8 Designing & Development of Salesforce Tanner_07

Sales Management: Shaping Future Sales Leaders

Organization of the Organization of the Sales ForceSales Force

Organization of The Sales Force

Basic Management Function of Arranging Basic Management Function of Arranging The Firm’s Sales Activities The Firm’s Sales Activities

Tasks of The Sales Organization

1.Maintenance of order in achieving sales force goals/objectives

2.Assignment of specific tasks and responsibilities

3.Integration and coordination with other elements of the firm

How a Firm’s Goals Affect the Design of Its Sales Force

Organization of sales force is driven by strategic goals

Organizational sales structures serve a number of purposes that include

1. Serving buyers effectively in ways they want to be served

2. Operating efficiently and effectively as measured by cost and customer satisfaction

The Size of the Sales Force

BreakdownBreakdown MethodMethod

WorkloadWorkload MethodMethod


WorkloadWorkload MethodMethod

Compute total sales call workload Determine amount of work performed by

each rep Factor in additional work responsibilities


BreakdownBreakdown MethodMethod

- - Divide forecasted sales revenue by average sales dollars per salesperson

Step 1 – Compute total number of calls to current customersCategory Number of Accounts Calls/year Total Calls A 100 48 4800 B 300 24 7200 C 500 12 6000

-------- Total Calls28000

Step 2 – Compute total calls made per salesperson Salesperson will average 10 calls per day 10Salesperson will work in the field 6 days 6Salesperson will work 45 weeks a year 45 10 x 6 x 45 = 2700 calls/year

Workload - Basis

Step 3 – Compute total number of salespersons

Total sales calls to existence accounts 28000Sales calls made per salesperson 2700

Adjust for other work load factors

15% time to call prospects and 10% to provide after sales service = 25%

Workload - Basis

Developing A Sales Organization


1.Formal & informal organization

2.Horizontal & vertical

3.Centralized & decentralized

4.The line and staff components of the organization


Formal and informal organizations - Formal and informal organizations - every firm has a formal & an informal organization.

The formal organization is a creation of management

CEO CEO

NSMNSM

RSMRSM

ASMASM

SalespersonSalesperson

Informal organization is developed from the social relationships existing with in the formal organization structure.


Informal organization

Communication pattern formed from the social relationship existing with in the formal organization

Salesperson ASM RSM NSM CEO

Manager Marketing distribution Manager NSM Manager AccountsManager Marketing distribution Manager NSM Manager Accounts


Vertical Sales Organization

Several level of management, all reporting upward to the next level

CEO

NS

RSM

ASM

FS

SR


Horizontal Sales Organization

Number of management level is small and number of manager at particular level is large

Chief Sales Executive

District Sales Manager District Sales Manager District Sales ManagerDistrict Sales Manager District Sales Manager District Sales Manager District Sales ManagerDistrict Sales Manager Karachi Multan Lahore IslamabadKarachi Multan Lahore Islamabad


CentralizedCentralized

Responsibility and authority are concentrated

at higher level of management

DecentralizedDecentralized Delegated to lower levels of management

- Structure is ineffective unless the assignment of decision making to lower levels of sales management is accompanied by a complete authority to carry out the decision.


Line and Staff Marketing OrganizationLine and Staff Marketing Organization

A line function is a primary organizational activity and staff function is a supporting organizational activity.

In a marketing organization selling function is the line component.

Advertising, marketing research, sales training, and distributor relations are considered as staff roles


Line Marketing OrganizationLine Marketing Organization

Vice President for sales

General Sales Manager

Regional Sales Manager N

Regional Sales Manager C

Regional Sales Manager S


Line and Staff Marketing OrganizationLine and Staff Marketing Organization

Vice President for Marketing


Regional Sales Manager N

Regional Sales Manager C

Regional Sales Manager S

------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Sales Training Sales Analyst Sales Planning Distribution Manager

Marketing Research

Advertising

Best way to design a sales structure is toBest way to design a sales structure is to Determine sales activities that must be performed

to reach goals Create sales structure that affords highest levels

of service to buyers at lowest overall cost

Select, train and manage reps and managers to become experts in their assigned duties

Basic Types of Sales Organization

Geographic Sales Structure

Sales Structures Geographic Specialization Customer Specialization Product Specialization

Geographical, Product and Market Structures

MarketSales Structure

Reps assigned to particular customers or industries Reps learn more about customer’s specific business

needs and offers customized solutions

ProductSales Structure

Sales activities organized around related product lines or manufacturing divisions

