Chapter 7

2,122 views

Published on

  • Be the first to comment

Chapter 7

  1. 1. Part Four: Designing and Developing the Sales Force Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  2. 2. Designing and Organizing the Sales Force Chapter 7 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.
  3. 3. How a Firm’s Goals Affect the Design of Its Sales Force <ul><li>Organization of sales force is driven by strategic goals </li></ul><ul><li>Organizational sales structures serve a number of purposes that include </li></ul><ul><ul><li>Serving buyers effectively in ways they want to be served </li></ul></ul><ul><ul><li>Operating efficiently as measured by cost and customer satisfaction </li></ul></ul><ul><li>Best way to design a sales structure is to </li></ul><ul><ul><li>Determine sales activities that must be performed to reach goals </li></ul></ul><ul><ul><li>Create sales structure that affords highest levels of service to buyers at lowest overall cost </li></ul></ul><ul><ul><li>Select, train and manage reps and managers to become experts in their assigned duties </li></ul></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  4. 4. Areas Impacted by a Firm’s Sales Force Structure Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  5. 5. Areas Impacted by a Firm’s Sales Force Structure <ul><li>Organizing the Strategic & Tactical Designs of the Firm’s Sales Force </li></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  6. 6. Areas Impacted by a Firm’s Sales Force Structure <ul><li>Example: purchase sales force optimization software and an associated consultancy from Cozmix, Inc., Heathrow, FL </li></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  7. 7. The Size of the Sales Force <ul><li>Breakdown method </li></ul><ul><ul><li>Divide forecasted sales revenue by average sales dollars per salesperson </li></ul></ul><ul><li>Workload method </li></ul><ul><ul><li>Compute total sales call workload </li></ul></ul><ul><ul><li>Determine amount of work performed by each rep </li></ul></ul><ul><ul><li>Factor in additional work responsibilities </li></ul></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  8. 8. Workload Method Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  9. 9. Specialists vs. Generalists <ul><li>Generalist force : sells the brewery’s entire product line to a group of customers that use/re-sell the product(s) similarly </li></ul><ul><ul><li>Wayne Densch Company, Sanford, FL </li></ul></ul><ul><li>Specialist force : specializes in one product or product line </li></ul><ul><ul><li>Pharmaceutical manufacturers organize forces by product families because each may be prescribed for different illnesses </li></ul></ul><ul><li>Specialized sales structure can offer expertise advantages over generalist sales force but at a “cost” </li></ul><ul><ul><li>Coordinated to address buyers’ needs </li></ul></ul><ul><ul><li>Integrated with other organizational functions </li></ul></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  10. 10. Geographical, Product, and Market Structures Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Market Sales Structure <ul><li>Reps assigned to customers based on markets or how product is sold </li></ul><ul><li>Reps learn more about customer’s specific business needs and offers customized solutions </li></ul>Product Sales Structure <ul><li>Sales activities organized around related product lines or manufacturing divisions </li></ul><ul><li>Interacts with buyers as specialists </li></ul>Geographical Sales Structure <ul><li>Depends on physical boundaries to organize sales force with customer accounts </li></ul><ul><li>Interacts with buyers as generalists </li></ul>
  11. 11. Geographical, Product, and Market Structures Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Market Sales Structure <ul><li>Reps assigned to customers based on markets or how product is sold </li></ul><ul><li>Reps learn more about customer’s specific business needs and offers customized solutions </li></ul>Product Sales Structure <ul><li>Sales activities organized around related product lines or manufacturing divisions </li></ul><ul><li>Interacts with buyers as specialists </li></ul>Geographical Sales Structure <ul><li>Depends on physical boundaries to organize sales force with customer accounts </li></ul><ul><li>Interacts with buyers as generalists </li></ul>
  12. 12. Geographical Sales Structure Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- PROs <ul><li>Relatively easy to design </li></ul><ul><li>Minimizes duplication of effort </li></ul><ul><li>Ensures a specific salesperson is assigned to each customer </li></ul><ul><li>Sales calls more efficiently scheduled </li></ul><ul><li>Territory can be divided or combined to respond to market conditions </li></ul>CONs <ul><li>Work best when product line is simple </li></ul><ul><li>Can be inefficient </li></ul>
  13. 13. Geographic-Based Structure Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  14. 14. Geographical, Product, and Market Structures Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Market Sales Structure <ul><li>Reps assigned to customers based on markets or how product is sold </li></ul><ul><li>Reps learn more about customer’s specific business needs and offers customized solutions </li></ul>Product Sales Structure <ul><li>Sales activities organized around related product lines or manufacturing divisions </li></ul><ul><li>Interacts with buyers as specialists </li></ul>Geographical Sales Structure <ul><li>Depends on physical boundaries to organize sales force with customer accounts </li></ul><ul><li>Interacts with buyers as generalists </li></ul>
