Sales ManagementThe Marketing Series is one of the most comprehensive collections of books in marketing andsales available from the UK today.Published by Butterworth-Heinemann on behalf of The Chartered Institute of Marketing, theseries is divided into three distinct groups: Student (ful lling the needs of those taking theInstitute’s certi cate and diploma quali cations); Professional Development (for those on formalor self-study vocational training programmes); and Practitioner (presented in a more informal,motivating and highly practical manner for the busy marketer).Formed in 1911, The Chartered Institute of Marketing is now the largest professional market-ing management body in Europe with over 60,000 members located worldwide. Its primaryobjectives are focused on the development of awareness and understanding of marketingthroughout UK industry and commerce and in the raising of standards of professionalism inthe education, training and practice of this key business discipline.THEMARKETING SERIESBHSTUDENTTHEMARKETING SERIESBHPROFESSIONALDEVELOPMENTTHEMARKETING SERIESBHPRACTITIONER
Books in the seriesRoyal Mail Guide to Direct Mail for Small BusinessesBrian ThomasThe CIM Handbook of Selling and Sales StrategyDavid JobberThe CIM Handbook of Export MarketingChris NoonanThe Creative MarketerSimon MajaroThe Customer Service PlannerMartin ChristopherThe Effective AdvertiserTom BrannanIntegrated Marketing CommunicationsIan Linton and Kevin MorleyThe Marketing AuditMalcolm H. B. McDonaldThe Marketing PlannerMalcolm H. B. McDonaldMarketing StrategyPaul Fi eldCybermarketingPauline Bickerton, Matthew Bickerton and Upkar Pardesi(Forthcoming: The CIM Handbook of Strategic Marketing by Colin Egan and Michael Thomas; The CIMHandbook of Service Marketing by Colin Egan)
ContentsPreface xviiPart One Functions and Organization of the Sales Force 11 Roles and functions in the sales force 3Key sales and marketing functional activities 3Sales functional activities 5Typical job functions in a sales organization 7The sales manager or sales director 7The eld sales manager 8The key account manager 9The territory manager (or salesperson) 9The merchandiser 10Product promoters 10Sales management qualities 11A sales manager’s personal audit 112 Sales structures and organization 13Considerations in organizing the sales force 13Developing a structure 14Geographical, horizontal, vertical factors 14Management span of control 14Other organizational considerations 16Some typical evolving organization structures 16Developing a basic structure 16A geographically organized sales force 18Trade sector specialization 18Product specialization 23Key account management 24Export department organization 28Matrix organizations 29Checklist 2.1: Effective organizational structures 31Part Two: Developing a Motivating Sales Environment 333 Motivational management in the sales force 35
What is motivation? 35Why salespersons need motivation 35Motivational factors 36Hierarchy of needs theory 36Goal setting theory 37Equity theory 38McClelland’s achievement–power–af liation theory 39Expectancy theory 39Practical motivation 40Job satisfaction 40Demotivators 40Motivators 42A framework for practical motivation 42The manager’s motivational role 47The manager’s leadership role 47Motivation through involvement in decision making 48Checklist 3.1: Demotivators 50Checklist 3.2: Practical motivation 514 Sales management by objectives 52Establishing a hierarchy of objectives 52A hierarchy of objectives for retail products 52A hierarchy of objectives for industrial products 54Managing to sales objectives 55The basic principles of establishing objectives 55Typical focus of sales objectives 59Checklist 4.1: Establishing a hierarchy of objectives 635 Motivating through rewards and incentives 65Developing motivational rewards 65The main options and their suitability 65Basic salary or wages 66Commissions 66Bonuses 68Contests 68Stock options and pro t sharing 69Job perquisites 69Incentive scheme principles 69Checklist 5.1: Reward systems as motivational tools 706 Providing appraisals and feedback for motivation, training and discipline 73The role of appraisals 73What to measure and appraise 73Standards of performance 74Skills and competencies 74Subjective factors 74Sources of appraisal information 75Guidelines for managers operating an appraisal system 75Developing an appraisal scheme 76Giving feedback for motivation, appraisal, training and discipline 79vi Contents
Formal feedback guidelines 79Setting the scene 79Planning for change 79Feedback environment 79Getting a commitment to change 80Checklist 6.1: Feedback 83Checklist 6.2: Appraisals 847 Communication in the sales force 86The role and purpose of communications 86Purpose and means of communicating 86Means of communicating 87How to communicate 88What to communicate 88Essential information 88Optional information 89Whom to communicate with 89Style of communications 89Sales bulletins and other memoranda 90Who communicates with the sales force 91Frequency of communications 91Sales bulletin content 91Structure of sales bulletins 92Audio, visual and computer media communications 92Checklist 7.1: Communications 95Checklist 7.2: Sales bulletins and memos 968 Sales meetings and conferences 98Organizing and running sales meetings 98The purpose of meetings and conferences 98Sales meeting organization 98Conducting sales meetings 99Chairing the sales meeting 100Communication aids 101Making sales meeting presentations 102The audience 102The purpose 102The subject matter 103Structuring the presentation 104Checklist 8.1: Organizing a meeting or conference 106Checklist 8.2: Preparing a presentation for a meetin 107Checklist 8.3: Structuring the presentation 108Checklist 8.4: Practical tips on the presentation 109Part Three: Sales Recruitment and Training 1119 Recruitment and selection in the sales force 113Overview of the recruitment process and key steps 113Qualities and skills of salespersons 113Job descriptions and person speci cations 116Contents vii
Functions of a job description 116Content and coverage of a job description 116Person speci cations 117Sourcing applicants for sales positions 119Job application forms 121Guidelines for press advertisements 123Coverage of advertisements 123Screening applicants 123Screening applicant interests 124Communicating with unsuccessful applicants 124Conducting interviews 125The interview environment 125Duration of the interview 125Interview conduct and content 125Format of the interview 125The eight-point interview framework 126Notes at interviews 128The selection shortlist 128Group selection tasks 128Checking references 131Making the selection 136Checklist 9.1: Recruitment stages 136Checklist 9.2: Interview guidelines 138Checklist 9.3: The eight-point interview framework 140Checklist 9.4: Taking candidate references 14210 Basic sales training 144The role of training in the sales force 144Why train? 144Managing to key result areas 144The focus of sales training 146Assessing the training needs 146Typical coverage of sales training 148Basic training programme coverage 148Company knowledge 148Product knowledge 149Training in the selling process 149Further considerations in industrial and business-to-business selling 151Conducting group training sessions 152Variety in effective training 154Lectures 154Demonstrations 154Role playing 155Closed circuit television in role playing 155Films or videos 155Feedback reviews and discussions 156Printed handouts 156Specialist training 157Use of training consultants 157Length of training courses 157viii Contents
A typical induction training programme 157Training sales managers 157Checklist 10.1: Basic training for salespersons 16011 Field sales training 163The role and purpose of eld training 163Assessing training needs 163Functional activities 163Sales techniques 165Organization 166Personal attitudes 167Training stages 168The training audit 168Conducting eld sales training 169Priority training 170A training framework 172Training feedback 173Judging the trainer’s effectiveness 173Checklist 11.1: Guidelines for eld training 174Checklist 11.2: Guidelines for giving training feedback 176Part Four: Planning, Forecasting and Performance Monitoring 17712 The planning process 179Why plan? 179Stages in the planning process 179Decision areas in strategy development 181Inputs to market sales planning 181Contributions to market planning 181Historical market and performance data in planning 183Key planning assumptions 185Market size 185Market dynamics 185Spend 186Organization changes 186Parallel activity 186Government regulations 186Competitor activity 186Socio-economic factors 187Demographic factors 187Checklist 12.1: Decision areas in sales strategy development 187Checklist 12.2: The planning framework 188Checklist 12.3: Planning inputs – historical data and assumptions 18913 Sales forecasting 191Terminology associated with sales forecasting 191Planning time spans 193What to forecast 193Typical considerations in forecasting 193Main methods of developing forecasts 194Contents ix
Current demand 197Total market potential 197Industry sales and market shares 198Multiple factor index method 199Market build-up method 199Future demand 199Time series analysis 199Statistical demand analysis 200Market sales tests 200Expert opinion 200Marketers’ opinions 201Surveys of future buying plans 201Other considerations in forecasting 201In ation 201Seasonal trends 202Cyclical trends 202Random uctuations 202Product life cycles 202Developing a practical market forecast 202Information inputs for forecasting 203Tabulating data and projecting trends in moving annual formats 204Moving annual data 204The ‘Z’ chart in monitoring performance 206Forecasting from moving annual total data 208Problems in using trend data based on past sales 209Building forecasts from local market sales data 210The importance of key accounts 210Building targets for a larger customer base 212Checklist 13.1: Forecasting and planning 21414 Performance monitoring 217Monitoring sales performance 217Analyses of sales despatches 217Market share analysis 223Monitoring pro tability of sales activity 224Monitoring salesperson performance 228What to measure 228Monitoring monthly sales against territory sales budgets 228Continuous monitoring 230Competitive benchmarking 230Presenting sales monitoring data 230Checklist 14.1: Sales performance measurement 232Checklist 14.2: Competitive benchmarking 233Part Five: Management and Control of the Sales Force 23515 Territory management 237Management of resources 237Managing selling time 237Sales activities 237x Contents
