SALES FORCE ORGANISATION TOPIC 6 SALES MANAGEMENT

AIM: Acquire the skills in sales force organization. OBJECTIVES: 5.1. Various ways by which sales forces can be organised 5.2. Strategic accounts management programs 5.3. Reasons for the growth in telemarketing & its implementation issues 5.4. Why & when sales agents are utlised 5.5. Evolving trends in sales force organisation

5.1. Various ways by which sales forces can be organised Generalist versus specialist structures Strategic account management program Telemarketing Independent sales agents Emerging sales force organization issues

Generalist Vs Specialist Structures: Sales force organisational structures vary from generalist to highly specialised structures. Generalist – where each SP sells all products to all customers within a particular geographic area. Specialized – teams of SP focus on specific products, markets, or selling activities.

A sales force is adaptive if the company can react quickly to product & market changes without major structural overhaul. Efficiency reflects the rate at which key sales activities, such as calls, demonstrations & proposals are performed. Effectiveness represents the buyer’s favorable reaction to the sales effort.

Generalist Structure: Most common & least complicated (aka geographic organization) SP usually have small sales territories & minimal travel time, & spend a high % of their time face to face with customers. Very effective if no. of product line is manageable & selling process is relative homogenous for all customers & prospects. SP can have opportunity to gain in-depth knowledge of local culture, eco & competitive conditions.

Product Specialization Product based specialisation is most appropriate when a firm has a large, diverse & complex line of products. J&J uses this structure. Each SP specialised by selling a few of the products from the org’s total product portfolio & reports to same limited mgt structure. Limitations – low geographic efficiency, each SP must cover a large geographic area thus increase in travel expense & decrease face2face time with customers.

Customer Specialisation Aka vertical marketing, each SP or team sells the entire product line to select types of buyers. Adv. It allows SP to gain a better understanding of the customers special needs & problems & become experts. Disadv. Can lead to conflict with the marketing org, which is organized along products. When in-depth analysis is required to solve customers problems. SP may not have necessary product expertise to answer customers queries. Thus have product specialist that SP can call on.

Functional Specialisation Focus on the jobs/functions performed by customer contact people. Product & market heterogeneity & complexity may need a diverse set of skills & knowledge. Thus SP specializes in specific functions e.g: new customer specialists retention specialists End-user specialists Sales engineers Service consultants

Strategic Account Mgt Program Significant changes now occurring in marketing is org’s are finding it necessary to develop a strategic account mgt program. SMP is more than selling, it is marketing directed at a select group of customers that account for a large share of the seller’s total revenues. 2 problems firms face are: - Strategic accounts selection - How to organize

Strategic Accounts Selection Which customers should be treated as strategic account. Many companies initially choose too many firms resulting in overworked SP & under serviced customers. Those customers who purchase a significant volume & exhibit one or more of the following qualify for a strategic account progarm: - involve multiple people in the buying process - purchase centrally - desire a long term, cooperative working relationship - expect specialized attention & service

How To Organise Firms use a number of approaches to organise their Strategic accounts. The major organizational alternatives are: Existing sales force – less risky & expensive Management – assign to top mgt Separate sales force Cross functional sales team-complex selling process

Telemarketing Customer contacts using telecommunications tech for personal selling without direct F-2-F contact. Adv. Cost effective sales calls. Upto 15 times more efficient then battling traffic. Presents some challenges:

Acceptance- integrating telemkt with traditional sales force bec SP feel threatened by telemkters. SP may withhold customer infor. Management-hiring the right person. Need good customer service person with successful SP. Motivation & retention has been a problem, they do not have the freedom of movement as SP do + low pay. Role of internet-does internet replace or enhance current sales & mkting effort. Gives telemkting visual support. Chat facility on internet. Airlines are replacing telemkt with internet, encouraging online sales.

Some Additional Issues: Effectiveness of a sales force structure will depend on a firm’s obj’s, strategies, capabilities & external env. Additional points to consider when evaluating specialization options: If co. obj is - to reduce costs, then full line SP & telemkting are best. To increase revenue, specialization (product, customer, functional, major acc) supported by telemkting should be considered.

Development of specialized skills must be fostered & enhanced by appropriate training programs. When specialising a firm must have the capability of developing new products & modify existing ones. Sales force reorganisation cannot solve a product problem. If mkt is vulnerable to demand then specialists may prove too expensive & difficult to redeploy. In fact there is no optimal way for all firms to organise.

Independent Sales Agents An alternative is to hire independent sales agents to perform the selling function. SA are not employees but independent business given exclusive contracts to perform the selling function within certain geographic areas. When using agents management should consider 3 factors: - economic consequences - level of control - market environment

1.Economic Consequences Fixed cost nature of sales force vs variable cost nature of sales agents. Sales agents receive neither salary nor reimbursement for travel or entertainment exp. Since agents are paid on commission, costs rise as sales volume increases.

2.Level of Control Managers control a firms sales force through selection, training, supervision, policies & procedures, evaluation & compensation means. 2 levels of competition faced when using sales agents- using an agent who sells competing products.

3.Market Conditions Sales agents have selling skills, client relationship & general product knowledge. Good in certain market conditions. Market factors that favour use of sales agents Fragmented mkt, customers are difficult to find or understand Buying is decentralised Local knowledge & distribution is important Firm sells few products firm is not well known & has less equity in mkt.

Selecting a Sales Agency Factors that need to be considered” Product line compatibility Percentage of the agents attention that will be devoted to product. Agents prior track record Agents management practices

Emerging Sales Force Organization Issues: Centralization vs decentralization - what extent control & authority over sales force should rest with top mgt vs regional/area managers. Trend is toward decentralisation due to diverse customers & competition.Many firms use centralised with decentralised sales. Cross functional coordination – two way communication between sales & other depts. Need to work with depts as engineering, mkting, production, acc, operations, etc.

Global account org.- requires suppliers to have global capabilities. Sales teams – today’s customers have customized & complex needs that may not be met by individual SP. Selling partners – need to market through selling partners. SP who are not on company payroll but who sell, provide technical & operating support.