Module 4

Sales Organization Structure

and Salesforce Deployment

1
Sales Organization Concepts
Specialization
Degree to which salespeople and
sales managers concentrate on
specific sales or sales-support
activities, specific products, and/or
specific customers.

2
 Sales Organization Concepts
Salesforce Specialization
Continuum

GENERALISTS Some SPECIALISTS

All selling specialization Certain selling
activities and all of selling activities for
products to all activities, certain products
customers products, and/or for certain
customers customers
3
Sales Organization Concepts
Centralization
Degree to which important
decisions and tasks are
performed at higher levels in the
management hierarchy.

4
 Span of Control vs. Management Levels
Flat Sales Organization

Management
National
Sales Manager

Levels
District District District District District
Sales Manager Sales Manager Sales Manager Sales Manager Sales Manager

Span of Control
Tall Sales Organization
National

Management
Sales Manager

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

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Span of Control
 Line vs Staff Positions
National Sales Manager

Sales Training Manager

Regional Sales Manager

Sales Training Manager

District Sales Manager

Salespeople

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 Generalization Specialization
Centralization Decentralization
Tall Organizations Flat Organizations

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 Selling Situations that Affect
Specialization Decisions
 Selling Effort vs. Selling Skill
 Environmental Characteristics
 High uncertainty
 Low uncertainty
 Customer Needs and Product Complexity

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 Selling Situation Contingencies
Customer and Product Determinants of
Salesforce Specialization
Customer Needs Different

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

Customer Needs Similar 9

 Geographic Sales Organization
National Sales Manager

Sales Training Mgr

Eastern Regional Sales Mgr Western Regional Sales Mgr

Zone Sales Mgrs (4) Zone Sales Mgrs (4)

District Sales Mgrs (20) District Sales Mgrs (20)

Salespeople (100) Salespeople (100)

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 Product Sales Organization
National Sales Manager

Office Equipment Sales Mgr Office Supplies Mgr

District Sales Mgrs (10) District Sales Mgrs (10)

Salespeople (100) Salespeople (100)

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 Market Sales Organization
National Sales Manager

Commercial Accounts Sales Mgr Government Account Sales Mgr

Sales Training
Manager District Sales Mgrs (10)

Zone Sales Mgrs (4)

Salespeople (50)

District Sales Mgrs (25)

Salespeople (50) 12
 Functional Sales Organization
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)
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Major Accounts
 Large accounts
 Complex needs
 National Accounts
 Global Accounts

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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
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 Comparison of
Sales Organization Structures
Organizational
Structure Advantages Disadvantages
Geographic • Low Cost • Limited Specialization
• No Geographic Duplication •Lack of Management Control Ove
• No Customer Duplication Product or Customer Emphasis
• Fewer Management Levels
Product • Salespeople Become • High Cost
Experts In Product Attributes• Geographic Duplication
and 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
Functional • Efficiency in Performing • Geographic Duplication
Selling Activities • Customer Duplication 16
• Need for Coordination
Hybrid Sales Organization Structure
National Sales Manager

Commercial Accts Sales Mgr Government Accts Sales Mgr

Major Accts Regular Accts Office Equipt Office Supplies

Sales Mgr Sales Mgr Sales Mgr Sales Mgr

Field Telemarketing
Sales Mgr Sales Mgr

Western Eastern
Sales Mgr Sales Mgr
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 Salesforce Deployment
 Allocating selling effort
 Determining salesforce size
 Designing territories

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 Interrelatedness of Salesforce
Deployment Decisions
Allocation of How much selling effort is needed to
cover accounts and prospects
Selling adequately so that sales and profit
Effort objectives will be achieved?

Salesforce How many salespeople are required

to provide the desired amount of
Size selling effort?

How should territories be designed

Territory and salespeople assigned to
Design territories to ensure proper coverage
of accounts and to provide each
salesperson with a reasonable 19
opportunity for success?
Allocation of Selling Effort
Analytical Approaches
 Single Factor Model
 Portfolio Models
 Decision Models

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 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

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Allocation of Selling Effort
Single Factor Model Example

Market Potential Average Sales Calls to

Categories an Account Next Year

A 32
B 24
C 16
D 8

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Allocation of Selling Effort
Portfolio Models

 Account Opportunity
 Competitive Position

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 Allocation of Selling Effort
Portfolio Model Segments and Strategies
Competitive Position
Account Opportunity Strong Weak

Segment 1 Segment 2
Low High

Segment 3 Segment 4

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 Allocation of Selling Effort
Decision Models
 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

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 Sales Force Size
Key Considerations
 Sales Productivity
 Ratio of sales
generated to
selling effort
employed
 Salesforce Turnover Cost Sales
 Costly
 Manage pipeline

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 Sales Force Size
Analytical Tools
Breakdown Approach

Forecasted Sales
Sales Force Size =
Average Sales per Salesperson
 Assumes an Accurate Sales Forecast
 Advantage
 Easy to use
 Disadvantages
 Conceptually weak; sales determine sales
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 Sales Force Size
Analytical Tools
Breakdown Approach

Forecasted Sales
Sales Force Size =
Average Sales per Salesperson

= $50,000,000 / $2,000,000
= 25 salespeople

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 Sales Force Size
Analytical Tools
Workload Approach

# of Total Selling Effort Needed

Salespeople = Avg Selling Effort per Salesperson
 Integrates the salesforce size with account
effort allocation strategies
 Advantages
 Easy to develop
 Sound conceptually

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 Sales Force Size
Analytical Tools
Workload Approach

# of Total Selling Effort Needed

Salespeople = Avg Selling Effort per Salesperson

37,500 sales calls needed

=
500 annual sales calls per salesperson

= 75 salespeople

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 Sales Force Size
Analytical Tools
Incremental Approach
Optimal # of Salespeople is where:
Marginal Profit from Added Salesperson =
Marginal Cost of That Salesperson
 Advantage
 Quantifies the important relationships
between salesforce size, sales, and costs
 Disadvantages
 Difficult to develop
 Requires historical data
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 Designing Territories
 Territory - consists of whatever specific
accounts are assigned to a specific
salesperson
 Work unit for a salesperson

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 Territory Design Procedure

Select Analyze Form Assess Finalize

Planning Planning Initial Territory Territory
and and Territories Workload Design
Control Control Unit
Unit Opportunity

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Assigning Salespeople to
Territories
Farmers or Hunters

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 Using Technology
 Software to automate the process
 Design potential territories
 Print maps
 Compare opportunity and work load
 Easy to make changes

 Sales Territory Configurator

 Tactician
 TerrAlign

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 "People"
Considerations

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