lecture, organisation and structure of sales activities and controlling sales output, by, rahat...
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Organisation and Structure of Sales Activities and controlling
sales output
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Lecture
By: Rahat Kazmi
This lecture was prepared for BTEC Business Studies Level 4, but can also be useful for other business studies students, Sales Managers, Sales Team Leaders and Supervisors
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Organize Around Customers
ã Historicalã Product-centered ã Expertise in features and functions
ã Todayã Customer-centeredã Expertise in business issuesã Sales resources deployed to provide
best service to best customersSource: HR Chally Group (2007), The Chally World Class Excellence Research Report: The Route to the Summit. Dayton, OH: HR Chally Group.
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ã Identify purposes of sales organizationã Understand different horizontal
organizational structures of a sales force.
ã Outline major issues in key account and team selling.
ã Discuss key vertical structure issues in sales organizations.
ã Identify important issues in starting a new sales force from the ground up.
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Purposes of Sales Organization
ã Divide and arrange activities so the firm can benefit from specialization of labor
ã Provide for stability and continuity in firm’s selling efforts
ã Provide for coordination of activities assigned to sales force and to departments in the firm
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Division and Specialization of Labor
ã Increase productivity - specialists can become proficient at assigned tasks
ã Divide required selling activities to gain maximum benefits within the sales force
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Division and Specialization of Laborã Line organization
ã Verticalã Chain of command runs from chief sales
executive down through levels of subordinates
ã Each subordinate responsible to one personVP Sales
Director of UK. Sales
Regional Mgr. for England
District Mgr. for Wandsworth
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Division and Specialization of Labor
ã Line and staff organizationã Vertical (most common)ã Several sales management activities assigned
to separate specialists
VP Sales
Director of Sales Training
Director of DistributorRelations
Director of Sales
Promotion
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Stability and Continuityã Organize activities without
regard to talents of current employees
ã People can be trained to fill positions
ã Same activities will be carried out even if designated individuals receive promotions or leave
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Sales Organization Structure
ã Horizontal – divides selling activities among sales force
ã Vertical – assigns authority for specific sales management activities
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Which Sales Structure Should You Have?
ã https://www.youtube.com/watch?v=fmqNAwAjz-g
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Horizontal Structure Options
Outside Agents
Company Sales Force
Geographic
Co-Marketing
Product
Nat’l KeyAccounts
Market/Customer Type Team Selling Selling
Function
SellingCenters
MatrixOrganizations
OR
Telemarketing
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Outsourcing the Sales Forceã Types of agents
ã Manufacturer’s representativesã Sell part of the output of their principalsã Take neither ownership nor physical
possession of goodsã Cover specific territory and specialize in
limited range of complementary productsã Selling agents
ã Do not take title or possession of the goods they sell
ã Compensated by commissionsã Broad authority to modify prices and terms
of saleã Actively shape manufacturer’s promotional
and sales programs
HorizontalStructureOptions
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Six C’s of findingthe right rep
HorizontalStructureOptions Source: Dan Hanover, “Independents Day,” Sales & Marketing
Management, April 2000, pp. 65–68.
