Module 5

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Module 5

  1. 1. Sales Organizational Structure <ul><li>Why do we need an organizational structure or hierarchy? </li></ul>Control and Coordination Mechanism
  2. 2. Principles of Sales Organizations <ul><li>Span of Control, Management levels. </li></ul><ul><li>Specialization vs. Generalization </li></ul><ul><li>Centralization vs. Decentralization </li></ul><ul><li>Integration & Coordination w/ Other Functions </li></ul>
  3. 3. Geographic Specialization Product Specialization Customer Specialization Functional Specialization
  4. 4. Customer Specialized Sales Force Selected products to all customer in six-state area
  5. 5. Product Specialized Sales Force Selected products to all customer in six-state area
  6. 6. Functional Specialization
  7. 7. Geographical Sales Organization All products to all customers in assigned states
  8. 8. Sales Force Alternatives <ul><li>Internet </li></ul><ul><li>Industrial Distributors </li></ul><ul><li>Independent Representatives </li></ul><ul><li>Trade Shows </li></ul><ul><li>Telemarketing </li></ul>
  9. 9. Telemarketing <ul><li>Advantages </li></ul><ul><li>Low cost per sales call </li></ul><ul><li>Profitably serve small to medium customers </li></ul><ul><li>Speed/time saving of telephone ordering </li></ul><ul><li>Challenges </li></ul><ul><li>Acceptance by field salespeople </li></ul><ul><li>Hiring, motivating & retaining good telemarketers </li></ul><ul><li>The “Telemarketing” Stigma. </li></ul>
  10. 10. Doing the Math on Account Management Field Rep Telemarketing Sales calls per day 5 25 Sales calls per quarter 325 1624 Sales calls per year 1300 6500 Reps required 6.5 1.2 Cost per sales call $250 $15 Cost per year $1,998,750 $117,000
  11. 11. Sales Force Deployment <ul><li>Word load </li></ul><ul><ul><li>Focus on tasks to be performed </li></ul></ul><ul><ul><li>Number of customers </li></ul></ul><ul><ul><li>Planned call frequencies </li></ul></ul><ul><li>Determining Optimal Number of Salespeople </li></ul><ul><ul><li>Affordability -- % of Sales </li></ul></ul><ul><li>Design and Allocate Territory </li></ul>
  12. 12. Sales Force Size <ul><li>Breakdown Approach </li></ul><ul><li>Salesforce Size = Forecasted Sales / Avg. Sales per Salesperson </li></ul><ul><li>Workload Approach </li></ul><ul><li>Salesforce Size = Total Selling Effort / Avg. selling effort per salesperson </li></ul><ul><li>Incremental Approach </li></ul><ul><li>Other Issues: </li></ul><ul><li>Productivity </li></ul><ul><li>Turnover </li></ul>
  13. 13. Sales-force Size <ul><li>Incremental Approach </li></ul><ul><li>Number of Marginal Marginal </li></ul><ul><li>Salespeople Profit Cost </li></ul><ul><li>100 $50,000 $45,000 </li></ul><ul><li>101 $48,000 $45,000 </li></ul><ul><li>102* $46,000 ------------ $45,000 </li></ul><ul><li>103 $44,000 $45,000 </li></ul><ul><li>104 $42,000 $45,000 </li></ul><ul><li>Relates sales-force size, sales and costs. </li></ul><ul><li>Difficult to develop - historical data, changes in labor market etc. </li></ul>
  14. 14. Territory Design <ul><li>Why Use territories? </li></ul><ul><li>Motivation & cost Savings </li></ul><ul><ul><li>relationship building & maintenance </li></ul></ul><ul><ul><li>Involvement & pride in “their” customers </li></ul></ul><ul><ul><li>reduced duplication of sales costs </li></ul></ul><ul><ul><li>less travel time & effort, high productivity. </li></ul></ul><ul><li>Evaluation & Control </li></ul><ul><ul><li>ability of salespeople across balanced territories </li></ul></ul><ul><ul><li>performance across time, sales potential & quotas. </li></ul></ul>
  15. 15. Territory Design Procedure <ul><li>Objective : Equal work Load across all territories. </li></ul><ul><li>Determine Allocation Criteria </li></ul><ul><ul><ul><li>Territory balance -- effect on morale </li></ul></ul></ul><ul><ul><ul><li>Customer balance - distribute commission </li></ul></ul></ul><ul><ul><ul><li>Potential balance - share business growth </li></ul></ul></ul><ul><ul><ul><li>Size balance - reduce transportation costs </li></ul></ul></ul><ul><li>Choose starting points </li></ul><ul><ul><ul><li>Salesperson’s home </li></ul></ul></ul><ul><ul><ul><li>Large customer - cut transportation cost </li></ul></ul></ul><ul><ul><ul><li>Big city - convenient for services </li></ul></ul></ul>
  16. 16. Territory Design Procedure (Contd…) <ul><li>Combine Adjacent Control Unit </li></ul><ul><ul><li>Add adjacent counties/areas to the starting point. </li></ul></ul><ul><ul><li>Running totals on allocation criteria. </li></ul></ul><ul><ul><li>Balance between territories. </li></ul></ul><ul><li>Compare Sales Territories </li></ul><ul><ul><li>Mountains, roads, population center locations? </li></ul></ul><ul><ul><li>Comparison on other variables (area/ travel distances etc.) </li></ul></ul><ul><li>Assign people to Sales Territories </li></ul>
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