Sales Management 6
Sales Organization
Purpose of Sales Organization

Divide and coordinate activities so that the
group can accomplish objectives better than
if acting as individuals.
– Specialization of Labor
– Stability and Continuity
– Coordination and Integration

Goals  Structure
Specialization of Labor

Concentrate: Become more proficient at
one thing.

Assign tasks according to ability.

Line/Staff organization is most common.
Stability and Continuity

You can organize around activities, not
around individuals.

The organization survives the individuals
within it.
Coordination and Integration
Activities of the sales force must be
integrated with customer needs and
concerns.
 Selling activities must be coordinated with
other departments: production, product
development, logistics, finance.
 Selling tasks among specialists must be
coordinated.

Internal: Horizontal Structure

Geography: States/Regions, Downtown/Suburban

Product Type:

Customer Type:

Selling Function:
Yard Equipment vs. Power Tools
Industrial/Consumer,
Hospitals/Schools, Wholesalers/Retailers
Prospecting, presenting, servicing
Geography: Urban/Suburban; City/Region/State
Product Type: Lawn Equipment/Power Tools
Customer Type: Industrial/Consumer; Institutions;
Wholesale/Retail
Selling Function: Prospecting, Presenting, Closing
Geographic Organization
Simplest and most common form
 Each salesperson handles all sales
functions in the territory.
 Advantages:

– Cheaper: travel, management
– One point of contact for customer

Disadvantages:
– No division/specialization of labor
– Salespeople focus on products/customers
that benefits themselves.
Product Orientation

Used primarily by firms with large and diverse
product lines, and firms with highly technical
products.

Advantages:
– Familiarity with technology and applications
– Can lead to closer coordination with production
– Better control: can allocate across company lines.

Disadvantages:
– Duplication of effort  higher selling costs
– Need more coordination
– Multiple contact people for customers
Customer/Market Organization

Advantages:
– Better understanding of customers’ needs
– Can be trained to sell to particular customers (e.g.
Hospitals vs. Schools)
– Can gain insight into product applications,
innovations, new products
– Managers can vary sales force size to market

Disadvantages:
– Higher selling expenses
– Large customers can have multiple sales contacts
Selling Function Organization


Acquiring new customers (development
specialists) vs. maintaining and servicing
existing customers
Telemarketing: Inside/Outside Sales
– Prospecting/Qualifying: turn leads over
– Servicing problems quickly: hotlines
– Seeking repeat sales: especially small & remote
customers
– Quicker communication on noteworthy
developments (new products, promotions, etc.)
– Feed-in via targeted advertising, direct mail, toll-free
lines, web pages
National/Key Accounts I
Rules of Thumb: 10% of customers can lead
to 50% of sales; 20% can lead to 80%.

Salesperson must be a business manager:
– Be able to customize products/services
– Knowledgeable about strategic objectives
– Can build and implement a business plan
National/Key Accounts II

Major account management has dual goals:
– Making sales
– Developing long term relationships with major
customers


Larger share of customer leads to larger profit.
But:
– Major accounts often need detailed and sophisticated
treatment.
– Need more experienced, expert salespeople with greater
authority. Commission may lead to conflict.
National/Key Accounts III

Assign key accounts to top sales executives

Create separate corporate division

Create separate sales force
National/Key Accounts IV
Smaller firms don’t have resources for
separate division or sales forces.
 They have relatively few major accounts
 Salesperson must be high enough in the
organization to make/influence decisions.
 Takes time from managerial responsibilities.

National/Key Accounts V

When few customers account for a large
percentage of sales: can coordinate
manufacturing, logistics, marketing and
sales.

But there is often a duplication of efforts
and added sales expenses.
National/Key Accounts VI

Treat major account executives like:
– Regional sales managers
– District managers
– Vice presidents

Advantages:
– Know customer better, can service better
– Often viewed as promotion, can assign best people

Disadvantages:
– Duplication of effort
– Expense
Team Selling

Response to more complex relationship
with customer: Stronger knowledge,
better service

Get different expertise from multiple
organizational functions

High costs: time and personnel

Complicated: coordination, motivation,
compensation
Multi-level Selling

Teams call on corresponding management
levels at the customer’s office.
– VP to VP
– Engineer to Engineer
– Technician to Technician
Co-Marketing Alliances

Teams from multiple organizations work
together to sell complex products or
systems.

Capitalize on each member’s competencies
(technical knowledge, sales force)
Starbuck’s Board of Directors






Howard Schultz
Starbucks Corporation
chairman
Jim Donald
Starbucks Corporation
president and chief executive officer
Barbara Bass
Gerson Bakar Foundation
president
Howard Behar
Starbucks Corporation
director
William (Bill) Bradley
Allen & Company LLC
managing director
Mellody Hobson
Ariel Capital Management, LLC
Ariel Mutual Funds
president





Olden Lee
PepsiCo, Inc.
retired executive
James Shennan, Jr.
Trinity Ventures
general partner emeritus
Javier Teruel
Colgate - Palmolive Company
vice chairman
Myron Ullman, III
J.C. Penney Company, Inc.
chairman and chief executive officer
Craig Weatherup
Pepsi-Cola Company
retired chief executive officer
Logistical Alliances and
Computerized Ordering

Direct and often automatic reordering
(e.g. EDI)

Easier for customer

Creates structurally tied relationship

Frees sales force up to sell to new
customers, or new products to existing
customers.
Global Sales Structure

Same basic issues:
– Own sales force vs. agent
– If own people, what structure?

Decision factors more complicated due to
distance, customs, legal/political
considerations.
Vertical Structure I

Should Sales be integrated within the
Marketing Department as it seems to be in
over ¾ of companies responding to survey?

Should it be a separate unit as it is in about
20% of the responding companies?
Vertical Structure II

Number of Management Levels vs. Span
of Control
– How many levels to have?
– How many people should each manager
supervise?
– Fewer levels
» Facilitates communication
» Lowers administrative costs
» Lowers quality: less effectiveness and
productivity
Vertical Structure III

Reduce span of control if:
– Sales task is complex
– Profit impact of each salesperson’s performance
is high
– Salespeople are well paid and professional
Vertical Structure IV

Where should authority reside?
– Hiring, Firing, Evaluation

Selling and Managerial Responsibilities?
– Most spend about 1/3 of time on sales (vs. mgmt)
– They want commission rewards
– Usually needed on key accounts, especially for their
sales ability

Should Sales Manager control sales-related
activities?
– Installation, maintenance, order processing, delivery
– Usually not credit: conflict and awkward
Vertical Structure V

Technology may change sales management
issues as much as it has sales person issues.
Cell phones, computers, etc.
Quality time?

Staff Support vs. Outsourcing
– Specialized knowledge
– Most common: recruiting, training, sales
analysis (Research?)