Chapter 6
Sales force organization
Sales force organization is the process of allocating and managing sales resources to
meet sales and marketing objectives. The organization reflects the number of sales
representatives and their skills, the size of the product range, the location of customers and
prospects, and the market sectors in which a company operates. An effective sales force
organization provides account and geographic coverage, minimizes wasted resources and
time, and ensures a higher probability of attaining sales quotas, according to consultancy
Baker Communications.
Product Organization
If selling your company’s products requires various types of specialized knowledge,
adopt a product-organization structure for your sales force. Salespeople must understand and
be able to operate all the equipment they sell so they can anticipate and convincingly answer
customers' questions. By organizing your sales force so each salesperson is responsible for
selling only the products she knows best, you increase the effectiveness of your whole sales
force. The disadvantage of this approach is the potential for redundancy and scarcity: As
consumer demand shifts from one product to another, you might end up with too many
specialized salespeople in one area and too few in another.
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
Geographic Organization
Dividing your sales force by geographic region is the simplest approach. It reduces
travel time, which means less overhead. A disadvantage is that each salesperson must
understand how to sell every product you want sold in his assigned region. If your product
line requires specialized knowledge, training your salespeople could get expensive.
Advantages

Low cost

No geographic overlap

No customer overlap
Disadvantages

Limited product line knowledge

Limited customer knowledge

Lack of management control over product or customer emphasis
Customer Organization
Organizing your sales force to suit various types of customers also can be effective.
Suppose a hospital equipment manufacturer markets its products to large hospitals, nursing
homes and private practices. Dedicating a portion of its sales force to each type of customer
allows the manufacturer to customize its sales pitches to speak to each customer’s typical
needs. The disadvantage of this approach is the same as with geographic organization: Each
section of the sales force needs broad knowledge to sell the equipment properly.
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
Expert Insight
After adopting an organizational structure that suits your needs, tweak it as necessary.
For example, if you choose a geographic organization but don’t want to invest in training
each salesperson to sell a particularly complex product in your line, create a dedicated sales
team for that one product. This sort of combination approach can give you the best of both
worlds.
Advantages

Effectiveness in performing selling activities
Disadvantages

Coordination

Geographic duplication

Customer duplication
Chapter 7
Sales Person Recruiting and Selection
Aligning People to Core Job Responsibilities
Missionary:

Technical skills, relationship building skills
Sales Support:

Empathy, relationship building skills
New Business:

Assertiveness, persuasiveness, time management, ability to close
Recruiting Sources
Classified Ads

Reaches wide audience (trade publications may narrow the reach)

Used if high turnover

Tend to over-produce under-qualified candidates
Present Employees

Familiar w/ company products & procedures

Established job histories

Sales as a promotion

Over-rely on previous experience
Referrals/Networking

Company executives understand needs, culture and potential fit for sales
responsibilities
Employment Agencies

best if company pays
Schools & Colleges

Poised & easily trained

Lack experience & become bored
Customers, Suppliers & Competition

Good if need w/out much training

Legal & ethical issues

Common: insurance, stock broker, office equipment, clothing
RESUME ANALYSIS
1. Account for all dates.
2. Examine the number of jobs and length of time spent on each job.
3. Reasons for leaving job.
4. Is there a pattern of growth?
QUESTIONS ABOUT INTERVIEWERS
What Research Shows

Does extensive interviewing experience help an interviewer to make better
judgments?

Does pressure to recruit impair the judgment of experienced interviewers less than
inexperienced interviewers?

When interviewing multiple recruits, do interviewers tend to use previous applicants
as the standard of comparison for subsequent applicants?

Will the positive effects of good appearance offset an unfavorably rated personal
history for a recruit?

How much of the factual information presented in an interview will the interviewer
remember immediately after a short interview if no notes are taken?

How will lack of notes and factual recall affect the interviewer’s rating of the recruits
interviewed?

How reliably can a group of interviewers rate a recruit’s qualifications for a job?

How reliably can a group of interviewers rate future job performance by a recruit?
COMMON INTERVIEWER MISTAKES
1. Failure to establish rapport
2. Lack of plan
3. Insufficient time
4. Not listening
5. Personal bias
6. Questions
7. First impressions
Chapter 8
Sales Force Development
Why Train Salespeople?

