ORGANIZING THE SALES FORCE

MBA III ASM

Firms must structure the sales force so that customers can purchase what they want, when they want and from the channel that is convenient to them. Organization of sales in different ways viz. sales teams, sales alliances, and
other methods to serve their buyers well.

Sales force today must

Build

trust with buyers Work in sync with other departments

Objectives:

How a firms' goals affect the organization of its sales force? Understand different sales force structures. Understand different factors in organizing sales force

How a firms goals affect the design of its sales force?

How the sales force would be structured? (Jabong, Flipkart, Reebok) Which customers the sales force would cater to? What products would they sell? Which regions are they targeting? Day to day activities

Structure of sales

Sales managers role

Recruitment & Selection

Training

Evaluation & Compensation

Structuring of sales force should precede recruitment and selection, as per firms strategy.

Definition: Sales Organization

A group of individuals striving to reach qualitative (long term aligned with objectives) and quantitative (short term like sales volume, profits) objectives, and bearing formal and informal relations to one another.

Characteristics of good organization:

Division of work
Job

Analysis and Description Authority and Responsibility

Span of management
Chain

of command Unity of command Unity of direction

Change management Adaptive

Purpose of organising

Delegation of authority and staff specialization Define authority (line, staff and functional) Economize executive time * Widen span of control (no. of execs reporting) ~ Synergy

Factors in organising

Size of sales force Specialized or generalized Structures Independent Reps

Size of sales force

Economic theory: hire as long as marginal revenue exceeds marginal cost Two alternate methods used: Breakdown method
Divide

forecasted sales revenue by average sales per salesperson

Contd

Workload method
Compute

total sales call workload Compute calls made per salesperson Compute total number of salesperson Factor in additiona l responsibilities

Organization by specialization

Like in software services sector, medical specialists to sell drugs Computer manufacturers organize sales force by education markets, B2B and consumer. Specialized sales force is required in following:
Market

penetration, Market development, Product development, diversification

Types of organization

I. Geographical organization
Chief Marketing Executive

Advertising manager

General Sales Manager

Marketing Research Manager

Sales Promotion Manager

Western Regional Sales Manager

Eastern Regional Sales Manager

District Managers

District Managers

Territory Sales Manager

Territory Sales Manager

Contd

Divide market by territories/ sales regions All sales people sell all products Advantages: Local reach, less travel, customer deals with only one person Disadvantages: no specialization, duplication in offices, favouratism Strategic Implication: Best for org. with wide territories, homogeneous product line

II. Product Sales Organisation

Sales Manager

Product A Sales Manager

Product B Sales Manager

Product C Sales Manager

Salesman

Salesman

Salesman

Contd

Specialized in a product line Advantages: best for diversification, product development, different channels Disadvantages: additional management, overlap in territories, customer confusion Example: Xerox 3 products: computer, copiers, office equipment (cust issue, sales force trained in all 3 areas) Example: GE offers solutions in gas, energy, healthcare, oil, aviation.

Market sales structure

Assign sales force to customers based on their markets like telecom, military, automobile Marketing concept of customer satisfaction by better understanding of needs is fulfilled. Sales force can thus offer customized solutions Can also be done by the way product is sold individual customers or B2B

Sales force organized by Customer Type

Contd

Effective when seller wants to penetrate a new market E.g. in pharma sector, number of sales people to sell to physicians, hospital and healthcare providers have increased. Merits: Can offer specialized training and develop individualized sales force approaches Limitations:

Selling expenses high for different locations For multiple divisions, salespeople end up calling the same person leading to duplication of effort, buyer confusion

Functional sales organization

Two functions:
Account

opening Account maintenance

Example in banks, or in insurance services sector Creates coordination problems but can be overcome through CRM Provide Training to ensure smooth hand off to person who handles the account Specialist has authority and not just advisor

Line & Staff organisation

Staff positions created to assist sales managers Efficient and specialist advise to sales manager Expensive and can lead to conflicts between line and staff

Key Account structure

Key account or national accounts Those which receive extra attention and service levels by assigning special salesperson to them Key account Customers large revenue, profits, strategic importance for salesfirm Example: Wal Mart, P&G 80:20 rule (for profit and customers) Organizing: assign executives OR separate sales force division (CISCO 15 VIP A/C)

Independent Sales Rep

Agents who sell on behalf of the firm in regions where no company sales force is present Best when entering new territory:
no

commission till product is sold in place and experienced sales force Know their customer

Contd

Demerits:
Little

control May hold market information Loyalty issues

How to choose:
Offer

better package Written agreement on extent of feedback expected Decide firm/ individual us needed Go for organized search

Process of setting sales orgn

Firms objectives Sales qualitative objectives Quantitative objectives

Determine activities

Assign personnel to position

Set objectives

Analyze objectives Identify tasks Volume of performance

Define positions

Group similar activities Related activities form departments division

From existing OR New specialized recruits

Provide control

Formal/ Informal means Org. chart and manuals