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  1. Part IIISALES FORCE ACTIVITIES Chapter 6: Sales Force Organization

  2. Sales Force Organization: Impact Structure Compensation Sales Management Role Performance Evaluation Training Program Recruiting/ Selection Figure 6-1: Decisions Affected by Sales Force Organization

  3. Sales Force Organization: Topics

  4. Generalist versus specialist structures • Sales force organizational structure vary from: • To generalist structures where each salesperson sells all products to all customers within a particular geographic area . • To specialist or highly specialized sales forces ,where teams of salespeople focus on specific products , markets , or functions. • Specialization presents important challenges in terms of coordination ,integration, and higher expenses .

  5. Strategic Account Programs: Survey Results Today In Five Years 49% 45% 24% 20% 18% 17% 16% 11% Figure 6-2: How Sales Forces are Organized

  6. Generalist versus specialist structures • In general ,companies attempt to develop a sales force organization that is adaptable ,efficient ,effective. • A sales force organization is adaptive if the company can react quickly to product and market changes without a major structural overhaul. • Efficiency reflects the rate at which key sales activities ,such as calls ,demonstration ,and proposals are performed . • Effectiveness represents the buyer’s favorable reaction to the sales effort .(as example customer positive response to sales calls due to its superior customer knowledge . • Four fundamental structures for organizing a sales force are • Generalist • Product specialized • Customer specialized • Functional specialized

  7. Generalist structures • The most common and least complicated sales force organization is a generalist structure ,also referred as geographic organizations , in which each salesperson sells the firm’s entire product line to all accounts and prospects ,usually within a specific geographic area. • The geographic area have small sales • Minimal travel time • Salesperson spend a high percentage of their time face to face with customers . • This method tend to be the highly efficient sales structures . • This method work best when the product line consists of related products or services that appeal to a rather homogeneous group of buyers . • In this method the salesperson have big opportunity to go in depth of the local culture ,economic ,and competitive conditions . • Disadvantage like ,salesperson focus on lines with which they are comfortable ,neglecting the lines that are newer , more difficult to sell , but possibly more profitable .

  8. Generalist structures • When so many products to sell ,it is difficult to have the expertise needed to develop creative solution to customers’ problems . • Salesperson may find themselves at a competitive disadvantage if they are asked to sell to customers with problems and needs that are diverse and complex • Salesperson may spend too much time with customers who are easy to sell, and are not profitable or have an opportunity to grow . • The most complex problem are coordinating the sales force effort across different geographic areas . • Many organization have decided that they need to specialize beyond simple geography ,on one of this three thing : (products , customers ,activities )

  9. Sales Force Organization: Generalist Figure 6-3: Geographical Sales Organization National Sales Manager Central Regional Sales Manager Eastern Regional Sales Manager Western Regional Sales Manager Northeast District Sales Manager Mid-Atlantic District Sales Manager Southern District Sales Manager Connecticut Rhode Island Maine New Jersey Pennsy-lvania North Carolina South Carolina New York Vermont Delaware District of Columbia Georgia Alabama New York Massachusetts Virginia Maryland Mississippi Florida

  10. Generalist structures • Product specialization : • A product based specialization is most appropriate when a firm has a large, diverse, and complex line of products. • Each sales person specializes by selling only a few of the products in the organization’s total product portfolio and reports to a management structure that is also focused on the same limited number of product lines. • Coordination occurs at the highest levels in the organization .

  11. Sales Force Organization: Product Specialists Figure 6-4: Product Specialized Sales Force National Sales Manager Eastern Regional Sales Manager Northeast District Sales Manager Mid-Atlantic District Sales Manager Southern District Sales Manager Printer Equipment Salesperson Server Salesperson Minicomputer Salesperson Programmable Calculator Salesperson Copier Salesperson Large Computer Salesperson

  12. Advantages Allows focusing of sales effort Expertise developed in limited number of products Disadvantages More expensive to operate May result in duplication of sales calls to clients Product Specialist Organization: Analysis

  13. Generalist structures • Customer specialization : • Refered also as vertical marketing ,in which each salesperson or sales team sells te entire product line to select types of buyers . • This type is used by companies as companies try to become more market focused .

