sales organisation

7/29/2019 sales organisation

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Sales Organization Structure andSales Force Deployment

Module Four


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Ingram LaForge Avila

Schwepker Jr. Williams

Professional Selling:

A Trust-Based Approach

Module 4:

Sales Organization Structure and Sales Force Deployment

Learning Objectives

1. Define the concepts of specialization,centralization, span of control versus managementlevels, and line versus staff positions.

2. Describe the ways sales forces might bespecialized.

3. Evaluate the advantages and disadvantages ofsales organization structures.

4. Name the important considerations in organizingmajor account management programs.


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Module 4:


Learning Objectives

5. Explain how to determine the appropriate salesorganization structure for a given selling situation.

6. Discuss sales force deployment.7. Explain three analytical approaches for

determining allocation of selling offer.

8. Describe three methods for calculating sales forcesize.


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Module 4:


Learning Objectives

9. Explain the importance of sales territories and list

the steps in the territory design process.10. Discuss the important people considerations in

sales force deployment.


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Module 4:


Setting the Stage

1. What is one of the key changes IBM

made to the structure of its salesorganization?

2. What change did IBM make to the way itssalespeople and sales managers

interact?

Strategy and SalesOrganization Structure: IBM


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Module 4:


Sales Organization Concepts

SpecializationThe degree to which individuals perform some of therequired tasks to the exclusion of others. Individualscan become experts on certain tasks, leading to better

performance for the entire organization.

Centralization

The degree two which important decisions and tasksperformed at higher levels in the management hierarchy.

Centralized structures place authority and responsibilityat higher management levels.


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Module 4:


Sales Force Specialization Continuum

Some specializationof selling activities,

products, and/or

customers

All selling activitiesand all products to

all customers

GeneralistsCertain sellingactivities for certain

products for certaincustomers

Specialists


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Module 4:


Flat Sales Organization

Span of Control

Man

agementLevels

NationalSales

Manager

DistrictSales

Manager

DistrictSales

Manager

DistrictSales

Manager

DistrictSales

Manager

DistrictSales

Manager

Span of Control vs. Management Levels


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Module 4:


Tall Sales Organization

National SalesManager

Span of Control

M

anagementLevels

District

SalesManager

District

SalesManager

District

SalesManager

District

SalesManager

District

SalesManager

District

SalesManage

r

Regional SalesManager

Regional SalesManager

Span of Control vs. Management Levels


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Module 4:


National Sales Manager

Regional Sales Managers

District Sales Managers

Sales Training Manager


Salespeople

Staff Position

Line Position

Line vs. Staff Positions

S lli Sit ti F t d


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Module 4:


Organizational

Structure

Environmental

Characteristics

Task

Performance

Performance

Objective

SpecializationHigh Envir.uncertainty Nonroutine Adaptiveness

CentralizationLow Envir.Uncertainty Repetitive Effectiveness

Selling-Situation Factors and

Organizational Structure

C t d P d t D t i t


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Module 4:


SimpleProductOffering

ComplexRange ofProducts

Customer Needs Different

Customer Needs Similar

Market-Driven

Specialization

Product/Market-Driven

Specialization

Geography-Driven

Specialization

Product-Driven

Specialization

Customer and Product Determinants

of Sales Force Specialization


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Module 4:


Geographic Sales Organization


Zone Sales Managers (4) Zone Sales Managers (4)

District Sales Managers (20)

Salespeople (100) Salespeople (100)


Eastern Region Sales Manager Western Region Sales Manager



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Module 4:


Product Sales Organization


Office Equipment Sales Manager Office Supplies Sales Manager


Salespeople (100) Salespeople (100)



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Module 4:


Market Sales Organization


Zone Sales Managers (4)


Salespeople (150)


Commercial AccountsSales Manager

Government AccountsSales Manager

Sales TrainingManager

Salespeople (50)


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Module 4:


Functional Sales Organization


Field Sales Manager Telemarketing Sales Manager

Regional Sales Managers (4)

Salespeople (160)

Salespeople (40)




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Module 4:


Large

Small

Complexity of Account

SizeofAcc

ount

LargeAccount

Simple Complex

MajorAccount

Regular

Account

Complex

Account

Identifying Major Accounts


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Module 4:


Develop Major Account Salesforce

Assign Major Accounts toSales Managers

Assign Major Accounts to Salespeoplealong with Other Accounts

Major Accounts Options


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Module 4:


Comparison ofSales Organization Structures

OrganizationalStructure Advantages Disadvantages

Geographic

Low Cost

No geographic duplication No customer duplication Fewer management levels

Limited specialization

Lack of managementcontrol over product orcustomer emphasis

Product

Salespeople become expertsin product attr. & applications Management control over

selling effort

High cost Geographic duplication Customer duplication


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Schwepker Jr. WilliamsProfessional Selling:


Module 4:


