Part III
SALES FORCE ACTIVITIES
Chapter 6:
Sales Force
Organization
Sales Force Organization: Impact
Structure
Sales
Management
Role
Compensation
Recruiting/
Selection
Training
Program
Performance
Evaluation
Figure 6-1: Decisions Affected by Sales Force Organization
Sales Force Organization: Topics
Sales Force
Generalists
Sales Force
Specialization
Strategic
Account
Management
Telemarketing
Emerging
Issues
Strategic Account Programs:
Survey Results
49%
Today
In Five Years
45%
24%
18%
20%
17%
16%
11%
Customer
Generalist
Product
Lines
Figure 6-2: How Sales Forces are Organized
Functional
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
Vermont
New York
Massachus
etts
New York
New Jersey
Pennsylvania
North
Carolina
South
Carolina
Delaware
District of
Columbia
Georgia
Alabama
Virginia
Maryland
Mississippi
Florida
Figure 6-3: Geographical Sales Organization
Sales Force Organization:
Product Specialists
National Sales
Manager
Eastern Regional
Sales Manager
Northeast District
Sales Manager
Printer
Equipment
Salesperson
Server
Salesperson
Mid-Atlantic District
Sales Manager
Minicomputer
Salesperson
Programmable
Calculator
Salesperson
Figure 6-4: Product Specialized Sales Force
Southern District
Sales Manager
Copier
Salesperson
Large
Computer
Salesperson
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
Sales Force Organization:
Customer Specialists
National Sales
Manager
National Accounts
Manager
Northeast District
Sales Manager
Salesperson
For Educational
Institutions
Manager of
Export Sales
Eastern Regional
Sales Manager
Mid-Atlantic District
Sales Manager
Salesperson for
Retail Customers
Southern District
Sales Manager
Salesperson for
Government
Agencies
Salesperson for
Manufacturers
Figure 6-5: Customer Specialized Sales Force
Salesperson for
Bank Customers
Salesperson for
Wholesale
Customers
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
Sales Force Organization:
Functional Specialists
Division
Marketing Manager
Industry
Sales Manager
Account Executives
(Salespeople)
Systems
Manager
Administrative
Manager
System Reps
Market
Administrative
(Technical Support)
Figure 6-6: Functional Specialization
(Training & Installation)
Functional Specialists: Alternatives
Alternatives
Companies
New Customers  American Express
 Gillette
Retention  Browning-Ferris Industries
End-Users  Lexmark International
Sales Engineers 