Planning 237Selling 237Communicating 238Administering 239Decision making 241Market intelligence 241Territory planning 241Territory sales forecasting 242Developing sales strategies 242Territory call coverage and journey planning 243Territory call coverage 244Coverage 244Sales call rate 244Journey planning principles 244Journey cycle planning 245Journey scheduling 245Weekly journey plan 245Segmenting a territory for coverage 246Segmenting a territory for coverage: mapping 247Cold call prospecting 248Purpose of cold call prospecting 248Sources of new prospects 249Customer targeting 249The questions in targeting customers 249Surveying for outlets 249Some special considerations in coverage planning 251Van sales 251Tele-sales 251Relief salespersons 252The costs of selling 252Checklist 15.1: Resource control 253Checklist 15.2: Managing selling time 254Checklist 15.3: Functional activities 255Checklist 15.4: Territory management 25716 Sales force administration 260Basic administrative controls 260Field sales administration 260Sales of ce administration 260Customer call records 261Daily activity reports 264Using the daily activity report 266Journey plans 267Order forms 267Credit notes and product uplift notes 268Contact reports 268The sales planning slip 269Sales promotion control forms 270Expense control form 271Quotation forms 271Contents xi
Guidelines for designing forms 272Essential customer communications 275Product price lists 275Speci cation sheets 275Catalogues and brochures 276Advertising and promotional programme information sheets 276Checklist 16.1: Sales force administration 27617 Sales management control 278The need for control 278Types of controls 278Managing time 279Salesperson use of time 279Sales manager’s time use analysis 280Field controls 282Identifying key result areas and setting performance standards 282Sources of control data and performance information 283Supplementary analysis 284Sales performance league tables 285Monitoring performance against territory sales target 285Field checks or audits 289Focusing performance measures on key result areas 289Checklist 17.1: Management control and performance monitoring 292Part Six: Developing the Business 29718 Trade development 299Mapping trade channels 299Using trade channel data 301Developing and using trade terms 306What the trade looks at 306Credit 306Discounts 308Types of motivational discounts 308Minimum orders 308Guidelines for establishing minimum orders 308Managing wholesale distributors 309The role of the wholesaler or trade distributor 309Auditing the wholesalers 310Problems in managing wholesalers 311Attitudes of wholesalers 311Limitations on the supply company’s ability to manage wholesalers 312Developing the partnership and motivating distributors 312The focus of value-adding activities 313Practical ways to add value to wholesaler relations 314Checklist 18.1: Trade channel mapping 315Checklist 18.2: Trade terms and customer credit 316Checklist 18.3: Managing wholesalers and trade distributors 317xii Contents
19 Sales promotion 320Sales promotion 320De nitions 321Using promotions in the marketing communications mix 321Advantages of sales promotions 321A decision making framework for evaluating promotion options 323Types of sales promotions 323The advertising and promotion plan 328Promotion planning 329Setting promotion objectives 330A promotional brief format 335Evaluating and monitoring promotions 335Key account promotional activity 335Guidelines for developing promotional materials 337Financing advertising and promotions 339Advertising reserves 339Spend in the marketing mix 340Exhibitions 342Exhibition objectives 342Which exhibition? 343Exhibition planning 343Exhibition follow-up 344Appendix 19-A: Typical focuses of sales promotions – examples 344Checklist 19.1: Basic promotion planning 348Checklist 19.2: Promotion formats 349Checklist 19.3: Exhibition planning 35020 Merchandising at the point of sale 352The importance of merchandising 352Merchandising in relation to strategy and communications 353Bene ts of merchandising 353Space management in the selling environment 353Merchandising in the sales call 356On-shelf display 359Off-shelf feature displays 361Point of sale material 363Use of point of sale material by the salesperson 363Checklist: 20.1: Merchandising in retail and trade outlets 366Checklist: 20.2: Creating impact at the point of sale 36821 Key account management 370The stages in key account management 370Trade channel mapping 370Developing key account pro les 372Getting to know the buyer 372Establishing relationships 373Building relationships within key accounts 373Contacts to develop and follow up with 378Supporting relationships with a value-adding approach to account management 380Account penetration and development 383Contents xiii
Agreeing a modus operandi for account management 384Key account negotiating 386Typical pattern to the annual round of negotiations 386Follow up to negotiations 387Follow-up with retail accounts 387Follow-up with industrial and commercial key accounts 388Category management 390What is category management? 390The supplying companyís role 390The key account managerís role 390Developing the product category 391The buyer and category management 391Checklist 21.1: Key account pro les 392Checklist 21.2: Key account knowledge 393Checklist 21.3: Getting to know the buyer 394Checklist 21.4: Building relations within key accounts 395Checklist 21.5: Detailed key account knowledge 397Checklist 21.6: Key account development 40022 Alternative sales or distribution operations 402Telephone selling 402Cold call canvassing 402Emergency contact with customers 403Coverage of small accounts or geographically remote customers 404Tele-ordering for regular repeat product orders 404Promotional thrusts focusing on special activity 404Customer satisfaction research 404Other customer-oriented marketing research 404Training 404Wholesalers, distributors, brokers and agents 405Wholesalers and distributors 405Brokers and agents 405Customer contact 405Agreements with agents and distributors 407Other ordering or distribution methods 407Exclusive retail stockists 407Postal orders 407Direct mail campaigns 408Mail order catalogues 408Computer ordering 408Direct home distributors – network marketing 408Checklist 22.1: Alternative methods of generating sales 409Checklist 22.2: Selecting agents and distributors 41023 Developing international markets 412How the company bene ts from exporting 412The broader international opportunities 412The export sales manager 413Role of the export sales manager 413Skills in the international marketer 414xiv Contents
Measuring the export marketers’ performance 415Desk research 415Distribution channels 416Factors in studying distribution needs 417Identifying and selecting agents and distributors 420Managing agents and distributors 421Market activities 421Field work 422Checklist 23.1: Exporting – the bene ts and the opportunities 423Index 425Contents xv
PrefaceSales management is an integral part of marketing management. The sales team are the imple-menters of marketing strategy and tactics at the customer interface. Modern sales manage-ment is not about leading a team of foot-in-the-door salespersons. It is a complex anddisciplined mix of: marketing skills, professional selling and negotiation skills, people man-agement skills (including selection, motivation, communicating and training), sales strategyand tactical planning skills, data management and performance monitoring skills (involvinga high level of numeracy and experience in using computers to advantage in sales and cus-tomer management). The material coverage of this text addresses many of these topics in apractical way that sales managers can use in self-development, or adapt to team developmentneeds.This text is targeted at the professional sales manager, who wants to make the most of themarket opportunities, and develop the productivity of his or her sales team. Companies arefacing increasing competition, with threats to many traditional markets and customer bases,as supply and purchase points in many market segments become more concentrated. Totackle the threats and capitalize on opportunities the modern sales manager needs a farbroader range of selling and managerial skills and experience than in past decades. The aimof this text is to provide some skill-developing inputs that will enable the proactive sales man-ager to build on this material in managing the sales team and sales environment more prof-itably and productively.The contents of this text should be of interest to:● senior sales and marketing directors charged with responsibilities for overalldevelopment of markets, planning and strategy, and who may nd this a useful referencetext● eld sales managers who may nd that much of this text has practical application byadapting the principles as relating to team management into their own environment● salespersons and students of marketing and sales management, who will nd that thetext provides a comprehensive coverage of practical sales management principles thatwill provide a rmer base for their entry into sales line management.The reader with international responsibilities, or with a broader interest in marketing aspectsof management, can usefully supplement reading of this work with reference to my compan-ion volume The CIM Handbook of Export Marketing (Butterworth-Heinemann 1996, ISBN 0 75062573 2).Throughout this text use of the masculine gender can be taken as including the femininegender, without intention to discriminate or imply anything other than that marketers of bothsexes are equal in all respects in selling and sales management.Chris J. NoonanE-mail: Noonan@cjn.co.uk
The sales organization, commonly referred toas the sales force, plays a key role in thegrowth, development, profitability andimpact on customers (whether trade or directcustomers) of most companies. It may repre-sent only one department, or division, withina company organization, and often be rela-tively small in numbers in relation to totalemployees, especially in manufacturingindustries, but it is a critical resource thatmust be nurtured, developed and motivatedto ful l its potential within the companyorganization and the external market place.Key sales and marketing functionalactivitiesThe functional activities undertaken by thesales and marketing departments can nor-mally be allocated into one of the three cate-gories of management, administration orplanning, as illustrated in Figure 1.1, andexpanded in Table 1.2.1Roles and functions in the sales forceFigure 1.1 The main categories of sales and marketing activityManagementAdministration PlanningThe functionalactivities that keepthe businessrunning day to dayThose activitiesthat are reallydealing with pastsalesThose sales managementactivities that are focused onplanning for, and obtaining,future business
