1. Sales Organization Structure & Sales Force Deployment
Module Four
Sales Organization Structure & Sales Force Deployment

2. Sales Organization Structure

3. Sales Organization Concepts
Specialization
The degree to which individuals perform some of the required tasks to the exclusion of others. Individuals can become experts on certain tasks, leading to better performance for the entire organization.
Centralization
The degree two which important decisions and tasks performed at higher levels in the management hierarchy. Centralized structures place authority and responsibility at higher management levels. 3

4. Sales Force Specialization Continuum
Specialists
Certain selling activities for certain products for certain customers
Generalists
All selling activities
and all products to
all customers
Some specialization
of selling activities,
products, and/or
customers 2

5. Span of Control vs. Management Levels
Flat Sales Organization
Span of Control
Management Levels
National Sales Manager
District Sales Manager

6. Span of Control vs. Management Levels
Tall Sales Organization
National Sales Manager
Span of Control
Management Levels
District Sales Manager
Regional Sales Manager

7. Line vs. Staff Positions
National Sales Manager
Regional Sales Managers
District Sales Managers
Sales Training Manager
Salespeople
Staff Position
Line Position 4

8. Dynamic sales environment
Selling Situations
Selling-Situation Factors & Organizational Options
Organizational
Structure
Environmental
Characteristics
Task
Performance
Performance
Objective
Specialization
Dynamic sales environment
Nonroutine
Adaptiveness
Centralization
Relatively stable
sales environment
Repetitive
Effectiveness 5

9. Geographic Sales Organization
National Sales Manager
Zone Sales Managers (4)
District Sales Managers (20)
Salespeople (100)
Eastern Region Sales Manager
Western Region Sales Manager
Sales Training Manager

10. Product Sales Organization
National Sales Manager
Office Equipment Sales Manager
Office Supplies Sales Manager
District Sales Managers (10)
Salespeople (100)

11. Market Sales Organization
National Sales Manager
Zone Sales Managers (4)
District Sales Managers (25)
Salespeople (150)
District Sales Managers (5)
Commercial Accounts
Sales Manager
Government Accounts
Sales Training Manager
Salespeople (50)

12. Functional Sales Organization
National Sales Manager
Field Sales Manager
Telemarketing Sales Manager
Regional Sales Managers (4)
Salespeople (160)
Salespeople (40)
District Sales Managers (2)
District Sales Managers (16)

13. Sales Organization Structures Major Accounts Options
Develop Major Account Salesforce
Assign Major Accounts to
Sales Managers
Assign Major Accounts to Salespeople along with Other Accounts

14. Sales Organization Structures
Comparison of
Sales Organization Structures
Organizational
Structure
Advantages
Disadvantages
Geographic
Low Cost
No geographic duplication
No customer duplication
Fewer management levels
Limited specialization
Lack of management
control over product or
customer emphasis
Product
Salespeople become experts
in product attr. & applications
Management control over
selling effort
High cost
Geographic duplication
Customer duplication 7

15. Sales Organization Structures
Comparison of
Sales Organization Structures
Organizational
Structure
Advantages
Disadvantages
Market
Salespeople develop
better understanding of
unique customer needs
Management control over
selling allocated to different
markets
High cost
Geographic duplication
Functional
Efficiency in performing
selling activities
Geographic duplication
Customer duplication
Need for coordination 7

16. Hybrid Sales Organization Structure
National Sales Manager
Major Accounts
Sales Manager
Regular Accounts
Office Equipment
Office Supplies
Field Sales
Manager
Telemarketing
Commercial Accounts
Government Accounts
Western
Eastern

17. Sales Force Deployment

18. Sales Force deployment decisions can be viewed as providing answers to three interrelated questions.
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 to ensure proper coverage of accounts and to provide each salesperson with a reasonable opportunity for success? 3

19. Interrelatedness of Sales Force Deployment Decisions
Allocation of
Selling Effort
How much selling effort is needed to cover accounts and prospects adequately so that sales and profit objectives will be achieved?
Sales Force
Size
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?
Territory
Design 4

20. Allocation of Selling Effort Analytical Approaches
Easy to Develop and Use
Difficult to Develop and Use
Low
Analytical
Rigor
High
Single Factor
Models
Portfolio
Models
Decision
Models

21. Allocation of Selling Effort: Single Factor Models
Accounts classified into categories based on one factor, such as volume 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 5

22. Allocation of Selling Effort Single Factor Model Example
Market Potential
Categories A B C D
Average Sales Calls to
an Account Last Year 25 23 20 16
an Account Next Year 32 24 8 6