Service Consultants 

3M
AT&T
IBM
McKesson Corporation
Strategic Accounts:
What is Different about Strategic Accounts?
Previous
Approach
New Strategic
Account
Business Plan  3 – 6 months
Duration
 2 – 3 years
Structure of  Tactical
Business Plan
promotional
program
 Strategic business
plan focused on
growth and
profitability
Personnel  Sales reps and
Involvement
purchasing agents
Figure 6-7 : Changes in Joint Account Planning
 Senior management
from both companies
Strategic Accounts:
Who are Strategic Accounts?
 When a customer purchases a significant
volume and exhibits one or a combination
of the following:
 Multiple people are involved in the buying
process
 Purchasing is centralized
 The customer desires a long-term, cooperative
working relationship
 The customer expects specialized attention
and service
Strategic Accounts:
Common Problems with Account Selection
 Too many “strategic accounts”
 “We see them as strategic, but they don’t even see
us on their radar.”
 Too much organizational effort directed towards big
name accounts
 Not thinking enough about return on relationship
investment
 No common process across the organization
 No tracking and reviewing of strategic account
selection
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
Strategic Accounts:
Alternative Organization Model Effectiveness
Existing Sales Force  Least effective
 Lowest market performance
Sales Management  Somewhat more effective
 Slightly better market performance
Separate Sales Force  Fairly effective
 Good Market Performance
Cross-Functional  Most effective
Sales Teams  Best Market Performance
Table 6-1: Doing the Math on Account Management
Strategic Accounts Programs:
Benefits
Increased sale to
national accounts
91%
Increased profits
from national
accounts
83%
Increased
market share
74%
Improved customer
communications
74%
Improved customer
coordination
30%
Strategic Accounts Programs:
Compensation Levels
$99,460
Telecom
$112,414 $115,905 $117,997
Other
Services
Other
Mfg
Chemicals
$124,208
High Tech
Strategic Accounts Programs:
Insights from Strategic Account Executives
“Until the customer tell us we’re a strategic
supplier, I can’t believe that they are
in fact a strategic account for us.”
“Strategic accounts bring the opportunities
to you, instead of you always having to try to push
the ideas on them.”
“If our products and services aren’t critical
to our customer’s performance and results,
it is silly to call them ‘strategic accounts’.”
Strategic Accounts Programs:
Insights from Strategic Account Executives
“Before a real strategic account would
[make a particular decision],
they would ask us for inputs, knowing our
interests and theirs were aligned.”
“The best strategic accounts are willing to
open the door, allow us to help them.
There is an ongoing invitation to bring
expertise into their firm.”
Strategic Account Programs:
Survey Results
Are training programs for the strategic account
manager different?
Different
training for
strategic
account
managers
37%
26%
37%
No difference in
training for strategic
account managers or
other sales staff
Provide no training
for strategic
account managers
Strategic Account Programs:
Survey Results
Do your strategic account managers carry an
assigned sales quota?
No Response
Yes
3%
No
68%
29%
Strategic Account Programs:
Survey Results
Do strategic account managers have formal
authority over the rest of the sales organization?
No Response
7%
24%
Sales team
reports
directly to
the
strategic
account
manager
22%
47%
May assemble
temporary “virtual”
sales teams that
report directly to the
strategic account
manager
No formal authority
over others in the
sales organization
Strategic Account Programs:
Survey Results
How do you measure the success of a
strategic account program?
Sales Volume
80%
Customer Satisfaction
53%
Profitability
45%
Volume of Recurring Revenue Stream
29%
Incremental Orders from Existing Accounts
22%
Number of Customer with Strategic
Account Agreements
11%
Number of Transactions/Orders
6%
Number of Products Shipped
6%
Sales Force Organization:
Cost Analysis
Field Rep
Telemarketing
Sales calls per day
5
25
Sales calls per quarter
325
1624
Sales calls per year
1300
6500
Salespeople required
6.5
1.2
Cost per sales call
$250
$15
Cost per year
$1,998,750
$117,000
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 6-8: 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
Sales Force Organization:
Economic Analysis of Sales Agents
Independent
Agents
Total
Selling
Costs
Own Sales Force
Break-Even Sales
Sales Volume
Figure 6-9: 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.

The products are easily
understood commodities that
have been around for a long
time.

Buying is decentralized.

Local knowledge and local
distribution is important.

The selling cycle is short and
orders are typically small.

The company is selling only a
few products.

It is not necessary to tightly
control the selling effort.

There is a good potential
sales agency who has
significant marketing
expertise in the industry.

Ongoing support activities
are not important and the
company does not need
customer information.

The company is not well
known and has little equity in
the market.
Figure 6-10: Market Factors Favoring the Use of Sales Agents
Sales Force Organization:
Selecting a Sales Agency
1. Define the ideal market focus.
2. Identify compatible principles.
3. Specify the necessary technical background.
LOCATING AGENTS:
Rep. Directories
Customer References
Compatible Manufactures
References from Current Agents
Trade Shows
Sales Force Organization:
Sales Agent Decision and the Product Life Cycle
Disengagement
Decision
Introduction
Re-engagement
Decision
Manufacturer
Re-employs
Rep firm to
lower fixed
sales costs
Global Account Success Keys
1. The company’s value proposition must be
right.
2. Global account teams must be crossfunctional
3. Account teams must be driven from the top.
4. A mindset of constant improvement is key.
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
Figure 6-11: Sales Team Organization at Ericsson
Account
Coordinators
Sales Force Organization:
Evaluating Organizational Structure
 Financial performance -- must consider
BOTH costs and revenues
 Adaptability
External
Internal
 New competitors
 Changing technology
 Modification to channel
systems
 Industry life cycle




Company goals
Management philosophy
Production capabilities
Technical resources
 Integration -- subunits of sales
organization must work in harmony