Part III SALES FORCE ACTIVITIES Chapter 6: Sales Force Organization

Structure Sales Force Organization: Impact Compensation Sales Management Role Performance Evaluation Recruiting/ Selection Training Program Figure 6-1: Decisions Affected by Sales Force Organization

Sales Force Organization: Topics Specialization Strategic Account Management Telemarketing Independent Agents Emerging Issues

Strategic Account Programs: Survey Results Today In Five Years 49% 45% 24% 20% 18% 17% 16% 11% Customer Generalist Product Lines Functional Figure 6-2: How Sales Forces are Organized

Figure 6-3: Geographical Sales Organization Sales Force Organization: Generalist 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 Rhode Island Maine New Jersey Pennsy-lvania North Carolina South Carolina Vermont New York Delaware District of Columbia Georgia Alabama Massachusetts New York Virginia Maryland Mississippi Florida Figure 6-3: Geographical Sales Organization

Figure 6-4: Product Specialized Sales Force Sales Force Organization: Product Specialists National Sales Manager Eastern Regional Sales Manager Northeast District Sales Manager Mid-Atlantic District Sales Manager Southern District Sales Manager Printer Equipment Salesperson Server Salesperson Minicomputer Salesperson Programmable Calculator Salesperson Copier Salesperson Large Computer Salesperson Figure 6-4: Product Specialized Sales Force 1

Product Specialist Organization: Analysis 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 3

Figure 6-5: Customer Specialized Sales Force Sales Force Organization: Customer Specialists 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 Bank Customers Salesperson for Manufacturers Salesperson for Wholesale Customers Figure 6-5: Customer Specialized Sales Force 1

Customer Specialist Organization: Analysis Advantages Consistent with market driven strategy Salespeople become customer experts Customer segments receive appropriate resources Disadvantages May conflict with marketing organization Product expertise may be lacking More expensive 4

Figure 6-6: Functional Specialization Sales Force Organization: Functional Specialists Division Marketing Manager Industry Sales Manager Systems Manager Administrative Manager Account Executives (Salespeople) System Reps (Technical Support) Market Administrative (Training & Installation) Figure 6-6: Functional Specialization 1

Organizational Structure Advantages Disadvantages Generalist (Geographic) Low cost No geographic overlap No customer overlap Limited product line knowledge Limited customer knowledge Lack of management control over product or customer emphasis Product Product knowledge Control over product emphasis Low geographic efficiency Customer duplication Geographic duplication Customer Deeper customer knowledge Control over customer emphasis High cost Less product knowledge More geographic duplication Difficult coordination with product managers Functional Effectiveness in performing selling activities Coordination Figure 6-7: Comparing Sales Organization Structures

Strategic Accounts: What is Different about Strategic Accounts? Previous Approach New Strategic Account Bsiness Plan Duration 3 – 6 months 2 – 3 years Structure of Business Plan Tactical promotional program Strategic business plan focused on growth and profitability Personnel Involvement Sales reps and purchasing agents Senior management from both companies Figure 6-8 : Changes in Joint Account Planning

Alternative Organization Models Strategic Accounts: Alternative Organization Models 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 8

Table 6-1: Doing the Math on Account Management Field Rep Telemarketing Sales calls per day 5 25 Sales calls per quarter 325 1,624 Sales calls per year 1,300 6,500 Salespeople required 6.5 1.2 Cost per sales call $250 $15 Cost per year $1,998,750 $117,000 Table 6-1: Doing the Math on Account Management 8

Figure 6-9: The Scope of Telemarketing Activities Sales Force Organization: Scope of Telemarketing Activity Description Customer Service Companies provide customers provide customers with a number they can call if they have questions. Prospecting and Lead Qualification Firms are taking a proactive approach to prospecting by having telemarketers call prospects or qualify them for face-to-face selling. Account Management Selling secondary product lines or service small customers by phone, thereby freeing their salespeople to concentrate on larger customers and strategic product lines. Promotion Support Develop newspaper and magazine ads that feature either a local or an 800 number to get additional product information or place an order. Figure 6-9: The Scope of Telemarketing Activities

Sales Force Organization: Telemarketing Advantages and Challenges Advantages Low cost per sales call Profitably serve small to medium customers Speed/time saving of telephone ordering Challenges Acceptance by field salespeople Management Role of the Internet 10

Figure 6-10: Total Costs of Independent Agents vs. Own Sales Force Sales Force Organization: Economic Analysis of Sales Agents Independent Agents Total Selling Costs Own Sales Force Break-Even Sales Sales Volume Figure 6-10: Total Costs of Independent Agents vs. Own Sales Force

Sales Force Organization: Market Conditions Favoring Sales Agents The market is fragmented and customers are difficult to find or understand. Buying is decentralized. Local knowledge and local distribution is important. The company is selling only a few products. There is a good potential sales agency who has significant marketing expertise in the industry. The company is not well known and has little equity in the market. The products are easily understood commodities that have been around for a long time. The selling cycle is short and orders are typically small. It is not necessary to tightly control the selling effort. Ongoing support activities are not important and the company does not need customer information. Figure 6-11: Market Factors Favoring the Use of Sales Agents

Figure 6-12: The Marketing-Sales Handoff Customer Awareness Brand Awareness Brand Consideration Marketing Brand Preference Handoff Purchase Intent Purchase Sales Customer Loyalty Customer Advocacy Figure 6-12: The Marketing-Sales Handoff

V.P. Business Operations Sales Force Organization: Key Account Sales Teams at Ericsson Country President V.P. Business Operations Key Account Team Sales Director Director of Operations Director Product Support Global Accounts Director Account Managers Project Managers Product Managers Account Managers Account Coordinators Technical Support Engineers Account Coordinators Figure 6-13: Sales Team Organization at Ericsson