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SALES MANAGEMENT

Chapter 6:

Sales Force
Organization
Learning Objectives:
Explain the various ways to
organize sales force.
Explain what a strategic accounts
management program means.
State the reasons for the growth
in telemarketing.
Tell why and when sales agents
are utilized.
Describe evolving trends in sales
force organization.
Chapter Outline:

Sales Force Organization.


Strategic Account
Management Program.
Telemarketing.
Independent Sales Agents.
Emerging Sales Force
Organization
Sales Force Organization:
Topics

Sales Force Strategic


Sales Force Telemarketin Emerging
Specializatio Account
Generalists g Issues
n Management
Generalist versus
Specialist Structures
In general ,companies attempt to develop a sales force
organization that is adaptable, efficient, effective.

A sales force organization is adaptive if the company can react


quickly to product and market changes without a major
structural overhaul.

Efficiency reflects the rate at which key sales activities, such as


calls, demonstration, and proposals are performed.

Effectiveness represents the buyers favorable reaction to the


sales effort. (as example customer positive response to sales
calls due to its superior customer knowledge .

Four fundamental structures for organizing a sales force are:

1. Generalist
2. Product specialized
3. Customer specialized
4. Functional specialized
Generalist Structures
The most common and least complicated sales force organization
is a generalist structure, also referred as geographic organizations,
in which each salesperson sells the firms entire product line to all
accounts and prospects, usually within a specific geographic area.

The geographic area have small sales and minimal travel time.
Salespersons spend a high percentage of their time face to face
with customers.

This method tends to be the highly efficient sales structures and


works best when the product line consists of related products or
services that appeal to a rather homogeneous group of buyers.

In this method the salesperson have a big opportunity to go in


depth of the local culture, economic, and competitive conditions.

Disadvantages: salespersons focus on lines with which they are


comfortable, neglecting the lines that are newer, more difficult to
sell, but possibly more profitable.
Generalist Structures
When so many products to sell, it is difficult to have the
expertise needed to develop creative solution to
customers problems.

Salespersons may find themselves at a competitive


disadvantage if they are asked to sell to customers with
problems and needs that are diverse and complex.

Salespersons may spend too much time with customers


who are easy to sell, and are not profitable or have an
opportunity to grow.

The most complex problem are coordinating the sales


force effort across different geographic areas.

Many organization have decided that they need to


specialize beyond simple geography, on one of this three
things: (products, customers, activities)
General Structure
Organization: Analysis
Advantages
Best for homogenous group of buyers.
In-depth knowledge of the local culture,
economic, and competitive conditions.

Disadvantages
Less knowledge of the product.
Inability to create solutions for the
customers problems.
Focus on the easy to sell customers.
Sales Force Organization:
Generalist
National Sales
Manager

Central Regional Eastern Regional Western Regional


Sales Manager Sales Manager Sales Manager

Northeast District Mid-Atlantic Southern District


Sales Manager District Sales Sales Manager
Manager

Connecticut New Pennsy- North South


Rhode Maine
Jersey lvania Carolina Carolina
Island

District of
Vermont New York Delaware Georgia Alabama
Columbia

Massachu
New York Virginia Maryland Mississip Florida
setts
pi

Figure 6-3: Geographical Sales Organization


Product Specialist
Structures
A product based specialization is most
appropriate when a firm has a large,
diverse, and complex line of products.

Each sales person specializes by selling


only a few of the products in the
organizations total product portfolio and
reports to a management structure that
is also focused on the same limited
number of product lines.

Coordination occurs at the highest levels


in the organization .
Sales Force Organization:
Product Specialists
National Sales
Manager

Eastern Regional
Sales Manager

Northeast District Mid-Atlantic Southern District


Sales Manager District Sales Sales Manager
Manager

Printer Server Minicomput Programmab Copier Large


Equipment Salesperso er le Salesperso Computer
Salesperso n Salesperson Calculator n Salesperson
n Salesperson

Figure 6-4: Product Specialized Sales Force


Product Specialist
Organization: Analysis
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
Customer Specialist
Structures
Referred also as vertical
marketing, in which each
salesperson or sales team sells
the entire product line to select
types of buyers.

This type is used by companies


as companies try to become
more market focused.
Sales Force Organization:
Customer Specialists
National Sales
Manager

National Accounts Eastern Regional Manager of


Manager Sales Manager Export Sales

Northeast District Mid-Atlantic Southern District


Sales Manager District Sales Sales Manager
Manager

Salesperson Salesperson Salesperson Salesperson


For for Retail for for Bank
Educational Customers Government Customers
Institutions Agencies
Salesperson Salesperson
for for Wholesale
Manufacturers Customers

Figure 6-5: Customer Specialized Sales Force


Customer Specialist
Organization: Analysis
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
Functional Specialization
Structures

Focuses on the activities or


functions performed by customer
contact people.

