Organizing the Sales Effort

Organize Around Customers

Historical

Product-centered Expertise in features and functions Customer-centered Expertise in business issues Sales resources deployed to provide best service to best customers

Today

Source: 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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Identify purposes of sales organization Understand different horizontal organizational structures of a sales force. Outline major issues in key account and team selling. Discuss key vertical structure issues in sales organizations. Identify important issues in starting a new sales force from the ground up.
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Purposes of Sales Organization

Divide and arrange activities so the firm can benefit from specialization of labor Provide for stability and continuity in firm s selling efforts Provide for coordination of activities assigned to sales force and to departments in the firm

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Division and Specialization of Labor

Increase productivity specialists can become proficient at assigned tasks Divide required selling activities to gain maximum benefits within the sales force

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Division and Specialization of Labor

Line organization

Vertical Chain of command runs from chief sales executive down through levels of subordinates Each subordinate responsible to one person

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Division and Specialization of Labor

Line and staff organization

Vertical (most common) Several sales management activities assigned to separate specialists

VP Sales

Director of Sales Training

Director of Distributor Relations

Director of Sales Promotion

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Stability and Continuity

Organize activities without regard to talents of current employees People can be trained to fill positions Same activities will be carried out even if designated individuals receive promotions or leave
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Sales Organization Structure

Horizontal divides selling activities among sales force Vertical assigns authority for specific sales management activities

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Horizontal Structure Options

Outside Agents
OR

Company Sales Force

Geographic

Product

Market/ Customer Type

Team Selling

Selling Function

Co-Marketing

Nat l Key Accounts

Selling Centers Matrix Organizations

Telemarketing

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Outsourcing the Sales Force

Types of agents

Manufacturer s representatives

Sell part of the output of their principals Take neither ownership nor physical possession of goods Cover specific territory and specialize in limited range of complementary products Do not take title or possession of the goods they sell Compensated by commissions Broad authority to modify prices and terms of sale Actively shape manufacturer s promotional and sales programs

Selling agents

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1. Compatible lines 4.1

Six C s of finding the right rep

2. Compatible territories 3. Compatible customers 4. Credibility of the rep 5. Capabilities 6. Credits

Source: Dan Hanover, Independents Day, Sales & Marketing Management, April 2000, pp. 6568.

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Outsourcing Considerations

Economic Criteria Control Transactions costs Strategic Flexibility

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Geographic Organization

Simplest and most common method Individual salespeople assigned to separate geographic territories Responsible for performing all activities necessary to sell all products
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Geographic Organization

Lowest costs Travel time and expenses minimized Sales administration and overhead costs kept low

Does not provide benefits associated with specialization of labor

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Geographic sales organization

4.3

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Product Organization
Separate sales force for each product (or category) in the line

Salespeople master effective selling methods for single or related products Closer alignment of sales and production Sales management controls allocation of selling effort across the line

Duplication of effort

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4.4

Sales force organized by product type

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Customer Type/Market Organization

Natural extension of marketing concept and strategy of market segmentation

Better understanding of customer needs Increased familiarity with certain businesses Increased control over allocation of selling effort

Possible higher selling and administrative costs Duplication of effort

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Sales force organized by customer type

4.5

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Selling Function Organization

Salespeople specialize in performing different selling functions e.g. prospecting and developing new accounts versus maintaining and servicing existing customers

Skills matched to sales function Developmental salespeople often a successful alternative

Customer objections to switch to maintenance salesperson Feelings of rivalry between the sales force

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Telemarketing

Form of organization by selling function Qualifying potential new accounts Servicing existing accounts quickly Seeking repeat purchases from existing accounts that cannot be covered efficiently in person Providing quick communication of newsworthy developments
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4.2 Database Capabilities and Telemarketing

Collects/provides information Prequalifies prospects, can transfer to salesperson to close sale

Database Database Analysis Formulates prospecting solutions Telemarketing Software matches homeowners against other data to qualify customers, predict interest; generates prospect universe

Customized Direct Mail

Follows-up with prospects not ready to buy, provides response vehicles (web address, toll-free #)
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Source: KenSpralling, 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. 6264.

National and Key Accounts

Separate corporate division/sales force Deliver high-level customer service to attract and maintain large and important customers Key account sales execs

Business managers capable of managing key accounts Customize products and services Plan and implement key account business plans

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Team Selling

Integrates functional specialists with customer relationship specialists ID team structure that meets customer needs Benefits

Customer questions answered faster Customers can speak directly with desired specialist
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Other Team Selling Structures

Selling center brings together individuals from around the organization to help salesperson Matrix organization employs directreporting salespeople who support internal consultants with specialized expertise Multi level selling sales team consists of personnel from various managerial levels who call on their counterparts in the buying organization
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Co-Marketing Alliances

Develop marketing and sales programs to sell integrated systems directly to the ultimate customer

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Logistical Alliances and Computerized Ordering

Customer point of view

Convenient Flexible Less time consuming

How will computerized reorder systems change the role of the sales force?

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Vertical Structure Issues

Span of Control

Managerial Levels

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Larger Span of Control

Greater control/ responsiveness due to fewer management layers Lower admin costs

Reduced oneto-one communication due to larger # of subordinates Managements may be less effective, negating cost savings
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Span of Control

Reduce span of control when:

Sales task is complex Profit impact of each salesperson s performance is high Salespeople are well paid and professional Also, at higher levels in the organization
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Managerial Decision Levels

How much, where should the managerial authority lie? 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

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Managerial Selling Responsibilities

Managers often active in sales to key accounts Organizations value their selling skills Managers value commissions, contact with marketplace Drawback some managers neglect managerial responsibilities
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4.6

Line and staff sales organization

4.6

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