4 Sales ManagementTable 1.2 Main functional responsibilities in sales and marketing departmentsFunctional responsibilitiesSales● Achieving sales volume requirements● Achieving distribution objectives● Product display/merchandising● Call (outlet) coverage● Sales force recruitment● Sales force training● Provision of feedback to sales force● – bulletins● – conferences● – personal contact● Trade terms● – ﬁnancial terms of trade● – warranties and sale conditions● – order size and delivery● Performance measurement● – sales volumes/values● – call coverage● – distribution● – display achievements● Credit control● Collection of payments● Customer service and care● Order processing● Maintaining records on sales forceactivity and customer activity● Sales forecasting● Pricing policies and proﬁt planning● Sales promotions and competitions● Sales force rewards and incentives● Management trainingMarketing● Brand management (including proﬁtability)● Market research● Product performance and market shareanalysis● Brand publicity including public relations,sponsorship, etc.● Advertising and promotion● Packaging supplies (ordering and stockcontrol if not an allocated responsibility ofpurchasing or production functions)● Production scheduling (if not an allocatedresponsibility of another department)● Regulatory compliance of product andpackaging in domestic (and export)markets● Sales & marketing forecasts● Pricing policies & proﬁt planning● New product development● New product test marketing● Product design (physical attributes, size,shape, packaging)Functional responsibilitiesSales MarketingAdministrationPlanningManagement
Roles and functions in the sales force 5Sales functional activitiesTable 1.1 can be expanded with the following additional commentary on the main sales man-agement functional activities.Achieving sales Once a forecast or target is set or agreed, the sales manager becomesvolume responsible for its achievement. Achievement of sales forecasts is usu-ally critical to achievement of the company’s nancial plans (pro tabil-ity, ability to meet operating expenses, etc.).Distribution Product distribution targets may be set independently of sales volumetargets, but higher sales volume is commonly a function of increasingdistribution as well as generating more product offtake or usagethrough existing users or outlets.Product display These are traditional sales force functions in consumer product compa-and merchandising nies, and also with some industrial products distributed through tradestockists. Where offtake is a factor of display, the salesperson shouldhave display guide-lines and objectives, possibly for regular shelf spacein the trade outlet (retail outlets, cash and carry stores) and for off-shelfpromotional or feature displays.The merchandising function may be performed by the sales force, or bya separate team (possibly of part-timers) charged with that responsibility.Many consumer goods companies contract the merchandising to special-ist companies that provide merchandising services to a range of suppliers.Call coverage This is the actual process of making physical calls on customers. Wherea company has a stable customer base, calling might be scheduled atsome regular frequency relating to actual or potential sales (see latersections on journey planning), or to the amount of stock a customer can(or will) carry.Sales recruitment The identi cation of suitable persons for a selling position, and theirand training subsequent training, must be a fundamental responsibility of sales man-agers. Clear job speci cations and job holder pro les should be devel-oped, based upon qualities and skills known to be relevant toperformance in the company’s trading environment.Once suitable persons are identi ed and recruited, there are three lev-els of training that the sales manager needs to incorporate into his or hermanagement activities:● initial induction training, likely to include industry and product knowl-edge, as well as basic selling skills● ongoing ﬁeld sales training● supporting training provided at sales meetings and conferences.Provision of It is essential to communicate achievements, objectives, plans, pro-feedback grammes, and policies, in order to provide support and motivation.Sales managers typically hold (area or national) sales meetings at regu-lar frequencies to provide a feedback forum and to give sales teammembers a chance to interrelate, and these can be supplemented bysales bulletins or newsletters.Trade terms Marketing and nance departments will usually have an input to acompany’s trade terms. The sales manager should be the expert on thecustom and practice within his or her markets, knowing industry
6 Sales Managementnorms, and constantly reviewing competitive pricing, trade terms, andpromotions.Performance Statistical sales performance measures must relate sales achievementsmeasurement to targets, plans, and budgets, and form part of a programme of rapidfeedback to salespersons. Performance statistics need to be brokendown to give measures for each territory and customer, and, whereverpractical, should be benchmarked against comparable external data, e.g.for the industry or product category. Comparative gures for perfor-mance against plans often cover:● sales volumes by product and customer● sales values by product and customer● proﬁtability by product and customer (not measured often enough!)● call coverage achieved versus the scheduled or optimum coverage asrelated to sales● product distribution achieved by product and sales territory, or by tar-get market sector● display achievements by product, territory, etc., where this is a rele-vant measure for consumer products.Credit control This functional responsibility is often shared with a section of thenance department. In the nal analysis, however, it must be acceptedas a sales management responsibility to collect overdue payments, asthe sales force are involved in selecting customers and advising on theirsuitability for credit.Collection of In most developed markets payment for goods despatched is made bypayments cheque, or direct bank-to-bank transfers. Late payers are usuallyreminded by a letter serving as a polite reminder, followed subsequently ifpayment is not made by more terse chasers. In some markets salespersonstraditionally collect payment while calling on customers, but this is notideal as it distracts from the salesperson focusing on selling, and maybring a negative atmosphere into what should be a positive environment.Customer service This function has grown in importance over recent years, as suppliersand care work not just to meet customer expectations from products and service,but to exceed them. This may include a very broad range of activities,from providing product lea ets and information, to answering queriesabout where orders are in a supply pipeline, to provision of after salesservice and technical support.Order processing This activity also might t within a sales organization, within customerservice, or possibly a separate distribution department. Wherever it isplaced as an activity, its function impacts on the selling activities, assalespersons and their customers clearly have particular concerns aboutthe speed and accuracy of processing orders, and the management oforder processing from all stages through collection (by a sales call ortelephone call) to delivery and payment.Maintaining The sales force needs to have information on its customers and its ownactivity records activities. Most companies have a customer record system, such as acustomer card where the salesperson records all customer details andsales history, call dates, etc. Salespersons should have information thatshows when calls are scheduled or have been made, and the results, aswell as recording sales objectives for each customer.
Typical job functions in a salesorganizationThe sales manager or sales directorThis is the person who is head of the salesorganization, by whatever title. Frequentlyhe will either sit on the company board orexecutive committee, or, at least, reportdirectly to it. In some companies the salesmanager comes within a combined sales andmarketing department, possibly reporting toa marketing director or commercial director.Here we are less concerned with titles thanwith job functions. The main functions of theposition would include:● forecasting potential sales volumes and prices● identifying, setting, and achieving salesobjectives, targets, budgets and proﬁtplans● assigning sales force priorities in line withobjectives and plans● developing programmes for ﬁeldimplementation of the company’smarketing plan (including developingsupporting sales promotional activitywithin budgetary limits and in conjunctionwith the marketers)● designing and developing a salesorganization and structure to achievecompany plans and objectives, and suitedto the company, industry and markets (andwhich might include selection of agents,distributors, etc.)● developing motivational reward andincentive packages● converting overall plans and objectivesinto speciﬁc standards of performance,sales targets, and programmes forsubordinate functions and managers,including regional/area managers andRoles and functions in the sales force 7Sales forecasting While this is a function that often overlaps with marketing, sales man-agers do have a key contribution to make to the forecasting and plan-ning process, notably in relation to sales volume and value estimates, inestablishing distribution and display objectives, and in setting budgetsfor a sales organization that can achieve its objectives.Pricing policies The marketing and sales departments will both be closely involved indeveloping and implementing market pricing policies, to ensure correctpositioning versus competitors’ products while also satisfying companypro t objectives.Sales promotions While a marketing department might initiate much tactical promotion-and competitions al activity, in support of strategic objectives (e.g. aimed at increasing dis-tribution, display, and user/consumer trial), some promotional activityaimed at improving performance against the same key result areasmight be under the control of the sales manager alone, such as salesforce incentives and competitions.Sales force rewards The sales manager (often with advice from a human resources depart-and incentives ment) will have responsibility to ensure that rewards and incentivespromote a high level of morale, motivating achievement of goals andobjectives, encouraging excellence, and developing loyalty amongst thegood performers. While this could be seen as a management function, Iprefer to assign it to planning, as reward packages have a great bearingon future success.Sales management While many sales managers recognize the need for training their salestraining teams, they often neglect their own development. Management train-ing, to meet the future needs of the business and demands of sales man-agement jobs, is a key activity. A well-trained team of sales managerswill contribute to their own further self-development, to company per-formance, and to the morale and training of salespersons.
