Sales Management Chapter 6 - Pham Tran Khoa

10/10/2023
SALES
MANAGEMENT
PHẠM TRẦN KHOA (Lecturer, MBA)
Larana, Inc.
PART 2 – SALES FORCE ACTIVITIES
Chapter 6
SALES FORCE STRUCTURE
Daniel Gallego Oliva Wilson
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Learning objectives
1 Explain the various ways in which sales forces can be organized.
2 Explain what a strategic accounts management program means.
3 State the reasons for the growth in telemarketing and IT

implementation issues.
4 Tell why and when sales agents are utilized.
5 Describe evolving trends in sales force organization.
Table Of Content
1. Xerox reorganizes
2. Generalist versus specialist structures
Workshop Purpose Strengths
3. Strategic account management program
4. Telemarketing
Marketing Problem Type Digital Marketing
5. Some additional issues
6. Independent sales agents How To Get Started
7. Emerging sales force organization issues
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Table Of Content
4. Telemarketing
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Xerox reorganizes
Case study of Xerox:
In 1985, Xerox reorganized - the sales force was reorganized into a
singles full-line sales force assigned by customer segment and
geography. Five market segments were defined including customer
system users, standard commercial accounts, small business, third
parties, and institutional customers such as government and
educational institutions.
→ Reorganization at Xerox was an immediate success
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Xerox reorganizes
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Figure 6-1: Decisions Affected by Sales Force Organization

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1 Xerox reorganizes
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Table Of Content
4. Telemarketing
2 GENERALIST VERSUS SPECIALIST STRUCTURES
Sales force organizational structures vary from generalist structures,

where each salesperson sells all products to all customers within a
particular geographic area, to highly specialized sales forces, where
teams of salesperson focus on specific products, markets, or functions.
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GENERALIST VERSUS SPECIALIST STRUCTURES

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Figure 6-2. How Sales Forces are Organized

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– Generalist structure
Generalist structure is referred to as a geographic organization, in
which each salesperson sells the firm’s entire product line to all
accounts and prospects, usually within a specific geographic area.
A generalist organization works best when the product line consists
of related products/services that appeal to a rather homogeneous
group of buyers.
Salespeople have a greater opportunity to gain in-depth knowledge
of the local culture, economic, and competitive conditions.
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Shortcomings:
+ Salespeople tend to focus on the lines which they are comfortable,
neglecting the lines that are newer, more difficult to sell, but
possibly more profitable.
+ It is difficult to develop the expertise needed to develop creative
solutions for customer’s problems.
+ Salespeople may find themselves at a competitive disadvantages if
they are asked to sell to customers with problems and needs that
are diverse and complex.
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Figure 6-3
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– Product specialization
This is most appropriate when a firm has a large, diverse and
complex line of products.
• In product-specialized sales force structure, each salesperson
specializes by selling only a few of the products in the
organization’s total product portfolio and reports to a
management structure.
• A product-based specialization is the most effective way to
ensure that a product or product line receives the desired level
of selling effort.
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Shortcomings:
+ Low geographic efficiency, each product specialist must usually
cover a large geographic area.
→ Increases travel expenses and reduces the amount of face-to-
face time with customers; it may also create confusion on the
part of customers.
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Figure 6-4
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– Customer specialization
Customer specialization is referred to as vertical

marketing, each salesperson or sales team sells
the entire product line to select types of buyers.
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Advantages of customer specialization:
+ Salespeople gain a better understanding of the customer’s special needs,
problems and become experts in a particular customer or industry.
+ Very adaptive as well to changes in customer needs and buying behavior.
+ Result in an important selling advantage when an organization wishes to
execute a consultative or enterprise-level relationship strategy with its customers.
+ Customer or market receives the appropriate level of selling resources.
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Disadvantages of customer specialization:
+ Lead to conflict with the marketing organization
+ Product expertise may be lacking
+ More expensive
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Figure 6-5
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– Functional specialization
Functional specialization focuses on the activities or functions
performed by customer contact people.
Some specific functions or activities:
+ New customer specialists
+ Retention specialists
+ End-user specialists
+ Sales engineers
+ Service consultants
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2
Figure 6-6
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2
Organizational Structure Advantages Disadvantages
• Limited product line knowledge
• Low cost
• Limited customer knowledge
Generalist (Geographic) • No geographic overlap
• Lack of management control over product or
• No customer overlap
customer emphasis
• Low geographic efficiency
• Product knowledge
Product • Customer duplication
• Control over product emphasis
• Geographic duplication
• High cost
• Deeper customer knowledge • Less product knowledge
Customer
• Control over customer emphasis • More geographic duplication
• Difficult coordination with product managers
• Coordination
• Effectiveness in performing
Functional • Geographic duplication
selling activities
• Customer duplication
Figure 6-7. Comparing Sales Organization Structures
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Table Of Content
4. Telemarketing
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3 STRATEGIC ACCOUNT MANAGEMENT PROGRAM

