2. • To understand the concepts of the sales Organization,
and the basic types of sales Organizations
• To know specialization within the sales Organization,
and alternative organizational approaches for major
accounts
• To determine the size of the salesforce by using various
methods
• To understand the major stages of salesforce staffing
process, consisting of planning, recruiting, selecting,
hiring, socialisation and assimilation
• To realise the importance of the various steps included in
planning, recruiting, and selection stages.
Learning Objectives
3. A sales organzation assists the sales manager
t o c a r r y o u t n e e d e d t a s k s e f f i c i e n t l y
a n d effectively to achieve results.
The basic concepts of the sales Organization are:
• Degree of centralzation
• Degree of specialization
• Line or staff positions
• Market orientation
• Effective co-ordination
Concepts of Sales Organization
4. Basic Types of Sales
Organizations
Sales Organizations are generally classified
into four basic types:
• Line Organization
• Line and staff Organization
• Functional Organization
• Horizontal Organization
We shall discuss main characteristics,
advantages, and disadvantages of each
type of sales Organization
5. Characteristics: All managers have line authority to direct and control
subordinates. Used in small firms / departments
Advantages: Simple Organization, clear authority, quick decisions,
low cost
Disadvantages: No support to line managers from subordinates who
have specialised knowledge / skills. Less time for planning / analysis
Organization
Area Sales
Manager1
Area Sales
Manager3
Area Sales
Manager4
Area Sales
Manager2
salespeople salespeople
salespeople salespeople
Head
Marketing
Sales
Manager
Line
6. Characteristics: Specialist staff managers are available for senior
marketing / sales managers. Staff managers’ role is to assist / advise line
managers. Used in medium and large size Organizations
Advantages: Better marketing decisions, superior sales performance
Disadvantages: High cost and coordination, slower decision making,
conflict may arise if staff managers’ role is not clear
Line and Staff Organization
Salespeople Salespeople
Salespeople
Area Sales
Manager-1
Area Sales
Manager-1
Area Sales
Manager-1
Customer
Service
Manager
Marketing Research
Manager
Sales Manager
Promotional
Manager
Head-Marketing
7. Characteristics: Each functional specialist has line responsibility over
salespeople. Used by a large firm with many products / market
segments, minimising line authority to functional managers
Advantages: Qualified specialists guide salesforce, simple to administer
Disadvantage: confusion due to more managers giving orders to
salesforce
Functional Organization
Area Sales Manager #4
Salespeople
Customer Service
Manager
Marketing Research
Manager
Sales Manager
Promotional
Manager
Head-Marketing
8. Characteristics: Removes management levels & departmental
boundaries. Except planning team, all others are members of cross-
functional teams. Used by firms having partnering relationships with
customers.
Advantages: Reduction in supervision, unnecessary tasks, & cost;
Improved efficiency and customer responses.
Operations Team:
•Production / Operations
•Quality Assurance
•Systems Engineering
Customer Satisfaction
Team:
•Sales & Marketing
•Pricing, Promotion
•Channels, Logistics
Customer Support Team:
•Information
•Service
•Training
Research & Design Team:
•Customer Research
•Product / Service Design
Planning Team:
•Strategic Planning
•Accounts, Finance
•HR, Administration
•Chief Operation Officer
Organization
Horizontal
9. specialization within Sales
Organization
• Needed to increase effectiveness of salesforce
• Done by expanding basic sales Organization
• Basis of specialisation
• Geography
• Type of product
• Market
• Combination of above
• Criteria for selection – (1) nature of product, (2)
salesforce abilities, (3) demands of selling job,
(4) customer and market facts
10. Characteristics: salespeople, assigned geographic areas, are responsible
for all selling activities to all customers within assigned areas. Branch sales
managers adjust marketing plan to local needs
Advantages: Better market coverage and customer service, more control
over salesforce, quick response to local conditions & competition
Disadvantages: Limited specialization of marketing tasks. Hence, it is
combined with product / market sales Organization
Geographic Specialisation
Branch Sales
Manager-2
Salespeople
Branch Sales
Manager-4
Branch Sales
Manager-1
Branch Sales
Manager-3
Salespeople
Salespeople Salespeople
General Sales
Manager
Customer Service
Manager
Marketing Research