Interacts with buyers as specialists

GeographicalSales Structure

Depends on physical boundaries to organize sales force with customer accounts

Interacts with buyers as generalists

Geographical Sales Structure

PROs

Relatively easy to design

Minimizes duplication of effort

Ensures a specific salesperson is assigned to each customer

Sales calls more efficiently scheduled

Territory can be divided or combined to respond to market conditions

CONs

Work best when product line is simple

Can be inefficient

6/4/2015

Geographic-Based Structure

Geographical, Product and Market Structures

MarketSales Structure









Product Sales Structure

Limitation: can be confusing for buyerLimitation: can be confusing for buyer

1. Called on same accounts/customer2. Had little knowledge of each other’s products3. Did not cooperate by providing leads and info

to each another4. Buyer/customer confusion


Product Specialization Product Specialization


Sales Manager Product C

Sales Manager Product B

Sales Manager Product A

Geographical, Product, and Market/customer Structures

Customer/marketSales Structure









Customer/market-Based Structure

PROs

Effective strategy when a seller wants to penetrate a new market

Allows selling firm to vary allocation of sales efforts to specific customers or industries by adding to or reducing the number of salespersons slotted in one area to another

Permits firm to offer specialized training and develop individualized sales approaches and applications by industry

CONs

Selling expenses are higher than for geographic-based structure

Multiple reps calling on same client/geography

Buyer confusion

Duplication of effort

Higher expenses


Customer Specialization Customer Specialization By type of IndustryBy type of Industry


Sales Manager Electronics

Mkt

Sales Manager Military Mkt

Sales Manager Computer Mkt

Market-Based Structure


Customer SpecializationCustomer Specialization By Distribution Channel By Distribution Channel


Sales Manager Exports

Domestic Sales Manager


Customer Specialization Customer Specialization By General type of Customers By General type of Customers


Sales Manager Institutions

Sales Manager Small Business

Sales Manager Major

Accounts

Key Accounts

Key Accounts:

- customers that are large in terms of sales revenue and profitability and strategically important for the future of the firm

80/20 Rule:

- 80% of a firm’s total business and profits are derived from 20% of its customers

Large, strategic accounts require higher levels of service and deeper buyer-seller relationships

Key Account Structures

Use Existing Force

Sales force structure is simplified

All accounts are managed under a single organizational structure

CONs

Reps may take short-term view

Reps may not understand broader, overall needs of key accounts

Assign Execs

Assigning sales and marketing executives to manage key accounts makes sense for smaller firms that cannot afford separate sales effort

CONs

Can take a lot of time, leaving less time for other duties, like managing sales force

Create Separate

Create separate sales structures to serve most important customers

Integrates marketing and sales for key accounts under one organizational structure

CONs

Establishing distinct sales channels for major acc’ts is more costly

Duplication of effort Financial viability if key

acc’ts lost

Adding Independent Sales Reps to the Sales Structure

Ownership Do not take ownership of the product

Commission Receive commission for all sales they make within

an assigned geographical territory

Clients Sell on behalf of mfgs or other sellers in territories

where no company sales force is present

Inventory Do not maintain an inventory

Sales Traditionally sells several related, noncompeting

product lines

Use of Sales Agents

Common for manufacturers to use sales agents when entering new territories with low or unknown sales volumes Selling costs (commissions) incurred only

when product or service is sold

Advantages An “in-place” or existing sales force Established buyer relationships Little (or no) fixed costs Experienced sales personnel Lower costs per sales call Long-term stability in the territory

Use of Sales Agents

Tendency for mfgs to take credit for positive sales outcomes and assign blame for negative outcomes

Disadvantages Seller may not receive equal time for their products

Agents blamed for shifting sales call focus to another product line when buyer’s need is not easily identified

Agents criticized for not opening new accounts, not following up on leads, representing too many mfgs, and communicating poorly with the firms they represent

Company Salesperson or Sales Agent?

Salesperson When it’s important to control

sales effort, product or related technology is new, buyers need high level of service

Company exerts greater control over sales force efforts

Greater control over who is hired

Sales agent When potential sales

revenue is low in a territory When revenue will take

years to become substantial When qualified sales agents

already operate in the area When it’s not feasible for

company sales force to cover entire market

Relations With Other Departments

Key Concern of Sales Manager Key Concern of Sales Manager

Relation with other departments

As per marketing concept, all business activities should be coordinated to satisfy customer need

Sales department is the key link, so coordinating the sales effort with other departments is absolutely essential


Two types of departments sales MUST have good working relationship

1.Connected with marketing activities, advertising, marketing research, sales promotion, product management

2.Non marketing functions such as HR, manufacturing and finance

Top management - responsible for departmental coordination

A thorough understanding of other departments’ functions, and how these relates to the sales efforts, is required

Coordination may be achieved through policies, written communications, meetings and similar formal management activities

Successful coordination between departments often involve informal communications as well

Relation with other marketing function

Marketing mix

Combination of the various techniques used to satisfy customers needs and to stimulate sales

Coordination between various elements of the marketing mix is essential

Most companies try to achieve this by requiring the heads of all marketing , including sales to report to a top marketing executive

Special organizational structure such as product management are also used to coordinate sales with other marketing functions


