ORGANISING AND STAFFING THE SALESFORCE

Prof. Dr. Githa Heggde

BASIC TYPES OF SALES ORGANISATIONS

Sales organisations are generally classified into four basic types:

• Line Organisation• Line and staff organisation• Functional organisation• Horizontal organisation

We shall discuss main characteristics, advantages, and disadvantages of each type of sales organisation

LINE ORGANISATION

Characteristics: All managers have line authority to direct and control subordinates. Used in small firms / departments

Advantages: Simple organisation, clear authority, quick decisions, low cost

Disadvantages: No support to line managers from subordinates who have specialised knowledge / skills. Less time for planning / analysis

LINE AND STAFF ORGANISATION

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 organisations

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

FUNCTIONAL ORGANISATION

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

HORIZONTAL ORGANISATION

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.

Research & Design Team:•Customer Research•Product / Service Design

Planning Team:•Strategic Planning•Accounts, Finance•HR, Administration•Chief Operation Officer

Operations Team:•Production / Operations•Quality Assurance•Systems Engineering

Customer Support Team:•Information•Service•Training

Customer Satisfaction Team:•Sales & Marketing•Pricing, Promotion•Channels, Logistics

SPECIALISATION WITHIN SALES ORGANISATION Needed to increase effectiveness of

salesforce Done by expanding basic sales

organisation 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

GEOGRAPHIC SPECIALISATION

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 specialisation of marketing tasks. Hence, it is combined with product / market sales organisation

PRODUCT SPECIALISATION

Used when the company has many products and / or brands

Two types of product specialisation(x). Sales organisation with product specialised salesforce

(y). Sales organisation with product managers as staff specialists

FIG. ‘Y’ SALES ORGANISATION 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 specialisation by salespeople

MARKET SPECIALISATION

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

COMBINATION SALES ORGANISATION

Characteristics: Many firms use some combination of specialisation organisations, called hybrid or combination sales organisation, with a view to minimise disadvantages and maximise advantages of specialisation organisations

Figure above shows combination of geographic and market specialisations

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:

WORKLOAD METHOD

Assumption: All salespeople have equal workload Steps involved to calculate salesforce size are:

1) Classify customers as per their sales potential2) Decide time per sales call and call frequencies

for each class of customers3) Calculate total market workload = (1) x (2) in

hours4) Decide total work time available per salesperson5) Divide total work time available by different

activities per salesperson in hours6) Calculate total number of salespeople needed

)5(

)3(

nsalespersoperavailabletimesellingtotal

workloadmarkettotal

Workload Method (Continued) Advantages: simple method, conceptually sound, used

for all types of selling situations Disadvantages: Neglects sales productivity &

salesforce turnoverSales Potential / Breakdown Method

The formula used is: , whereN=Number of salespeople needed, or salesforce sizeS=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

)1( TP

SN

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

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

PLANNING STAGE

It consists of three steps:• 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

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

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) Analyse 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.

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

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

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

FINDING THE SOURCES OF SALES RECRUITS

For identifying prospective candidates, firms use internal and external sources. They include:

Internal Sources External Sources

• Employee referral programmes• Current employees• Promotions and transfers

• Advertisements in newspapers and journals / magazines• The Internet (job sites)• Educational institutions• Employment agencies• Job fairs• Other companies

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

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

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

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

TESTING

Many firms use tests as a selection tool 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

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

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

TRAINING SALESFORCE

SALES TRAINING

Proper training can prepare salespeople to meet with customer expectations

New salespeople spend a few weeks to several months in training

Companies view sales training important for protecting their investments in their salesforce

Sales Training Process consists of:• Assessing sales training needs• Designing and executing sales training programs• Evaluating and reinforcing sales training programs

ASSESSING SALES TRAINING NEEDS

Sales training needs are assessed both for• Newly hired sales trainees, and• Experienced / existing salespeople

Methods used for assessing training needs are:• First level sales managers’ observation• Survey of salesforce and field sales managers• Customer survey• Performance testing of salespersons• Job description statements• Salesforce audit (as a part of marketing audit)

DESIGNING AND EXECUTING SALES TRAINING PROGRAMME

For this, sales manager takes five decisions, called:ACMEE: Aim, Content, Methods, Execution, Evaluation

First three words and organisational decisions relate to designing of sales training

