5
Sales Organization Structure and Salesforce Deployment
Sales Organization Concepts
Salesforce Specialization Continuum
(Figure 5.1)
GENERALISTS All selling activities and all products to all customers
SPECIALISTS Certain selling activities for certain products for certain customers Some specialization of selling activities, products, and/or customers
Sales Organization Concepts
Centralization
Degree to which important decisions and tasks are performed at higher levels in the management hierarchy
Span of Control vs Management Levels
(Figure 5.2)
Flat Sales Organization
Management Levels
National Sales Manager
District Sales Manager
District Sales Manager
District Sales Manager
District Sales Manager
District Sales Manager
Span of Control
Tall Sales Organization
National Sales Manager
Management Levels
Regional Sales Manager
Regional Sales Manager
District Sales Manager
District Sales Manager
District Sales Manager
District Sales Manager
District Sales Manager
District District Sales Manager
Span of Control
Line vs Staff Positions
(Figure 5.3)
National Sales Manager Sales Training Manager Regional Sales Manager Sales Training Manager District Sales Manager
Salespeople
Selling Situation Contingencies
Consideration of Specialization
Empirical support for the notion that: A generalized salesforce should be used when selling effort is more important than selling skill A specialized salesforce should be used when selling skill is more important than selling effort
Consideration of Environmental Characteristics, Task Characteristics, and Performance Objectives Consideration of Customer Needs and Product Complexity
Selling Situation Contingencies
Customer and Product Determinants of Salesforce Specialization
(Figure 5.4)
Customer Needs Different MarketDriven Specialization GeographyDriven Specialization Product/MarketDriven Specialization ProductDriven Specialization
Simple Product Offering
Complex Range of Products
Customer Needs Similar
Geographic Sales Organization
(Figure 5.5)
National Sales Manager
Sales Training Manager
Eastern Regional Sales Manager
Western Regional Sales Manager
Zone Sales Manager (4)
Zone Sales Manager (4)
District Sales Managers (20)
District Sales Manager (20)
Salespeople (100)
Salespeople (100)
Product Sales Organization
(Figure 5.6)
National Sales Manager
Office Equipment Sales Manager
Office Supplies Manager
District Sales Manager (10)
District Sales Manager (10)
Salespeople (100)
Salespeople (100)
Market Sales Organization
(Figure 5.7)
National Sales Manager
Commercial Accounts Sales Manager Sales Training Manager Zone Sales Managers (4)
Government Account Sales Manager
District Sales Managers (10)
Salespeople (50)
Dsitrict Sales Managers (25)
Salespeople (50)
Broad Market Specialization
Consumers and/or Industrial Government agencies, educational institutions, distributors, and retailers, OEMs
Specific Industry Specialization
Functional Sales Organization
(Figure 5.8)
National Sales Manager
Field Sales Manager
Telemarketing Sales Manager
Regional Sales Managers (4)
District Sales Managers (2)
District Sales Managers (16)
Salespeople (40)
Salespeople (160)
Sales Organization Structures
Identify Major Accounts
(Figure 5.9)
Large
Large Account
Major Account
Size of Account
Regular Small Account Simple
Complexity of Account
Complex Account Complex
Sales Organization Structures
Major Account Options
(Figure 5.10)
Develop Major Account Salesforce
Assign Major Accounts to Sales Managers
Assign Major Accounts to Salespeople along with Other Accounts
Comparison of Sales Organization Structures
(Exhibit 5.2)
Organizational Structure
Geographic
Advantages
Low Cost No Geographic Duplication No Customer Duplication Fewer Management Levels Salespeople Become Experts in Product Attributes and Applications Management Control over Selling Effort Allocated to Products Salespeople Develop Better Understanding of Unique Customer Needs Management Control Over Selling Effort Allocated to Different Markets Efficiency in Performing Selling Activities
Disadvantages
Limited Specialization Lack of Management Control Over Product or Customer Emphasis
Product
High Cost Geographic Duplication Customer Duplication
Market
High Cost Geographic Duplication
Functional
Geographic Duplication Customer Duplication Need for Coordination
Hybrid Sales Organization Structure
(Figure 5.11)
National Sales Manager Commercial Accounts Sales Manager Government Accounts Sales Manager
Major Accounts Sales Manager
Regular Accounts Sales Manager
Office Equipment Sales Manager
Office Supplies Sales Manager
Field Sales Manager Western Sales Manager
Telemarketing Sales Manager
Eastern Sales Manager
Salesforce Deployment
Sales management decisions involved in allocating selling effort, determining salesforce size, and designing territories
Interrelatedness of Salesforce Deployment Decisions
(Figure 5.12)
Allocation of Selling Effort Salesforce Size Territory Design
How much selling effort is needed to cover accounts and prospects adequately so that sales and profit objectives will be achieved?
How many salespeople are required to provide the desired amount of selling effort?
How should territories be designed and salespeople assigned to territories to ensure proper coverage of accounts and to provide each salesperson with a reasonable opportunity for success?
Allocation of Selling Effort
(Figure 5.13)
Analytical Approaches to Allocation of Selling Effort
Easy to Develop and Use Single Factor Model
Low Analytical Rigor
Portfolio Models
High Analytical Rigor Decision Models
Difficult to Develop and Use
Allocation of Selling Effort
Single Factor Models
Easy to develop and use/low analytical rigor Accounts classified into categories based on one factor, such as market potential All accounts in the same category are assigned the same number of sales calls Effort allocation decisions are based on the analysis of only one factor and differences among accounts in the same category are not considered in assigning sales call coverage
Allocation of Selling Effort
Portfolio Models
Account Opportunity - an accounts need for and ability to purchase the firms products Competitive Position - the strength of the relationship between the firm and an account
Decision Models
Allocation of Selling Effort
Simple Basic Concept - to allocate sales calls to accounts that promise the highest sales return from the sales calls
Optimal number of calls in terms of sales or profit maximization
Sales Force Size
Key Considerations
Sales Productivity - the ratio of sales generated to selling effort employed
Increase in # of Salespeople = Increased Sales, but not in a direct linear relationship
Salesforce Turnover
Is very costly
Analytical Tools
Breakdown Approach
Sales Force Size
Assumes an Accurate Sales Forecast Advantage
Easy to use
Disadvantages Forecasted Sales
Conceptually weak; sales determine sales
Sales Force Size =
Forecasted Sales
Average Sales per Salesperson
Analytical Tools
Workload Approach
Sales Force Size
Integrates the salesforce size with account effort allocation strategies Total selling effort need varies depending upon whether single factor, portfolio, or decision models were used to calculate the allocation of effort Advantages
Easy to develop Sound conceptually
# of Salespeople =
Total Selling Effort Needed
Average Selling Effort per Salesperson
Analytical Tools
Incremental Approach
Sales Force Size
Advantage
Quantifies the important relationships between salesforce size, sales, and costs
Disadvantages
Difficult to develop Development of response functions requires historical data
Optimal # of Salespeople is where:
Marginal Profit from Added Salesperson = Marginal Cost of That Salesperson
Designing Territories
Territory - consists of whatever specific accounts are assigned to a specific salesperson
Work unit for a salesperson
Territory Considerations
Trading areas Present effort Recommended effort
Assigning Salespeople to Territories Farmers or Hunters
"People" Considerations