Increased Productivity

Reduce Turnover

Improve Customer relations

Better Morale

Improve Time and Territory Efficiency
Sales Training Process
Planning for Sales Training
•
Assessing Sales Training Needs
–
Strategic Objectives
•
–
Change in strategy, market environment, and competitive environment
Sales Force Observation and Survey
–
Customer Information
–
Company Records
Developing the Training Program
Training Topics

Product Knowledge

Selling

Improving Teamwork

Customer and Market Information

Company Orientation

Technology-Based Selling Skills

Other Topics
Where to Train
•
Centralized Versus Decentralized Training
–
Centralized Training
•
–
Decentralized Training
•
•
All the salespeople to be trained are brought to one central location
Usually done in field or regional sales offices
Field Training
–
On-The-Job-Training (OJT)
•
Learn from experience
Who Should Train

Staff Specialists

Outside Specialists

Line Executive
Training Methods

Role-Playing

CDs, Podcasts, and Audiotapes

Internet
Chapter 9
Leading a Sales Force
Leading Versus Managing
Personal vs. Organizational Needs
Sales Manager Power
Expertise Power

The belief that a person has valuable knowledge or skills in a given area.

“I respect her knowledge and good judgment because she is well trained.”
Referent Power

Perceived attractiveness of one party to another.

(i.e., friendship, perceived similarity, etc.)
Legitimate Power

The designated right to the leader.
Reward Power

Ability for the manager to reward the other person for a designated action.
Coercive Power

Belief that one party can remove rewards and provide punishment to affect behavior.
•
Leads to compliance due to fear of punishment.
Transformational vs. Transactional Leadership
Chapter 10
Ethics in Sales Management
When faced with an opportunity to exaggerate in job interviews, who would
exaggerate more: professors, politicians, preachers, or salespeople? Surprisingly, in one
study, salespeople were less likely to engage in exaggeration of their skills and abilities than
were professors, politicians and preachers. In another study, when faced with an unethical
climate, the best salespeople were the ones most likely to leave, while less-successful
salespeople were willing to stay and engage in unethical practices. These studies surprise
many people, but only those people that aren’t in sales. Most salespeople are scrupulously
ethical and, like Ted Schulte mentioned at the start of the chapter, they are in sales because
they really enjoy working to help people solve problems.
Common Ethical Issues for Salespeople
What are the most common ethical issues facing salespeople? Many of the most common
situations you could face as a salesperson involve issues such as the following:




A customer asking for information about one of their competitors, who happens to be one
of your customers
Deciding how much to spend on holiday season gifts for your customers
A buyer asking for something special, which you could easily provide, but aren’t
supposed to give away
Deciding to play golf on a nice day, since no one knows if you are actually at work or not
Let’s examine each of the issues. In the first issue, a customer owns the information about
their business. The salesperson may hold that information, such as how many cases of the
product they purchase or who their customers are, but that salesperson does not have the right
to share that information with the customer’s competitor. In many instances, a buyer may ask
the seller to sign a nondisclosure agreement because, in order to serve the buyer, the seller
will gain access to important private information about that buyer. But even if there is no
nondisclosure agreement, courts are likely to agree with the buyer that the seller has an
obligation to protect the buyer’s information.
In the second issue, the concern is whether the gift is so extravagant that it is
considered a bribe. In some companies, such as IBM and Walmart, buyers are not allowed to
accept so much as a free cup of coffee from a seller. These companies do not allow their
buyers to receive promotional items such as a pen or coffee cup with the seller’s logo on it
because they want every vendor to have free access to sales opportunities and earn the
business on their merits, not their freebies. Many buyers would question the motives of a
salesperson giving too large a gift. Most salespeople agree that lavish entertainment and gifts
are becoming less important in business because decision makers know these add to the costs
of doing business and they’d rather get a better price than be entertained.
The third issue is tough for salespeople because there are two factors involved: a
possible violation of company policy and providing an unfair advantage to one customer.
Customers may not know that their special request could get the salesperson in trouble and
the request may be reasonable, just against company policy. In that instance, the salesperson
should not follow through on the request, though it might make sense to see if the policy can
be changed. The second factor, though, is a bit more difficult because the request can be
unfair to other customers, and may cause legal problems. As long as the special request can
be provided to anyone who asks for it, no law is broken. What if the special request is for a
discount? Pricing discrimination laws could come into play if such a discount is not made
available to all who ask. What if the request isn’t illegal, but other customers find out and get
upset that they weren’t offered the same benefit? Then the salesperson may get a reputation
for being untrustworthy.
In the final issue, the question is whether the salesperson is cheating the company out
of time and effort. Some argue that a salesperson who is paid straight commission (paid by
the sale) is not stealing anything from the company, but others argue that even in that
instance, the company is being deprived of possible sales that would be gained if the
salesperson was working.
Examples of Pressures Facing Sales Managers

