1. 4 Organizing the Sales Effort McGraw-Hill/Irwin
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Organize Around Customers
Historical
Product-centered
Expertise in features and functions
Today
Customer-centered
Expertise in business issues
Sales resources deployed to provide best service to best customers
Source: HR Chally Group (2007), The Chally World Class Excellence Research Report: The Route to the Summit. Dayton, OH: HR Chally Group.

3. Identify purposes of sales organization
Understand different horizontal organizational structures of a sales force.
Outline major issues in key account and team selling.
Discuss key vertical structure issues in sales organizations.
Identify important issues in starting a new sales force from the ground up.

4. Purposes of Sales Organization
Divide and arrange activities so the firm can benefit from specialization of labor
Provide for stability and continuity in firm’s selling efforts
Provide for coordination of activities assigned to sales force and to departments in the firm

5. Division and Specialization of Labor
Increase productivity - specialists can become proficient at assigned tasks
Divide required selling activities to gain maximum benefits within the sales force

6. Division and Specialization of Labor
Line organization
Vertical
Chain of command runs from chief sales executive down through levels of subordinates
Each subordinate responsible to one person

7. Division and Specialization of Labor
Line and staff organization
Vertical (most common)
Several sales management activities assigned to separate specialists

8. Stability and Continuity
Organize activities without regard to talents of current employees
People can be trained to fill positions
Same activities will be carried out even if designated individuals receive promotions or leave

9. Sales Organization Structure
Horizontal – divides selling activities among sales force
Vertical – assigns authority for specific sales management activities

10. Horizontal Structure Options
Outside Agents OR
Company Sales Force
Geographic
Product
Market/
Customer Type
Team Selling
Selling
Function
Note to instructor – mouse-over a shape then click on it to link to the slide with relevant details. A “back arrow” appears on each detail slide allowing you to return to this overview slide.
Co-Marketing
Nat’l Key
Accounts
Selling
Centers
Telemarketing
Matrix
Organizations
4-10

11. Outsourcing the Sales Force
Types of agents
Manufacturer’s representatives
Sell part of the output of their principals
Take neither ownership nor physical possession of goods
Cover specific territory and specialize in limited range of complementary products
Selling agents
Do not take title or possession of the goods they sell
Compensated by commissions
Broad authority to modify prices and terms of sale
Actively shape manufacturer’s promotional and sales programs
Horizontal
Structure
Options

12. Compatible territories Compatible customers Credibility of the rep
Compatible lines
Compatible territories
Compatible customers
Credibility of the rep
Capabilities
Credits
4.1
Six C’s of finding the
right rep
Horizontal
Structure
Options
Source: Dan Hanover, “Independents Day,” Sales & Marketing Management, April 2000, pp. 65–68.

13. Outsourcing Considerations
Economic Criteria
Control
Transactions costs
Strategic Flexibility
Horizontal
Structure
Options

14. Geographic Organization
Simplest and most common method
Individual salespeople assigned to separate geographic territories
Responsible for performing all activities necessary to sell all products
Horizontal
Structure
Options

15. Geographic Organization
Lowest costs
Travel time and expenses minimized
Sales administration and overhead costs kept low
Does not provide benefits associated with specialization of labor
Horizontal
Structure
Options

16. Geographic sales organization
Horizontal
Structure
Options
4.3

17. Product Organization
Separate sales force for each product (or category) in the line
Salespeople master effective selling methods for single or related products
Closer alignment of sales and production
Sales management controls allocation of selling effort across the line
Duplication of effort
Horizontal
Structure
Options

18. 4.4
Sales force organized by product type
Horizontal
Structure
Options

19. Customer Type/Market Organization
Natural extension of marketing concept and strategy of market segmentation
Better understanding of customer needs
Increased familiarity with certain businesses
Increased control over allocation of selling effort
Possible higher selling and administrative costs
Duplication of effort
Horizontal
Structure
Options

20. 4.5 Sales force organized by customer type Horizontal Structure
Options
4.5

21. Selling Function Organization
Salespeople specialize in performing different selling functions – e.g. prospecting and developing new accounts versus maintaining and servicing existing customers
Skills matched to sales function
Developmental salespeople often a successful alternative
Customer objections to switch to maintenance salesperson
Feelings of rivalry between the sales force
Horizontal
Structure
Options

22. Telemarketing Form of organization by selling function
Qualifying potential new accounts
Servicing existing accounts quickly
Seeking repeat purchases from existing accounts that cannot be covered efficiently in person
Providing quick communication of newsworthy developments
Horizontal
Structure
Options

23. 4.2 Database Capabilities and Telemarketing
Prequalifies prospects, can transfer to salesperson to close sale
Collects/provides information
Database
Database
Analysis
Software
Telemarketing
Customized
Direct
Mail
Formulates prospecting solutions – matches homeowners against other data to qualify customers, predict interest; generates prospect universe
Note to instructor – click on each box to display relevant detail information
Follows-up with prospects not ready to buy, provides response vehicles (web address, toll-free #)
Horizontal
Structure
Options
Source: KenSpralling, “Centex Houses Ranks Highest in Customer Satisfaction in 10 major: U.S. Markets, According to Independent Study,” September 14, 2005; Alicia Orr, “Predicting a Need,” Target Marketing, February 2001, pp. 62–64.

24. National and Key Accounts
Separate corporate division/sales force
Deliver high-level customer service to attract and maintain large and important customers
Key account sales execs
Business managers capable of managing key accounts
Customize products and services
Plan and implement key account business plans
Horizontal
Structure
Options

25. Team Selling
Integrates functional specialists with customer relationship specialists
ID team structure that meets customer needs
Benefits
Customer questions answered faster
Customers can speak directly with desired specialist
Horizontal
Structure
Options

26. Other Team Selling Structures
Selling center brings together individuals from around the organization to help salesperson
Matrix organization employs direct-reporting salespeople who support internal consultants with specialized expertise
Multi level selling – sales team consists of personnel from various managerial levels who call on their counterparts in the buying organization
Horizontal
Structure
Options

27. Co-Marketing Alliances
Develop marketing and sales programs to sell integrated systems directly to the ultimate customer
Horizontal
Structure
Options

28. Logistical Alliances and Computerized Ordering
Customer point of view -
Convenient
Flexible
Less time consuming
How will computerized reorder systems change the role of the sales force?
Horizontal
Structure
Options

29. Vertical Structure Issues
Span of Control
Managerial Levels
4-29

30. Larger Span of Control
Greater control/ responsiveness due to fewer management layers
Lower admin costs
Reduced one-to-one communication due to larger # of subordinates
Managements may be less effective, negating cost savings

31. Span of Control Reduce span of control when: Sales task is complex
Profit impact of each salesperson’s performance is high
Salespeople are well paid and professional
Also, at higher levels in the organization

32. Managerial Decision Levels
How much, where should the managerial authority lie?
Hiring, firing, evaluation

33. Managerial Decision Levels
Importance of decision =
Managerial decision level
Sales force pay =
Managerial decision level
Complex selling tasks =
Managerial decision level
4-33

34. Managerial Selling Responsibilities
Managers often active in sales to key accounts
Organizations value their selling skills
Managers value commissions, contact with marketplace
Drawback – some managers neglect managerial responsibilities

35. Line and staff sales organization
4.6
Line and staff sales organization
4.6