key account executives, ensuring that eachis allocated a fair share in relation tohistorical performance or potential● developing systems of monitoring salesperformance at all levels of theorganization and for all trade sectors,including systems for benchmarkingcompany performance versus competitors’performance and trade/customerexpectations● developing a head ofﬁce sales supportorganization that may include:– operational planning and forecasting;– sales recruitment and sales training;– sales performance monitoring andperformance feedback reporting;– sales promotions department (planningpromotions, in liaison with themarketers, and providing all sales aidsincluding product literature, displayaids, samples, etc.);– customer service departments;– order processing departments;– tele-sales departments;– product distribution (if this responsibilityis under the sales function);– production scheduling (if thisresponsibility is under the sales function)● selecting and training all subordinatemanagers and salespersons● setting terms of trade, including basicprices (in conjunction with marketing),scale discounts and allowances,promotional allowances, etc.● communicating with the sales force andwith customers as necessary (includingagents and distributors as appropriate) onmatters concerned with plans,programmes, policies, and performancefeedback● assisting with the test marketing of newproducts● building good internal relationships andliaising with all other departmentsconcerned with forecasting and planning,marketing, production, ﬁnance,distribution, etc.The ﬁeld sales managerThe eld sales manager is the person withspeci c responsibility for the eld implemen-tation of the marketing programme. Largercompanies have a network of eld sales man-agers, often entitled area managers or districtmanagers, leading smaller teams usually offrom six to ten salespersons. The eld salesmanager:● accepts responsibility for achievingassigned objectives, targets, forecasts,budgets, etc., with and through the team● liaises with salespersons and superiors insetting sales performance targets,objectives, standards of performance, etc.by territory● plans and monitors call coverage tooptimize effective frequency of calling inrelation to potential● implements ﬁeld programmes supportingcompany marketing plans● maximizes the sales effort by providingtraining, counselling and feedback● exercises control and maintains teamdiscipline● interprets and ﬁlters company policies● communicates effectively with salespersonsthrough regular sales meetings andbulletins● selects, trains, manages, motivates andcontrols his or her sales team● advises superiors on market intelligence,competitive products, promotions, terms oftrade● liaises between head ofﬁce departmentsand ﬁeld personnel● ensures each of his or her sales teamachieves high job satisfaction through:– job content– team spirit and membership– management– monetary and non-monetary rewards– recognition of achievements– quality of products sold– the company as a good employer.8 Sales Management
The effective eld sales manager will work toaccomplish his or her goals and maximizesales team performance by:● ensuring he or she is well briefed oncompany policies, objectives and activities● putting subordinates ﬁrst in his or herpriorities.The key account managerManagement of the company’s business andrelations with major customers will normallybe the responsibility of a key account man-ager who:● liaises with Sales Director and marketingdepartments in setting customertargets/forecasts, which would be brokendown by product and branch or uselocation (depending on whether thesupplier is offering industrial inputs orproducts for resale through tradedistribution channels)● liaises with buyers to agree annual salesvolume forecasts, and to negotiate anyongoing supply contracts● advises on setting terms of trade for eachkey account, and then manages thebusiness to these trade terms● conducts negotiations on products(standard products or special productionruns such as customized industrialproducts or private label retail products),quantities, prices, promotions, specialoffers, etc.● implements the company’s sales andmarketing programme at the key accountlevel● negotiates special distributionrequirements● monitors key account proﬁt performanceand achieves satisfactory proﬁtcontributions from accounts● recommends key account specialpromotional activity to senior managers● reports market intelligence concerning thekey account’s own strategies andperformance, and that of competitors withthe account● follows up at individual locations of multi-branch customers to ensure programmeimplementation, ensuring that all branchlocations receive adequate directcoverage (either personally or throughother members of the sales team)● develops relationships with other keyaccount personnel inﬂuential in the buyingprocess (e.g. users, speciﬁers, budgetcontrollers, other authorizers, etc.) – thisnetworking within major accounts isnormally critical to successful businessdevelopment● liaises internally with all departments andcolleagues involved in supplying orservicing the key account● monitors performance of the key accountin terms of sales volumes, turnover,proﬁtability, usage/distribution, and anyother relevant criteria, comparingperformance with plans agreed with theaccount head ofﬁce buying team, givingbreakdowns for branches/subsidiaries,providing feedback and promotingcorrective action to counter any deviationsfrom plans.The territory manager (or salesperson)The person who most frequently provides thedirect interface with the mass of customers isthe territory salesperson, who● agrees with his or her ﬁeld sales managerthe individual customer and territoryobjectives, targets and programmes,breaking down the larger territory targetby product and customer, for eachmeasured time period or journey cycle● agrees additional business developmentobjectives for the territory or for individualcustomers to encourage growth beyondthe normal levels expected● develops a professional rapport andbusiness relationship with all buyers andinﬂuential contacts● develops his or her professional sellingskills, not just relying on relationshipselling● maintains planned call coverageRoles and functions in the sales force 9
● develops a programme ofprospecting/pioneer calling to identifynew worthwhile customers on the assignedterritory● identiﬁes new product and new prospectopportunities● maintains full and accurate customer callrecords● avoids out-of-stock situations, checkingstock in all outlets, and sells in product tosatisfy demand and offtake● achieves maximum levels of sales anddistribution in current and potential outlets● achieves optimum levels of product displayfor retailed products in all appropriateoutlets● motivates and trains customer staff topromote company brands againstcompetition, giving them guidance in anynecessary technical knowledge, andhelping them understand andcommunicate the product features andbeneﬁts● provides market intelligence feedback oncompetitive activity.The merchandiserThis role is primarily a function in consumerproduct companies, where goods are offeredfor resale through a network of retailers ortrade distributors, and where there is consid-erable competition for display space and dis-play impact on consumers who face a mass ofsimilar competing products. Typically themerchandiser, whether directly employed bythe supplier or engaged through a contractmerchandising company, will work to:● locate products and display material atkey selling spots within any productcategory (where the merchandiser canarrange this locally)● maximize display of company products inassigned retail outlets● tidy any displays, ensuring damagedproduct is not left on display● ensure products in retail outlets arecorrectly priced according to the retailoutlet’s pricing structure (and can advise astore on competitor pricing where anindividual branch manager has anyauthority to vary prices)● rotate products according to any sell bycode● support products on promotion throughconstruction of feature displays andplacement of promotional point of sale(POS) material● motivate retail outlets to re-order companyproducts as necessary to maintain stocklevels avoiding out-of-stock situations● report on competitive activity.Product promotersWhen a supplier is running certain types ofpromotional activity with trade dealers orretail customers it is sometimes appropriatefor them to place product promoters at thecustomer’s locations to communicate prod-uct features and bene ts directly to cus-tomers. These promoters can ful l a usefulrole, if suitable persons are selected andtrained, by:● promoting consumer trial through:– sampling/demonstrating products– direct customer contact– supporting promotional activity at thepoint of sale● motivating display retention throughpresence and activity● providing a direct interface between thedistribution company and the customer,reporting on attitudes, reactions, etc.● cementing relationships between thedistribution company and on or off traderetailer.Here we have only reviewed some of the typ-ical eld selling job functions within a sellingorganization. These will be supported by arange of specialist functions or departmentsto ensure that they can perform optimally,possibly including order processing, tele-sales, customer service, sales training, salesplanning, sales promotions, with additionalclerical support. There is no de nitively cor-rect sales organization, as it must be designed10 Sales Management
to re ect the needs of the company, the tradechannels, the products, and nal users/con-sumers. This will be looked at further inChapter 2.Sales management qualitiesWhile the later chapter on sales personnelselection will look in more detail at qualitiesof persons suited to selling, at this early stageit is perhaps worth a comment on some basicpersonal qualities appropriate to sales man-agers. He should be:● a good organizer and administrator, able toplan, implement and monitor sales activity● a good communicator, with colleagues,subordinates, customers and tradecontacts at all levels● decisive, thereby inspiring colleaguesand subordinates with a sense ofleadership, direction andconﬁdence● fair, objective and impartial in allocatingobjectives and dealing with business andpersonnel issues● a team leader, with that intangibleleadership quality that inspires others tofollow and take direction, with initiative toidentify and take advantage ofopportunities, and not given to panic intimes of adversity but cool-headed inworking towards corrective action.Roles and functions in the sales force 11
12 Sales ManagementA sales manager’s personal auditAs a short self-analysis exercise take a moment to assign a rating against each of thequestions listed below. This is not all-comprehensive, but will serve to alert you toyour strengths and development areas, and act as a prompt in planning self-develop-ment.Factors you are weaker on should score lower, and factors you consider your strengthsshould score high. How would your subordinate salespersons rate you on each ofthese factors? You can then either sit with your own line manager and discuss the rat-ings versus the importance of each of the factors in the job, or use your notes to assesspersonal training needs objectively.SCORE NOTESDo You 1, 2, 3, 4, 5, 6● Provide leadership?● Motivate your team?● Set goals and objectives?● Develop sales strategies and tactics?● Prepare forecasts, plans or set targets?● Develop promotional programmes?● Recruit the right people?● Provide training to meet job and individual needs?● Communicate effectively?● Measure performance?● Provide feedback?● Exercise control and discipline?● Counsel effectively?● Recognize or anticipate problems?● Exercise initiative?● Take decisions promptly?● Exercise good judgement?● Develop corrective action programmes?● Manage resources cost effectively?● Delegate effectively?● Develop organizational structures to suit thecompany business and trading environment?● Develop or cooperate with sales support functions?● Develop control systems and procedures?● Have all the necessary skills for your job?● Recognize the need for motivating rewardprogrammes?