Incentives to provide favorable earnings reports

High rewards for short –term profits at expense of long-term growth

Greed

Reputation

Other?
Case – Defining Moment
 You are the regional sales manager of a technology-based firm.
 Stacy, one of your branch managers, wants to fire Kathy, a salesperson you hired last
year, for underperformance (lack of territory development).
 While there are no formal quotas, the other salespeople have had double-digit revenue
growth recently, while Kathy has experienced 8% growth.
 Kathy works 40 hour weeks, however, everyone else puts in about 50-60 hours per
week.
 Kathy is devoted mother with full custody of her 5-year-old daughter and no child
support or other assistance from her ex-husband.
Common Sales Ethics Issues
 Hiring and Firing
 House Accounts
 Expense Accounts
 Gifts for Buyers
 Bribes
 Entertainment
Eight Ways to Keep You Sales Force Honest
1. Get support from top management showing that they expect you to follow the spirit
and letter of the law.
2. Develop and distribute a sales ethics policy.
3. Establish the proper moral climate. If the bosses follow the rules, then the troops are
apt to do likewise.
4. Assign realistic sales goals. People who try to meet an unfair quota are more likely to
rationalize their way to a kickback scheme.
5. Set up controls when needed. Watch people who live above their income.
6. Suggest that salespeople call for help when they face unethical demands.
7. Get together with your competition if payoffs are an industry problem.
8. Blow the whistle if necessary.
Chapter 11
Sales Force Motivation
Your Sales Force is your Revenue Generating Engine. Does the engine need a tuneup? Are you giving high octane fuel to your sales force engine, or are you pushing the pedal
to the metal and never getting out of second gear? The right motivation can accelerate
sustainable revenue growth.
Motivation does not Guarantee Performance
Motivation does not guarantee performance. Motivation inspires performance from
capable sales associates. Motivation is necessary to retain and sustain performance. Without
motivation, sales associates will lose interest or relinquish loyalty over time. However,
motivation alone does not guarantee success.
Select qualified candidates based on the presentation of your product or services. All
sales cycles are not the same. Support new and existing sales associates with equal passion.
Continually measure performance internally and externally to identify trends. Develop a
culture to nurture the sales force and feed the economic engine.
Sales Motivation does not come from Posters or Slogans
Professional Sales Associates are evaluated based purely on performance, not on
buzzwords, catchy phrases, or slogans that appear on motivational posters. Some other career
position evaluations are conducted with a yearly review, summarizing teamwork, progress,
and ability to follow or give direction. Sales professionals are evaluated daily, monthly, and
quarterly based on financial metrics. Performance is determined by the bottom line. In the
language of the sales professional, actions and attainment speak louder than words. If you
want to motivate the professional sales force, be prepared to speak in the same language.
How to Motivate the Sales Force
There are three critical elements to motivate a successful and high performance
professional sales force. These elements are Appreciation, Recognition, and Compensation. It
is necessary to provide all three ingredients with integrity.
Appreciation
Giving Recognition and Compensation is not the same as demonstrating
Appreciation. Recognition implies personal performance. Appreciation requires a mutual
understanding of the value of the personal performance as a contribution to the greater good
of the organization. The sales professional is just one important participant. All of the
employees and roles in the organization contribute to the success of the organization. To
effectively demonstrate appreciation, it is necessary to understand and communicate how the
roles of the various departments and functions work together, and the impact of each on
another.
Once appreciation is measured in terms of benefit to the organization, then it becomes
easy to identify how to express appreciation. Quite often, this expression of appreciation is
bestowed in the form of training and development. The training is intended to help the sales
associate sustain and expand on successful performance by providing a platform to learn
more about the product, process, integration, or techniques. Appreciation may be presented in
the form of tools that enable and empower the sales associate with hardware, software, or
knowledge. Appreciation acknowledges contribution to the organization and empowers
continued success.
The contributions of a sales associate may be worthy of demonstrating appreciation,
even when personal attainment has not achieved the necessary levels for recognition or
compensation.
Recognition
Give recognition for the attainment of personal goals. Recognition may be shared in
the form of awards, certificates, or personal accolades. It may also be provided in the form of
written communication. It is important to give team or group recognition when appropriate,
just as it is important to provide individual recognition when appropriate. Recognition should
be fair, balanced, and earned. When it is earned, it should not be forgotten.
Verbal recognition is a nice gesture, but not a lasting one. If the contributions of the
sales associate have had a significant benefit to the organization, and if the associate has
achieved personal commitments, give lasting recognition in the form of a certificate or award.
An award is a lasting reminder to the recipient, and to those individuals who may also want to
receive one, that the organization recognizes and appreciates personal achievement.
Compensation
The professional sales associate is measured by compensation to the organization in
the form of revenue. Is it a surprise that the sales associate measures the performance of the
organization to the sales associate in the same manner? Commission and bonus plans should
be clear and easily understood. Commission, as pay for performance, should be realistic, even
when it is treated as a 'stretch goal'.
Some sales cycles and customers take longer to close. Does the company strategy or
compensation plan change more frequently than the product offering? How significant are
these changes, and how well are they understood? Are compensation plans based on history,
opportunity, the sales pipeline, or an unattainable pipe dream? Does the plan reward the team
as a percentage of individual effort, thereby encouraging reciprocal support? Commission
plans should be based on an allocation, as opposed to a budget. Commission should be an
appropriated investment as incentive for team building and individual compensation.
Putting It All Together
Is your sales force treated as the pipeline to profit, or as a necessary evil? Beware if
your competitors value your top performers more than you do. Loyal customers are just as
likely to be loyal to a trusted sales associate as they are likely to be loyal to a company or
brand. Cultivate, educate and motivate your sales force to nurture a high performance
revenue generating engine.
Use a balanced approach of Appreciation, Recognition and Compensation to
acknowledge, reward and motivate the sales force as an investment to growing revenue.
Giving Status to Salespeople
1. Compensation
- exceed first-line managers
2. Job Title
- no cost but considerable payback
3. Company Car Upgrade
- salespeople spend much time in car
reminds them of their value.
4. Car Phone –
- justified on a purely business basis
5. Field Sales Council
- meet president for 1/2 day open-ended discussion on field marketing conditions report back to field meetings the results
6. Outside Secretarial Support
- or more exclusive central.
7. Published Success Stories
- high form of recognition
8. Task Force Assignments
- e.g., review of all paperwork.
Role Perceptions
 Typical Sales Job Activities
 Where is their potential for the following:
–
Ambiguity
–
Lack of Accuracy
–
Conflict
Self-Management

