5

Sales Organization Structure and Salesforce Deployment

Sales Organization Concepts

Salesforce Specialization Continuum
(Figure 5.1)

GENERALISTS All selling activities and all products to all customers

SPECIALISTS Certain selling activities for certain products for certain customers Some specialization of selling activities, products, and/or customers

Sales Organization Concepts

Centralization
Degree to which important decisions and tasks are performed at higher levels in the management hierarchy

Span of Control vs Management Levels

(Figure 5.2)
Flat Sales Organization
Management Levels
National Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

Span of Control

Tall Sales Organization

National Sales Manager

Management Levels

Regional Sales Manager

Regional Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District Sales Manager

District District Sales Manager

Span of Control

Line vs Staff Positions

(Figure 5.3)
National Sales Manager Sales Training Manager Regional Sales Manager Sales Training Manager District Sales Manager

Salespeople

Selling Situation Contingencies

Consideration of Specialization
Empirical support for the notion that: A generalized salesforce should be used when selling effort is more important than selling skill A specialized salesforce should be used when selling skill is more important than selling effort

Consideration of Environmental Characteristics, Task Characteristics, and Performance Objectives Consideration of Customer Needs and Product Complexity

Selling Situation Contingencies

Customer and Product Determinants of Salesforce Specialization
(Figure 5.4)

Customer Needs Different MarketDriven Specialization GeographyDriven Specialization Product/MarketDriven Specialization ProductDriven Specialization

Simple Product Offering

Complex Range of Products

Customer Needs Similar

Geographic Sales Organization

(Figure 5.5)
National Sales Manager
Sales Training Manager

Eastern Regional Sales Manager

Western Regional Sales Manager

Zone Sales Manager (4)

Zone Sales Manager (4)

District Sales Managers (20)

District Sales Manager (20)

Salespeople (100)

Salespeople (100)

Product Sales Organization

(Figure 5.6)
National Sales Manager

Office Equipment Sales Manager

Office Supplies Manager

District Sales Manager (10)

District Sales Manager (10)

Salespeople (100)

Salespeople (100)

Market Sales Organization

(Figure 5.7)
National Sales Manager

Commercial Accounts Sales Manager Sales Training Manager Zone Sales Managers (4)

Government Account Sales Manager

District Sales Managers (10)

Salespeople (50)

Dsitrict Sales Managers (25)

Salespeople (50)

Broad Market Specialization

Consumers and/or Industrial Government agencies, educational institutions, distributors, and retailers, OEMs

Specific Industry Specialization

Functional Sales Organization

(Figure 5.8)
National Sales Manager

Field Sales Manager

Telemarketing Sales Manager

Regional Sales Managers (4)

District Sales Managers (2)

District Sales Managers (16)

Salespeople (40)

Salespeople (160)

Sales Organization Structures

Identify Major Accounts
(Figure 5.9)

Large

Large Account

Major Account

Size of Account

Regular Small Account Simple

Complexity of Account

Complex Account Complex

Sales Organization Structures

Major Account Options
(Figure 5.10)

Develop Major Account Salesforce

Assign Major Accounts to Sales Managers

Assign Major Accounts to Salespeople along with Other Accounts

Comparison of Sales Organization Structures

(Exhibit 5.2)
Organizational Structure
Geographic

Advantages
Low Cost No Geographic Duplication No Customer Duplication Fewer Management Levels Salespeople Become Experts in Product Attributes and Applications Management Control over Selling Effort Allocated to Products Salespeople Develop Better Understanding of Unique Customer Needs Management Control Over Selling Effort Allocated to Different Markets Efficiency in Performing Selling Activities

Disadvantages
Limited Specialization Lack of Management Control Over Product or Customer Emphasis

Product

High Cost Geographic Duplication Customer Duplication

Market

High Cost Geographic Duplication

Functional

Geographic Duplication Customer Duplication Need for Coordination

Hybrid Sales Organization Structure

(Figure 5.11)
National Sales Manager Commercial Accounts Sales Manager Government Accounts Sales Manager

Major Accounts Sales Manager

Regular Accounts Sales Manager

Office Equipment Sales Manager

Office Supplies Sales Manager

Field Sales Manager Western Sales Manager

Telemarketing Sales Manager

Eastern Sales Manager

Salesforce Deployment
Sales management decisions involved in allocating selling effort, determining salesforce size, and designing territories

Interrelatedness of Salesforce Deployment Decisions

(Figure 5.12)

Allocation of Selling Effort Salesforce Size Territory Design

How much selling effort is needed to cover accounts and prospects adequately so that sales and profit objectives will be achieved?

How many salespeople are required to provide the desired amount of selling effort?

How should territories be designed and salespeople assigned to territories to ensure proper coverage of accounts and to provide each salesperson with a reasonable opportunity for success?

Allocation of Selling Effort

(Figure 5.13)

Analytical Approaches to Allocation of Selling Effort

Easy to Develop and Use Single Factor Model

Low Analytical Rigor

Portfolio Models

High Analytical Rigor Decision Models

Difficult to Develop and Use

Allocation of Selling Effort

Single Factor Models
Easy to develop and use/low analytical rigor Accounts classified into categories based on one factor, such as market potential All accounts in the same category are assigned the same number of sales calls Effort allocation decisions are based on the analysis of only one factor and differences among accounts in the same category are not considered in assigning sales call coverage

Allocation of Selling Effort

Portfolio Models

Account Opportunity - an accounts need for and ability to purchase the firms products Competitive Position - the strength of the relationship between the firm and an account

Decision Models

Allocation of Selling Effort

Simple Basic Concept - to allocate sales calls to accounts that promise the highest sales return from the sales calls
Optimal number of calls in terms of sales or profit maximization

Sales Force Size

Key Considerations

Sales Productivity - the ratio of sales generated to selling effort employed

Increase in # of Salespeople = Increased Sales, but not in a direct linear relationship

Salesforce Turnover
Is very costly

Analytical Tools
Breakdown Approach

Sales Force Size

Assumes an Accurate Sales Forecast Advantage

Easy to use

Disadvantages Forecasted Sales

Conceptually weak; sales determine sales

Sales Force Size =

Forecasted Sales
Average Sales per Salesperson

Analytical Tools
Workload Approach

Sales Force Size

Integrates the salesforce size with account effort allocation strategies Total selling effort need varies depending upon whether single factor, portfolio, or decision models were used to calculate the allocation of effort Advantages
Easy to develop Sound conceptually

# of Salespeople =

Total Selling Effort Needed

Average Selling Effort per Salesperson

Analytical Tools
Incremental Approach

Sales Force Size

Advantage
Quantifies the important relationships between salesforce size, sales, and costs

Disadvantages
Difficult to develop Development of response functions requires historical data

Optimal # of Salespeople is where:

Marginal Profit from Added Salesperson = Marginal Cost of That Salesperson

Designing Territories
Territory - consists of whatever specific accounts are assigned to a specific salesperson
Work unit for a salesperson

Territory Considerations
Trading areas Present effort Recommended effort

Assigning Salespeople to Territories Farmers or Hunters

"People" Considerations