ch06 - sales force organization[1]

Part IIIPart III

SALES FORCE SALES FORCE ACTIVITIESACTIVITIES

Part IIIPart III

SALES FORCE SALES FORCE ACTIVITIESACTIVITIES

Chapter 6:

Sales Force Organization

Figure 6-1: Decisions Affected by Sales Force OrganizationFigure 6-1: Decisions Affected by Sales Force Organization

Structure

Performance Evaluation

Compensation

TrainingProgram

Recruiting/Selection

SalesManagement

Role

Sales Force Organization: Sales Force Organization: ImpactImpact

Figure 6-3: Geographical Sales OrganizationFigure 6-3: Geographical Sales Organization

Eastern RegionalSales Manager

Sales Force Organization: Sales Force Organization: GeneralistGeneralist

MassachuMassachusettssetts

VermontVermont New YorkNew York

New YorkNew York

MaineMaineNew New

JerseyJersey

DelawareDelaware

VirginiaVirginia

ConnecticutConnecticutRhode Rhode IslandIsland

Pennsy-Pennsy-lvanialvania

District of District of ColumbiaColumbia

MarylandMaryland

North North CarolinaCarolina

GeorgiaGeorgia

MississipMississippipi

South South CarolinaCarolina

AlabamaAlabama

FloridaFlorida

National SalesManager

Western RegionalSales Manager

Central RegionalSales Manager

Northeast District Northeast District Sales ManagerSales Manager

Mid-Atlantic Mid-Atlantic District Sales District Sales

ManagerManager

Southern District Southern District Sales ManagerSales Manager

Figure 6-4: Product Specialized Sales ForceFigure 6-4: Product Specialized Sales Force

Sales Force Organization: Sales Force Organization: Product SpecialistsProduct Specialists

Eastern RegionalSales Manager

National SalesManager

Northeast District Northeast District Sales ManagerSales Manager

Southern District Southern District Sales ManagerSales Manager

DictationDictationEquipmentEquipmentSalespersoSalesperso

nn

Typewriter Typewriter SalespersoSalesperso

nn

MinicomputMinicomputer er

SalespersonSalesperson

ProgrammabProgrammablele

CalculatorCalculatorSalespersonSalesperson

CopierCopierSalespersoSalesperso

nn

Large Large ComputerComputer

SalespersonSalesperson

Mid-Atlantic Mid-Atlantic District Sales District Sales

ManagerManager

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

Product Specialist Product Specialist Organization: Organization: AnalysisAnalysis

Figure 6-4: Product Specialized Sales ForceFigure 6-4: Product Specialized Sales Force

Sales Force Organization: Sales Force Organization: Customer SpecialistsCustomer Specialists

Eastern RegionalSales Manager

National SalesManager

Northeast District Northeast District Sales ManagerSales Manager

Southern District Southern District Sales ManagerSales Manager

SalespersonSalespersonFor For

Educational Educational InstitutionsInstitutions

Salesperson Salesperson for for

ManufacturersManufacturers

Salesperson Salesperson for Retail for Retail

CustomersCustomers

Salesperson Salesperson for for

Government Government AgenciesAgencies

Salesperson Salesperson for Bank for Bank

CustomersCustomers

Mid-Atlantic Mid-Atlantic District Sales District Sales

ManagerManager

National AccountsManager

Manager ofExport Sales

Salesperson Salesperson for Wholesale for Wholesale

CustomersCustomers

Advantages Consistent with market driven strategy

Salespeople become customer experts

Customer segments receive appropriate resources

Disadvantages May conflict with marketing organization

Product expertise may be lacking

More expensive

Customer Specialist Customer Specialist Organization: Organization: AnalysisAnalysis

Figure 8-5: Functional SpecializationFigure 8-5: Functional Specialization

Sales Force Organization: Sales Force Organization: Functional SpecialistsFunctional Specialists

DivisionMarketing Manager

SystemsManager

IndustrySales Manager

AdministrativeManager

System RepsSystem Reps(Technical Support)(Technical Support)

Account Account ExecutivesExecutives (Salespeople)(Salespeople)

MarketMarketAdministrativeAdministrative

(Training & Installation)(Training & Installation)

