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S16 : SALES MANAGEMENT HP CSO

PGP II (2012-13 )

Sales and Distribution Management

Prof. Avinash Mulky

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Sales

OutcomeSales ProcessStructure

Compensation

Skills

Management

Culture

Sales Management Strategy

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Approaches to structuring sales force

Geographic

Product based

Market based or Customer segment based

Hybrid

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Achieving structuring objectives

Encouraging efficiency

Geographic ( or generalist)

structure

Encouraging effectiveness

Specialised structures

Market based Product based

Hybrid

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Study the Products, and

Markets

Develop a coverage matrix

Generate alternative sales force

structures

Evaluate alternative structures

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Evaluating the alternative structures

Customers Will the structure add value to customers?

Will the sales force be more responsive to customer needs?

Will the structure enhance relationships?

Is it easy for customers to interact with the organisation?

Employees Will the structure provide rewarding work?

Will the structure provide growth opportunities?

Will the structure minimise transition disruption?

Will the structure provide enhanced earnings opportunities

for top performers?

Company Does the structure provide efficiency gains?

Does the structure provide efficiency gains?

Is the structure adaptable?

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Compensation

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Key decisions for compensation plan design

Decision Description

Level How much should sales people be paid?

Mix What proportion of a salespersons compensation

should be incentive (variable, at risk) pay?

Measures of performance What measures should be used to determine the

incentive compensation?

Performance payout

relationships

How should incentive payment vary with measured

performance?

Source; Zoltners et al (2001)

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Which type of company would use either of these?

Plan A Plan B

100% Commission from first rupee of

sale

No cap

100 % salary, reviewed annually

Company vehicle ( Motor bike)

Health and accident insurance

Promotion into managerial job possible

if performance is good

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Incentive plans that influence time spent

Product Allocation Customer allocation

2 % commission on sales of Product A

3% commission on sales of Product A

2 % commission on business from

existing customers

3 % commission on business from

existing customers

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Determining the best mix of salary and incentive

Measurability of performance

Sales force causality

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Sales Force causality

Rep Sale

Rep Sale

Free sale

Carryover sale

Franchise sale

Free sale

Carryover sale

Franchise sale

Territory # 1 Territory # 2

Source; Adapted from Zoltners et al (2001)

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Dimensions that determine a salespersons salary /

incentive mix

Favour incentives Favour Salary

Short term results are rewarded Long term results are rewarded

Sales force focuses on results Sales force focuses on activity

Sales persons are empowered Strong controls are in place

Individual orientation is favoured Team orientation is favoured

Sales force tries to be adaptive Stability is preferred

Source; Adapted from Zoltners et al (2001)

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PayoutPayout

SalesSales

Commission system

3% commission on every rupee of saleRs. 20,000 salary plus 2% commission on

every rupee of sale

Payout

Sales

1% commission upto target

5% commission on every rupee overtarget

Source; Adapted from Zoltners et al (2001)

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Sales challenges: HP-CSO

Drive profitable revenue growth

Find / create new opportunities

Win current deals Migrate to more profitable opportunities

Control / reduce cost of sales

Manage sales resources better

Accurately forecast sales

Improve capabilities, effectiveness and motivation of salesforce

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Routine

transactions

Customised

interactions

withA

customers

Interactions

requiring

Innovative

solutions

Transactional-

Internal SF

Transactional-

Internal SF

Internal SF-

Order handling

Internal SF-

Order handling

Distributors

Sales, adminis trative processes (offices)

Order to delivery processes (order handling)

Product mix optimisation

Standardised sales processes (value selling tools)

Specialised

consultative

SF

Specialised

consultative

SF

Key account

teams

Product

developmentteams

Customer

segments

Lean

Backbone

High touch

overlays

Customised

interactions

through

distributors