Sales Management 6

1. Sales Management 6 Sales Organization

2. 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

3. Specialization of Labor • Concentrate: Become more proficient at one thing. • Assign tasks according to ability. • Line/Staff organization is most common.

4. Stability and Continuity • You can organize around activities, not around individuals. • The organization survives the individuals within it.

5. 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.

6. Internal: Horizontal Structure • Geography: States/Regions, Downtown/Suburban • Product Type: Yard Equipment vs. Power Tools • Customer Type: Industrial/Consumer, Hospitals/Schools, Wholesalers/Retailers • Selling Function: Prospecting, presenting, servicing

7. Geography: Urban/Suburban; City/Region/State

8. Product Type: Lawn Equipment/Power Tools

9. Customer Type: Industrial/Consumer; Institutions; Wholesale/Retail

10. Selling Function: Prospecting, Presenting, Closing

11. 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.

12. 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

13. 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

14. 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

15. 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

16. 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.

17. National/Key Accounts III • Assign key accounts to top sales executives • Create separate corporate division • Create separate sales force

18. 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.

19. 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.

20. 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

21. 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

23. Multi-level Selling • Teams call on corresponding management levels at the customer’s office. • VP to VP • Engineer to Engineer • Technician to Technician

24. 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)

26. Howard SchultzStarbucks Corporationchairman Jim DonaldStarbucks Corporationpresident and chief executive officer Barbara BassGerson Bakar Foundationpresident Howard BeharStarbucks Corporationdirector William (Bill) BradleyAllen & Company LLCmanaging director Mellody HobsonAriel Capital Management, LLCAriel Mutual Fundspresident Olden LeePepsiCo, Inc.retired executive James Shennan, Jr.Trinity Venturesgeneral partner emeritus Javier TeruelColgate - Palmolive Companyvice chairman Myron Ullman, IIIJ.C. Penney Company, Inc.chairman and chief executive officer Craig WeatherupPepsi-Cola Companyretired chief executive officer Starbuck’s Board of Directors

27. 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.

29. 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.

31. 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?

32. 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

35. 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

36. 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

37. 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?)