Manager Promotion
Manager
Head-Marketing
11. Product Specialisation
• Used when the company has many products and / or brands
• Two types of product specialisation
(x). Sales Organization with product specialised salesforce
(y). Sales Organization with product managers as staff specialists
Salespeople –
Product Gr. ‘A’
Salespeople –
Product Gr. ‘B’
Sales Training
Manager
Area Sales Managers –
Product Group ‘B’
Area Sales Managers
– Product Group ‘A’
General
Sales Manager
Marketing
Research
Manager
Promotion
Manager
Head-Marketing
12. Fig. ‘y’ Sales Organization with Product Managers as Staff Specialists
In fig. ‘x’: Characteristics: Salespeople in each product group sell only the products
in that group
Advantage: Each product gets specialised attention from the salesforce
Disadvantage: Sometimes, more salespeople contact the same customer, resulting
in customer dissatisfaction and higher cost
In fig. ‘y’: Characteristics: Each product manager plans and implements marketing
plan, for a product group
Advantage: Corrects the problem of duplication calls on a customer by salespeople
Disadvantage: Lack of product specialization by salespeople
Product Manager
Product Gr. ‘B’
General
Sales Manager
Promotion
Manager
Product Manager
Product Gr. ‘A’
Marketing Research
Manager
Area Sales
Managers
Salespeople
Head-Marketing
13. • Characteristics: Desirable when customers are classified by type, user
industry, or channel. Salespeople carry out all activities for all products only
for specific customer groups
• Advantages: Meets needs of specific customer groups, implements
customer-centred philosophy of the company
• Disadvantages: Geographic duplication, high cost
Market Specialisation
Sales Executives Salespeople
Area Sales Mgrs-
Consumer Markets
Area Sales Mgrs
International
Salespeople
Salespeople
Area Sales Manager-
Commercial
Area Sales Manager-
Government
Sales Manager-
Commercial
Sales Manager-
Government
Sales Manager-
International-
Markets
Sales Manager-
Consumer Markets
General Sales
Manager
14. • Characteristics: Many firms use some combination of specialization
Organizations, called hybrid or combination sales Organization,
with a view to minimize disadvantages and maximize
advantages of specialization Organizations
• Figure above shows combination of geographic and market
specialisations
Combination Sales
Organization
Director – Sales
& Marketing
Regional Sales
Mgr. - Commercial
Salespeople
Regional Sales
Mgr. – Govt.
Salespeople
Regional Sales
Mgr. - Dealers
Salespeople
General Manager
Sales - South
General Manager
Sales - North
General Manager
Sales - East
General Manager
Sales - West
15. Alternatives for Major Accounts
• Major accounts / customers are called by
various names like key accounts, corporate
accounts, house accounts
• They make up a large share of a firm’s sales volume
and profits
• Firms use the following alternative approaches
to deal effectively with them
• Create a position of major / national account
manager
• Use existing territory sales managers
• Create a separate division
• Create a separate salesforce
16. Size of the
Salesforce
• How many salespeople needed (or salesforce
size) to achieve a firm’s sales and profit
objectives is a key decision
• Methods available to decide optimum
salesforce size are as follows:
• Workload
• Sales potential (or breakdown)
• Incremental
• We shall discuss these methods briefly:
17. Workload
Method
• Assumption: All salespeople have equal workload
• Steps involved to calculate salesforce size are:
1) Classify customers as per their sales potential
2) Decide time per sales call and call frequencies for each
class of customers
3) Calculate total market workload = (1) x (2) in hours
4) Decide total work time available per salesperson
5) Divide total work time available by different activities per
salesperson in hours
6) Calculate total number of salespeople needed
total market workload (3)
total selling time available per salesperson (5)
=
18. Workload Method (Continued)
• Advantages: simple method, conceptually sound, used for all
types of selling situations
• Disadvantages: Neglects sales productivity & salesforce
turnover
Sales Potential / Breakdown Method
• The formula used is: , where
N=Number of salespeople d
T,)
or salesforce size
S=Annual sales forecast for the company in value (Rs. Million)
P=Estimated productivity of the average salesperson in sales
(Rs. Million)
T=Estimated percentage of annual salesforce turnover
• Advantages: Simple and straight forward
• Disadvantages: Conceptually weak; lead time needed for a
new salesperson to reach average productivity
19. Incremental Method
