Organizing the Sales Effort

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

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Today
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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 Å Å Å 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 4-4 .

Division and Specialization of Labor Å Å Increase productivity specialists can become proficient at assigned tasks Divide required selling activities to gain maximum benefits within the sales force 4-5 .

Division and Specialization of Labor Å Line organization Å Å Å Vertical Chain of command runs from chief sales executive down through levels of subordinates Each subordinate responsible to one person 4-6 .

Division and Specialization of Labor Å Line and staff organization Å Å 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 4-7 .

Stability and Continuity Å Å Å 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 4-8 .

Sales Organization Structure Å Å Horizontal divides selling activities among sales force Vertical assigns authority for specific sales management activities 4-9 .

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 4-10 .

Outsourcing the Sales Force Å Types of agents Å Manufacturer s representatives Å Å Å 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 Å Selling agents Å Å Å Å 4-11 .

Capabilities 6. ´Independents Day.1 Six C s of finding the right rep 2. Compatible territories 3. Credits Source: Dan Hanover. Credibility of the rep 5. 4-12 . pp. 65²68. Compatible lines 4.1.µ Sales & Marketing Management. Compatible customers 4. April 2000.

Outsourcing Considerations Å Å Å Å Economic Criteria Control Transactions costs Strategic Flexibility 4-13 .

Geographic Organization Å Å Å Simplest and most common method Individual salespeople assigned to separate geographic territories Responsible for performing all activities necessary to sell all products 4-14 .

Geographic Organization Å Å Å Lowest costs Travel time and expenses minimized Sales administration and overhead costs kept low Å Does not provide benefits associated with specialization of labor 4-15 .

Geographic sales organization 4.3 4-16 .

Product Organization Separate sales force for each product (or category) in the line Å Å Å 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 Å Duplication of effort 4-17 .

4.4 Sales force organized by product type 4-18 .

Customer Type/Market Organization Natural extension of marketing concept and strategy of market segmentation Å Å Å Better understanding of customer needs Increased familiarity with certain businesses Increased control over allocation of selling effort Å Å Possible higher selling and administrative costs Duplication of effort 4-19 .

Sales force organized by customer type 4.5 4-20 .

prospecting and developing new accounts versus maintaining and servicing existing customers Å Å Skills matched to sales function Developmental salespeople often a successful alternative Å Å Customer objections to switch to maintenance salesperson Feelings of rivalry between the sales force 4-21 .g.Selling Function Organization Salespeople specialize in performing different selling functions ± e.

Telemarketing Å Å Å Å Å 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 4-22 .

´Predicting a Need.µ Target Marketing.investors.com. toll-free #) 4-23 Source: KenSpralling. Alicia Orr.4. February 2001. generates prospect universe Customized Direct Mail Follows-up with prospects not ready to buy. provides response vehicles (web address.2 Database Capabilities and Telemarketing Collects/provides information Prequalifies prospects. 2005. Markets. ´Centex Houses Ranks Highest in Customer Satisfaction in 10 major: U. pp. According to Independent Study. 62²64. .µ www. can transfer to salesperson to close sale Database Database Analysis Formulates prospecting solutions Telemarketing Software matches homeowners against other data to qualify customers.S. predict interest. September 14.

National and Key Accounts Å Å Å Separate corporate division/sales force Deliver high-level customer service to attract and maintain large and important customers Key account sales execs Å Å Å Business managers capable of managing key accounts Customize products and services Plan and implement key account business plans 4-24 .

Team Selling Å Å Å Integrates functional specialists with customer relationship specialists ID team structure that meets customer needs Benefits Å Å Customer questions answered faster Customers can speak directly with desired specialist 4-25 .

Other Team Selling Structures Å Å Å 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 4-26 .

Co-Marketing Alliances Å Develop marketing and sales programs to sell integrated systems directly to the ultimate customer 4-27 .

Logistical Alliances and Computerized Ordering Å Customer point of view Å Å Å Convenient Flexible Less time consuming Å How will computerized reorder systems change the role of the sales force? 4-28 .

Vertical Structure Issues Span of Control Managerial Levels 4-29 .

negating cost savings 4-30 .Larger Span of Control Å Å Greater control/ responsiveness due to fewer management layers Lower admin costs Å Å Reduced oneto-one communication due to larger # of subordinates Managements may be less effective.

at higher levels in the organization 4-31 .Span of Control Å Reduce span of control when: Å Å Å Å Sales task is complex Profit impact of each salesperson s performance is high Salespeople are well paid and professional Also.

evaluation 4-32 . firing.Managerial Decision Levels Å Å How much. where should the managerial authority lie? Hiring.

Managerial Decision Levels Importance of decision = Managerial decision level Sales force pay = Managerial decision level Complex selling tasks = Managerial decision level 4-33 .

Managerial Selling Responsibilities Å Å Å Å 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 4-34 .

6 4-35 .6 Line and staff sales organization 4.4.