  14. Sales Force Organization: Customer Specialists Figure 6-5: Customer Specialized Sales Force National Sales Manager National Accounts Manager Manager of Export Sales Eastern Regional Sales Manager Northeast District Sales Manager Mid-Atlantic District Sales Manager Southern District Sales Manager Salesperson For Educational Institutions Salesperson for Retail Customers Salesperson for Government Agencies Salesperson for Bank Customers Salesperson for Manufacturers Salesperson for Wholesale Customers

  15. Advantages Consistent with market driven strategy Salespeople become customer experts Customer segments receive appropriate resources Disadvantages May conflict with marketing organization Product expertise may be lacking More expensive Customer Specialist Organization: Analysis

  16. Generalist structures • Functional specialization : • Focuses on the activities or functions performed by customer contact people . • Product and market heterogeneity and complexity may require a diverse set of skills and knowledge (used for large global organization)

  17. Sales Force Organization: Functional Specialists Figure 6-6: Functional Specialization Division Marketing Manager Industry Sales Manager SystemsManager Administrative Manager Account Executives (Salespeople) System Reps(Technical Support) Market Administrative (Training & Installation)

  18. Functional Specialists: Alternatives

  19. Sales Force Organization • There is no one best way to organize the sales force , and companies are experimenting with many different forms in order to compete profitably . • A company should start by examining its customers and looking at its organization from the customer’s perspective .

  20. Strategic account management program • Regardless of whether the sales force consists of specialists or generalists ,one of the most significant changes now occurring in marketing is that many organizations are finding it necessary to develop strategic account management program in addition to their regular sales force . • Strategic account management program is more than a selling strategy .it is a marketing philosophy directed at a select group of customers that account for a disproportionately large share of the seller’s total revenues . • To success in managing new strategic accounts you should address two issues : • Account selection • Organizational structure

  21. Strategic account management program • Strategic account selection : • Which customers should be treated as a strategic account , many companies choose too many accounts to participate in the program ,resulting in an over work for sales force , and under serviced customers. • There is a tendency to focus on customer size , because a few portion of the largest customers, are represent a big portion of company sales , and losing on of those customers is a disaster . • On the other hand , size is not a good indicator that a customer wants this special type of relationship .

  22. Strategic Accounts: What is Different about Strategic Accounts? Figure 6-7 : Changes in Joint Account Planning

  23. Strategic Accounts: Who are Strategic Accounts? • When a customer purchases a significant volume and exhibits one or a combination of the following: • Multiple people are involved in the buying process • Purchasing is centralized • The customer desires a long-term, cooperative working relationship • The customer expects specialized attentionand service

  24. Too many “strategic accounts” “We see them as strategic, but they don’t even see us on their radar.” Too much organizational effort directed towards big name accounts Not thinking enough about return on relationship investment No common process across the organization No tracking and reviewing of strategic account selection Strategic Accounts: Common Problems with Account Selection

  25. Existing Sales Force Low risk; little change Management Sell National Accounts Keeps management close to customer Separate Sales Force More aggressive; more expensive; alternative to sales management for promotion for sales staff Sales Teams Use when selling process is complex Strategic Accounts: Alternative Organization Models

  26. Strategic Accounts: Alternative Organization Model Effectiveness Table 6-1: Doing the Math on Account Management

  27. Strategic Accounts Programs: Benefits Increased sale to national accounts Increased profits from national accounts Increasedmarket share Improved customer communications Improved customer coordination 91% 83% 74% 74% 30%

  28. Strategic Accounts Programs: Compensation Levels $124,208 $115,905 $117,997 $112,414 $99,460

  29. Strategic Accounts Programs: Insights from Strategic Account Executives “Until the customer tell us we’re a strategicsupplier, I can’t believe that they arein fact a strategic account for us.” “Strategic accounts bring the opportunitiesto you, instead of you always having to try to push the ideas on them.” “If our products and services aren’t criticalto our customer’s performance and results,it is silly to call them ‘strategic accounts’.”