• It is based on marginal analysis theory of economics
• Basic concept: Net profits will increase
when additional salespeople are added, if the
incremental sales revenues exceed the incremental
costs
• Merit: Conceptually accurate, as it
quantifies relationships between salesforce size,
sales, costs, profits
• Demerit: Can not be used if historical data on
sales and costs are not available
20. Salesforce Staffing
• It is one of the most challenging and
important responsibilities / activities of sales
management
• Salesforce Staffing Process includes
following stages:
• Planning
• Recruiting
• Selecting
• Hiring
• Socialisation
• We shall briefly discuss each of the above stages
21. Planning
Stage
• Establish responsibility for staffing process
• Decide number of salespeople needed
• Outline the type of salespeople needed
• Establish responsibility for staffing process
• Company management decides responsibilities for
various stages / activities of staffing process
• Generally in a medium / large size company, middle
and senior levels H.R. and sales managers are
responsible
• Proper coordination needed between sales,
marketing, and HR executives
• It consists of three steps:
22. Planning Stage (Continued)
Decide the number of salespeople needed
• Steps followed by each territory sales manager to plan
requirement of sales people:
1) Decide optimum salesforce size (using methods
discussed earlier)
2) Add number of promotions, retirements, transfers out,
terminations, resignations expected from existing
salespeople
3) Subtract expected transfers into the territory and existing
salesforce
4) Make a total of new salespersons needed
• Territory sales managers submit their requirements to
national / general sales manager, who calculates the total
number of new salespersons to be hired
23. Outline Type of Salespeople
Needed
The steps involved in the process are:
• Conducting a job analysis
• Preparing a job description
• Developing job qualifications / specifications
Conducting a Job Analysis
• It is done by a person from sales / H. R. department,
or a consultant. It consists of two tasks:
(1) Analize environment in which the salesperson
would work – E.G. nature of customers, competitors,
products.
(2) Determine duties and responsibilities of the
salesperson. Obtain information from sales
managers, customers, etc.
23
24. Preparing a Job Description
• It is a written document developed from the
job analysis
• The detailed job description is a useful tool
for recruiting, selecting, training, compensating,
and evaluating salespeople
• Some of the points it generally covers are:
• Job title, reporting relationship, types of products /
services sold, types of customers, duties and
responsibilities, location and geographic area to
be covered
25. Developing Job Qualifications /
Specifications
• These are generally based on job description
• Job specifications / qualifications include education,
sales experience, skills, and personality traits
• Many studies done, but no generally accepted job
qualifications for selecting salespeople, due to many
types of sales jobs
• Some methods used for developing job specifications
are as under:
• Study job description. Useful for a new company
• Analyse personal histories of salespersons
• Ask customers
26. Recruiting Salesforce
• Recruiting include activities to get individuals who will
apply for the job
• The general purpose of recruitment is to get enough
qualified candidates, to enable company select the right
persons
• H.R. and sales managers must update information on
government employment regulations
• Recruiting stage / process includes following activities:
• Finding the sources of sales recruits
• Evaluating and selecting recruiting sources
• Contacting candidates through the selected source
27. External Sources
• Advertisements in
newspapers and journals /
magazines
• The Internet (job sites)
• Educational institutions
• Employment agencies
• Job fairs
• Other companies
Finding the Sources of Sales Recruits
• For identifying prospective candidates, firms use internal
and external sources. They include:
Internal Sources
• Employee referral
programmes
• Current employees
• Promotions and transfers
28. Evaluating and selecting Recruiting Sources
• Recruiting sources are evaluated based on the database
built over number of years
• Evaluating factors are:
• Performance rating of salespeople, after 2 years
working
• Percentage of salespeople retained, after 2 years
working
• Total cost of recruiting
• Selecting most effective source of recruiting at least
cost
• For a new company, selection depends on cost
• Contacting candidates through the selected source is
