Sales Organizational Structure

1
Sales Organizational Structure

• Why do we need an organizational structure or
  hierarchy?

Control and Coordination Mechanism
2
Principles of Sales Organizations

• Span of Control, Management levels.
• Specialization vs. Generalization
• Centralization vs. Decentralization
• Integration Coordination w/ Other Functions

3
Geographic Specialization
Product Specialization
Customer Specialization
Functional Specialization
4
Customer Specialized Sales Force
Selected products to all customer in six-state
area
5
Product Specialized Sales Force
Selected products to all customer in six-state
area
6
Functional Specialization
7
Geographical Sales Organization
All products to all customers in assigned states
8
Sales Force Alternatives

• Internet
• Industrial Distributors
• Independent Representatives
• Trade Shows
• Telemarketing

9
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
• The Telemarketing Stigma.

10
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 Reps required
6.5 1.2 Cost per sales call
250 15 Cost per year
1,998,750 117,000
11
Sales Force Deployment

• Word load
• Focus on tasks to be performed
• Number of customers
• Planned call frequencies
• Determining Optimal Number of Salespeople
• Affordability -- of Sales
• Design and Allocate Territory

12
Sales Force Size

• Breakdown Approach
• Salesforce Size Forecasted Sales / Avg. Sales
  per Salesperson
• Workload Approach
• Salesforce Size Total Selling Effort / Avg.
  selling effort per salesperson
• Incremental Approach
• Other Issues
• Productivity
• Turnover

13
Sales-force Size

• Incremental Approach
• Number of Marginal Marginal
• Salespeople Profit Cost
• 100 50,000 45,000
• 101 48,000 45,000
• 102 46,000 ------------ 45,000
• 103 44,000 45,000
• 104 42,000 45,000
• Relates sales-force size, sales and costs.
• Difficult to develop - historical data, changes
  in labor market etc.

14
Territory Design

• Why Use territories?
• Motivation cost Savings
• relationship building maintenance
• Involvement pride in their customers
• reduced duplication of sales costs
• less travel time effort, high productivity.
• Evaluation Control
• ability of salespeople across balanced
  territories
• performance across time, sales potential quotas.

15
Territory Design Procedure

• Objective Equal work Load across all
  territories.
• Determine Allocation Criteria
• Territory balance -- effect on morale
• Customer balance - distribute commission
• Potential balance - share business growth
• Size balance - reduce transportation costs
• Choose starting points
• Salespersons home
• Large customer - cut transportation cost
• Big city - convenient for services

16
Territory Design Procedure (Contd)

• Combine Adjacent Control Unit
• Add adjacent counties/areas to the starting
  point.
• Running totals on allocation criteria.
• Balance between territories.
• Compare Sales Territories
• Mountains, roads, population center locations?
• Comparison on other variables (area/ travel
  distances etc.)
• Assign people to Sales Territories