Strategic account management program is a marketing
philosophy directed at a select group of customers that account
for a disproportionately large share of the seller’s total revenues.
Figure 6-8
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3 STRATEGIC ACCOUNT
MANAGEMENT PROGRAM
Two issues have been particularly problematic
with new strategic account programs is
Account selection and Organization structure.
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– Strategic accounts selection
Customers who best qualify for a strategic account program are
those who purchase a significant volume and exhibit one or a
combination of the following characteristics:
* Involve multiple people in the buying process
* Purchase centrally
* Desire a long-term, cooperative working relationship
* Expect specialized attention and service
* Align strategic intent
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STRATEGIC ACCOUNT MANAGEMENT PROGRAM

3
– How to organize?
The major organizational alternatives are as follows:
Existing Sales Force
• Low risk; little change
Management
• Keeps management close to customer
Separate Sales Force
• More aggressive; more expensive; alternative to sales
management for promotion for sales staff
Cross-Functional Sales Teams
• Use when selling process is complex
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– How to organize?
Strategic account management represents a significant opportunity for
many companies to grow through meeting the needs of their customers.
Management needs to consider and debate the following questions:
• To what extent are we able to gain grater customer investment in the
relationship, sharing information, and trust?
• Are we able to proactively respond to changing customer needs?
Is top management significantly involved with our strategic account program?
• Is there a high level of esprit de corps within the program?
• Are sufficient marketing and sales resources committed to the program?
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Table Of Content
4. Telemarketing
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4 TELEMARKETING
Telemarketing refers to customer contact utilizing telecommunications

technology for personal selling without direct, face-to-face contact.
Business-to-business telemarketing is growing 30 – 40 percent a year
and generated sales in excess if $200 billion.
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TELEMARKETING – Advantages
4
Table 6-1: Doing the Math on Account Management

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4 TELEMARKETING – Advantages
Figure 6-9
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4 TELEMARKETING
Advantages:
+ It allows companies to make cost-effective sales calls
+Make many more calls per day than field salespeople.
+ Profitably serve small to medium customers
+ Speed/time saving of telephone ordering
Challenges:
+ Acceptance by field salespeople
+ Management
+ Motivation
+ Role of the Internet
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Table Of Content
4. Telemarketing
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5 SOME ADDITIONAL ISSUES
• If a company’s objective is to reduce costs, then full-line

salespeople and telemarketing are the best low-cost options.
• If a company’s objective is to increase revenue, then
specialization supported by telemarketing should be considered.
• Exceptional training capabilities are frequently critical to the
success of specialized salespeople.
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5 SOME ADDITIONAL ISSUES

• When specializing, firm must have the capability of
developing new products and modifying existing
products for individual product lines and/or markets.
Sales force reorganization can’t solve a product problem.
• If your market is susceptible to demand or margin
downturns, then specialists may prove too expensive
and too difficult to redeploy.
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Table Of Content
4. Telemarketing
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6 INDEPENDENT SALES AGENTS
• An important alternative is to hire independent sales agents

(or manufactures’ reps) to perform the selling function.
• Sales agents are not employees, but independent businesses
given exclusive contracts to perform the selling function
within specified geographic areas.
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6 INDEPENDENT SALES AGENTS –

When to use sales agents
Management should consider 3 factors:
1. Economic consequences
2. Level of control
3. Market environment
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6 INDEPENDENT SALES AGENTS –

When to use sales agents
Factor 1: Economic consequences
The economic issue center on the fixed-cost
nature of a dedicate sales force versus the
largely variable cost nature off sales agents.
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INDEPENDENT SALES AGENTS – When to use sales agents

6
Suppose that independent sales agents receive a 5% commission on sales

Administrative overhead costs $50,000
Company sales personnel receive a 3% commission + a salary
Total salary and administrative expenses are $550,000
At what sales level would be the cost of
a company sales force equal that of sales agents?
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6
Cost of company sales force = Cost of sales agents
→ 0.03x + 550,000 = 0.05x + 50,000
x: the breakeven sales volume
Solving for x → x = $25,000,000

If sales are expected to be below $25 million, the sales agents are less expensive.
The cost of a company sales force is less when sales exceed $25 million.
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6 Factor 1: Economic consequences
Total
Selling
Costs
$25 million sales volume

Figure 6-10. Total Costs of Independent Agents versus Own Sales Force
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6
Factor 2: Level of control
Managers can control a company sales force through

the selection, training, and supervision of salespeople;
establishment of operating policies and procedures;
and various evaluation and reward programs.
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6
Factor 3: Market Conditions
Figure 6-11: Market Factors Favoring the Use of Sales Agents
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Table Of Content
4. Telemarketing
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7 EMERGING SALES FORCE

ORGANIZATION ISSUES
Five issues related to sales force organization
are getting increasing management attention:
• Marketing-Sales discounted
• Cross-functional coordination
• Global account organizations
• Sales teams
• Selling partners
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7 EMERGING SALES FORCE ORGANIZATION ISSUES

