4 organizing the sales effort mcgraw-hill/irwincopyright © 2009 by the mcgraw-hill companies, inc....
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4 Organizing theSales Effort
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
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Organize Around Customers
Historical Product-centered Expertise in features and functions
Today Customer-centered Expertise in business issues Sales resources deployed to
provide best service to best customers
Source: HR Chally Group (2007), The Chally World Class Excellence Research Report: The Route to the Summit. Dayton, OH: HR Chally Group.
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Identify purposes of sales organization
Understand different horizontal organizational structures of a sales force.
Outline major issues in key account and team selling.
Discuss key vertical structure issues in sales organizations.
Identify important issues in starting a new sales force from the ground up.
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Purposes of Sales Organization
Divide and arrange activities so the firm can benefit from specialization of labor
Provide for stability and continuity in firm’s selling efforts
Provide for coordination of activities assigned to sales force and to departments in the firm
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Division and Specialization of Labor
Increase productivity - specialists can become proficient at assigned tasks
Divide required selling activities to gain maximum benefits within the sales force
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Division and Specialization of Labor
Line organization Vertical Chain of command runs from
chief sales executive down through levels of subordinates
Each subordinate responsible to one person
VP Sales
Director of U.S. Sales
Regional Mgr. for NE US
District Mgr. for Massachusetts
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Division and Specialization of Labor
Line and staff organization Vertical (most common) Several sales management activities
assigned to separate specialists
VP Sales
Director of Sales Training
Director of DistributorRelations
Director of Sales Promotion
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Stability and Continuity
Organize activities without regard to talents of current employees
People can be trained to fill positions
Same activities will be carried out even if designated individuals receive promotions or leave
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Sales Organization Structure
Horizontal – divides selling activities among sales force
Vertical – assigns authority for specific sales management activities
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Horizontal Structure Options
Outside Agents
Company Sales Force
Geographic
Co-Marketing
Product
Nat’l KeyAccounts
Market/Customer Type
Team SellingSelling
Function
SellingCenters
MatrixOrganizations
OR
Telemarketing
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Outsourcing the Sales Force
Types of agents Manufacturer’s representatives
Sell part of the output of their principals Take neither ownership nor physical
possession of goods Cover specific territory and specialize in
limited range of complementary products Selling agents
Do not take title or possession of the goods they sell
Compensated by commissions Broad authority to modify prices and
terms of sale Actively shape manufacturer’s
promotional and sales programsHorizontalStructureOptions
HorizontalStructureOptions
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4.1Six C’s of finding theright rep
HorizontalStructureOptions
HorizontalStructureOptions
Source: Dan Hanover, “Independents Day,” Sales & Marketing Management, April 2000, pp. 65–68.
1. Compatible lines
2. Compatible territories
3. Compatible customers
4. Credibility of the rep
5. Capabilities
6. Credits
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Outsourcing Considerations
Economic Criteria Control Transactions costs Strategic Flexibility
HorizontalStructureOptions
HorizontalStructureOptions
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Geographic Organization
Simplest and most common method
Individual salespeople assigned to separate geographic territories
Responsible for performing all activities necessary to sell all products
HorizontalStructureOptions
HorizontalStructureOptions
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Does not provide benefits associated with specialization of labor
Geographic Organization
HorizontalStructureOptions
HorizontalStructureOptions
Lowest costs Travel time
and expenses minimized
Sales administration and overhead costs kept low
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4-164.3
Geographic sales organization
HorizontalStructureOptions
HorizontalStructureOptions
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Duplication of effort
Product Organization
HorizontalStructureOptions
HorizontalStructureOptions
Salespeople master effective selling methods for single or related products
Closer alignment of sales and production
Sales management controls allocation of selling effort across the line
Separate sales force for each product (or category) in the line
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4.4
Sales force organized by product type
HorizontalStructureOptions
HorizontalStructureOptions
