The Sales Organization

The Sales OrganizationThe Sales Organization

Variations in Selling

Organizational Structure

Marketing 3345

FundamentalPrinciples

Sales ForceSpecialization

Sales ForceAlternatives

Sales ForceSize

EmergingIssues

Fundamental Organization Principles

Unity of Command Each person should report to only one boss. A clear and unbroken chain of command should link every person in an organization with someone a level higher.

Stability and Continuity Activities should be assigned without

regard for the talents and preferences of current employees.

Coordination and Activities of salespeople should be Integration integrated with customer needs,

coordinated with activities of other departments, and coordinated with tasks of all salespeople.

Geographical Sales Organization

Connecticutand Rhode

IslandMaine

Vermont New York

Massachusetts

New York

NortheastDistrict

Sales Manager

CentralRegional

Sales Manager

NewJersey

Pennsy-lvania

Delaware District ofColumbia

Virginia Maryland

Mid-AtlanticDistrict

Sales Manager

EasternRegional

Sales Manager

NorthCarolina

SouthCarolina

Georgia Alabama

Mississippi Florida

SouthernDistrict

Sales Manager

WesternRegional

Sales Manager

NationalSales Manager

Organization:Geographical Organizations

Organization:Geographical Organizations

• Advantages

– Tends to achieve lowest costs

– Travel time and expenses are minimized

– Sales Administration and overhead costs are

kept low

• Disadvantages

– It does not provide any benefits associated with

specialization of labor

Product Specialized Sales Force

NortheastDistrict

Sales Manager

DictationEquipment

Salesperson

TypewriterSalesperson

MinicomputerSalesperson

ProgrammableCalculator

Salesperson

CopierSalesperson

LargeComputer

Salesperson

Mid-AtlanticDistrict

Sales Manager

SouthernDistrict

Sales Manager

EasternRegional

Sales Manager

NationalSales Manager

Organization:Product Specialization

Organization:Product Specialization

• 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 Specialized Sales Force

NationalAccountsManager

NortheastDistrict

Sales Manager

Salespersonfor Educational Institutions

Salespersonfor Manufacturers

Salespersonfor Retail

Customers

Salespersonfor Government

Agencies

Salespersonfor Wholesale

Customers

Salespersonfor Bank

Customers

Mid-AtlanticDistrict

Sales Manager

SouthernDistrict

Sales Manager

EasternRegional

Sales Manager

Managerof

Export Sales

NationalSales Manager

Organization: Customer Specialization

Organization: Customer Specialization

• Advantages

– Consistent with market driven strategy

– Salespeople become customer experts

• Disadvantages

– More expensive

Functional Specialization

Account Executives(salespeople)

Industry SalesManagers

Systems reps(technical support)

SystemsManager

MarketAdministration

(training and installation)

AdministrativeManager

Division MarketingManager

Organization:Functional Specialization

Organization:Functional Specialization

Focus on phases in customer relationship:

• Initial sales

• Follow-up technical support and service

• Promotion efforts specialist

WHO ARE 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 DESRIES A LONG-TERM, COOPERATIVE WORKING RELATIONSHIP

• THE CUSTOMER EXPECTS SPECIALIZED ATTENTION AND SERVICE

• 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 DESRIES A LONG-TERM, COOPERATIVE WORKING RELATIONSHIP

• THE CUSTOMER EXPECTS SPECIALIZED ATTENTION AND SERVICE

OrganizationOrganization

Strategic Account Organization Alternatives• 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

BENEFITS OF STRATEGIC ACCOUNTMARKETING

BENEFITS OF STRATEGIC ACCOUNTMARKETING

30%

74%

74%

83%

91%Increased sale tonational accounts

Increased profitsfrom nationalaccounts

Increased marketshare

Improved customercommunications

Improved customercoordination

Survey Results: Strategic Account Management

Survey Results: Strategic Account Management

37%

37%

26%

Provide no training for strategic account managers

Different training for strategic account managers

No difference in training for strategic account managers or other sales staff

37%

26%

37%

Are training programs for the strategic account manager different?

Survey Results: Strategic Account Management

Survey Results: Strategic Account Management

Yes

No

No Response

29%

3%

68%

Do your strategic account managers carry an assigned sales quota?

29%

3%

68%

Survey Results: Strategic Account Management

Survey Results: Strategic Account Management

No formal authority over others in the sales organization

Sales team reports directly to the strategic account manager

May assemble temporary “virtual” sales teams that report directly to the strategic account manager

No Response

24%

22%

47%

Do strategic account managers have formal authority over the rest of the sales organization?

7%

47% 24%7%

22%

Survey Results: Strategic Account Management

Survey Results: Strategic Account Management

How do you measure the success of a strategic account program?

