales call 250
15 Cost per year 1,998,750
117,000
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MAJOR BENEFITS OF TELEMARKETING

• Percent of
• Respondents
• CUSTOMER BENEFIT 65.2
• Speed of communication to customer 21.5
• Timeliness of contact 14.2
• Ease/Convenience to customer 10.8
• Customer relations 10.2
• Frequency of contact 8.5
• COST EFFECTIVE 43.7
• DIRECT CONTROL 1.4
• MARKETING RESEARCH 4.8
• PROVIDE TECHNICAL SUPPORT 1.1

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Organization Telemarketing

• Advantages
• Low cost per sales call
• Profitably serve small to medium customers
• Speed/time saving of telephone ordering
• Challenges
• Acceptance by field salespeople
• Hiring, motivating retaining good telemarketers

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PROJECTED GROWTH IN SALESPEOPLEAND TELEMARKETERS
Telemarketers Average Number per Company
Five Years Ago Today Five Years from Now
21.99
27.9
28.11
29.9
36.49
Field Salespeople Average Number per Company
Five years Ago Today Five years from Now
41.64
27.5
53.07
12.5
59.66
Source Geri Gantman, Exclusive Survey,
Business Marketing, (September, 2007), p. 64. 353
companies in survey.
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EVOLUTION OF SELLING METHODSOLD
Stage in Selling Process
Prospect/ Present/ Service/ Qualify
Close Reorder
Large Medium Small
Account Size
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EVOLUTION OF SELLING METHODSNEW
Stage in Selling Process
Prospect/ Present/
Service/ Qualify Close Reorder
Large Medium Small
Account Size
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Total Costs of Independent Agents vs. Own Sales
Force
Independent agents
Total selling costs
Own sales force
Break- even sales
Sales volume
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HIRING INDEPENDENT AGENTS DEVELOPING THE IDEAL
AGENT PROFILE

• 1. Define the ideal market focus.
• 2. Identify compatible principles.
• 3. Specify the necessary technical
• background.
• LOCATING AGENTS Rep. Directories
• Customer References
• Compatible Manufactures
• References from Current Agents
• Trade Shows

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HIRING INDEPENDENT AGENTS DEVELOPING THE IDEAL
AGENT PROFILE

• Six Cs of Finding the Right Mnfr Rep
• Compatible Lines
• Compatible Territories
• Compatible Customers
• Credibility of the Rep
• Capabilities
• Credit Worthiness

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Agent Decision and the Product Life Cycle
Manufacturer Re-employs Rep firm to lower fixed
sales costs
Disengagement Decision
Re-engagement Decision
Introduction
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Re - Organization

• Evaluating Organizational Structure
• Financial performance -- must consider
• BOTH costs and revenues
• Adaptability
• External - Internal
• New competitors - Company goals
• Changing technology - Management philosophy
• Modification to channel - Production
  capabilities
• systems - Technical resources
• Industry life cycle
• Integration -- subunits of sales org must work
  in harmony