Considerations in organizing thesales forceThe sales organization, as illustrated inFigure 2.1, should be designed to takeaccount of certain key factors, such as:● marketing strategy– marketing goals and market shareobjectives;– market segmentation and productpositioning issues;– arget market sectors;– marketing communications reaching thetarget market (prospective customersinﬂuenced by advertising andpromotion must have a means to tryand buy the product)● sales strategy– identifying and servicing tradecustomers or product users;– market coverage objectives;– sales volume/value objectives (to meetmarketing objectives)● distribution channels– needs of each level of the distribution chain;– market distribution infrastructure● product needs.2Sales structures and organizationFigure 2.1 Key factors impacting on sales force organization designSALESORGANIZATIONMarketingstrategySalesstrategyDistributionchannelsProductneeds
Developing a structureGeographical, horizontal, vertical factorsA field sales organization is normallydesigned to re ect the geographical spread ofoutlets in any market. In addition it will growboth vertically, with tiers being added, andhorizontally as development demands theintroduction of more specialized positions. Inaddition, account must be taken of tradechannel structures for the market sectorsbeing serviced by the sales teams.GeographicallySales and management responsibilities couldbe divided by geographical area (possiblybased on population locations or customerlocations), so that certain functions are pro-vided within a de ned area. Typically salesterritories are assigned on a geographicalbasis, and with some organizations a net-work of regional distribution centres is strate-gically located to service customers. In alarger sales organization sales support ser-vices might also be split geographically, e.g.with a network of regional sales trainers, orcustomer service staff with a speci c regionalresponsibility.HorizontallyFunctions are mutually exclusive as a depart-mental sub-activity, e.g. sales training, cus-tomer service, sales planning,VerticallyWithin a department, as workload growsbeyond the capacity of existing personnel,functional responsibilities are delegateddownwards, with new tiers of managementand non-management functional positionsappearing. Each new level should haveclearly defined responsibilities, objectivesand standards of performance.Trade channel structuresIn some organizations that sell products inseveral market sectors a different sales teamis developed to handle sales activity in sepa-rate trade channel market sectors withgreater specialization, e.g. in the wines andspirits trade it is common to have separatesales teams servicing the ON trade (hotels,restaurants, food service and institutionalcustomers) and OFF trade (supermarkets,liquor stores). Pharmaceutical companiescommonly develop separate sales teams tosell into pharmacies and hospitals, and tobrief doctors. Suppliers of components mighthave one sales team servicing other manufac-turers who would use the components asoriginal equipment in another nished prod-uct, and a separate team servicing the (larger)network of replacement parts dealers.Management span of controlConsideration will also have to be given tothe span of control limits of each manager tomanage, motivate, train and control salesper-sons, which is dependent on:● the nature of work being performed(skilled or unskilled)● the knowledge or experience of thepersons involved in managing or beingmanaged● the physical proximity of jobs● the similarity of content of the jobs beingmanaged● the time available and required fortraining, planning, communicating andsupervising.There is a general view that any single man-ager is limited in the number of persons he orshe can supervise directly, and in the numberof different functions he or she can manageeffectively. Typically a manager might super-vise four to six functions (sub-departments).In managing a sales team experience showsthat rst line eld sales managers (area ordistrict managers) can only supervise effec-tively between six and ten salespersons, pro-viding all the inputs to management, control,training, performance monitoring, planning,communicating, etc. While some companies14 Sales Management
will try to run with much larger teams, thenormal result is a re- ghting approach toeld sales management, with a negligiblefocus on training, and very little time beingspent with any individual. A good rule ofthumb for a eld sales manager would be tospend at least half a day to a day with eachsalesperson in his or her team each twoweeks.From this commentary we see that the sizeof a sales force will vary with the number ofmanagement tiers, and effective span of con-trol at each level. Figure 2.2 and Table 2.1illustrate how an organization might grow aslevels are added. In these examples I haveassumed that the span on control reduces thehigher the position, as the higher the level ofmanagement the more time must be given toactivities such as planning, rather than eldsalesperson management. Very large salesSales structures and organization 15Figure 2.2 Adding management tiers as the sales force grows in sizeDivisionalmanagersRegional managersArea managersField salespersonsSpan of control3–4 regional managersSpan of control4–6 area managersSpan of control6–10 salespersonsTable 2.1 Relationship between sales force size and span of controlSpan of control of ﬁrst Span of control of ﬁrst Span of control of ﬁrstline manager (area line manager (area line manger (areamanager) = 6 manager) = 8 manager) = 10Required number of ﬁeld Hierarchical Hierarchical Hierarchicalsalespersons to cover management management managementcustomer base organization required organization required organization requiredAM RM DM AM RM DM AM RM DM50 8 1 or 2 6 5100 17 3 13 2 or 3 10 2200 33 5 1 25 4 1 20 3 1300 50 8 2 38 6 or 7 2 30 5 1 or 2400 66 11 3 50 8 2 40 7 2Notes to tableAM = Area manager RM = Regional manager DM = Divisional managerIt is assumed for the calculation that the regional manager can manage six area managers, and the divisional managercan manage four regional managers.Span of control of ﬁrst Span of control of ﬁrst Span of control of ﬁrstline manager (area line manager (area line manger (areamanager) = 6 manager) = 8 manager) = 10Required number of ﬁeld Hierarchical Hierarchical Hierarchicalsalespersons to cover management management managementcustomer base organization required organization required organization required
forces are more commonly found in devel-oped markets for consumer products andsome service industries (such as insurance)rather than in industrial products, as the for-mer normally have a much greater potentialcustomer base to contact and service than doindustrial product suppliers.Other organizational considerationsThere are some other considerations in plan-ning the organization structure, includingthose listed below.● Workloads of individuals The number ofpositions at any level depends on theworkload capacity of individuals withineach functional activity in the sales force.● Functional activities It is necessary toidentify the functions requiring separatemanagement input, control anddevelopment to improve the quality andquantity of output.● Communications within the salesorganization Effective communications areessential to provide feedback, motivation,planning, recognition, and achievement ofcommon objectives through coordinatedactivities.● Flexibility The sales organization shouldbe ﬂexible enough to adapt to changingmarket conditions. Barriers to ﬂexibilityshould be avoided or removed.● Role clariﬁcation Avoid internal conﬂictand non-functioning by ensuring eachperson in the sales team is very clear onhis/her role, and avoid duplication offunctional responsibilities, assign clearresponsibilities, and promote good formaland informal communications.In a eld selling organization managementcontrol and motivation are more likely to beeffective in an environment of ‘one person,one boss’. One salesperson is normallyresponsible for all sales through an accountor, at least, of a clearly de ned product cate-gory. Various forms of functional or matrixmanagement structures that might work inthe of ce environment often result in confu-sion and under-performance if introduced toa eld selling organization. Any factor thatcan introduce confusion into the eld man-agement equation may need to be addressed.For example, companies that introduce therole of eld sales trainer, to supplement thework of the area eld sales managers, usuallynd that those trainers rapidly become awareof the need not to usurp the authority of theline managers and be seen as an ‘alternativemanager’.Some typical evolving organizationstructuresDeveloping a basic structureReaders in medium to larger companies mayhave quite substantial selling organizations,and perhaps forget how the sales organiza-tion developed from its embryonic begin-nings, when there were probably fewcustomers and products, and very few per-sonnel managed by a single sales manager,illustrated in outline in Figure 2.3.16 Sales ManagementSales and marketingmanagerFieldsalespersonDepartmentsecretarySales officemanagerFigure 2.3 A basic sales organization structure
As the sales volume increases, or the prod-uct range or product complexity grows, alarger, more sophisticated organization willbe required to handle workloads or provideadditional support functions, possibly alongthe lines illustrated in Figure 2.4. A number ofthe job functions do not have line manage-ment responsibility over eld selling opera-tions, but provide essential support. A formaljob evaluation process will need to be devel-oped at this point to fairly assess the relativevalues in terms of contribution to sales divi-sion goals and objectives, and seniority ofeach position. In this illustration, the func-tions reporting to the sales planning managerwould be quite different, but would all workin close proximity to him or her and eachother, therefore being a manageable mix offunctions.A further stage of development typicallyoccurs as sales grow to new levels, and it isfelt necessary to split sales and marketingfunctions. Workloads might also be increas-ing, product ranges further expanding, mar-ket infrastructures changing, and targetsegments becoming more defined, withgrowing product service needs. The structureadopted will vary according to the nature ofthe market, i.e. whether consumer goods,industrial goods, or consumer services orbusiness-to-business services are being pro-vided.Sales and marketingdirectorField salesmanagerSales planningmanagerMarketingmanagerArea salesmanagersProductmanagersKey accountsmanagersMarketresearchmanagerSales trainingmanagerDisplay andpromotionsmanagerCustomerservicemanagerInformationand planningmanagerFigure 2.4 A developing organization structure
