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The

The Sales
Sales Organization
Organization
Variations in Selling
Organizational Structure
Marketing 3345

Fundamental
Principles

Sales Force
Specialization

Sales Force
Alternatives

Sales Force
Size

Emerging
Issues

Unity of Command

Each person should report to only one


boss. A clear and unbroken chain of
command should link every person in
an organization with someone a level
higher.

Stability and Continuity

Activities should be assigned without


regard for the talents and preferences
of current employees.

Coordination and
Integration

Activities of salespeople should be


integrated with customer needs,
coordinated with activities of other
departments, and coordinated with
tasks of all salespeople.

Fundamental Organization Principles

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
and Rhode
Island

Maine

New
Jersey

Vermont

New York

Massach
usetts

New York

Pennsylvania

North
Carolina

South
Carolina

Delaware

District of
Columbia

Georgia

Alabama

Virginia

Maryland Mississippi

Geographical Sales Organization

Florida

Organization:
Organization:
Geographical
Geographical Organizations
Organizations

Advantages

Tends to achieve lowest costs


Travel time and expenses are minimized
Sales Administration and overhead costs are
kept low
Disadvantages
It does not provide any benefits associated with
specialization of labor

National
Sales Manager

Eastern
Regional
Sales Manager

Northeast
District
Sales Manager

Dictation
Equipment
Salesperson

Typewriter
Salesperson

Mid-Atlantic
District
Sales Manager

Minicomputer
Salesperson

Southern
District
Sales Manager

Programmable
Calculator
Salesperson

Product Specialized Sales Force

Copier
Salesperson

Large
Computer
Salesperson

Organization:
Organization:
Product
Product Specialization
Specialization

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

National
Sales Manager

National
Accounts
Manager

Eastern
Regional
Sales Manager

Manager
of
Export Sales

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 Manufacturers

Customer Specialized Sales Force

Salesperson
for Bank
Customers

Salesperson
for Wholesale
Customers

Organization:
Organization:
Customer
Customer Specialization
Specialization
Advantages
Consistent with market driven strategy
Salespeople become customer experts
Disadvantages
More expensive

Division Marketing
Manager

Industry Sales
Managers

Systems
Manager

Administrative
Manager

Account Executives
(salespeople)

Systems reps
(technical support)

Market
Administration
(training and installation)

Functional Specialization

Organization:
Organization:
Functional
Functional Specialization
Specialization
Focus on phases in customer relationship:
Initial sales
Follow-up technical support and
service
Promotion efforts specialist

WHO
WHO ARE
ARE STRATEGIC
STRATEGIC ACCOUNTS?
ACCOUNTS?
WHEN
WHENAACUSTOMER
CUSTOMERPURCHASES
PURCHASESAA
SIGNIFICANT
SIGNIFICANTVOLUME
VOLUMEAND
ANDEXHIBITS
EXHIBITSONE
ONEOR
OR
AACOMBINATION
COMBINATIONOF
OFTHE
THEFOLLOWING:
FOLLOWING:
MULTIPLE
MULTIPLEPEOPLE
PEOPLEARE
AREINVOLVED
INVOLVEDIN
INTHE
THE
BUYING
BUYINGPROCESS
PROCESS
PURCHASING
PURCHASINGIS
ISCENTRALIZED
CENTRALIZED
THE
THECUSTOMER
CUSTOMERDESRIES
DESRIESAALONG-TERM,
LONG-TERM,
COOPERATIVE
COOPERATIVEWORKING
WORKINGRELATIONSHIP
RELATIONSHIP
THE
THECUSTOMER
CUSTOMEREXPECTS
EXPECTSSPECIALIZED
SPECIALIZED
ATTENTION
ATTENTIONAND
ANDSERVICE
SERVICE

Organization
Organization
Strategic Account Organization Alternatives
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

BENEFITS
BENEFITS OF
OFSTRATEGIC
STRATEGICACCOUNT
ACCOUNT
MARKETING
MARKETING
Increased sale to
national accounts

91%

Increased profits
from national
accounts

83%

Increased market
share

74%

Improved customer
communications

74%

Improved customer
coordination

30%

Survey
Survey Results:
Results: Strategic
Strategic Account
Account
Management
Management
Are training programs for the strategic account manager different?
Provide no training
37% for strategic account
managers
26%

37%
37%

Different training for


37% strategic account
managers
No difference in
training for strategic
26% account managers or
other sales staff

Survey
Survey Results:
Results: Strategic
Strategic Account
Account
Management
Management
Do your strategic account managers carry an assigned sales quota?

