LECTURE 4
ORGANIZATION OF THE SALES FORCE
• Sales structure provides a framework for sales
organization operations by indicating what
specific activities are performed by whom in
the sales organization. The sales organization
structure is the vehicle through which
strategic plans are translated into selling
operations in the marketplace.
The important role of sales organization structure for a
firm has been described as follows:
• The role of organization in sales has been
compared to that of the skeleton in the human
body; it provides a framework within which
normal functions must take place.
• There is however, a degree of uniformity in the
human skeleton that does not characterize the
sales organization. Each firm has its own
objectives and problems, and the structure of the
sales organization reflects its diversity.
ORGANIZATION OF THE SALES FORCE
Organization of the sales force refers to all activities involved in organizing a given sales department. To
ensure effective implementation of strategies in order to achieve set objectives, key activities
involved are:
• Division of the work load into tasks – specialization
• Grouping identified similar tasks into positions
• Assigning authority to position
• Synchronizing responsibility with volume authority, that is, responsibility must go
commensurate with volume of authority.
• Establishing channels of communications
• Establishing relationship
• Establishing chain of command
• Staff the department.
Principles of Organization
• Organize activities and not people
• Responsibility and authority should be properly
related
• Activities must be well balanced and coordinated
• Span of executive control and responsibility
should be reasonable.
• The organization should be stable and flexible.
Organizational Process
The organizational process would basically involve the following steps:
• Setting of objectives for the sales department
• Determine sales department activities
• Group related activities locally
• Develop a structural arrangement of all activities
• Staff the structure
• Test the soundness of the structure in the light of the above
mentioned principles.
Types of Organizational Structure
• Line structure
• Line and Staff structure
• Line and functional
• Regional
• Divisional
Sales Structures
Line
• This is the simplest structure any given sales department
can have. Here, the head of department does all the
planning and performs most of the operations. The line
structure has certain key characteristics and is hierarchical
in nature. These include
• Authority flows from top to bottom
• Orders are relayed from the top sales manager through
each successive level to the rank and file.
• There are no specialists
• There is centralization of authority
The line and staff structure
• Relevant when the firm has expanded marketing
operations in terms of scope and complexity. In this
regard sales executives are assisted by staff assistants
who provide specialist services.
• In this structure the specialist only have advisory
relationships with sales managers and sales
representatives.
• However, they may have line authority over people in
their specific department. Thus there are two parallel
lines of authority; - two bosses.
Functional Sales Organization
• This type of specialization is functional specialization.
Most selling situations require a number of selling
activities, there may be efficiencies in having sales
people specialize in performing certain of these
required activities.
• Many firms are using a telemarketing salesforce to
generate leads, qualify prospects, monitor shipments,
and so forth, while the outside salesforce concentrates
on sales-generating. These firms are specializing by
function.
Geographic Sales Organization
• Most sales forces use some type of geographic
specialization. This is the least specialized and most
generalized type of sales force.
• Sales people are typically assigned a geographic area and
are responsible for all selling activities to all accounts
within the assigned area.
• There is no attempt to specialize by product, market or
function
• All geographic areas are served by only one sales person
Product sales organization
• Product specialization has been popular in recent
years, but it seems to be declining in importance
at least in certain industries.
• Salesforce specializing by product assigned sales
people selling responsibility for specific product or
product lines. The objective is for sales people to
become expert in the assigned product categories
Product sales organization
• Thus, the structure involves the division of firm’s product
lines into groups with sales executives responsible for each
group. It’s therefore useful when the firm’s product lines
are diversified or when the product has varied end uses.
• The sales executive responsible for a given product group
is therefore an expert with expert knowledge of that
product division. Staff executive in this type of
organization are not specialized by product lines and
therefore they are of little help to product managers in
terms of provision of product knowledge.
Market Sales Organization
• An incredibly important type of specialization is
market specialization. Sales people are assigned
specific types of customers and are required to
satisfy all needs of these customers.
• The basic objective of market specialization is to
ensure that salespeople understand how
customers use and purchase their products.
Salespeople should then be able to direct their
efforts to satisfy customer needs better.
Salesforce deployment
• The important sales management decisions involved in
allocating selling effort, determining salesforce size, and
designing territories are often referred to as sales force
deployment.
• These decisions are closely related to the sales organization
structure decisions. Changes in structure often require
adjustments in all three areas of salesforce deployment - selling
effort allocation, salesforce size determination and territory
design.
• Salesforce deployment decisions can be viewed providing
answers to three interrelated questions.
Salesforce deployment
• 1. How much selling effort is needed to cover
accounts and prospects adequately so that sales
and profit objectives will be achieved?
• 2. How many salespeople are required to provide
the desired amount of selling effort?
• 3. How should territories be designed to ensure
proper coverage of accounts and to provide each
salesperson with a reasonable opportunity to
success?
Salesforce deployment
• Decisions in one salesforce deployment area
affects decisions in other areas. For example,
the decision on allocation of selling effort
provides input for determining salesforce size,
which provides input for territory design.
1 Interrelationship of Salesforce Development Decision
2,000 accounts multiplied by 25 sales
Allocations of Selling
Efforts calls/accounts =
5,000 sales calls required to cover accounts
50,000 sales calls required
Salesforce Size
divided by 1,250 sales/salesperson = 40
salespeople
needed
40 territories needed to provide each salesperson
Territory Design
with opportunity for success and to ensure
proper
coverage of accounts.