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Possible higher selling and administrative costs
Duplication of effort
Customer Type/Market Organization
HorizontalStructureOptions
HorizontalStructureOptions
Better understanding of customer needs
Increased familiarity with certain businesses
Increased control over allocation of selling effort
Natural extension of marketing concept and strategy of market segmentation
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4-204.5
Sales force organized by customer type
HorizontalStructureOptions
HorizontalStructureOptions
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Customer objections to switch to maintenance salesperson
Feelings of rivalry between the sales force
Selling Function Organization
HorizontalStructureOptions
HorizontalStructureOptions
Skills matched to sales function
Developmental salespeople often a successful alternative
Salespeople specialize in performing different selling functions – e.g. prospecting and developing new accounts versus maintaining and servicing existing customers
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Telemarketing
Form of organization by selling function
Qualifying potential new accounts Servicing existing accounts
quickly Seeking repeat purchases from
existing accounts that cannot be covered efficiently in person
Providing quick communication of newsworthy developmentsHorizontal
StructureOptions
HorizontalStructureOptions
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4.2 Database Capabilities and Telemarketing
HorizontalStructureOptions
HorizontalStructureOptions
Source: KenSpralling, “Centex Houses Ranks Highest in Customer Satisfaction in 10 major: U.S. Markets, According to Independent Study,” www.investors.com, September 14, 2005; Alicia Orr, “Predicting a Need,” Target Marketing, February 2001, pp. 62–64.
DatabaseDatabaseAnalysisSoftware
TelemarketingCustomized
DirectMail
Collects/provides information
Formulates prospecting solutions – matches homeowners against other data to qualify customers, predict interest; generates prospect universe
Prequalifies prospects, can transfer to salesperson to close sale
Follows-up with prospects not ready to buy, provides response vehicles (web address, toll-free #)
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National and Key Accounts
Separate corporate division/sales force
Deliver high-level customer service to attract and maintain large and important customers
Key account sales execs Business managers capable of
managing key accounts Customize products and services Plan and implement key account
business plansHorizontalStructureOptions
HorizontalStructureOptions
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Team Selling
Integrates functional specialists with customer relationship specialists
ID team structure that meets customer needs
Benefits Customer questions answered
faster Customers can speak directly
with desired specialistHorizontalStructureOptions
HorizontalStructureOptions
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Other Team Selling Structures
Selling center brings together individuals from around the organization to help salesperson
Matrix organization employs direct-reporting salespeople who support internal consultants with specialized expertise
Multi level selling – sales team consists of personnel from various managerial levels who call on their counterparts in the buying organization
HorizontalStructureOptions
HorizontalStructureOptions
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Co-Marketing Alliances
Develop marketing and sales programs to sell integrated systems directly to the ultimate customer
HorizontalStructureOptions
HorizontalStructureOptions
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Logistical Alliances and Computerized Ordering
Customer point of view - Convenient Flexible Less time consuming
How will computerized reorder systems change the role of the sales force?
HorizontalStructureOptions
HorizontalStructureOptions
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Vertical Structure IssuesSpan of Control
Managerial Levels
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Reduced one-to-one communication due to larger # of subordinates
Managements may be less effective, negating cost savings
Larger Span of Control
Greater control/ responsiveness due to fewer management layers
Lower admin costs
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Span of Control
Reduce span of control when: Sales task is complex Profit impact of each
salesperson’s performance is high
Salespeople are well paid and professional
Also, at higher levels in the organization
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Managerial Decision Levels
How much, where should the managerial authority lie?
Hiring, firing, evaluation
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Managerial Decision Levels
Importance of decision =
Managerial decision level
Sales force pay = Managerial decision level
Complex selling tasks =
Managerial decision level
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Managerial Selling Responsibilities
Managers often active in sales to key accounts
Organizations value their selling skills
Managers value commissions, contact with marketplace
Drawback – some managers neglect managerial responsibilities
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4.6
4.6
Line and staff sales organization