Relation with other marketing function

Advertising Relation between sales and advertising are of special concern

Both form of promotion have the same purpose – to inform the public and persuade people to buy

Sales manager must aware of the advertising department’s plans and activity, so that sales activity can be complemented

Advertising – A good source of sales lead

Salespeople can provide feedback on advertising


Relations With Other

Relation with Non marketing Departments

Research and Development Most companies have R&D department

May be a separate staff department or responsibility may be assigned to production or marketing

Primary responsibility or function is to perform basic research and engineering activity needed to develop new products and improve existing

Sales department can assist R&D efforts in two primary ways

1. Salespeople are excellent sources of new product and product modification

2.Salespeople have valuable insight into whether or not a new product will meet customer need

Relation with Non marketing DepartmentsRelation with Non marketing Departments

Research and DevelopmentResearch and Development Relationship is crucial in high-tech firms

Field sales managers find themselves dealing with many tasks

Issues, as how headquarter staff should interact with field sales management, final customers and whether sales people should be trained on each product technology?

To solve these problems, high-tech companies have developed “account control concept” authority and responsibility for handling each account rests with field sales management

Product specialist accompany salespeople when specific product knowledge is needed


Relation with productionRelation with production Function is to prepare the product for sale

Production department’s concerns are minimizing cost through standardization, long & continuous production run, long production lead time

Sales executive want many types of products, frequent product changes, customer’s special order & short production lead time

Best way is JOINT PLANNING


Relations with HRRelations with HR Responsible for the people, or human resources

The unique aspects of managing people who sell often lead to conflict s between sales and human resource manager

HR do not understand the problems involved in managing people who are located away from the home office.

Sales managers/departments themselves handle the more complex tasks of selecting , training, developing & evaluating their own personnel.

However, sales manager often need to consult HR for guidance for rapidly changing issues, health and safety. A sales manager would be unwise not to take advice from expert


Relation with Finance – Three major areasRelation with Finance – Three major areas Budgeting

- Sales department provides short and long range sales estimates as - Sales department provides short and long range sales estimates as the basis of financial planning & budgetingthe basis of financial planning & budgeting

Cost control

- Accounting specialist can assist sales managers in their efforts to - Accounting specialist can assist sales managers in their efforts to control costs, by providing data for selling cost analysis control costs, by providing data for selling cost analysis

Credit

- Credit plans are major concerns for sales as well as finance. Sales - Credit plans are major concerns for sales as well as finance. Sales executive should have input into establishing credit policies. Sales executive should have input into establishing credit policies. Sales people can also provide current credit status information people can also provide current credit status information


Major Trends in Sales Organizations

Changing Trend Traditional forms of sales organization have changed their approachTraditional forms of sales organization have changed their approach

In search of new and better ways to serve their marketsIn search of new and better ways to serve their markets

For Consumer goods & service companies, the new approaches For Consumer goods & service companies, the new approaches involve product manager form of organizationinvolve product manager form of organization

Industrial manufacturer are looking closely at strategies that will help Industrial manufacturer are looking closely at strategies that will help them adapt to change buying behavior and develop more specialized them adapt to change buying behavior and develop more specialized sales forcesales force

For many companies, the major challenge is change from a For many companies, the major challenge is change from a

““Product” To “Customer Driven Orientation” Product” To “Customer Driven Orientation”


Telemarketing - Use of telecommunication technology in personal Use of telecommunication technology in personal sellingselling

Direct Marketing

An emerging form of promotion and distribution that combines element An emerging form of promotion and distribution that combines element of advertising and personal sellingof advertising and personal selling

Approach that bypasses intermediaries to deliver goods and services Approach that bypasses intermediaries to deliver goods and services directly from seller to buyerdirectly from seller to buyer

Greatest strength of direct marketing is its ability to deliver individual Greatest strength of direct marketing is its ability to deliver individual selling message to specific prospects or customers with affordable selling message to specific prospects or customers with affordable cost.cost.

Development/maintenance of customer data base is the key Development/maintenance of customer data base is the key


Telemarketing Job Types

1. Account manager - 1. Account manager - Accounts responsibility, Post sales service, Accounts responsibility, Post sales service, Order taking, Problem solvingOrder taking, Problem solving

2. Prospector -2. Prospector - Prospecting Prospecting

3. Backup - 3. Backup - Field sales supportField sales support

4. Customer relation specialist - 4. Customer relation specialist - information transfer, complaints, information transfer, complaints, conducting research, promotion inquiries, customer serviceconducting research, promotion inquiries, customer service

Inbound Telemarketing - Potential customer contacts the selling companyPotential customer contacts the selling company

Outbound Telemarketing - Selling companies contact the prospect and cus- Selling companies contact the prospect and customerstomers

THANKS THANKS

8 Designing & Development of Salesforce Tanner_07

Documents

Transcript of 8 Designing & Development of Salesforce Tanner_07