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The Sales Organization

Variations in Selling Organizational Structure. The Sales Organization. Marketing 3345. Fundamental Principles. Sales Force Specialization. Sales Force Alternatives. Sales Force Size. Emerging Issues. Fundamental Organization Principles.

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The Sales Organization

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  1. Variations in Selling Organizational Structure The Sales Organization Marketing 3345

  2. Fundamental Principles Sales Force Specialization Sales Force Alternatives Sales Force Size Emerging Issues

  3. Fundamental Organization Principles Unity of Command Each person should report to only one boss. A clear and unbroken chain of command should link every person in an organization with someone a level higher. Stability and Continuity Activities should be assigned without regard for the talents and preferences of current employees. Coordination and Activities of salespeople should be Integration integrated with customer needs, coordinated with activities of other departments, and coordinated with tasks of all salespeople.

  4. National Sales Manager Geographical Sales Organization Central Eastern Western Regional Regional Regional Sales Manager Sales Manager Sales Manager Northeast Mid-Atlantic Southern District District District Sales Manager Sales Manager Sales Manager Connecticut New South Pennsy- lvania North Maine and Rhode Jersey Carolina Carolina Island District of Vermont New York Delaware Georgia Alabama Columbia Massach usetts New York Virginia Maryland Florida Mississippi

  5. Advantages Tends to achieve lowest costs Travel time and expenses are minimized Sales Administration and overhead costs are kept low Disadvantages It does not provide any benefits associated with specialization of labor Organization:Geographical Organizations

  6. Product Specialized Sales Force National Sales Manager Eastern Regional Sales Manager Northeast Mid-Atlantic Southern District District District Sales Manager Sales Manager Sales Manager Dictation Typewriter Minicomputer Programmable Copier Large Equipment Salesperson Salesperson Calculator Salesperson Computer Salesperson Salesperson Salesperson

  7. 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 Organization:Product Specialization

  8. Customer Specialized Sales Force National SalesManager National Eastern Manager Accounts Regional of Manager Sales Manager Export Sales Northeast Mid-Atlantic Southern District District District SalesManager SalesManager Sales Manager Salesperson Salesperson Salesperson Salesperson for Bank for Retail for Government for Educational Institutions Customers Customers Agencies Salesperson Salesperson for Manufacturers for Wholesale Customers

  9. Advantages Consistent with market driven strategy Salespeople become customer experts Disadvantages More expensive Organization: Customer Specialization

  10. Functional Specialization Division Marketing Manager Industry Sales Systems Administrative Managers Manager Manager Account Executives Systems reps Market (salespeople) (technical support) Administration (training and installation)

  11. Focus on phases in customer relationship: Initial sales Follow-up technical support and service Promotion efforts specialist Organization:Functional Specialization

  12. 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 DESRIES A LONG-TERM, COOPERATIVE WORKING RELATIONSHIP • THE CUSTOMER EXPECTS SPECIALIZED ATTENTION AND SERVICE

  13. Strategic Account Organization Alternatives 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 Organization

  14. BENEFITS OF STRATEGIC ACCOUNTMARKETING Increased sale to national accounts Increased profits from national accounts Increased market share Improved customer communications Improved customer coordination 91% 83% 74% 74% 30%

  15. Survey Results: Strategic Account Management Are training programs for the strategic account manager different? Provide no training for strategic account managers Different training for strategic account managers No difference in training for strategic account managers or other sales staff 37% 26% 37% 37% 37% 26%

  16. Survey Results: Strategic Account Management Do your strategic account managers carry an assigned sales quota? Yes No No Response 68% 29% 29% 68% 3% 3%

  17. Survey Results: Strategic Account Management Do strategic account managers have formal authority over the rest of the sales organization? No formal authority over others in the sales organization Sales team reports directly to the strategic account manager May assemble temporary “virtual” sales teams that report directly to the strategic account manager No Response 47% 7% 47% 24% 24% 22% 22% 7%

  18. Survey Results: Strategic Account Management How do you measure the success of a strategic account program? 80% Sales volume Customer satisfaction Profitability Volume of recurring revenue stream Incremental orders from existing accounts Number of customer with strategic account agreements Number of transactions/orders Number of products shipped 53% 45% 29% 22% 11% 6% 6%

  19. Table 8-2: Ranking of Customers’ Wants 1980 19902000 Contact with outside salesperson 1 3 8 Frequency and speed of delivery 2 1 2 Price 3 2 4 Range of Available Products 4 5 3 Capable inside salesperson 5 4 1

  20. SCOPE OF TELEMARKETING’S ROLE • Customer Service • Prospecting and Lead Qualification • Sales Support • Advertising and Promotion

  21. Doing the Math on Account Management Field RepTelemarketing 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

  22. MAJOR BENEFITS OF TELEMARKETING • Percent of • Respondents • CUSTOMER BENEFIT 65.2% • Speed of communication to customer 21.5 • Timeliness of contact 14.2 • Ease/Convenience to customer 10.8 • Customer relations 10.2 • Frequency of contact 8.5 • COST EFFECTIVE 43.7 • DIRECT CONTROL 1.4 • MARKETING RESEARCH 4.8 • PROVIDE TECHNICAL SUPPORT 1.1

  23. Advantages Low cost per sales call Profitably serve small to medium customers Speed/time saving of telephone ordering Challenges Acceptance by field salespeople Hiring, motivating & retaining good telemarketers Organization: Telemarketing

  24. PROJECTED GROWTH IN SALESPEOPLEAND TELEMARKETERS Telemarketers Average Number per Company Five Years Ago Today Five Years from Now 21.99 +27.9% 28.11 +29.9% 36.49 Field Salespeople Average Number per Company Five years Ago Today Five years from Now 41.64 +27.5% 53.07 +12.5% 59.66 Source: Geri Gantman, “Exclusive Survey,” Business Marketing, (September, 2007), p. 64. 353 companies in survey.

  25. Face-to- Face Selling (FTF) FTF FTF FTF FTF FTF FTF FTF TM EVOLUTION OF SELLING METHODSOLD Stage in Selling Process Prospect/ Present/ Service/ Qualify Close Reorder Large Medium Small Account Size

  26. National Account Manage- ment (NAM) NAM NAM Telemar- keting (TM) FTF FTF & TM TM TM TM EVOLUTION OF SELLING METHODSNEW Stage in Selling Process Prospect/ Present/ Service/ Qualify Close Reorder Large Medium Small Account Size

  27. Total Costs of Independent Agents vs. Own Sales Force Independent agents Total selling costs Own sales force Break- even sales Sales volume

  28. HIRING INDEPENDENT AGENTS DEVELOPING THE “IDEAL” AGENT PROFILE 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

  29. HIRING INDEPENDENT AGENTS DEVELOPING THE “IDEAL” AGENT PROFILE • Six Cs of Finding the Right Mnfr Rep • Compatible Lines • Compatible Territories • Compatible Customers • Credibility of the Rep • Capabilities • Credit Worthiness

  30. Agent Decision and the Product Life Cycle Manufacturer Re-employs Rep firm to lower fixed sales costs Disengagement Decision Re-engagement Decision Introduction

  31. Evaluating Organizational Structure Financial performance -- must consider BOTH costs and revenues Adaptability External - Internal New competitors - Company goals Changing technology - Management philosophy Modification to channel - Production capabilities systems - Technical resources Industry life cycle Integration -- subunits of sales org must work in harmony Re - Organization

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