Comparison ofSales Organization Structures

OrganizationalStructure Advantages Disadvantages

Market

Salespeople developbetter understanding of

unique customer needs Management control over

selling allocated to differentmarkets

High cost Geographic duplication

Functional Efficiency in performing

selling activities

Geographic duplication Customer duplication Need for coordination


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Schwepker Jr. WilliamsProfessional Selling:

A Trust-Based ApproachModule 4:


Hybrid Sales Organization Structure


Major AccountsSales Manager

Regular AccountsSales Manager

Office EquipmentSales Manager

Office SuppliesSales Manager

Field SalesManager

TelemarketingSales Manager

Commercial AccountsSales Manager

Government AccountsSales Manager

WesternSales Manager

EasternSales Manager


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Ingram LaForge AvilaSchwepker Jr. Williams

Professional Selling:A Trust-Based Approach

Module 4:


Salesforce Deployment

1. How much selling effort is needed to cover accounts and

prospects adequately so that sales and profit objectiveswill be achieved?

2. How many salespeople are required to provide the desiredamount of selling effort?

3. How should territories be designed to ensure propercoverage of accounts and to provide each salespersonwith a reasonable opportunity for success?

Sales Force deployment decisions can be viewed as

providing answers to three interrelated questions.


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Module 4:Sales Organization Structure and Sales Force Deployment

Interrelatedness of

Sales Force Deployment Decisions

How much selling effort is needed to coveraccounts and prospects adequately so that salesand profit objectives will be achieved?

How many salespeople are required to provide thedesired amount of selling effort?

How should territories be designed and salespeopleassigned to territories to ensure proper coverage ofaccounts and to provide each salesperson with areasonable opportunity for success?

Allocation ofSelling Effort

Sales ForceSize

TerritoryDesign


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Single Factor

Models

Easy to Develop and Use

Difficult to Develop and Use

LowAnalyticalRigor

HighAnalyticalRigor

Portfolio

Models

Decision

Models

Analytical Approaches to

Allocation of Selling Effort

S


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Single Factor Models

Easy to develop and use/low analytical rigor

Accounts classified into categories based on onefactor, such as market potential

All accounts in the same category are assigned thesame number of sales calls

Effort allocation decisions are based on the analysisof only onefactor and differences among accounts inthe same category are notconsidered in assigningsales call coverage

Si l F t M d l E l


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Single Factor Model Example

Market PotentialCategories

ABCD

Average Sales Calls toan Account Last Year

25232016

Average Sales Calls toan Account Next Year

3224168

P tf li M d l


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Portfolio Models

Account Opportunity - an accounts needfor and ability to purchase the firms

products

Competitive Position - the strength of therelationship between the firm and an

account


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Portfolio Model Segments and Strategies

Competitive Position

Segment 1 Segment 2

Segment 4Segment 3

Strong Weak

Low

High

Acco

untOpportu

nity

D i i M d l


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Decision Models

Simple Basic Concept - to allocate salescalls to accounts that promise the highest

sales return from the sales calls

Optimal number of calls in terms of sales orprofit maximization

S l F Si K C id ti


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Sales Force Size: Key Considerations

Sales Produc tiv i ty- the ratio of sales generated toselling effort used In early stages, the addition of salespeople increases sales

considerably more than the selling costs. As salespeoplecontinue to be added, sales increases tend to decline until apoint is reached when the costs to add a salesperson are morethan the revenues that salesperson can generate.

Salesfo rce Turno ver

Is very costly

Should be anticipated

S l F Si A l ti l T l


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Sales Force Size: Analytical Tools

Salesforce size = Forecasted sales / Average sales per person

The Breakdown Approachis used to determine thenumber of salespeople needed to generate aforecasted level of sales. This approach is easy todevelop. However, it is weak conceptually. Theconcept underlying the calculations is that salesdetermine the number of salespeople neededputtingthe cart before the horse.



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The Workload Approachdetermines how much sellingeffort is needed to adequately cover the firms market.

Then the number of salespeople required to providethis amount of selling effort is calculated. Thisapproach relatively simple to develop and is soundconceptually.

Number of salespeople =Total selling effort needed

Average selling effort persalesperson



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The Inc remental Approachis the most rigorous forcalculating salesforce size. Its compares the marginalprofits and marginal costs associated with eachincremental salesperson. The major advantage is that it

quantifies the important relationships between salesforcesize, sales, and costs. However, this method is difficult todevelop, and it cannot be used for new sales forces wherehistorical data and accurate judgments are not possible.

# of Salespeople Marginal Contribution Marginal Cost

100101102103

$85,000$80,000$75,000$70,000

$75,000$75,000$75,000$75,000

D i i T it i


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Designing Territories

Territories consist of whatever specificaccounts are assigned to a specificsalesperson. The territory can be viewed asthe work unit for a salesperson.

Territory Considerations Trading areas

Present effort

Recommended effort

Territor Design Proced re


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Ingram LaForge AvilaProfessional Selling: Module 4:

Territory Design Procedure

FinalizeTerritory

Design

AssessTerritory

Workload

Form InitialTerritories

Analyze

Planning andControl Unit

Opportunity

SelectPlanning and

Control Unit

sales organisation

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