  15. 15. Product Sales Structure <ul><li>Limitation: can be confusing for buyer </li></ul><ul><li>Example: Xerox has 3 separate sales forces </li></ul><ul><ul><li>Called on same accounts </li></ul></ul><ul><ul><li>Had little knowledge of each other’s products </li></ul></ul><ul><ul><li>Confused buyers who had genuine need for Xerox products </li></ul></ul><ul><ul><li>Did not cooperate by providing leads and info to each another </li></ul></ul><ul><ul><li>Sales rose with combined force, but rep turnover increased </li></ul></ul><ul><ul><ul><li>Some reps not interested in or able to learn and sell three separate product lines </li></ul></ul></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  16. 16. Product-Based Structure Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  17. 17. Geographical, Product, and Market Structures Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Market Sales Structure <ul><li>Reps assigned to customers based on markets or how product is sold </li></ul><ul><li>Reps learn more about customer’s specific business needs and offers customized solutions </li></ul>Product Sales Structure <ul><li>Sales activities organized around related product lines or manufacturing divisions </li></ul><ul><li>Interacts with buyers as specialists </li></ul>Geographical Sales Structure <ul><li>Depends on physical boundaries to organize sales force with customer accounts </li></ul><ul><li>Interacts with buyers as generalists </li></ul>
  18. 18. Market-Based Structure Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- PROs <ul><li>Effective strategy when a seller wants to penetrate a new market </li></ul><ul><li>Allows selling firm to vary allocation of sales efforts to specific industries by adding to or reducing the number of salespersons slotted in one area to another </li></ul><ul><li>Permits firm to offer specialized training and develop individualized sales approaches and applications by industry </li></ul>CONs <ul><li>Selling expenses are higher than for geographic-based structure </li></ul><ul><li>Multiple reps calling on same client </li></ul><ul><ul><li>Buyer confusion </li></ul></ul><ul><ul><li>Duplication of effort </li></ul></ul><ul><ul><li>Higher expenses </li></ul></ul>
  19. 19. Market-Based Structure Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  20. 20. Functional and Combination Sales Structures Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Functional <ul><li>Selling process divided into two or more steps performed by specialists </li></ul><ul><li>Example: grocery </li></ul><ul><ul><li>Establish account </li></ul></ul><ul><ul><li>Manage inventory & orders </li></ul></ul><ul><ul><li>Merchandising </li></ul></ul>CONs <ul><li>Coordinating multiple specialists </li></ul><ul><li>Ensuring smooth transition from account establishment to management </li></ul>Combination <ul><li>Sales force organized based on mix of product, market, and geographical factors </li></ul><ul><li>Work best when market is large, product mix complex, and customers require different applications </li></ul>CONs <ul><li>Expensive </li></ul><ul><li>Can result in duplicate sales efforts </li></ul>
  21. 21. Pros & Cons of Various Structures Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  22. 22. Should You Specialize Your Sales Force? <ul><li>Sales specialization may improve performance </li></ul><ul><li>However: </li></ul><ul><ul><li>Specialization can be expensive </li></ul></ul><ul><ul><ul><li>Must produce results that are greater than investment </li></ul></ul></ul><ul><ul><li>Sales specialization is often more difficult to manage </li></ul></ul><ul><ul><ul><li>Requires greater oversight to align with firm’s strategy </li></ul></ul></ul><ul><ul><li>Changing sales assignments are challenging: </li></ul></ul><ul><ul><ul><li>Must modify job content and account assignments </li></ul></ul></ul><ul><ul><ul><li>This requires substantial planning and investment </li></ul></ul></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  23. 23. Common Forms of Sales Specialization <ul><li>Size </li></ul><ul><ul><li>Current and potential sales or profits </li></ul></ul><ul><ul><li>Large firms moved from geographical to major account </li></ul></ul><ul><li>Product </li></ul><ul><ul><li>One type of product; deep product knowledge </li></ul></ul><ul><li>Industry or market </li></ul><ul><ul><li>SPs maximize industry-specific application knowledge </li></ul></ul><ul><li>Purchasing status </li></ul><ul><ul><li>“ Hunters” go after new prospects/accounts while “farmers” serve existing customers </li></ul></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  24. 24. Global Sales Management: Sales Structures in Global Markets <ul><li>Country’s cultural context greatly influences the type of organizational sales force structure used </li></ul><ul><ul><li>Low-context: USA, UK </li></ul></ul><ul><ul><li>High-context: remaining </li></ul></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- <ul><li>Firms often employ geographical territories to structure overseas sales forces </li></ul><ul><li>Might use cultures, including languages, to “group” sales force </li></ul><ul><ul><li>Examples: Belgium, Austria + Germany ; Australia + NZ </li></ul></ul>
