Lecture, organisation and structure of sales activities and controlling sales output, by, rahat kazmi

Organisation and Structure of
Sales Activities and controlling
sales output
McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rightsreserved.
Lecture
By: Rahat Kazmi
This lecture was prepared for BTEC Business Studies
Level 4, but can also be useful for other business
studies students, Sales Managers, Sales Team Leaders
and Supervisors
Follow him on Twitter: twitter.com/srahatkazmi
Join Facebook Fan’s page : facebook.com/TrainingConsultant & facebook.com/softskillsexperts
Visit the website: www.softskillsexperts.com

Organize Around Customers
ã Historical
ã Product-centered
ã Expertise in features and functions
ã Today
ã Customer-centered
ã Expertise in business issues
ã Sales resources deployed to provide
best service to best customers
Source: HR Chally Group (2007), The Chally World Class Excellence
Research Report: The Route to the Summit. Dayton, OH: HR Chally Group.

ã Identify purposes of sales organization
ã Understand different horizontal
organizational structures of a sales
force.
ã Outline major issues in key account
and team selling.
ã Discuss key vertical structure issues in
sales organizations.
ã Identify important issues in starting a
new sales force from the ground up.

Purposes of Sales Organization
ã Divide and arrange activities so the
firm can benefit from specialization
of labor
ã Provide for stability and continuity
in firm’s selling efforts
ã Provide for coordination of activities
assigned to sales force and to
departments in the firm

Division and Specialization of Labor
ã Increase productivity - specialists
can become proficient at assigned
tasks
ã Divide required selling activities to
gain maximum benefits within the
sales force

ã Line organization
ã Vertical
ã Chain of command runs from chief sales
executive down through levels of
subordinates
ã Each subordinate responsible to one person
VP Sales
Director of UK. Sales
Regional Mgr. for
England
District Mgr. for
Wandsworth

ã Line and staff organization
ã Vertical (most common)
ã Several sales management activities assigned
to separate specialists
VP Sales
Director of
Sales Training
Director of
Distributor
Relations
Director of
Sales
Promotion

Stability and Continuity
ã Organize activities without
regard to talents of current
employees
ã People can be trained to fill
positions
ã Same activities will be carried
out even if designated
individuals receive promotions
or leave

Sales Organization Structure
ã Horizontal – divides selling
activities among sales force
ã Vertical – assigns authority for
specific sales management
activities

Which Sales Structure Should
You Have?
ã https://www.youtube.com/watch?v=fmqN
AwAjz-g

Horizontal Structure Options
Outside Agents
Company Sales Force
Geographic
Co-Marketing
Product
Nat’l Key
Accounts
Market/
Customer Type
Team Selling
Selling
Function
Selling
Centers
Matrix
Organizations
OR
Telemarketing

Outsourcing the Sales Force
ã Types of agents
ã Manufacturer’s representatives
ã Sell part of the output of their principals
ã Take neither ownership nor physical
possession of goods
ã Cover specific territory and specialize in
limited range of complementary products
ã Selling agents
ã Do not take title or possession of the
goods they sell
ã Compensated by commissions
ã Broad authority to modify prices and terms
of sale
ã Actively shape manufacturer’s promotional
and sales programs
Horizontal
Structure
Options

Six C’s of finding
the right rep
Horizontal
Structure
Options
Source: Dan Hanover, “Independents Day,” Sales & Marketing
Management, April 2000, pp. 65–68.
1. Compatible lines
2. Compatible territories
3. Compatible customers
4. Credibility of the rep
5. Capabilities
6. Credits

Outsourcing Considerations
ã Economic Criteria
ã Control
ã Transactions costs
ã Strategic Flexibility
Horizontal
Structure
Options

Geographic Organization
ã Simplest and most common
method
ã Individual salespeople assigned
to separate geographic
territories
ã Responsible for performing all
activities necessary to sell all
products
Horizontal
Structure
Options

ã Does not
provide
benefits
associated with
specialization
of labor
Geographic Organization
Horizontal
Structure
Options
ã Lowest costs
ã Travel time and
expenses
minimized
ã Sales
administration
and overhead
costs kept low

Geographic sales
organization
Horizontal
Structure
Options

ã Duplication of effort
Product Organization
Horizontal
Structure
Options
ã Salespeople master
effective selling
methods for single
or related products
ã Closer alignment of
sales and
production
ã Sales management
controls allocation
of selling effort
across the line
Separate sales force for each product (or category) in
the line