  30. Strategic Accounts Programs: Insights from Strategic Account Executives “Before a real strategic account would [make a particular decision], they would ask us for inputs, knowing ourinterests and theirs were aligned.” “The best strategic accounts are willing toopen the door, allow us to help them.There is an ongoing invitation to bringexpertise into their firm.”

  31. Strategic Account Programs: Survey Results Are training programs for the strategic account manager different? Different training for strategic account managers No difference in training for strategic account managers or other sales staff 26% 37% 37% Provide no training for strategic account managers

  32. Strategic Account Programs: Survey Results Do your strategic account managers carry an assigned sales quota? No Response Yes 3% No 68% 29%

  33. Strategic Account Programs: Survey Results Do strategic account managers have formal authority over the rest of the sales organization? No Response May assemble temporary “virtual” sales teams that report directly to the strategic account manager 7% 24% Sales team reports directly to the strategic account manager 22% 47% No formal authority over others in the sales organization

  34. Strategic Account Programs: Survey Results How do you measure the success of a strategic account program?

  35. Telemarketing • Telemarketing : refers to customer contacts utilizing telecommunications technology for personal selling without direct , face to face contact.

  36. Sales Force Organization: Cost Analysis

  37. Figure 6-8: The Scope of Telemarketing Activities Sales Force Organization: Scope of Telemarketing

  38. Advantages Low cost per sales call Profitably serve small to medium customers Speed/time saving of telephone ordering Challenges Acceptance by field salespeople Management Role of the Internet Sales Force Organization: Telemarketing Advantages and Challenges

  39. Some additional issues • Refer to page 180 on your book , and read it

  40. Independent sales agents • Independent sales agents: are hire to perform the selling function , they are not employees , but independent businesses given exclusive contracts , to perform the selling function within specified geographic areas . • They take either ownership nor physical possession of the products they sell , and are always compensated by commission . Agents are often used to develop new markets . They are selling from 5 to 8 non competing but related product ,that they are know fairly well ,and sell to similar types of buyers . • When to use sales agents : • Economic consequences • Level of control • Market conditions

  41. Figure 6-9: Total Costs of Independent Agents vs. Own Sales Force Sales Force Organization: Economic Analysis of Sales Agents Independent Agents Total Selling Costs Own Sales Force Break-Even Sales Sales Volume

  42. The market is fragmented and customers are difficult to find or understand. Buying is decentralized. Local knowledge and local distribution is important. The company is selling only a few products. There is a good potential sales agency who has significant marketing expertise in the industry. The company is not well known and has little equity in the market. The products are easily understood commodities that have been around for a long time. The selling cycle is short and orders are typically small. It is not necessary to tightly control the selling effort. Ongoing support activities are not important and the company does not need customer information. Sales Force Organization: Market Conditions Favoring Sales Agents Figure 6-10: Market Factors Favoring the Use of Sales Agents

  43. Sales Force Organization: Selecting a Sales Agency 1. Define the ideal market focus. 2. Identify compatible principles. 3. Specify the necessary technical background. LOCATING AGENTS: Rep. Directories Customer References Compatible Manufactures References from Current Agents Trade Shows

  44. Emerging sales force organization issues • Centralization versus decentralization • Cross functional coordination • Adv. ( share experience , speed up the production or selling process, safe time ) • Dis adv. (conflicts , directed by more than one manager ) • global account organization • Sales team ( bank of Palestine master card program adjustment ) • Selling partners : not on the payroll , they sell and provide technical and operating support .

  45. Global Account Success Keys • The company’s value proposition must be right. • Global account teams must be cross-functional • Account teams must be driven from the top. • A mindset of constant improvement is key.

  46. Sales Force Organization: Key Account Sales Teams at Ericsson Country President V.P. Business Operations Key Account Team Sales Director Director of Operations Director Product Support Global Accounts Director Account Managers Project Managers Product Managers Account Managers Account Coordinators Technical Support Engineers Account Coordinators Figure 6-11: Sales Team Organization at Ericsson

  47. Sales Force Organization: Evaluating Organizational Structure • Financial performance -- must consider BOTH costs and revenues • Adaptability • Integration -- subunits of sales organization must work in harmony