1. Compatible lines2. Compatible territories3. Compatible customers4. Credibility of the rep
5. Capabilities6. Credits
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Outsourcing Considerations
ã Economic Criteriaã Controlã Transactions costsã Strategic Flexibility
HorizontalStructureOptions
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Geographic Organization
ã Simplest and most common method
ã Individual salespeople assigned to separate geographic territories
ã Responsible for performing all activities necessary to sell all products
HorizontalStructureOptions
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ã Does not provide benefits associated with specialization of labor
Geographic Organization
HorizontalStructureOptions
ã Lowest costsã Travel time and
expenses minimized
ã Sales administration and overhead costs kept low
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Geographic sales organization
HorizontalStructureOptions
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ã Duplication of effort
Product Organization
HorizontalStructureOptions
ã Salespeople master effective selling methods for single or related products
ã Closer alignment of sales and production
ã Sales management controls allocation of selling effort across the line
Separate sales force for each product (or category) in the line
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Sales force organized by product typeHorizontalStructureOptions
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ã Possible higher selling and administrative costs
ã Duplication of effort
Customer Type/Market Organization
HorizontalStructureOptions
ã Better understanding of customer needs
ã Increased familiarity with certain businesses
ã Increased control over allocation of selling effort
Natural extension of marketing concept and strategy of market segmentation
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Sales force organized by customer typeHorizontal
StructureOptions
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ã Customer objections to switch to maintenance salesperson
ã Feelings of rivalry between the sales force
Selling Function Organization
HorizontalStructureOptions
ã Skills matched to sales function
ã Developmental salespeople often a successful alternative
Salespeople specialize in performing different selling functions – e.g. prospecting and developing new accounts versus maintaining and servicing existing customers
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Telemarketing
ã Form of organization by selling function
ã Qualifying potential new accountsã Servicing existing accounts quicklyã Seeking repeat purchases from
existing accounts that cannot be covered efficiently in person
ã Providing quick communication of newsworthy developmentsHorizontal
StructureOptions
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Telemarketing
https://www.youtube.com/watch?v=O6gt-WDvlhA
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Database Capabilities and Telemarketing
HorizontalStructureOptions
Source: Ken Spralling, “Centex Houses Ranks Highest in Customer Satisfaction in 10 major: U.S. Markets, According to Independent Study,” www.investors.com, September 14, 2005; Alicia Orr, “Predicting a Need,” Target Marketing, February 2001, pp. 62–64.
DatabaseDatabaseAnalysisSoftware
TelemarketingCustomized
DirectMail
Collects/provides information
Formulates prospecting solutions –matches homeowners against other data to qualify customers, predict interest; generates prospect universe
Prequalifies prospects, can transfer to salesperson to close sale
Follows-up with prospects not ready to buy, provides response vehicles (web address, toll-free #)
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National and Key Accountsã Separate corporate division/sales
forceã Deliver high-level customer service
to attract and maintain large and important customers
ã Key account sales execsã Business managers capable of
managing key accountsã Customize products and servicesã Plan and implement key account
business plansHorizontalStructureOptions
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Team Sellingã Integrates functional specialists
with customer relationship specialists
ã ID team structure that meets customer needs
ã Benefitsã Customer questions answered fasterã Customers can speak directly with
desired specialistHorizontalStructureOptions
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Other Team Selling Structuresã Selling center brings together
individuals from around the organization to help salesperson
ã Matrix organization employs direct-reporting salespeople who support internal consultants with specialized expertise
ã Multi level selling – sales team consists of personnel from various managerial levels who call on their counterparts in the buying organization
HorizontalStructureOptions
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Co-Marketing Alliances
ã Develop marketing and sales programs to sell integrated systems directly to the ultimate customer
HorizontalStructureOptions
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Logistical Alliances and Computerized Ordering
ã Customer point of view -ã Convenient ã Flexible ã Less time consuming
ã How will computerized reorder systems change the role of the sales force?
HorizontalStructureOptions
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Vertical Structure Issues
Span of Control
Managerial Levels
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ã Reduced one-to-one communication due to larger # of subordinates
ã Managements may be less effective, negating cost savings
Larger Span of Control
ã Greater control/ responsiveness due to fewer management layers
ã Lower admin costs
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Span of Control
ã Reduce span of control when:ã Sales task is complexã Profit impact of each
salesperson’s performance is high
ã Salespeople are well paid and professional
ã Also, at higher levels in the organization
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Managerial Decision Levelsã How much, where should the
managerial authority lie?ã Hiring, firing, evaluation
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Managerial Decision Levels
Importance of decision = Managerial decision level
Sales force pay = Managerial decision level
Complex selling tasks = Managerial decision level
4-35
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Managerial Selling Responsibilities
ã Managers often active in sales to key accounts
ã Organizations value their selling skills
ã Managers value commissions, contact with marketplace
ã Drawback – some managers neglect managerial responsibilities
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4.6
Line and staff sales organization
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