68% Yes

68%

29%

29% No

3%

3%

No Response

Survey
Survey Results:
Results: Strategic
Strategic Account
Account
Management
Management
Do strategic account managers have formal authority over the rest of
the sales organization?
No formal authority
47% over others in the sales
organization

47%

7%
22%

24%

Sales team reports


24% directly to the strategic
account manager
May assemble
temporary virtual
22% sales teams that report
directly to the strategic
account manager

7%

No Response

Survey
Survey Results:
Results: Strategic
Strategic Account
Account
Management
Management
How do you measure the success of a strategic account program?
Sales volume

80%

Customer satisfaction

53%

Profitability

45%

Volume of recurring revenue stream


Incremental orders from existing accounts
Number of customer with strategic
account agreements

29%

Number of transactions/orders
Number of products shipped

22%
11%
6%
6%

Table 8-2: Ranking of Customers Wants

Contact with outside salesperson


Frequency and speed of delivery
Price
Range of Available Products
Capable inside salesperson

1980

1990

2000

1
2
3
4
5

3
1
2
5
4

8
2
4
3
1

SCOPE
SCOPE OF
OF TELEMARKETINGS
TELEMARKETINGS
ROLE
ROLE
Customer Service
Prospecting and
Lead
Qualification
Sales Support
Advertising and
Promotion

Doing the Math on Account Management

Sales calls per day


Sales calls per quarter
Sales calls per year
Salespeople required
Cost per sales call
Cost per year

Field Rep

Telemarketing

5
325
1300
6.5
$250
$1,998,750

25
1624
6500
1.2
$15
$117,000

MAJOR
MAJOR BENEFITS
BENEFITS OF
OFTELEMARKETING
TELEMARKETING
Percent of
Respondents
CUSTOMER BENEFIT
Speed of communication to customer
Timeliness of contact
Ease/Convenience to customer
Customer relations
Frequency of contact

65.2%
21.5
14.2
10.8
10.2
8.5

COST EFFECTIVE
DIRECT CONTROL
MARKETING RESEARCH
PROVIDE TECHNICAL SUPPORT

43.7
1.4
4.8
1.1

Organization:
Organization: Telemarketing
Telemarketing
Advantages
Low cost per sales call
Profitably serve small to medium customers
Speed/time saving of telephone ordering

Challenges
Acceptance by field salespeople
Hiring, motivating & retaining good
telemarketers

PROJECTED
PROJECTED GROWTH
GROWTH IN
IN SALESPEOPLE
SALESPEOPLE
AND
ANDTELEMARKETERS
TELEMARKETERS
Telemarketers
Average Number per Company
Five Years Ago

21.99
21.99

Today

+27.9%

28.11
28.11

Five Years from Now

+29.9%

36.49
36.49

Field Salespeople
Average Number per Company
Five years Ago
Today
Five years from Now

41.64
41.64
53.07
53.07

+27.5%
+12.5%

59.66
59.66

Source: Geri Gantman, Exclusive Survey, Business Marketing, (September, 2007), p. 64. 353 companies in survey.

EVOLUTION
EVOLUTION OF
OF SELLING
SELLING METHODS
METHODS
OLD
OLD
Stage in Selling Process
Prospect/
Qualify

Large

Account
Size

Medium

Small

Present/
Close

Service/
Reorder

Face-toFace
Selling
(FTF)

FTF

FTF

FTF

FTF

FTF

FTF

FTF

TM

EVOLUTION
EVOLUTION OF
OF SELLING
SELLING METHODS
METHODS
NEW
NEW
Stage in Selling Process

Large

Account
Medium
Size

Small

Prospect/
Qualify

Present/
Close

Service/
Reorder

National
Account
Management
(NAM)

NAM

NAM

Telemarketing
(TM)

FTF

FTF
&
TM

TM

TM

TM

Total selling costs

Independent
agents
Own sales force
Breakeven
sales

Sales volume
Total Costs of Independent Agents vs. Own Sales Force

HIRING
HIRING INDEPENDENT
INDEPENDENTAGENTS
AGENTS DEVELOPING
DEVELOPING
THE
THE IDEAL
IDEALAGENT
AGENTPROFILE
PROFILE
1. Define the ideal market focus.
2. Identify compatible principles.
3. Specify the necessary technical
background.
Rep. Directories
Customer References
Compatible Manufactures
References from Current Agents
Trade Shows

LOCATING AGENTS:

HIRING
HIRING INDEPENDENT
INDEPENDENTAGENTS
AGENTS DEVELOPING
DEVELOPING
THE
THE IDEAL
IDEALAGENT
AGENTPROFILE
PROFILE

Six Cs of Finding the Right Mnfr Rep

Compatible Lines
Compatible Territories
Compatible Customers
Credibility of the Rep
Capabilities
Credit Worthiness

Agent
Agent Decision
Decision and
and the
the Product
Product Life
Life
Cycle
Cycle
Disengagement
Decision

Introduction

Re-engagement
Decision

Manufacturer
Re-employs
Rep firm to
lower fixed
sales costs

Re
Re -- Organization
Organization
Evaluating Organizational Structure
Financial performance -- must consider
BOTH costs and revenues
Adaptability
External
New competitors
Changing technology
Modification to channel
systems
Industry life cycle

- Internal
- Company goals
- Management philosophy
- Production capabilities
- Technical resources

Integration -- subunits of sales org must work in


harmony