Chapter 4 – Structuring the Sales Force for Strategic Advantage
I. The 3 Sales Force Structure Objectives
a. Adaptability – if adaptive, a company can react quickly to product and market changes without a major structural overhaul. It’s adaptive if a selling process can change resulting from product or market fluctuations can be accommodated within the existing sales force structure b. Efficiency i. Encouraging Efficiency: The Geographic structure – sales territories c. Effectiveness – increased in several ways: knowledge, focus, problem- solving ability, ability to make recommendations quickly, persuasiveness, skill i. Encouraging Effectiveness: Specialized Structures 1. Market Heterogeneity/Complexity – many market participants (customers and prospects) – have different needs and requirements – some markets are just very complicated 2. Product Heterogeneity/Complexity – some co.s have limited product lines while others have many – products can be complex too 3. Sales Force Activity Heterogeneity/Complexity – SF needs to find customers, identify needs, solve customer problems, sell, service, maintain, partner, and expand the business. Complex markets = complex activities. 4. Need for Specialization – excessive heterogeneity/complexity can create a need for specialization. II. Five SF Structures that Create Results a. Generalist SF Structure – each salesperson sells the firm’s entire product line to all accounts and prospects in a defined geographic area. Appropriate when the firms sells a manageable product line and the selling process is relatively homogenous for all customers/prospects. Smaller sales territories. Efficient but not very effective in heterogeneous environments. b. Market-Based SF Structure – typically, this is a response to market heterogeneity and complexity. c. Product-Based d. Activity-Based e. Mixed III. Developing an Efficient and Effective SF Structure – 4 Steps a. Study the Products, Markets, and Activity b. Develop a Coverage Matrix – a grid that displays any 2 of the 3 sources of heterogeneity (products, markets, or selling activities) c. Generate SF Structure Alternatives d. Evaluate Different SF Structures