Sales Force Management 2017

Course Outline (6/10)

Krzysztof Cybulski Ph.D. Marketing Chair Faculty of Management Warsaw University

Program of Sales Force Management Course

1. The Role of Sales Force in Today’s Changing World

2. Recruiting, Selecting & Hiring The Salespeople

3. Sales Training & Coaching Programs

4. Motivating the Sales Force

5. Salespeople Compensation Plan

6. Organizing the Sales Force. Functions of Sales Manager

7. Elements of Sales Planning and Sales Department Budgeting

8. Monitoring, Control and Evaluation of the Sales Force

9. Sales Organization Diagnosis

10. Special Sales Force Management Problems and Key Trends

Final Test

Agenda

Main Tasks of Sales Force

Leading Sales Force

Designing Sales Organization

Sizing Sales Organization

Inside or Outside Sales Force

Sales Territory Management

Sales Management as a Carrier

Main Duties and Responsibilities of Sales

Managers

Leading Sales Force

Hiring Salespeople

Hiring Salespeople

Salespeople Socialization and Training

Salespeople Socialization and Training

Profiling and Recruiting Salespeople

Profiling and Recruiting Salespeople

Establishing

Sales Force

Objectives

Establishing

Sales Force

Objectives

Designing Sales

Force

Organization

Designing Sales

Force

Organization

Evaluating and Selecting Candidates

Evaluating and Selecting Candidates

Establishing Sales Force Objectives

Prospecting – they find and develop new customers.

Communicating – they communicate information about company products and services.

Selling – they sell products by approaching the customers, presenting their products, answering objections and closing sales.

Servicing – in addition, salespeople provide services to customers (e.g. consulting on problems, providing technical assistance, arranging finance).

Information Gathering – salespeople carry out market research & intelligence work, and fill out sales call reports.

Designing Sales Force Organization

Territorial (Geographical) SF Structures

Product SF Structures

Market SF Structures

Functional SF Structures

Key Accounts SF Structures

Mixed SF Structures

Designing Sales Force Organization

Designing Sales Force Organization

Geographical Structure:

Each sales rep is assigned an exclusive territory.

Advantages:

Lowest possible costs because of low travel time &

administration expenses

Simplicity of organizational structure & information relations

Clarity in who is responsible for whom; one salesperson for

one customer

Disadvantages:

Salesperson has to sell the whole product line

Difficulties for dissimilar, complex products, no

specialization

Perhaps too much attention to easy-to-sell products

Designing Sales Force Organization

Product Structure:

Each sales rep is completely responsible for one product or

product line. Product specialization is particularly warranted

where the product are technically complex, highly unrelated, or

very numerous.

Advantages:

Better control of selling effort

Salespeople start to be experts in the products and needed

selling processes

Better control over product costs

Disadvantages:

High traveling costs

Duplication of calls & selling effort

Designing Sales Force Organization

Market Segments Structure:

Firm’s salesperson are often specialize along

industry or customer lines.

Advantages:

Better understanding of customer’s needs

Better allocation of marketing & selling effort due

to customers ranking

Disadvantages:

Higher costs related with extensive travel

Duplication of calls & selling effort

Designing Sales Force Organization

Key Accounts Structure:

Some firm create a separate corporate division for dealing with

major accounts; few major customers account for large amount of

company’s sales.

Advantages:

preferred supplier status

long, intense and profitable interaction

allows for close integration of manufacturing, logistics, marketing,

R & D

Disadvantages:

Excessive dependability on few buyers

Higher costs

Lack of experienced key account managers

Higher risk in general

Sales Force Sizing

How many salespeople are needed?

How many should be generalists?

How many should be specialists?

How many sales managers are needed?

How many telemarketing are needed?

How many support people are needed?

Sales Force Sizing

How much the company should

spend on the sales force?

What percent of sales should be

allocated to sales force expense?

How will sales and profits vary with

different sales force sizes?

Sales Force Size Estimation

Workload Method

Marginal Productivity Method

Average Productivity Method

Does Sales Force Become Too Small?

Numerous external and internal change forces

can cause a company’s sales force to become too

small.

External force include changes to company’s

customers, its competitors, and its environment.

Internal forces include new company strategies

and productivity enhancement initiatives.

Does Sales Force Become Too Small?