Any particular organization structureshould have scope for exibility to takeaccount of and develop with environmentalchanges. For example, the buying needs andpractices of retail or industrial customersmight change (buying may be consolidated atfewer buying points within large customerorganizations), product distribution patternsmight change (e.g. the advent of a growingdirect marketing and home shopping cul-ture).The nal organization should re ect skillsof individuals and accountabilities of man-agers. For example, in Figure 2.5, the positionof sales training manager could, logically,report to the national sales manager (in thatthe outcomes of the job impact directly on hisor her responsibilities and key performanceindicators); but he or she may have neitherthe skills, time, nor be well located to managethe function on a day-to-day basis. Figure 2.5illustrates examples of geographical, hori-zontal and vertical specialization.A geographically organized sales forceAs has been mentioned, a common way toorganize a sales force is with some geograph-ical split of responsibilities, breaking thecountry into similar sized areas and territo-ries, where the size comparison might consistof population bases, number of outlets orcustomers, or the relative turnover values orpotential. Figure 2.6 illustrates a typical basicgeographical structure.Trade sector specializationIn many fast moving consumer goods andindustrial product companies more than onesales force emerges over time to serve differ-ent trade sectors with the same product range(albeit the products may be presented andpacked slightly differently to better suit eachtrade sector). The various trade sectors mayhave very different service needs, or require-ments for promotional support, and requiredifferent inputs of selling time to developbusiness optimally. Figures 2.7 and 2.8 illus-trate some example structures.An example of the same products requir-ing more than one sales force to serve differ-ent trade sectors is the wines and spiritstrade. The retail (off-trade) sector will requirea more aggressive selling style in a very com-petitive retail environment, product merchan-dising, in-store promotional displays andconsumer promotions encouraging a take-home trial, with selling activity taking placeduring normal daytime hours. But the on-trade (bars, clubs, etc.) will require a differentselling style (less aggressive, perhaps, withemphasis on relationship development withowners/managers), probably a sales team thatcalls on customers when they are open fortrade (which in many markets will not be untillate in the day or the evenings), different for-mats of promotional support during peakevening opening hours, not with major featuredisplays, but perhaps with sponsored eventsand theme nights. Other examples follow.● Food companies frequently have productssold through more than one type of outlet(e.g. supermarkets and smallerindependent general stores orconfectionery/tobacco/news stores).● Pharmaceutical companies and othersuppliers of over-the-counter remedies arefrequently supplying to pharmacies,sundry non-pharmacy outlets (such as drugstores), and to hospitals and medicalcentres, while also needing to have aspecialist team for brieﬁng the medicalprofessions (who will not be orderingpersonally for resale).● An industrial manufacturer of paintstypically would develop a separate sellingstructure to service the very different enduse markets, likely to include industrialmanufacturers of equipment that requirespainting (e.g. by dipping or spraying), theprofessional decorating trade, as well asthe home do-it-yourself market.● A manufacturer of electrical components,such as switches, connectors, plugs,sockets, etc., might have quite a variety ofpotential trade sectors to supply (seeFigure 2.8), and all might require differentservice formats, and product variations.18 Sales Management
Managing directorSales director Marketing directorNational salesmanagerOperations andplanning managerNational accountsmanagerMarket researchmanagerProduct groupmanagersRegional salesmanagersArea salesmanagersTerritorysalespersonsSales trainingmanagerNational accountexecutivesPlanning andinformationmanagerProductmanagersMarket researchexecutivePromotions anddisplay managerCustomer servicemanagerFigure 2.5 Separate sales and marketing organizations
Sales directorRegionalsalesmanagersSalestrainingmanagerNationalaccountsmanagerRegionalsalesmanagersNationalaccountsmanagerMarketresearchersProductmanagersMarketing directorSalesoperationsmanagerNational salesmanager – pharmacysectorNational salesmanager – grocery anddrug store sectorsMarketresearchmanagerGroupproductmanagersAreasalesmanagersCustomerservicemanagerKeyaccountexecutivesAreasalesmanagersKeyaccountexecutivesPlanning andinformationmanagerTerritorysalespersonsTerritorysalespersonsFigure 2.7 Organization developed to service different trade sectors
In the example shown in Figure 2.8, retailers,such as the multiple do-it-yourself chains,might prefer single unit bubble packs.Building and electrical contractors wouldwant to purchase bulk quantities with price akey selection factor. Manufacturers of otherforms of electrical products would want com-ponent inputs, for designing into their ownproducts, where the component suppliermight have to custom design a product ofspecial size or shape to meet the customer’sneeds. In addition the component manufac-turer is likely to want to promote to personswho specify components (such as architectsof public sector bodies concerned with publichousing). All this can make for a sales forcestructure with several separate sales teamswho are each specialized in a market sector,possibly with special training or experience.Also, in this example I have deliberately usedthe title sales operations manager rather thansales of ce manager, to highlight that the jobis much more than an administrative func-tion, with considerable input to planning,customer service strategy development, anddevelopment of sales promotion support.22 Sales ManagementFigure 2.8 Sales organization for a manufacturer of electrical componentsSales directorRetailsalesmanagersPublic sectorsalesmanagerBuilding tradesalesmanagerProfessionalsector salesmanager, e.g.architectsComponentusage salesmanagerSalesoperationsmanagerKeyaccountexecutivesTrade dealersalesexecutivesOrderprocessingmanagerPlanning andinformationmanagerSalesexecutivesPromotionsmanagerSalesexecutivesSalesexecutivesSalesexecutivesCustomertechnicalsupport manager
Product specializationMany companies offer more than one prod-uct range, and these might be offered to acommon customer base, or to different targetmarket users/consumers. In such situationsthere may also be a need for different salesteams to specialize in the different productgroups, even where they might overlap, call-ing on some of the same customers. In someinstances the different sales teams might callon the same corporate customers, but dealwith quite a different group of buyers orspeci ers. Figures 2.9 and 2.10 give someillustrations.● Insurance companies typically offerproducts to meet very different personalneeds, such as household insurance, lifeassurance, and pension and investmentplans. Some of these categories arefrequently promoted by professionaladvisers (who typically receive acommission for recommendations), such aslawyers and accountants, and theseadvisers will need product brieﬁngs fromspecialist salespersons.● A company selling industrial machineryand consumable materials for use with themachinery, such as print bindingmachinery and the binding materials, orshoe making machinery and shoecomponents, may also decide to split thesales force into product teams. Themachinery may be purchased by one typeof buyer supported by specialist speciﬁers,such as engineers, and the consumablesmight be purchased by another buyersupported by ﬁnished product designersand production managers. Each buyingteam will have very different objectivesand criteria for judging products they areresponsible for. The machinery buyers mayhave concerns for capital cost, operatingSales structures and organization 23Figure 2.9 Sales organization for an insurance companySales directorLife assurancesalesmanagerHouseholdinsurance salesmanagerPensions andinvestmentssales managerPrivateclient salesexecutivesProfessionaladvisers salesexecutivesRegionalsalesmanagersProfessionaladviserssalesexectutivesPrivateclient salesexecutivesAreasalesmanagersTerritorysalespersons
costs, spare part and service availabilityand support, and the sales team mayneed a level of engineering expertise. Theconsumable products buying team may beconcerned for durability of the consumableinputs in ﬁnished products, design andaesthetic factors, ease of use byproduction operatives, minimum down-timethrough consumables jamming inmachinery, etc. If the products are verytechnical, it is likely that the sales teamsmay need to be supported by technicalexperts who can survey needs or workwith engineers in specifying productmodiﬁcations, as well as supervising testsand trials and providing installationsupport. A customer service function mayneed a particular focus on after-salestechnical support.Key account managementSome of the examples illustrated show a keyaccounts selling structure, sometimes alsoreferred to as national accounts management.Some comment on the development and roleof such a sub-organization is warranted here.In many markets there is a growingconcentration of buying points, in partthrough mergers and acquisitions, and inpart through organic expansion. In retailingconcentration is found in food, furniture,electrical goods, toys, pharmaceuticals,clothing, service products such as travel andcleaning, and so on. Smaller independentretailers have often banded into voluntarybuying groups in an attempt to remaincompetitive and to buy on better terms fromsuppliers. Similar trends are found in24 Sales ManagementFigure 2.10 Sales organization for a supplier of machines and related consumablesSales directorKeyaccountexecutivesKeyaccountexecutivesTechnicalsupportengineersTechnicalsupportspecialistsOrderprocessingdepartmentTele-salesdepartmentAfter-salesservicedepartmentCustomer servicemanagerMachinery salesmanagerMaterials salesmanagerSalesinformationdepartmentSalesexecutivesSalesexecutives
