Session 5

Organizing the Sales Effort

Sales team deployment
Sales force size
 Sales Organization
Need for sales organization
• Defines the lines of authority
• All necessary activities are assigned and
performance is monitored
• Establishes the lines of communications
• Provides coordination and balance
• Economizes on manager’s time (span of control)
• Development of specialists for various roles
• Defines career path
Defining the objectives of building a
sales organization ( qualitative and
quantitative)
• What activities must be performed and in what
volume? What will be the cost involved?
• Grouping activities into positions (job
description)
• Decide on hierarchy, authority & relationships
• Assigning personnel to the positions
(coordination and control)
• Check for provision for growth, flexibility and
control
 Factors influencing
structure
• Product and service-related factors
• Organization-related factors
• Marketing Mix-related factors
• Competitive factors
• Past Practice
• Use of technology
Porter’s Typology
Business Strategies Sales Force Implications

Low-cost Supplier Large customers, prospects



Sell on price

Significant order-taking responsibilities

Differentiation Sell non-price benefits

High-quality service

Low price-sensitivity customers

Niche (or focus) Expert in target market operations and

opportunities
Non-price benefits

Generic business strategies and their implications for the

sales force

Source: Adapted from William L. Cron and Michael Levy, “Sales Management
Performance Evaluation: A Residual Income Perspective,” Journal of Personal Selling &
Sales Management 7 (August 1987), pp. 57–66.
 Key questions to be answered before
structuring the sales team?
• Own sales team or outsourcing the
selling function?
• Degree of centralization in the
company?
• Kind of structure?
• How should the specialization be
utilized?
• How to handle major national
accounts?
 Outsourcing Considerations
• Economic Criteria
• Control
• Transactions costs
• Strategic Flexibility
• Cost comparison between a company sales
force and outsourced selling
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
Flat Sales Organization

Management Levels
National
Sales Manager

District District District District District

Sales Manager Sales Manager Sales Manager Sales Manager Sales Manager

Span of Control
Tall Sales Organization
National
Sales Manager

Management Levels
Regional Regional
Sales Manager Sales Manager

District District District District District District

District
Sales Manager Sales Manager Sales Manager Sales Manager Sales Manager Sales Manager

Span of Control
 Span of Control

span of control =

management levels + managers

4-11
 Larger Span of Control
• Greater control/  Reduced one-to-one
responsiveness communication due to
due to fewer larger # of
management subordinates
layers  Managements may be
• Lower admin less effective,
costs negating cost savings
 Span of Control
• Reduce span of control when:
– Sales task is complex
– Profit impact of each salesperson’s
performance is high
– Salespeople are fresh, inexperienced
and require close supervision
– Also, at higher levels in the organization
 Division and Specialization of
Labor
• Line organization
– Vertical
– Chain of command runs from chief sales
executive down through levels of
subordinates
– Each subordinate responsible to one
person
 Division and Specialization of
Labor
• Line and staff organization
– Several sales management activities assigned to
separate specialists

VP Sales

Director of
Director of Director of
Distributor
Sales Training Sales Promotion
Relations
Line vs Staff Positions

National Sales Manager

Sales Training Manager
Regional Sales Manager

Sales Training Manager

District Sales Manager

Salespeople
 Sales Organization Concepts
Salesforce Specialization
Continuum

GENERALISTS SPECIALISTS
All selling activities Certain selling activities
and all products to for certain products
all customers for certain customers
Some specialization
of selling activities,
products, and/or
customers
 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
Customer Needs Different

Market- Product + Market-

Driven Driven
Simple Specialization Specialization Complex
Product Range of
Offering Geography- Product- Products
Driven Driven
Specialization Specialization

Customer Needs Similar

 Geographic Sales
Organization

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)

Advantages / disadvantages
• Lowest cost • No benefit of
• Travel time / cost is division /
optimized specialization of
• Fewer managerial labor
levels required • Jack-of-all trades
• Overheads / • Less of control over
administrative what salesperson
costs are lowered will push more
• Less confusion
 Product Sales Organization