External change forces:

Market expands

Customers ask more from the sales force

Buying process changes so there are more

purchase influencers

Customers needs become more sophisticated

Customers require global reach

Competitors are expanding their sales forces

Does Sales Force Become Too Small?

External change forces:

New, larger, wealthier, smarter, more aggressive

competitors

Opportunity to take advantage of competitor’s

weaknesses

Better economic conditions

Outlook for future sales is better than company

expected

Industry deregulation and consolidation

Tight labor markets

Does Sales Force Become Too Small?

External change forces

Start up sales force

Launching new products

Entering new markets

Sales strategy (selling process) require more

salespeople

Targeting more customers and prospects

Rising market opportunity at lower financial risk

Does Sales Force Become Too Small?

Internal change forces

Increasing sales

Increasing market share

Increasing customer satisfaction

Increasing new business development

Increasing consultative, value-adding services

Reducing workload and travel per salesperson

because of large territories

Does Sales Force Become Too Big?

External forces create need to downsize the sales force

Market contraction

Buying process changes

Customer consolidation

Some customer prefer buy via internet or telesales

Customer need fewer services from salespeople

Fewer, weaker competitors

Competitors are downsizing their sales forces

Does Sales Force Become Too Big?

External forces create need to downsize the sales force

Commodification, increased price pressure, margin erosion

Weak economy

Financial success leading to overstaffing

Outlook for future sales is below company expectations

New sales channels

New technology reduce salesperson’s work

Does Sales Force Become Too Big?

Internal forces create need to downsize the sales force

Mergers/acquisition

Corporate strategy change

Shifting to a product or market emphasis that requires fewer

salespeople

Selling process and go-to-market changes that require

fewer salespeople

Targeting fewer customers

Selling fewer products

Does Sales Force Become Too Big?

Internal forces create need to downsize the sales

Pulling out of markets

Switch from revenue to a cost focus

Increasing productivity per salesperson

Reducing calls to unprofitable accounts

Reducing costs

Reassigning sales force tasks to less expensive

personnel (outsourcing)

Inside or Outside Sales Force

Own Sales Department

Outsourcing Salespeople

Mixed Solution?

Inside or Outside Sales Force

Inside or Outside Sales Force

Main Inner Determinants of Sales Force

Company’s Resources

Company’s Strategy

Position of Sales Department in the Company

Role of Personal Selling in the Promotion-Mix

Knowledge, Experience & Skills of Managers

Understanding of Modern Management Concepts

Inside or Outside Sales Force

Main External Determinants of Sales Force Management

Specific Character of the Industry

Market Position of the Company

Competitors’ Strategies & Activities of Rivals’ Sales Force

Available Managers & Salespeople

Access to Technology & Know-How

Sales Territory

Territory management is a customer group

or geographic area over which either an

individual salesperson or a sales team has

responsibility.

These territories are usually defined based

on geography, sales potential, its history or a

combination of these factors.

The ultimate aim of this division of areas is to

maximise sales and profits, and to allocate

resources efficiently.

Sales territory management why it is

important?

Sales territory management is more important than

many may realize. It can boost your sales team’s

morale, increase sales, provide a larger customer

base and inspire team cohesion. So what is it and

what do you need to focus on for efficient

management of sales territories?

It is very important to create sales territories that are

balanced. When a sales territory is out of balance,

there are two things that can happen.

If a territory is being under-serviced, the sales team

or salesperson is spread too thinly and it leads to

sub-optimal levels of activity.

Sales territory management why it is

important?

Those responsible for the territories will seek out too

few leads, identify too little prospects and spend too

little time with customers because they are

overworked. This leads to customers going to

competitors and you losing sales.

Over-servicing in a territory is where the sales team

has too little work and too many team members to

service a small area. This raises costs and prices

overall which ultimately leads to reduced sales.

Precious resources are also then not being utillized

in more important areas. This can lead to under-

servicing in other areas.

Sales territory management why it is

important?

Unbalanced territories can cause many problems.

Some of these include the unfair distribution of sales

potential amongst the sales force, distorted

compensation amongst sales reps and, reps leaving

the company to seek out better balance and

compensation elsewhere.

One of the things people can do to form good sales

territories is sales potential forecasting. This helps to

determine sales targets and identifies areas that are

worthy to allocate sparse resources to. Forecasting

determines the number of prospects in an area and

their combined (and individual) buying power.

Sales territory management why it is

important?