manufacturing for many product categories,where mergers provide benefits fromsynergy of operations. Buying then oftenbecomes centralized, rather than each branchor subsidiary organizing its own supplypurchasing.As purchasing becomes moreconcentrated many suppliers becomeconcerned for their margins (as buyersdemand larger discounts, performancerebates, promotional and display allowancesin retailing, and so on), and for security oftheir supply contracts. But there can also bebene ts from purchasing concentration andproactive key account management, such as:● an improved ability to forecast sales asmore and better information becomesavailable● better production planning and plantutilization● improved control over supplies of inputsand inventories● more ﬂexibility and control in developingspeciﬁc sales promotions to supportongoing marketing programmes● opportunities to negotiate larger andlonger-term supply contracts● new opportunities to supplement standardproducts with products customized tocustomer needs (e.g. private labelproducts for retailers, or customizeddesign of industrial products)● concentration of key selling functions tofew highly skilled key account businessdevelopment executives, trained tonegotiate with professional buyers● a possible reduction in the size of a ﬁeldsales force, with resultant cost savings,and an opportunity to focus moremanagement time and effort ondeveloping business with the majoraccounts (nationally and internationally).Key account management thrives on mutualrespect and recognition of professionalism, inall aspects of business relations and negotiat-ing. Neither party bene ts from ignoringproblems, either in relationships or techni-cally with products or service, and both havea strong interest in satisfactory resolution ofproblems standing in the way of mutuallyprofitable business development. Theaccount manager must, above all, be an ef -cient and effective communicator, both withthe customers and internally within the sell-ing organization, with a strong ability toin uence senior managers. It is critical toselect suitable persons to ful l the job func-tions, as not all salespersons will have thepersonal and technical skills and qualities towork as equals with buyers, authorizers,speci ers and any other persons inputting tothe buying process within major accountorganizations.The size of a national accounts organiza-tion will depend on the number of majoraccounts warranting treatment as keyaccounts. Many companies nd that a fewcustomers contribute most sales turnoverand pro t, and analysis normally con rmsthe broad Pareto ndings that 80 per cent ofsales comes from 20 per cent of turnover (i.e.the 80/20 rule, or Pareto rule). Typically,when trying to assess the number of keyaccount executives needed, look at:● how many customers provide at least 50per cent of turnover, or individuallyrepresent more than one per cent of sales(then this list can be reﬁned to include thelargest and those with most potential askey accounts)● the number of subsidiaries or branchlocations that need servicing for eachaccount (as these should all be theresponsibility of a single accountmanager)● the amount of time needed for planningand performance monitoring● the expected frequency of account contact(at head ofﬁce and branches).A simple tabulation of customer sales nor-mally highlights the potential candidates forkey account treatment (see Table 2.2). If thereare different product groups or market sec-tors, the key account structure may have spe-cialists in product groups or trade sectors, asillustrated in Figure 2.11.Sales structures and organization 25
The example customer mix shown in Table2.2 shows that 50 customers of a total activebase of 845 (six per cent of customers)accounted for two-thirds of sales and pro tswith our model company! And from amongstthe top 50 there are probably at least a dozenthat should warrant special development askey accounts, since each contributes betweenone and six per cent of sales. Even from thebrief customer names we can see a mix ofsome industrial and some retail clients, as theplastic moulding company supplies mouldedparts for industry as well as a range of retailplastic house wares.It is interesting to note in this example that,while the top 50 represent a similar propor-tion of both sales and pro ts, the ranking forsales and gross margin would not be exactlythe same, and there are signi cant differencesbetween the gross margin yields from thevarious customers. Key account managementis not just about generating and managingSales structures and organization 27Table 2.2 Tabulating data to identify the key accounts (continued)Alton Plastic Mouldings Top 50 customers (domestic market)Sales rank Customer name Cum % Cumulative Sales Gross Cumulative Cum %sales sales value margin gross marginmargin48 Huntingdon Spares 65 8,556,003 6,2596 22,283 3,580,570 6249 Raschid Electronics 65 8,617,985 6,1981 34,984 3,615,554 6350 Southern Garden Centres 66 8,679,655 6,1670 26,943 3,642,497 64Top 50 totals 8,679,655 3,642,496UK totals 1996(845 active customers) 13,231,111 5,732,214Top 50 as %age of UK customers 66% 64%AVERAGES PER CUSTOMER 15,658 6784Clerical andsupportstaffNorthernindustrialusersSouthernindustrialusersNational accountsmanagerNational accountexecutives – retailbuying groupsNational accountexecutives –industrial usersFigure 2.11 An example key account sales structureAlton Plastic Mouldings Top 50 customers (domestic market)Sales rank Customer name Cum % Cumulative Sales Gross Cumulative Cum %sales sales value margin gross marginmargin
turnover, but managing the total businesspartnership of supplier and customer, with afocus on the pro tability of trading.The key account organization structure, asa sub-department of the sales division, canincorporate, as appropriate, elements ofhorizontal, vertical and geographical special-ization, with an example illustrated inFigure 2.11.Export department organizationAll of the basic principles of developing asales and marketing organization outlined inthis chapter can be applied when structuringan export organization. In some companiesexport sales operations fall under the controlof a sales or marketing director, while inlarger organizations export will often be aseparate function with its own director head-ing the organization. Readers who have aparticular interest in export marketing andmanagement are referred to the author’scompanion book The CIM Handbook of ExportMarketing (Butterworth-Heinemann), whichincludes a number of developing organiza-tion examples. Figures 2.12 and 2.13 illustratetypically how the basic principles expoundedhere might look for a company with a largerexport sales and marketing organization. InFigure 2.12 the technical services manager isshown with a dotted line linking to the28 Sales ManagementExportadministrationmanagerExport directorExportmarketingmanagerExportsalesmanagerTechnicalservicesmanagerRegionalmanager– AsiaShippingmanagerShippingclerksCustomerservicemanagerProductmanagerCustomerservice staffRegionalmanager– AfricaRegionalmanager– MiddleEastRegionalmanager– NorthAmerica &CaribbeanRegionalmanager– SouthEuropeRegionalmanager– NorthEuropeRegionalmanager– SouthAmericaDistributors Distributors Distributors Distributors Distributors Distributors DistributorsFigure 2.12 A typical export department organized geographically
export director, just to indicate that this posi-tion only functionally supports export opera-tions rather than being a direct line report(probably reporting in to the research anddevelopment or engineering director,depending on the nature of the products).Matrix organizationsSome companies have found that the tradi-tional pyramidical organizational hierarchyhas not always been effective or easy to man-age as a company grows in size, and theproduct ranges and market sectors serveddiversify. Internal politics and communica-tion blockages or barriers can result in delaysin implementation of strategies and tacticsthrough all the departments that contributeto achievement of an effective plan.Marketing and sales managers cannot man-age their own departments in isolation fromother specialist functions or production anddistribution departments.The result in some companies has been fora form of matrix management to develop, tosupervise projects and sometimes productdevelopment and management (with Figure2.14 providing an illustration). In this sce-nario the team can control planning, decisiontaking, evaluation and resource allocation, aswell as performance monitoring againstplans and objectives.Typically, within the matrix, team leader-ship would be from a department with keyinputs to contribute, such as marketing orpossibly sales. Hierarchical reporting rela-tionships would still exist, in that each teammember has line superiors who would expectreports. As any reader who has experienceof this type of matrix team has probablySales structures and organization 29Export directorExportadministrationmanagerTechnologylicensingmanagerExportmarketingmanagerExport salesmanager –inudstrialproductsTechnicalservicesmanagerExport salesmanager –consumerproductsProductmanagers –industrialproductsProductmanagers –consumerproductsRegionalmanagers –industrialproductsRegionalmanagers –consumerproductsShippingmanagerShippingclerksCustomerservicestaffCustomerservicemanagerDistributors– industrialproductsDistributors–consumerproductsAfter-salesservicesupportcentresFigure 2.13 An export organization developed to serve market sectors
Productmanager 2Marketresearcher2Financialanalyst 2Distributionlogisticsmanager 2Productionmanager 2Productdevelopmentmanager 1Salesplanningmanager(leader)Regionalmanager 2Productmanager 1(leader)Marketresearcher1Financialanalyst 1Distributionlogisticsmanager 1Productionmanager 1CustomerservicemanagerRegionalmanager 1Accountmanager 1MarketingmanagerMarketresearchmanagerOperationsand planningmanagerNationalsalesmanagerNationalaccountsmanagerFinancedirectorDistributiondirectorProductiondirectorR & DdirectorSales directorExecutivePolicyCommitteeProductGroup AMarketing directorProductGroup BFigure 2.14 A form of team matrix managementNotes:Within each department and division there is a hierarchical structure (the management pyramid), although membership of any partic-ular matrix group need not depend on seniority but upon a manager’s functional contribution to that group. If it is felt that particularfunctions need to be represented on several projects or product groups, then one functional representative might sit on several groups.Each matrix group has a clear team leader.