23. Allocation of Selling Effort Portfolio Models
Accounts are ‘grouped’ by specific criteria to determine their value to the firm ie.
Account (Growth) Opportunity - an account’s need for and ability to purchase the firm’s products
Competitive (Advantage) Position - the strength of the relationship between the firm and an account 6

24. Allocation of Selling Effort: Decision Models
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 6

25. Sales Force Size Key Considerations
Sales Volume Growth
Anticipated increases
Sales Productivity
The ratio of sales to selling costs
Sales Force Turnover
Should be anticipated 15

26. Sales Force Size: Analytical Tools
The Breakdown Approach
Is used to determine the number of salespeople needed to generate a forecasted level of sales.
It is weak conceptually.
The concept underlying the calculations is that sales determine the number of salespeople needed— putting “the cart before the horse.”
Salesforce size = Forecasted sales / Average sales / person 16

27. Sales Force Size: Analytical Tools
The Workload Approach
Determines how much selling effort is needed to adequately cover the firm’s market.
Then the number of salespeople required to provide this amount of selling effort is calculated.
This approach relatively simple to develop and is sound conceptually.
Number of salespeople =
Total selling effort needed
Average selling effort per salesperson 16

28. Sales Force Size: Analytical Tools
The Incremental Approach
Its basic concept is to compare the marginal profits and marginal costs associated with each incremental salesperson.
The major advantage of this approach is that it quantifies the important relationships between salesforce size, sales, and costs.
However, the incremental method is difficult to develop, and it cannot be used for new sales forces where historical data and accurate judgments are not possible. 16

29. Designing Territories
Territories consist of whatever specific accounts are assigned to a specific salesperson. The territory can be viewed as the work unit for a salesperson.
Territory Considerations
Trading areas
Present effort
Recommended effort 19

30. DESIGNING TERRITORIES
EXTREMELY RARE
Most often territories evolve
with market development & volume,
And are revised / adjusted
on an ‘ongoing basis.

31. DESIGN GOALS
EQUALITY OF SALES
WORKLOAD
GROWTH POTENTIAL

32. SIX DESIGN STEPS
Select a control element for territory boundaries / size.
Determine location & potential of customers.
Determine basic territories
Assign sales people to territories.
Establish territorial coverage plans for sales reps.
Monitor sales & cost of sales on an ‘ongoing’ basis.

33. STEP ONE TERRITORIAL SIZE (miles covered)
Boundaries (usually political or geographical):
BASED ON:
REGION (WESTERN CANADA)
PROVINCE (BC)
CITY / COUNTRY (PRINCE GEORGE / VANDERHOOF, QUESNEL, ETC.)

34. STEP TWO Determine the location of potential customers from:
phone book
Mailing lists
route riding

35. TO DETERMINE BASIC TERRITORIES USE EITHER:
STEP THREE
TO DETERMINE BASIC TERRITORIES USE EITHER:
BUILD UP METHOD:
Establish individual performance parameters (workload capacity: # of calls per day x # of days), frequency / miles, account types a, b or c, length of call.
Draw out individual territory boundaries
Adjust as needed

36. STEP THREE BREAKDOWN METHOD: Determine total market sales potential
Establish individual territories:
Can use a market index x total sales potential, should use ‘hands on’ territory analysis as territories are rarely sufficiently uniform
Estimate sales volume per person and draw boundaries.
Adjust as needed

37. STEP FOUR Assigning sales people to territories
Need to match personality of the SR to the personality of the territory (ie. miles, account type, culture, etc.)
Can be a management tool
Beginner territories
‘Penal’ territories
‘Plum’ territories
Territory adjustment need is ‘ongoing’

38. STEP FOUR continued
Set performance norms that ‘flag’ when the need becomes critical.
Territory can ‘boom’ & far out pace sales (Alberta) / can shrink / dry up (Nfld.)
Claim jumping ~ territory / account overlap
Consequence of revising territories
People don’t like change: it means more work / less return.
The change needs to be ‘sold’
Compensation format may need adjustment

39. STEP FIVE Territory coverage
The plan of how the territory is to be serviced
Call sequence / frequency, routing
Sales management should only ‘do’ the initial ‘set up’
Assigned rep should submit modifications with as their territory knowledge develops.
Managements role is to set performance standards e.G. Calls per day, etc.
Need to factor in account merchandising, prospecting.

40. STEP SIX
Monitor sales
Cost of sales on an ‘ongoing’ basis.

41. Sales Organization Structure & Sales Force Deployment
A dynamic management undertaking
that must be constantly
assessed and ‘fine tuned’
to ensure the ideal balance
between profitability
and the development of
continued sales growth.