National Sales Manager

Office Equipment Sales Manager Office Supplies Manager

District Sales Manager (10) District Sales Manager (10)

Salespeople (100) Salespeople (100)

Advantages / disadvantages
• Helps to develop • Duplication of effort
product • Higher selling
competence expense
• Better coordination • More management
between sales & personnel required
production • Confusion at the
• Very important if customers’ ends
company sells • Opportunity to
tailored products /
solutions customers to play
one sales person
• Allocation of more against another
selling resources to
more crucial
products is possible
Market Sales Organization
National Sales Manager

Commercial Accounts Sales Manager Government Account Sales Manager

Sales Training Manager District Sales Managers (10)

Zone Sales Managers (4)

Salespeople (50)

Dsitrict Sales Managers (25)

Salespeople (50)

• Broad Market Specialization

– Consumers and/or Industrial
• Specific Industry Specialization
– Government agencies, educational institutions,
distributors, and retailers, OEMs
Advantages / disadvantages
• Natural extension of the • Overlap of geographical
marketing concept coverage
• Better understanding each • Higher selling expense
customer’s specific needs /
procedures / persons • More management
• Possibility of discovering personnel required
ideas for new products • Confusion at the
• Customizing the marketing customers’ ends if the
programs to suit specific same company has
customer group separate divisions in
• Allocation of more selling different industries
resources to more crucial • Opportunity to
markets is possible customers to play one
sales person against
another
 Comparison of
Sales Organization Structures
Organizational
Structure Advantages Disadvantages
Geographic • Low Cost • Limited Specialization
•No Geographic Duplication •Lack of Management Control Over
• No Customer Duplication Product or Customer Emphasis
•Fewer Management Levels
Product •Salespeople Become Experts in • High Cost
Product Attributes and • Geographic Duplication
Applications • Customer Duplication
•Management Control over
Selling Effort Allocated to
Products
Market •Salespeople Develop Better • High Cost
Understanding of Unique • Geographic Duplication
Customer Needs
•Management Control Over
Selling Effort Allocated to
Different Markets
 Hybrid Sales Organization
Structure

National Sales Manager

Commercial Accounts Sales Manager Government Accounts Sales Manager

Major Accounts Regular Accounts Office Equipment Office Supplies

Sales Manager Sales Manager Sales Manager Sales Manager

Field Telemarketing
Sales Manager Sales Manager

Western Eastern
Sales Manager Sales Manager
 Role of telemarketing
• Prospecting & qualifying potential new
accounts
• Permission for personal meeting
• Servicing existing account quickly ( such
as technical –assistance hotlines)
• Seeking repeat purchases from existing
customers
• Spreading awareness quickly about a new
product / promotion
 Sales Organization
Structures – selling to major
accounts
Identify Major/Key Accounts
Large Large Key
Account Account
Size of Account

Regular Complex
Small Account Account

Simple
Complex
Complexity of Account
 Key Account Management
• Deliver high-level customer service to
attract and maintain large and important
customers
• Key account sales execs
– Business managers capable of managing key
accounts
– Customize products and services
– Plan and implement key account business
plans
 Alternatives for Major
Accounts
• Major accounts / customers are called by
various names like key accounts, corporate
accounts, house accounts
• They make up a large share of a firm’s sales
volume and profits
• Firms use the following alternative
approaches to deal effectively with them
• Create a position of major / national
account manager
• Use existing territory sales managers
• Create a separate division
• Create a separate salesforce
Sales Organization
Structures
Major Account Options

Develop Major Account Salesforce

Assign Major Accounts to

Sales Managers

Assign Major Accounts to Salespeople

along with Other Accounts
 Team Selling
• Integrates functional specialists with
customer relationship specialists
• Ideal team structure that meets customer
needs
• Benefits
– Customer questions answered faster
– Customers can speak directly with desired
specialist
Examples – Projects, Industrial selling,
Software development, Advertising agencies