Product and market heterogeneity


and complexity may require a
diverse set of skills and knowledge
(used for large global organization).
Sales Force Organization:
Functional Specialists

Division
Marketing Manager

Industry Systems Administrative


Sales Manager Manager Manager

Market
Account System Reps Administrative
Executives (Technical Support)
(Training & Installation)
(Salespeople)

Figure 6-6: Functional Specialization


Functional Specialists: Analysis

Advantages
More functional focused.
Ability to provide problem solutions.

Disadvantages
May conflict with marketing
organization
More expensive
Functional Specialists:
Alternatives
Alternatives Companies
New Customers American Express
Gillette
Retention Browning-Ferris Industries

End-Users Lexmark International

Sales Engineers 3M
AT&T
Service IBM
Consultants McKesson Corporation
Sales Force
Organization
There is no one best way to
organize the sales force, and
companies are experimenting with
many different forms in order to
compete profitably.

A company should start by


examining its customers and
looking at its organization from the
customers perspective .
Strategic account
management program
Regardless of whether the sales force consists of
specialists or generalists, one of the most significant
changes now occurring in marketing is that many
organizations are finding it necessary to develop
strategic account management program in addition to
their regular sales force.

Strategic account management program is more than a


selling strategy. It is a marketing philosophy directed at
a select group of customers that account for a
disproportionately large share of the sellers total
revenues.

To success in managing new strategic accounts you


should address two issues:

1. Account selection
2. Organizational structure
Strategic account
management program
1. Strategic account selection:
Which customers should be treated as a strategic
account, many companies choose too many
accounts to participate in the program, resulting
in an over work for sales force , and under
serviced customers.

There is a tendency to focus on customer size,


because a few portion of the largest customers are
representing a big portion of company sales, and
losing on of those customers is a disaster.

On the other hand, size is not a good indicator that


a customer wants this special type of relationship.
Strategic Accounts:
What is Different about Strategic
Accounts?
Previous New Strategic
Approach Account
Business 3 6 2 3 years
Plan months
Duration
Structure of Tactical Strategic business
Business promotional plan focused on
Plan program growth and
profitability
Personnel Sales reps and Senior
Involvement purchasing management from
agents both companies

Figure 6-7 : Changes in Joint Account Planning


Strategic Accounts:
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 desires a long-term,
cooperative working relationship
The customer expects specialized attention
and service
Strategic Accounts:
Common Problems with Account
Selection
Too many strategic accounts
We see them as strategic, but they dont
even see us on their radar.
Too much organizational effort directed
towards big name accounts
Not thinking enough about return on
relationship investment
No common process across the organization
No tracking and reviewing of strategic account
selection
Strategic Accounts:
Alternative Organization Models
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
Strategic Accounts:
Alternative Organization Model
Effectiveness

Existing Sales Least effective


Force Lowest market performance

Sales Management Somewhat more effective


Slightly better market
performance
Separate Sales Fairly effective
Force Good Market Performance

Cross-Functional Most effective


Sales Teams Best Market Performance

Table 6-1: Doing the Math on Account Management


Strategic Accounts Programs:
Benefits
Increased sale to
national accounts
91%

Increased profits
from national 83%
accounts

Increased 74%
market share

Improved customer
74%
communications

Improved customer
30%
coordination
Strategic Accounts Programs:
Insights from Strategic Account
Executives
Until the customer tell us were a strategic
supplier, I cant believe that they are
in fact a strategic account for us.

Strategic accounts bring the opportunities


to you, instead of you always having to try to
push the ideas on them.

If our products and services arent critical


to our customers performance and results,
it is silly to call them strategic accounts.
Strategic Accounts Programs:
Insights from Strategic Account
Executives

Before a real strategic account would


[make a particular decision],
they would ask us for inputs, knowing our
interests and theirs were aligned.

The best strategic accounts are willing to


open the door, allow us to help them.
There is an ongoing invitation to bring
expertise into their firm.
Strategic Account Programs:
Survey Results
Are training programs for the strategic
account manager different?

Different No difference in
training training for
for strategic account
strategic managers or other
account 26% sales staff
managers 37%

37% Provide no
training for
strategic account
managers
Strategic Account Programs:
Survey Results
Do your strategic account managers carry
an assigned sales quota?

No
Yes Response
3%
No
68% 29%
Strategic Account Programs:
Survey Results
Do strategic account managers have formal
authority over the rest of the sales
organization?
No Response
May assemble
7% temporary
virtual sales
24% teams that report
Sales team directly to the
reports 22% strategic account
directly to manager
the
strategic
account
47% No formal
manager authority over
others in the
sales
organization
Strategic Account Programs:
Survey Results
How do you measure the success
of a strategic account program?
Sales Volume 80%
Customer Satisfaction 53%
Profitability 45%
Volume of Recurring Revenue Stream 29%
Incremental Orders from Existing 22%
Accounts
Number of Customer with Strategic 11%
Account Agreements
Number of Transactions/Orders 6%
Number of Products Shipped 6%