– Marketing-Sales discounted
What can be done to encourage greater alignment

between sales and marketing?
1. Encourage disciplined communication
2. Create joint assignments and rotate jobs
3. Co-locate marketers and salespeople
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EMERGING SALES FORCE ORGANIZATION ISSUES

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– Marketing-Sales discounted
Figure 6-12: The Marketing-Sales Handoff

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– Cross-functional coordination
Depending on the organization and situation, sales will
often need to work harmoniously with the following
departments to successfully address customer needs.
• Engineering
• Marketing
• Production
• Accounting and finance
• Operations/Customer service
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– Global Account Organizations
Global account management programs treat a customer’s

operations worldwide as one integrated account with
coherent terms for prices, product specifications, and service.
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– Sales teams
Sales teams consisting of salespeople, customer service,

technical specialists, and other functional areas.
The objective of these teams is to consolidate greater
knowledge and skills to focus on a more creative and
complete solution to a customer’s needs in order to
build stronger customer relationships.
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EMERGING SALES FORCE ORGANIZATION ISSUES

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– Sales teams
Figure 6-13
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– Selling partners
These are salespeople who are not on the payroll and who
not only sell but also provide technical and operating support.
Example: Siebel CRM, a division of Oracle Corporation, which
uses partner companies to customize its software for large
and medium size customers.
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Larana, Inc.
If you have any questions,

you are welcome to ask now
THANK YOU
57
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Sales Management Chapter 6 - Pham Tran Khoa

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10/10/2023

PART 2 – SALES FORCE ACTIVITIES

1 Explain the various ways in which sales forces can be organized.

2 Explain what a strategic accounts management program means.

3 State the reasons for the growth in telemarketing and IT

5 Describe evolving trends in sales force organization.

Figure 6-1: Decisions Affected by Sales Force Organization

2 GENERALIST VERSUS SPECIALIST STRUCTURES

Sales force organizational structures vary from generalist structures,

GENERALIST VERSUS SPECIALIST STRUCTURES

Figure 6-2. How Sales Forces are Organized

2 GENERALIST VERSUS SPECIALIST STRUCTURES

2 GENERALIST VERSUS SPECIALIST STRUCTURES

2 GENERALIST VERSUS SPECIALIST STRUCTURES

2 GENERALIST VERSUS SPECIALIST STRUCTURES

2 GENERALIST VERSUS SPECIALIST STRUCTURES

2 GENERALIST VERSUS SPECIALIST STRUCTURES

2 GENERALIST VERSUS SPECIALIST STRUCTURES

Customer specialization is referred to as vertical

2 GENERALIST VERSUS SPECIALIST STRUCTURES

2 GENERALIST VERSUS SPECIALIST STRUCTURES

2 GENERALIST VERSUS SPECIALIST STRUCTURES

2 GENERALIST VERSUS SPECIALIST STRUCTURES

GENERALIST VERSUS SPECIALIST STRUCTURES

GENERALIST VERSUS SPECIALIST STRUCTURES

3 STRATEGIC ACCOUNT MANAGEMENT PROGRAM

3 STRATEGIC ACCOUNT MANAGEMENT PROGRAM

STRATEGIC ACCOUNT MANAGEMENT PROGRAM

3 STRATEGIC ACCOUNT MANAGEMENT PROGRAM

Telemarketing refers to customer contact utilizing telecommunications

Table 6-1: Doing the Math on Account Management

5 SOME ADDITIONAL ISSUES

• If a company’s objective is to reduce costs, then full-line

5 SOME ADDITIONAL ISSUES

6 INDEPENDENT SALES AGENTS

• An important alternative is to hire independent sales agents

6 INDEPENDENT SALES AGENTS –

6 INDEPENDENT SALES AGENTS –

INDEPENDENT SALES AGENTS – When to use sales agents

Suppose that independent sales agents receive a 5% commission on sales

INDEPENDENT SALES AGENTS – When to use sales agents

Solving for x → x = $25,000,000

INDEPENDENT SALES AGENTS – When to use sales agents

$25 million sales volume

INDEPENDENT SALES AGENTS – When to use sales agents

Managers can control a company sales force through

INDEPENDENT SALES AGENTS – When to use sales agents

Figure 6-11: Market Factors Favoring the Use of Sales Agents

7 EMERGING SALES FORCE

7 EMERGING SALES FORCE ORGANIZATION ISSUES

What can be done to encourage greater alignment

EMERGING SALES FORCE ORGANIZATION ISSUES

Figure 6-12: The Marketing-Sales Handoff

7 EMERGING SALES FORCE ORGANIZATION ISSUES

7 EMERGING SALES FORCE ORGANIZATION ISSUES

Global account management programs treat a customer’s

7 EMERGING SALES FORCE ORGANIZATION ISSUES

Sales teams consisting of salespeople, customer service,

EMERGING SALES FORCE ORGANIZATION ISSUES

7 EMERGING SALES FORCE ORGANIZATION ISSUES

If you have any questions,

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