done by H. R. department
29. Selecting Salesforce
• Selection process consists of seven major selection
steps / tools
• Companies differ in using selection tools, depending on
expenditure budget and time available
• Major selection tools / steps are:
• Screening resumes
• Application blank
• Initial interview
• Intensive interview
• Testing
• Reference check
• Physical examination
30. Screening Resumes
• It is done when the company receives many resumes
• This step / tool not required, if somebody else like
employment agency does initial screening
• Initial screening of resumes are done by comparing with
job specifications
Application Blank
• Widely used, it is a methodical way of collecting relevant
information from the applicant
• Advantages of using application blank (also called
“formal application form”) are:
(1) Easy comparison of many applicants
(2) Useful for asking question during interview sessions
31. Interviews
• Widely used selection tool
• A good predictor of the candidate’s performance
• Initial interviews are used for screening candidates
• Intensive interviews are conducted to get indepth view of
candidates
• Interview structure / type of interviews:
• Structured / patterned / guided interviews
• Unstructured / non-directed / informal interviews
• Semi-structured interviews
• Behaviour and performance based interviews
• Stress interviews
• Purpose is to decide a candidate’s fitness for a job
32. Testing
• Many firms use tests as a selection tool – EG P&G, IBM
• Purpose of testing: To find whether applicants have traits /
characteristics that lead to success in sales job
• Type of selection tests:
• Aptitude tests measure ability for selling and learning
• Intelligence tests find out mental intelligence or intelligence
quotient (IQ)
• Interest tests find out level of interest in a sales career
• Knowledge tests measure knowledge of products, markets,
etc
• Personality tests find out attitude or traits like empathy,
self-confidence
• Tests must have reliability and validity
• Tests should be one of the selection tools and not the only tool
33. Reference Checks
• They are important due to possibilities of resume frauds and
false personal information
• They are done by letters / e-mails, telephones, or personal
visits
• Instead of candidate’s references, previous employers /
customers to be included for reference checks
Physical Examination
• Objective is to find a physical problem that may prevent job
performance of an applicant
• Most companies want their prospective employees to undergo
physical examination
• Increasing number of firms ask applicant to complete the
health information form without seeing a medical doctor
34. Hiring Stage
• After completing selection process, a list of candidates to be
hired is made
• In hiring stage, two activities are performed:
(1) The company making the job offer
(2) Persuading the applicant to accept it
Socialisation Stage
• It is the process through which new salespeople learn values,
norms, attitudes, and behaviour of people working in the firm
• Socialisation process starts before the new salesperson
accepts the job offer and continues until the person is
assimilated into the company culture
• Assimilation is the second stage of socialisation process
• Companies have this process, in order to retain new
salespeople
35. Key Learnings
• A sales Organization assists a sales manager to
carry out needed tasks efficiently and effectively
• Basic types of sales Organizations are : (1) line, (2)
line and staff, (3) functional, (4) horizontal
• specialization within sales Organization, which are
needed to increase effectiveness of salespeople, are: (a)
geographic, (b) product, (c) market, (d) combination
• Companies use alternate approaches to deal effectively
with major accounts
• Methods available for deciding optimum salesforce size
are: workload, sales potential, and incremental
36. Key Learnings (Continued)
• Salesforce staffing process includes five stages: planning,
recruiting, selecting, hiring, socialisation
• Planning stage includes (1) establishing responsibilities, (2)
deciding number of salespeople needed, (3) profiling the type of
salespeople needed
• Recruitment stage consists of (a) finding sources of sales
recruit, (b) evaluating and selecting recruitment sources, (c)
contacting candidates
• Selection process consists of seven steps / tools: (1) screening
resumes, (2) application blank, (3) initial interview, (4) intensive
interview, (5) testing, (6) reference check, (7) physical
examination
• Hiring stage includes (a) making the job offer, (b) persuading
applicant to accept it