How do these self-management techniques relate to the motivation theories -Maslow, Expectancy, etc.?

How will career stages affect this process?

Devise a self-management technique for taking more complete class notes.

Devise a self-management technique for making more sales presentations for a key
product group- e.g., PCs

What is the role of management in self-managing?
A Self-Contract

Clear detailed description of behavior targeted
for change.

How behavior is to be observed, measured and recorded

Detail of criterion for reinforcement

Designates the reinforcement

Stipulates the negative consequences of not fulfilling contract

Sets timing for delivering reinforcement
Sales Force Experiment – Conclusions

Most Universal salespeople are “quota achievers” not “dollar maximizers”.

When given a more easily attainable quota, motivation declines so much they will be
less likely to make lower than higher quota.

Set quotas at challenging levels and attach great significance to attainment

What salespeople say will likely differ from what they do.
Chapter 12
Compensating the Sales Force
•
Compensation in the global market is an extremely important managerial area
•
This is because the compensation plan:
•
–
Helps attract potential salespersons
–
Impacts a salesperson’s motivation
–
Is a determinant of status and value
–
Determines lifestyle and purchasing power
Compensation package is complex and affected by multiple forces:
–
A balance between company policies and country-specific elements
–
Total compensation package includes financial
•
–
and non-financial incentives
•
•
Salary, commission, bonus, stock options, benefits
Awards, recognition, vacation, and promotion
Hard to compare compensation plans because of their differences
–
Lower salary, but higher deferred components
–
Cannot simply transfer a compensation plan from one culture to another
•
–
What works in one culture will not work in another!
Compensation should motivate sales force to accomplish goals set by
management
•
Compensation may be changed to meet firm goals
Customer Satisfaction and Compensation
 IBM places significant resources toward monitoring customer satisfaction.
 All customers are surveyed annually on:
–
Overall customer satisfaction
–
The rep’s knowledge of the customer
–
The transaction or solution itself
–
How satisfied the customer is with the solution
–
The installation process (smooth or disruptive), including how long it took
–
The extent and clarity of the education provided
–
The time needed to get the application(s) up and running
–
The capability and speed of technical support
 Results are benchmarked against prior IBM performance, as well as the competition
 Results are used for compensating sales reps and managers.