Module 4 Sales Organization Structure and Salesforce Deployment

1. Module 4Sales Organization Structure and Salesforce Deployment

2. Sales Organization ConceptsSpecialization Degree to which salespeople and sales managers concentrate on specific sales or sales-support activities, specific products, and/or specific customers.

3. Sales Organization ConceptsSalesforce Specialization Continuum GENERALISTS All selling activities and all products to all customers Some specialization of selling activities, products, and/or customers SPECIALISTS Certain selling activities for certain products for certain customers

4. Sales Organization ConceptsCentralization Degree to which important decisions and tasks are performed at higher levels in the management hierarchy.

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

6. National Sales Manager Sales Training Manager Regional Sales Manager Sales Training Manager District Sales Manager Salespeople Line vs Staff Positions

7. Generalization Centralization Tall Organizations Specialization Decentralization Flat Organizations

8. Selling Situations that Affect Specialization Decisions • Selling Effort vs. Selling Skill • Environmental Characteristics • High uncertainty • Low uncertainty • Customer Needs and Product Complexity

9. Market- Driven Specialization Geography- Driven Specialization Product- Driven Specialization Selling Situation ContingenciesCustomer and Product Determinants of Salesforce Specialization Customer Needs Different Product/Market- Driven Specialization Simple Product Offering Complex Range of Products Customer Needs Similar

10. Geographic Sales Organization National Sales Manager Sales Training Mgr Eastern Regional Sales Mgr Western Regional Sales Mgr Zone Sales Mgrs (4) Zone Sales Mgrs (4) District Sales Mgrs (20) District Sales Mgrs (20) Salespeople (100) Salespeople (100)

11. Product Sales Organization National Sales Manager Office Equipment Sales Mgr Office Supplies Mgr District Sales Mgrs (10) District Sales Mgrs (10) Salespeople (100) Salespeople (100)

12. Market Sales Organization National Sales Manager Commercial Accounts Sales Mgr Government Account Sales Mgr Sales Training Manager District Sales Mgrs (10) Zone Sales Mgrs (4) Salespeople (50) District Sales Mgrs (25) Salespeople (50)

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

14. Major Accounts • Large accounts • Complex needs • National Accounts • Global Accounts

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

16. Organizational Structure Advantages Disadvantages Geographic · · Low Cost Limited Specialization · · No Geographic Duplication Lack of Management Control Over · Product or Customer Emphasis No Customer Duplication · Fewer Management Levels Product · · Salespeople Become High Cost Experts In Product Attributes · Geographic Duplication and Applications · Customer Duplication · Management Control over Selling Effort Allocated to Products Market · · Salespeople Develop Better High Cost Understanding of Unique · Geographic Duplication Customer Needs · Management Control Over Selling Effort Allocated to Different Markets Functional · · Efficiency in Performing Geographic Duplication Selling Activities · Customer Duplication · Need for Coordination Comparison of Sales Organization Structures

17. Hybrid Sales Organization Structure National Sales Manager Commercial Accts Sales Mgr Government Accts Sales Mgr Office Equipt Major Accts Regular Accts Office Supplies Sales Mgr Sales Mgr Sales Mgr Sales Mgr Telemarketing Field Sales Mgr Sales Mgr Western Eastern Sales Mgr Sales Mgr

18. Salesforce Deployment Allocating selling effort Determining salesforce size Designing territories

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

20. Allocation of Selling EffortAnalytical Approaches • Single Factor Model • Portfolio Models • Decision Models

21. Allocation of Selling EffortSingle Factor Models • Easy to develop and use/low analytical rigor • Accounts classified into categories based on one factor, such as market 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 notconsidered in assigning sales call coverage

22. Allocation of Selling EffortSingle Factor Model Example Market Potential Categories A B C D Average Sales Calls to an Account Next Year 32 24 16 8

23. Allocation of Selling EffortPortfolio Models • Account Opportunity • Competitive Position

24. Allocation of Selling EffortPortfolio Model Segments and Strategies Competitive Position Strong Weak Segment 1 Segment 2 High Account Opportunity Segment 3 Segment 4 Low

25. Allocation of Selling EffortDecision 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

26. Sales Force SizeKey Considerations • Sales Productivity • Ratio of sales generated to selling effort employed • Salesforce Turnover • Costly • Manage pipeline

27. Sales Force SizeAnalytical ToolsBreakdown Approach • Assumes an Accurate Sales Forecast • Advantage • Easy to use • Disadvantages • Conceptually weak; sales determine sales Forecasted Sales Sales Force Size = Average Sales per Salesperson

28. Sales Force SizeAnalytical ToolsBreakdown Approach = $50,000,000 / $2,000,000 = 25 salespeople Forecasted Sales Sales Force Size = Average Sales per Salesperson

29. Total Selling Effort Needed # of Salespeople = Avg Selling Effort per Salesperson Sales Force SizeAnalytical ToolsWorkload Approach • Integrates the salesforce size with account effort allocation strategies • Advantages • Easy to develop • Sound conceptually

30. Total Selling Effort Needed # of Salespeople = Avg Selling Effort per Salesperson Sales Force SizeAnalytical ToolsWorkload Approach = 75 salespeople 37,500 sales calls needed = 500 annual sales calls per salesperson

31. Sales Force SizeAnalytical ToolsIncremental Approach Optimal # of Salespeople is where: Marginal Profit from Added Salesperson = Marginal Cost of That Salesperson • Advantage • Quantifies the important relationships between salesforce size, sales, and costs • Disadvantages • Difficult to develop • Requires historical data

32. Designing Territories • Territory - consists of whatever specific accounts are assigned to a specific salesperson • Work unit for a salesperson

33. Territory Design Procedure Assess Territory Workload Analyze Planning and Control Unit Opportunity Form Initial Territories Select Planning and Control Unit Finalize Territory Design

34. Assigning Salespeople to Territories Farmers or Hunters

35. Using Technology • Software to automate the process • Design potential territories • Print maps • Compare opportunity and work load • Easy to make changes • Sales Territory Configurator • Tactician • TerrAlign

36. "People" Considerations