Sales volume

Customer satisfaction

Profitability

Volume of recurring revenue stream

Incremental orders from existing accountsNumber of customer with strategic account agreements

Number of transactions/orders

Number of products shipped

80%

53%

45%

29%

22%

11%

6% 6%

Table 8-2: Ranking of Customers’ Wants

1980 1990 2000

Contact with outside salesperson 1 3 8Frequency and speed of delivery 2 1 2Price 3 2 4Range of Available Products 4 5 3Capable inside salesperson 5 4 1

SCOPE OF TELEMARKETING’S ROLE

SCOPE OF TELEMARKETING’S ROLE

• Customer Service

• Prospecting and Lead Qualification

• Sales Support

• Advertising and Promotion

Doing the Math on Account Management

Field Rep Telemarketing

Sales calls per day 5 25Sales calls per quarter 325 1624Sales calls per year 1300 6500Salespeople required 6.5 1.2Cost per sales call $250 $15Cost per year $1,998,750 $117,000

MAJOR BENEFITS OF TELEMARKETINGMAJOR BENEFITS OF TELEMARKETING

Percent of Respondents

CUSTOMER BENEFIT 65.2%•Speed of communication to customer 21.5•Timeliness of contact 14.2•Ease/Convenience to customer 10.8•Customer relations 10.2•Frequency of contact 8.5

COST EFFECTIVE 43.7DIRECT CONTROL 1.4MARKETING RESEARCH 4.8PROVIDE TECHNICAL SUPPORT 1.1

Organization: TelemarketingOrganization: Telemarketing

Advantages• Low cost per sales call

• Profitably serve small to medium customers

• Speed/time saving of telephone ordering

Challenges• Acceptance by field salespeople

• Hiring, motivating & retaining good telemarketers

Five Years Ago

Today

Five Years from Now

TelemarketersAverage Number per Company

21.9921.99

28.1128.11

36.4936.49

Five years Ago

Today

Five years from Now 59.6659.66

53.0753.07

41.6441.64

Field SalespeopleAverage Number per Company

+27.9%

+29.9%

+27.5%

+12.5%

Source: Geri Gantman, “Exclusive Survey,” Business Marketing, (September, 2007), p. 64. 353 companies in survey.

PROJECTED GROWTH IN SALESPEOPLEAND TELEMARKETERS

PROJECTED GROWTH IN SALESPEOPLEAND TELEMARKETERS

Face-to-Face

Selling(FTF)

FTF FTF

FTF

FTF FTF

FTF FTF

TM

Stage in Selling Process

Prospect/ Present/ Service/Qualify Close Reorder

AccountSize

Large

Medium

Small

EVOLUTION OF SELLING METHODSOLD

EVOLUTION OF SELLING METHODSOLD

NationalAccountManage-

ment(NAM)

NAM NAM

Telemar-keting(TM)

TM TM

FTFFTF&

TM

TM

Stage in Selling Process

Prospect/ Present/ Service/Qualify Close Reorder

AccountSize

Large

Medium

Small

EVOLUTION OF SELLING METHODSNEW

EVOLUTION OF SELLING METHODSNEW

Total Costs of Independent Agents vs. Own Sales Force

Independentagents

Own sales force

Break-evensales

Tot

al s

elli

ng

cost

s

Sales volume

HIRING INDEPENDENT AGENTS DEVELOPING THE “IDEAL” AGENT PROFILE

HIRING INDEPENDENT AGENTS DEVELOPING THE “IDEAL” AGENT PROFILE

1. Define the ideal market focus.

2. Identify compatible principles.

3. Specify the necessary technical

background.

LOCATING AGENTS: Rep. Directories

Customer References

Compatible Manufactures

References from Current Agents

Trade Shows

• Six Cs of Finding the Right Mnfr Rep– Compatible Lines– Compatible Territories– Compatible Customers– Credibility of the Rep– Capabilities– Credit Worthiness

HIRING INDEPENDENT AGENTS DEVELOPING THE “IDEAL” AGENT PROFILE

HIRING INDEPENDENT AGENTS DEVELOPING THE “IDEAL” AGENT PROFILE

Introduction

Disengagement Decision Re-engagement

Decision

Manufacturer Re-employs Rep firm to lower fixed sales costs

Agent Decision and the Product Life Cycle

Agent Decision and the Product Life Cycle

Re - OrganizationRe - Organization

Evaluating Organizational Structure• Financial performance -- must consider

BOTH costs and revenues• Adaptability

– External - Internal• New competitors - Company goals• Changing technology - Management philosophy• Modification to channel - Production capabilities

systems - Technical resources

• Industry life cycle

• Integration -- subunits of sales org must work in harmony