Sales structures and organization 31discovered, the teams can only function effec-tively where each person has clearly de nedroles and contributions, so that disfunctional-ity and confusion do not hamper progresswhile managers argue over what they viewas incursions into their sphere of operations.While, on the one hand, to internal managersit seems essential to avoid con ict and confu-sion, what can frequently be overlooked inthe melee of internal politics is the confusioncustomers experience when they do notknow who, in a company, can effectivelymanage their business and relationship.Customers who nd they are being contactedby several persons (from the same or differ-ent departments), whether on separate oroverlapping issues, will rst become con-fused but soon learn to play the supplier’sweaknesses in managing communications totheir advantage. So whether a traditionalpyramidical structure or some form ofmatrix organizational structure is preferred,lines of communication, both internallyand externally, must be clearly drawn, andthe roles and responsibilities of individualsclari ed.
32 Sales ManagementChecklist 2.1Effective organizational structuresAction pointsIs your sales organization designed to:● prepare sales forecasts, plans, budgets, sales andmarketing programmes?● increase and/or maximize distribution?● merchandise and display product optimally?● provide timely and efﬁcient distribution to all outlets?● provide ﬁeld management to sales persons or outlets?● identify and develop new stockists/consumer locations?● recruit and develop the most suitable sales personnel?● provide comprehensive initial and ongoing training to staff?● measure performance?● provide performance feedback?● communicate effectively between all levels and to all staff?● control customer credit/cash management?● provide support services to the sales staff and trade outlets?● provide comprehensive customer service?● process orders promptly and efﬁciently?● provide support and service to key accounts and customers?● provide customer after-sales service?● respond to changing market needs for products?● reﬂect customer needs in terms of distribution, producttrends, etc.?● have in-built ﬂexibility to meet changing markets andenvironments?Are the following effective and realistic for all salesteam operatives?● reporting relationships?● spans of control?● workloads?● number/mix/range of functional activities?● internal and external communications?● organizational format?● reporting procedures, administrative systems and controls?If the answer to any of these is a ‘no’ or qualiﬁed ‘yes’, there may be scope for organiza-tional modiﬁcations or improvements that might increase the productivity and effectivenessof the organization.
Part TwoDeveloping a Motivating SalesEnvironment
What is motivation?Motivation is generally seen as the process ofgetting people to work towards achievementof an objective. Management may often takea rather limited view, or perhaps selfishapproach, to motivation, seeing it only as get-ting subordinate employees to work towardsachievement of a company goal or objective,possibly achieving the current salestargets. Traditional motivational theory (e.g.Maslow’s theory, subsequently developedand modi ed by others – see later) postulatesthat individuals are motivated only whenthey see an opportunity to ful l some per-sonal need, within a hierarchy of needs thatmay change over time as some of them aresatis ed. In fact, we can then see needs asbeing positively satis ed, in that somethingis added (perhaps a new automobile, or holi-day), or negatively satis ed in that somesource of dissatisfaction is lessened orremoved (such as accomplishing a task thatstops the pressures from the manager, allow-ing the achiever a quieter life, for a while). Ifwe de ne motivation as follows, then we seethat achievement of a goal or objective thatthe company values should be accompaniedby some reciprocation that the individual val-ues (which might be as simple as praise in asales bulletin, a bonus, or positive feedbackthrough promotion).Why salespersons need motivationMany sales managers apparently expect theirsales teams to be self-motivated, rather like aperpetual motion machine or self-windingwatch. Some readers may recognize thissymptom as common amongst those salesmanagers who spend little time working inthe eld with their team. Many even com-ment that when recruiting they seek to iden-tify self-motivated individuals. Perhaps whatthey are failing to recognize is that the appar-ently ‘self-motivated’ individual is actuallyhighly motivated towards achieving his orher clearly de ned goals and objectives atthat point in time (including landing the jobon offer at the interview), and once certainobjectives are achieved, that person needsnew horizons to aim at, and new motivationsto drive achievement towards those horizons.Salespersons need constant motivation tomaintain performance and productivity tosatisfactory levels, and to present challengesthat encourage them to raise their perfor-mance and productivity to greater than satis-factory levels by offering ways that addressthe personal needs of each. The sales man-ager who, when asked how he treats his sales3Motivational management in the salesforceMotivationThis is the process of getting people toact willingly towards achieving greatersatisfaction of their personal needsthrough the achievement of companygoals and objectives.
team, comments that he treats them all thesame is missing the point. They are not all thesame, any more than two children in a familyhave the same behavioural and motivationalpattern. Individual difference in motivationmust be identi ed, recognized and addressedif team performance is to be improved. Itwould be fairer to talk of treating all mem-bers of the sales team equally, that is byaddressing equally each person’s balance ofneeds.Motivational factorsTo maintain and improve performance andproductivity becomes a full-time job formany supervisors and managers within theirteams. This is particularly likely to be the casewhere managers fail to understand and applysome basic principles of motivation. Whilethis is the subject of many specialized texts,from the practical perspective there are sev-eral interesting approaches that readily trans-late into a sales environment. They have allbeen tested over the years, each having somevalidity in various circumstances. However,most of the attempts to verify motivation theo-ries are based on tests in western cultures, andeven within these there are found to be varia-tions in cultural response to efforts to motivateimproved performance and productivity.Hierarchy of needs theoryThis approach to understanding motivation(initially propagated by Maslow, see Figure3.2) recognized ve main types of needs:● physiological needs, addressing the basicsurvival requirements of the individual(e.g. food, health, security)● safety needs, addressing the need forphysical and emotional security● social needs, such as the need to belongand to be accepted within social groups,to give and receive affection● need for esteem, both internal esteem (self-respect, achievement) and external esteem(status, recognition, public attention)● self-actualization needs, those higher-levelneeds relating to self-achievement and self-fulﬁlment.Primary physiological and safety needs in themain are more easily met in developed36 Sales Management$$$$$Need EffortRewardFigure 3.1 A simple motivational model
nations, as an employer is providing a job,income and range of bene ts that addressthese needs, usually satisfying basic comfortand survival needs through:● security of employment● basic salary meeting ﬁnancialcommitments● earnings protection during periods ofsickness● pensions to provide for post-retirementincome● sickness and life assurance cover● safe working environments.Goal setting theoryThis approach to management and motiva-tion has gained many supporters amongstpractising managers. It postulates that settingand agreeing speci c and dif cult goals willlead to higher performance. Goals tell peoplewhat effort they can expect to have to expendto achieve it, and, if broken down, whatactions they need to take. Gaining acceptanceof, and commitment to, a goal presupposesthe individual sees it as realistic and achiev-able. Self-set goals typically have moreimpact on individual behaviour, particularlywhere the goals are made public within ateam.While on the one hand easier goals aremore likely to nd acceptance with manyemployees, once a harder goal is acceptedeffort towards achieving it normallyincreases until it is achieved, lowered orabandoned. While it is also recognized thatfeedback on progress towards a goal isimportant, it is also recognized that self-gen-erated feedback is a more powerful motivatorthan external feedback.Goal setting also assumes that:● individuals can inﬂuence outcomes● individuals have the independence topursue options● challenging goals will be accepted● performance is seen as important in thework and cultural environment.Managers who travel internationally willrealize that this goal setting approach tomotivation is less effective in some cultures,particularly where:Motivational management in the sales force 37PhysiologicalSafetySocialEsteemSelf-actualizationFigure 3.2 The traditional model of a hierarchy of needs