Functional Specialists: Functional Specialists: AlternativesAlternatives

AlternativesAlternatives CompaniesCompanies

New Customers American ExpressGillette

Retention Browning-Ferris Industries

End-Users Lexmark International

Sales Engineers 3MAT&T

Service Consultants

IBMMcKesson Corporation

Strategic Account Programs:Strategic Account Programs:Survey ResultsSurvey Results

18%18%

49%49%

20%20%

11%11%

45%45%

24%24%

17%17% 16%16%

TodayIn Five Years

Customer Generalist Product Lines

Functional

Figure 6-2: How Sales Forces are Figure 6-2: How Sales Forces are OrganizedOrganized

The Role of The Role of TelemarketingTelemarketing

Field RepField Rep TelemarketinTelemarketingg

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

Sales Force Organization:Sales Force Organization:Cost AnalysisCost Analysis

ActivityActivity DescriptionDescription

Customer Service

Companies provide customers provide customers with a number they can call if they have questions.

Prospecting and Lead

Qualification

Firms are taking a proactive approach to prospecting by having telemarketers call prospects or qualify them for face-to-face selling.

Account Management

Selling secondary product lines or service small customers by phone, thereby freeing their salespeople to concentrate on larger customers and strategic product lines.

Promotion Support

Develop newspaper and magazine ads that feature either a local or an 800 number to get additional product information or place an order.

Sales Force Organization:Sales Force Organization:Scope of TelemarketingScope of Telemarketing

Figure 6-8: The Scope of Telemarketing ActivitiesFigure 6-8: The Scope of Telemarketing Activities

Advantages Low cost per sales call

Profitably serve small to medium customers

Speed/time saving of telephone ordering

Challenges Acceptance by field salespeople

Management

Role of the Internet

Sales Force Organization:Sales Force Organization:Telemarketing Advantages and Telemarketing Advantages and ChallengesChallenges

Should you get outside Should you get outside help?help?

Figure 6-9: Total Costs of Independent Agents vs. Own Sales Figure 6-9: Total Costs of Independent Agents vs. Own Sales ForceForce

IndependentAgents

Own Sales Force

Break-Even Sales

Sales VolumeSales Volume

Sales Force Organization:Sales Force Organization:Economic Analysis of Sales Economic Analysis of Sales AgentsAgents

TotalTotalSellingSelling

CostsCosts

Figure 6-10: Market Factors Favoring the Use of Sales Figure 6-10: Market Factors Favoring the Use of Sales AgentsAgents

Sales Force Organization:Sales Force Organization:Market Conditions Favoring Sales Market Conditions Favoring Sales AgentsAgents The market is fragmented

and customers are difficult to find or understand.

Buying is decentralized.

Local knowledge and local distribution is important.

The company is selling only a few products.

There is a good potential sales agency who has significant marketing expertise in the industry.

The company is not well known and has little equity in the market.

The products are easily understood commodities that have been around for a long time.

The selling cycle is short and orders are typically small.

It is not necessary to tightly control the selling effort.

Ongoing support activities are not important and the company does not need customer information.

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

Sales Force Organization:Sales Force Organization:Selecting a Sales AgencySelecting a Sales Agency

Introduction

Disengagement Decision Re-engagement

Decision

Manufacturer Re-employs Rep firm to lower fixed sales costs

Sales Force Organization:Sales Force Organization:Sales Agent Decision and the Product Life CycleSales Agent Decision and the Product Life Cycle

Country President

V.P. Business OperationsKey Account Team

Global AccountsDirector

DirectorProduct Support

Director ofOperations

Sales Director

AccountManagers

AccountCoordinators

Project Managers

Technical SupportEngineers

ProductManagers

AccountManagers

AccountCoordinators

Figure 6-11: Sales Team Organization at EricssonFigure 6-11: Sales Team Organization at Ericsson

Sales Force Organization:Sales Force Organization:Key Account Sales Teams at EricssonKey Account Sales Teams at Ericsson

Financial performance -- must consider BOTH costs and revenues

Adaptability

Integration -- subunits of sales organization must work in harmony

ExternalExternal InternalInternal New competitors Changing technology Modification to

channel systems Industry life cycle

Company goals Management

philosophy Production

capabilities Technical resources

Sales Force Organization:Sales Force Organization:Evaluating Organizational Evaluating Organizational StructureStructure