ORGANIZING THE SALES FORCE

MBA III

ASM

Firms must structure the sales force so that customers can purchase what they want, when they want and from the channel that is convenient to them.

Organization of sales in different ways viz. sales teams, sales alliances, and other methods to serve their buyers well.

Sales force today must Build trust with buyers Work in sync with other departments

Objectives:

How a firms' goals affect the organization of its sales force?

Understand different sales force structures.

Understand different factors in organizing sales force

How a firms’ goals affect the design of its sales force?

How the sales force would be structured? (Jabong, Flipkart, Reebok)

Which customers the sales force would cater to?

What products would they sell? Which regions are they targeting? Day to day activities

Structuring of sales force should precede recruitment and selection, as per firms’ strategy.

Structure of sales

Sales managers’

role

Recruitment & Selection Training

Evaluation & Compensatio

n

Definition: Sales Organization

A group of individuals striving to reach qualitative (long term aligned with objectives) and quantitative (short term like sales volume, profits) objectives, and bearing formal and informal relations to one another.

Characteristics of good organization:

Division of work Job Analysis and Description Authority and Responsibility

Span of management Chain of command Unity of command Unity of direction

Change management Adaptive

Purpose of organising

Delegation of authority and staff specialization

Define authority (line, staff and functional)

Economize executive time * Widen span of control (no. of execs

reporting) ~ Synergy

Factors in organising

Size of sales force Specialized or generalized Structures Independent Reps

Size of sales force

Economic theory: hire as long as marginal revenue exceeds marginal cost

Two alternate methods used: Breakdown method

Divide forecasted sales revenue by average sales per salesperson

Cont’d…

Workload method Compute total sales call workload Compute calls made per salesperson Compute total number of salesperson Factor in additiona l responsibilities

Organization by specialization

Like in software services sector, medical specialists to sell drugs

Computer manufacturers organize sales force by education markets, B2B and consumer.

Specialized sales force is required in following: Market penetration, Market

development, Product development, diversification

Types of organization

I. Geographical organization

Chief Marketing Executive

Advertising manager

General Sales Manager

Western Regional

Sales Manager

District Managers

Territory Sales

Manager

Eastern Regional

Sales Manager

District Managers

Territory Sales

Manager

Marketing Research Manager

Sales Promotion Manager

Cont’d…

Divide market by territories/ sales regions

All sales people sell all products Advantages: Local reach, less travel,

customer deals with only one person Disadvantages: no specialization,

duplication in offices, favouratism Strategic Implication: Best for org.

with wide territories, homogeneous product line

II. Product Sales Organisation

Sales Manager

Product ASales

Manager

Product BSales Manager

Product CSales

Manager

Salesman Salesman Salesman

Cont’d…

Specialized in a product line Advantages: best for diversification,

product development, different channels Disadvantages: additional management,

overlap in territories, customer confusion Example: Xerox – 3 products: computer,

copiers, office equipment (cust issue, sales force trained in all 3 areas)

Example: GE – offers solutions in gas, energy, healthcare, oil, aviation….

Market sales structure

Assign sales force to customers based on their markets like telecom, military, automobile…

Marketing concept of customer satisfaction by better understanding of needs is fulfilled.

Sales force can thus offer customized solutions

Can also be done by the way product is sold – individual customers or B2B

Sales force organized by Customer Type

Cont’d… Effective when seller wants to penetrate

a new market E.g. in pharma sector, number of sales

people to sell to physicians, hospital and healthcare providers have increased.

Merits: Can offer specialized training and develop individualized sales force approaches

Limitations: Selling expenses high for different locations For multiple divisions, salespeople end up

calling the same person leading to duplication of effort, buyer confusion

Functional sales organization

Two functions: Account opening Account maintenance

Example in banks, or in insurance services sector

Creates coordination problems but can be overcome through CRM

Provide Training to ensure smooth hand off to person who handles the account

Specialist has authority and not just advisor

Line & Staff organisation

Staff positions created to assist sales managers

Efficient and specialist advise to sales manager

Expensive and can lead to conflicts between line and staff

Key Account structure

Key account or national accounts Those which receive extra attention and

service levels by assigning special salesperson to them

Key account Customers – large revenue, profits, strategic importance for salesfirm

Example: Wal Mart, P&G 80:20 rule (for profit and customers) Organizing: assign executives OR

separate sales force division (CISCO – 15 VIP A/C)

Independent Sales Rep

Agents who sell on behalf of the firm in regions where no company sales force is present

Best when entering new territory: no commission till product is sold “in place” and experienced sales force Know their customer

Cont’d…

Demerits: Little control May hold market information Loyalty issues

How to choose: Offer better package Written agreement on extent of feedback

expected Decide firm/ individual us needed Go for organized search

Process of setting sales orgn

Set

objectives

Firms’ objectivesSales qualitative objectivesQuantitative objectives

Determine

activities

Analyze objectivesIdentify tasksVolume of performance

Define

positions

Group similar activitiesRelated activities form departments division

Assign

personnel to

position

From existing ORNew specialized recruits

Provide

control

Formal/ Informal meansOrg. chart and manuals