Sales force organized by product typeHorizontal
Structure
Options

ã Possible higher
selling and
administrative costs
ã Duplication of effort
Customer Type/Market Organization
Horizontal
Structure
Options
ã Better
understanding of
customer needs
ã Increased
familiarity with
certain businesses
ã Increased control
over allocation of
selling effort
Natural extension of marketing concept and strategy
of market segmentation

Sales force organized
by customer type
Horizontal
Structure
Options

ã Customer
objections to switch
to maintenance
salesperson
ã Feelings of rivalry
between the sales
force
Selling Function Organization
Horizontal
Structure
Options
ã Skills matched to
sales function
ã Developmental
salespeople often a
successful
alternative
Salespeople specialize in performing different
selling functions – e.g. prospecting and developing
new accounts versus maintaining and servicing
existing customers

Telemarketing
ã Form of organization by selling
function
ã Qualifying potential new accounts
ã Servicing existing accounts quickly
ã Seeking repeat purchases from
existing accounts that cannot be
covered efficiently in person
ã Providing quick communication of
newsworthy developmentsHorizontal
Structure
Options

Telemarketing
https://www.youtube.com/watch?v=O6gt-
WDvlhA

Database Capabilities and
Telemarketing
Horizontal
Structure
Options
Source: Ken Spralling, “Centex Houses RanksHighest in Customer Satisfaction in 10
major: U.S. Markets, According to Independent Study,” www.investors.com, September
14, 2005; Alicia Orr, “Predicting a Need,” Target Marketing, February 2001, pp. 62–64.
Database
Database
Analysis
Software
Telemarketing
Customized
Direct
Mail
Collects/provides
information
Formulates prospecting solutions –
matches homeowners against other
data to qualify customers, predict
interest; generates prospect
universe
Prequalifies prospects, can
transfer to salesperson to close
sale
Follows-up with prospects not
ready to buy, provides response
vehicles (web address, toll-free #)

National and Key Accounts
ã Separate corporate division/sales
force
ã Deliver high-level customer service
to attract and maintain large and
important customers
ã Key account sales execs
ã Business managers capable of
managing key accounts
ã Customize products and services
ã Plan and implement key account
business plans
Horizontal
Structure
Options

Team Selling
ã Integrates functional specialists
with customer relationship
specialists
ã ID team structure that meets
customer needs
ã Benefits
ã Customer questions answered faster
ã Customers can speak directly with
desired specialistHorizontal
Structure
Options

Other Team Selling Structures
ã Selling center brings together
individuals from around the
organization to help salesperson
ã Matrix organization employs direct-
reporting salespeople who support
internal consultants with specialized
expertise
ã Multi level selling – sales team
consists of personnel from various
managerial levels who call on their
counterparts in the buying
organization
Horizontal
Structure
Options

Co-Marketing Alliances
ã Develop marketing and sales
programs to sell integrated
systems directly to the ultimate
customer
Horizontal
Structure
Options

Logistical Alliances and
Computerized Ordering
ã Customer point of view -
ã Convenient
ã Flexible
ã Less time consuming
ã How will computerized reorder
systems change the role of the
sales force?
Horizontal
Structure
Options

Vertical Structure Issues
Span of Control
Managerial Levels

ã Reduced one-
to-one
communication
due to larger #
of subordinates
ã Managements
may be less
effective,
negating cost
savings
Larger Span of Control
ã Greater
control/
responsiveness
due to fewer
management
layers
ã Lower admin
costs

Span of Control
ã Reduce span of control when:
ã Sales task is complex
ã Profit impact of each
salesperson’s performance is
high
ã Salespeople are well paid and
professional
ã Also, at higher levels in the
organization

Managerial Decision Levels
ã How much, where should the
managerial authority lie?
ã Hiring, firing, evaluation

Managerial Decision Levels
Importance of decision = Managerial decision level
Sales force pay = Managerial decision level
Complex selling tasks = Managerial decision level
4-35

Managerial Selling
Responsibilities
ã Managers often active in sales
to key accounts
ã Organizations value their
selling skills
ã Managers value commissions,
contact with marketplace
ã Drawback – some managers
neglect managerial
responsibilities

4.6
Line and staff sales organization

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