There are three main reasons why sales management usually

employs territories. It can be customer-related which increases

market coverage and provides good customer service. This

makes for higher sales figures and greater customer

satisfaction.

The second reason can be related to the salespeople

themselves. It increases enthusiasm and motivation in teams. It

is great for effective performance evaluation and decreases

employee turnover while providing reward potential for the

amount of effort taken.

The last reason can be releated to management. Control is

enhanced with territory allocation and is great for promotion

coordination. It provides potential for staff incentives and better

allocation of costs per territory.

Sales territory management why it is

important?

What do you need to take into consideration

when establishing territories?

Type of product or product line you have

Competition in territories

Channels of distribution and the transport system

Workload of the salesperson and the nature of the

assignment or job

Sales potential and servicing requirements of territory –

territories with limited potential can serve as a training

ground for new sales reps

Performance of a particular salesperson – this will

determine if they get more or less challenging territories

Sales territory management why it is

important?

Territory management can help spread out the

workload for your sales team, allowing them to

complete tasks more efficiently, build better

customer relationships and increase the good-

quality leads that they get.

Just as important is the motivation it provides to your

sales team if they feel like they are being productive

and accomplishing a lot of the sales goals they set

out to do

Sales and Sales Management as a Carrier

Sales Representative

Senior Sales Representative

Selling Specialist

Key Account Manager

Client Team Leader

National Account Manager

Sales Supervisor

Sales and Sales Management as a Carrier

Product Manager

Category Manager

District Manager

Regional Sales Manager

National Sales Manager

Vice President of Sales

Sales Managers their Duties and Responsibilities

Understanding the firm’s objectives, strategies &

market position

Preparing marketing (sales) plans & programs

Conveying these plans & programs to the

salespeople

Transforming these plans & programs into selling

tasks & methods

Organizing salespeople into effective and efficient

structures

Developing and updating sales forecast

Sales Managers their Duties and Responsibilities

Allocatining selling resources based on sales

forecasts & customer needs

Recruiting, selecting, training and assigning

salespeople to the sales territories

Motivating, compensating, and supervising sales

personnel

Synchronizing sales functions with other

marketing functions and production

Assessing sales performance by salespersons,

product lines, customer group and geographic

areas

Monitoring continuously competitors’ actions

Challenges of Newly Appointed Sales Manager

Choosing a leadership style

Supporting

Coaching

Mentoring

Team building

Representing

Persuading

Recognizing

Rewarding

Conflict management

Planning

Problem solving

Informing

Delegating

Clarifying

Monitoring

Leadership Behaviors and Styles

RELATIONSHIP-ORIENTED TASK-ORIENTED

Basic Leadership Styles

low task

and high relationship

high task

and

high relationship

low task

and

low relationship

high task

and

low relationship

High Low

Task behavior

Charismatic Leadership

Words and actions which transform the basic values,

beliefs, and attitudes of employees in such a way

that they are willing to perform beyond the standards

levels expected by the organization.

Articulate a vision

Challenge the status quo

Provide a role model

Reasons for Supervision

Leader

Training

Sales assistance

Enforcement Better

performance

Improved morale

Amount of Supervision Needed

Optimal

Amount of Supervision High Low

High

Low

Under Over

Morale Building Process

Integrate interests: match the person with the job

Foster open and frequent communication

Coaching and Mentoring Activities

Develop a strong corporate culture and a supportive organizational climate

Leader

Why aren't Sales Managers Doing a Better Job?

Ilogical selection of

Sales Managers

Peter’s Rule

Inadequate Training

Orientation towards

Sales not Relationship

Marketing

Insufficient blending of

Sales and Marketing

Functions

Key Words

Organizing Sales Efforts

Sizing and Deployment

Inside and Outside Sales Force

Sales Managers their Duties & Responsibilities

Sales & Sales Management as a Carrier

Tasks and Skills of Newly Appointed Sales Manager

Why aren't Sales Managers Doing a Better Job?

References

Darmon, R.Y.(2007). Leading the Sales Force, Cambridge

University Press.

Zoltners, A.A., Sinha, P., Lorimer, S.E. (2009), Building a Winning Sales Strategy, Amacom.

Zoltners, A.A., Sinha, P., Lorimer, S.E. (2004).Sales Force Design for Strategic Advantage, poalgrave macmillan.

Zoltners, A.A., Sinha, P., Lorimer, S.E. (2001).The Complete Guide to accelerating sales force performance. Amacom.