  25. 25. Key Accounts <ul><li>Key Accounts : customers that are large in terms of sales revenue and profitability and strategically important for the future of the firm </li></ul><ul><li>80/20 Rule : 80% of a firm’s total business and profits are often derived from 20% of its customers </li></ul><ul><li>Large, strategic accounts generally require higher levels of service and deeper buyer-seller relationships </li></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  26. 26. Key Account Structures Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Use Existing Force <ul><li>Sales force structure is simplified </li></ul><ul><li>All accounts are managed under a single organizational structure </li></ul>CONs <ul><li>Reps may take short-term view </li></ul><ul><li>Reps may not understand broader, overall needs of key acc’t </li></ul>Assign Execs <ul><li>Assigning sales and marketing executives to manage key accounts makes sense for smaller firms that cannot afford separate sales effort </li></ul>CONs <ul><li>Can take a lot of time, leaving less time for other duties, like managing sales force </li></ul>Create Separate <ul><li>Create separate sales structures to serve most important customers </li></ul><ul><li>Integrates marketing and sales for key accounts under one organizational structure </li></ul>CONs <ul><li>Establishing distinct sales channels for major acc’ts is more costly </li></ul><ul><li>Duplication of effort </li></ul><ul><li>Financial viability if key acc’ts lost </li></ul>
  27. 27. Discussion Questions <ul><li>What are three principal ways to manage national or key accounts? </li></ul><ul><li>What is the best approach for a smaller company? </li></ul><ul><li>What about a large, multi-divisional sales firm? </li></ul><ul><li>What concerns would you have about allowing your regular sales force to manage key or national accounts? </li></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  28. 28. Telemarketing and Computerized Sales Structures <ul><li>Telemarketing </li></ul><ul><li>Incoming: firm employs advertising and promo messages to end-users to “pull” or create buyer demand to call an 800 number and consult with in-house rep </li></ul><ul><li>Outgoing: pushing a firm’s product line by calling current or potential customers to try to uncover needs and close the sale </li></ul><ul><li>Computerized </li></ul><ul><li>Generated via Internet and telephone </li></ul><ul><li>Internet sales process varies greatly </li></ul><ul><li>Telemarketing is legal, but unwanted and intrusive telemarketing calls are likely to negatively impact an existing or potential business relationship </li></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  29. 29. The Sales Process in a “Hybrid” Selling Structure Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  30. 30. Global Sales Management: Some Offshore Call Centers Go Back Home <ul><li>Offshoring call centers was a cost-cutting measure </li></ul><ul><li>Global phenomenon </li></ul><ul><li>Buyers complained </li></ul><ul><ul><li>Miscommunications, lack of professionalism, incomplete product knowledge or ability to QUICKLY solve their problems </li></ul></ul><ul><ul><li>Perception is often that the lower-cost offshore centers equate to lower-quality overall service </li></ul></ul><ul><li>Firms responding </li></ul><ul><ul><li>Spend time & money for better training </li></ul></ul><ul><ul><li>Purchase equipment and software for enhanced communications </li></ul></ul><ul><ul><li>Re-position: “Support Centers” </li></ul></ul><ul><ul><li>Relocate: Florida, etc. </li></ul></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  31. 31. Ways to Construct Sales Force Reporting Structure Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Line Organization <ul><li>All salespeople, from highest to lowest levels, report to a single manager </li></ul><ul><li>Advantages </li></ul><ul><li>Chain of command is clear </li></ul><ul><li>Actions can be implemented quickly and easily through firm’s line structure </li></ul><ul><li>Disadvantages </li></ul><ul><li>As firms adopt customer relationship strategies, reps need greater authority to make quick decisions to keep customers satisfied </li></ul><ul><ul><li>To make quicker decisions sales organization must be flattened </li></ul></ul>Line and Staff Structure <ul><li>Using a line structure for core sales functions and placing support activities (sales training, customer service) into centers or departments outside of the line structure </li></ul><ul><li>Geographical, product, and market sales force structures are examples of Line and Staff Sales Structure </li></ul>
  32. 32. Span of Control <ul><li>Span of control : number of individuals that report directly to a sales manager </li></ul><ul><li>Customized customer solutions result in narrower spans of control (fewer employees reporting to sales manager) </li></ul><ul><li>Routine trade sales and telemarketing activities allow broader span of control (larger numbers of employees reporting to sales manager) </li></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Span of Control Ratios (Rep:Manager)
  33. 33. Sources of Conflict Between Firm and Sales Person/Selling Agent Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  34. 34. Company Salesperson or Sales Agent? <ul><li>Break-even analysis : compare fixed and variable costs associated with the two types of sales representation </li></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  35. 35. Company Salesperson or Sales Agent? <ul><li>Salesperson </li></ul><ul><ul><li>When it’s important to control sales effort, product or related technology is new, buyers need high level of service </li></ul></ul><ul><ul><li>Company exerts greater control over sales force efforts </li></ul></ul><ul><ul><li>Greater control over who is hired </li></ul></ul><ul><li>Sales agent </li></ul><ul><ul><li>When potential sales revenue is low in a territory </li></ul></ul><ul><ul><li>When revenue will take years to become substantial </li></ul></ul><ul><ul><li>When qualified sales agents already operate in the area </li></ul></ul><ul><ul><li>When it’s not feasible for company sales force to cover entire market (e.g., National Semiconductor, Advanced Micro Systems) </li></ul></ul>Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7-
  36. 36. Designing and Organizing the Sales Force Chapter 7 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall. 7- Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall.

×