Examples of Aims / Objectives of sales training:• Increase sales, profits, or both• Increase sales productivity• Improve customer relations• Prepare new salespeople for assignment to

territories

CONTENT OF TRAINING PROGRAMME

Content for new sales trainees is broader. It includes:• Company knowledge• Product knowledge• Customer knowledge• Competitor knowledge• Selling skills / sales techniques

Examples of specific content for experienced salespersons are:• New product knowledge• Introduce change in sales organisation• Negotiating skills

Content depends on the aims of training programme

SALES TRAINING METHODS

Selection of suitable methods for a training programme depends upon the topic and audience

Training methods are grouped into five categories:• Class room / Conference training• Behavioural learning / Simulations• Online training• Absorption training• On-the-job training

We shall briefly review the training methods

CLASS-ROOM / CONFERENCE TRAINING GROUP

The training methods in this group are: (1) lecture, (2) demonstration, and (3) group discussion

Lecture• Used when more information is presented in a

short time to a large number of participants• May lead to boredom due to less active

participation Demonstration

• Used for giving product knowledge Group discussion

• Useful when participants include experienced and inexperienced salespersons

• A panel discussion consists of a small group of people who discuss a specific topic

BEHAVIOURAL LEARNING / SIMULATION GROUP

This group consists of three training methods: (1) role playing, (2) case-studies, and (3) business games

Role playing• Useful method for teaching sales technique /

process• Typically, one trainee plays the role of a

salesperson and another trainee acts as a buyer Case studies

• Beneficial for understanding consumer behaviour, and building problem solving abilities

• Case teaching includes open discussion, group discussion and presentation

Business games• Helpful in learning impact of decision making• Generates enthusiasm and competitive spirit

ONLINE TRAINING GROUP

It includes (1) electronic performance support systems (EPSS), (2) interactive multimedia training, (3) distance learning

It takes 50 percent less time and costs 30-60 percent less, and more convenient than other training methods

Useful for getting basic knowledge like products and customers

Electronic performance support system (EPSS) makes information available immediately, in a personalised manner

Interactive media training is used for retraining salespeople who can repeat or skip material as desired

Distance learning is a personal training method, which is interactive

ABSORPTION TRAINING / SELF STUDY GROUP

It includes supplying audio cassettes, product manuals, books, articles, and CD-ROMs to salespeople, who read (or absorb) these materials without feedback

Useful for introducing basic materials or strengthening previous training

On-the-Job Training Group Most companies use this method as it places a sales

trainee in a realistic sales situation Typically, a junior salesperson is assigned to a senior

salesperson for some period of time In mentoring, a junior / new employee gets

information, advise and support from mentors / experienced persons

Job rotation is used to groom salespeople for management positions

ORGANISATIONAL DECISIONS FOR SALES TRAINING

Organisational decisions, which are parts of designing sale training programme, are:• Who will be the trainees?• Who will conduct the training?• When should the training take place?• How long should the training be?• Where should the training be done?• What will be the budgeted expenditure for the

training?

EXECUTION OF SALES TRAINING PROGRAMME

Usually sales trainer or sales training manager is responsible for entire process of sales training

Execution / implementation includes preparing time-table, arranging internal / external trainers, making travel arrangements of participants, arranging conference hall and teaching aids, and so on

A good practice to make a final check one / two days prior to start of training programme

Obtain feedback from the sales trainees at the end of the programme

EVALUATION OF SALES TRAINING PROGRAMME

It is done to improve training design and implementation, and to find if expenditure was worthwhile

Framework for sales training evaluation:

Outcomes to measure What to measure How to measure When to measure

• Reactions / Perceptions of participants

• Training objective• Was training worthwhile?

• Questionnaires•interviews

• After the training

• Learning – knowledge, skills, attitudes learnt

• Knowledge, skills, attitudes

• Tests• Interviews

• After training• Before & after – training

• Behavioural change • Trainees’ change of behaviour

• Self-assessment by trainees• Observation by supervisors / customers

• After training, over a period of one year

• Results – Performance; Benefits more than cost?

• Sales, Profits• Customer satisfaction

• Company data• Management judgement• Market survey

• After training, Quarterly, Yearly

REINFORCE SALES TRAINING

Behaviour of most salespeople would not change unless there is reinforcement to sales training

In many companies reinforcement or follow-up trainings are not done

Training methods used for reinforcement are:• Refresher training consists of continuous

training to overcome deficiencies of experienced salespeople and retraining of salespeople whose job requirements have changed

• Web-based or online methods to reinforce formal training sessions

• Senior salespeople or first line sales managers coaching new salespersons

THANK YOU