Chapter 4. Organizing the Sales Force

• Building Relationships – Sales Support Teams

  Sales methods are changing to serve customers better Selling today often calls for a group effort Sales teams include people from all departments Salespeople today must build trust with buyers Work with other departments Customer relationships are strengthened Text Examples: Procter & Gamble Monsanto Eastman Kodak

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• Introduction

  Organization is essential to accomplishing the organization’s goals Companies must organize objectives organize tasks organize individual assignments appoint a leader

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• Theories of Organization
  The Classical or Traditional Theory	Jobs are divided into highly specialized tasks Management coordinates these tasks Emphasizes Formal objectives Hierarchy of authority Control Oriented toward efficiency not people
  Neoclassical Theory	Emphasis on "humanizing" the organization May under emphasize the formal objectives, authority, and controls
  Modern Organization Theory Organization viewed as a system of interacting parts
  The individual	Demographics Psychographics Social Factors
  Formal Organizational Structure	Communication channels Line of authority Delegation of authority Delegation of responsibility Policies and procedures
  Informal Organization	Behavior standards Company culture
  Physical Setting	Process and devices Atmospheres
  Role and status patterns	Social status Groups
  Organizational objectives	Affected by all of the above
  A systems approach applied to sales management
  Sales force is one element of the marketing subsystem Sales force has components making it a system as well

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• The Dilemma
  Healthy individuals grow in seven dimensions These conflict with formal organization principles	Seven Growth dimensions
  	Passive infants to active adults Dependence to independence Few behaviors to many behaviors shallow concerns to long term concerns Unconnected challenges to long term integrated challenges Growing Ambition Impulsive to controlled
  How much structure and control should be imposed on a sales force? A sales manager has to be concerned with the total personal development of salespeople

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• Basic Guidelines for Good Organization
  Division of Work	Job Analyses Job Description Authorities Responsibilities
  Span of Management	Chain of command Unity of command (one boss) Unity of direction (single purpose)
  Change	Planned and communicated Flexibility and adaptability

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• Types of Organizations
  Characteristics	Clear line of authority Simple
  Advantages	Inexpensive Accountability
  Disadvantages	No specialists Limited growth potential
  Strategic Implications	Good for small firms Territories (regions) may be introduced
  Characteristics	Staff positions are created to assist sales managers
  Advantages	More efficient Manager has specialists to advise
  Disadvantages	Can get expensive conflicts between line and staff
  Strategic Implications	Manager has freedom to work with line people
  The Functional Organization
  Characteristics	In the line and staff organization the specialist can only advise Specialist has authority
  Advantages	Functional managers can optimize performance in their areas
  Disadvantages	Lots of potential conflict potential breakdown in unity of command (each salesperson being responsible to more than one boss)?
  Strategic Implications	Does not occur too often

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• Centralized Vs  Decentralized
  Factors Influencing The Decision	Centralized	Decentralized
  Costs		Expensive Duplicative
  Size of the Sales Force	Good for smaller forces	Might help with span of control issues Usually large force
  Geographic Size of the Market	Concentrated markets are well served	May elevate cost Enhance customer relationships
  Role of Personal selling in the Promotional Mix	Smaller role	Larger role
  Need for Decentralized Inventories		Can provide a home base for salespeople
  Need for service	Provides less service	Provides more service

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• Organizing by Specialization
  Companies grow by 4 strategies Growth can lead to reorganization
  Market penetration	Market Development
  Same Products Same customers Add new customers	Adapt Products New customers
  Product development	Diversification
  New Products Same customers	New Products New customers
  Reorganized by Sales Activities
  Characteristics	Used with penetration strategy Divide into two groups Account Development Account Maintenance
  Advantages	Allows some salespeople to hustle the new business Others maintain the relationship
  Disadvantages	Customers may not like it Account development may have different motivations
  Strategic Implications	Try it if Lots of customer turnover Different skills are needed Fast acquisition of new accounts is needed
  Geographic Areas
  Characteristics	Divide the market up into territories or regions All salespeople sell all products
  Advantages	Cultivates local markets Solve local problems quicker Can react to competition quicker Salespeople get better supervision Better service at lower cost Less travel Customer deals with only one person
  Disadvantages	Salesperson cannot be product specialist Technical support may be expensive Duplication of administration from office to office Salespeople stick to products and customers that they like
  Strategic Implications	Best for an organization with wide territories and a homogeneous product line
  Characteristics	Each salesforce handles a product or product line
  Advantages	Each product gets attention Good for diversification or market development
  Disadvantages	Additional management Overlapping territories Customer confusion
  Characteristics	Keep the same sales force Product managers usually staff
  Advantages	Less costly Central control of product managers
  Disadvantages	Product managers may lack authority and control Conflict resolution
  Strategic Implications When to use a product or product manager organization
  Complex products Dissimilar products Different channels used Buyers vary by product In-depth product knowledge required A single salesperson cannot keep up technically

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• Customer Structures
  When to use Customer Based Structures
  Salespeople need special knowledge to serve a customer Customer buys several of your products or product lines Same buying factors apply across product lines Same buyers and Influencers across product lines Accounts represent a large percentage of your income and need special attention
  Types of Customer Based Organizations
  Selected SIC Codes Selected customers by name (without centralized buying) Selected customer by region National or Key Accounts (with centralized buying)
  Diversification	May come as a result of acquisitions New organization may not blend in
  Combinations	Can combine any and all of the above Depends on need, cost, etc

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• Inside Salespeople
  Can create real selling economies when	Large geographic areas are covered Some areas are sparsely populated There are many marginal volume customers
  The Long-distance Specialist	For customers that you cant send an outside salesperson Call customers on a regular schedule Customer considers this specialist as their contact
  The Insider	Works with an outside sales force Follows up on a regular basis
  Independent Representatives
  Advantages	Disadvantages
  No up front costs No benefit costs Straight commission May be good for new product introductions Know their customers Usually know their product line	Less control May provide less service May not provide market information May carry competitor's product May not attend meetings or training
  Choosing Independent Representatives
  Develop a package to attract them Go on an organized search Decide of they can carry competitors product Decide if you want firms or individuals

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• Salesperson's Expectations

  Known quality product with some exclusive features Product that represents good value Complete training Training on obtaining a lead flow Customer financing Quality delivery and distribution Products that meet customer needs Company reputation for fair dealing Control of all employees to prevent unfair or undesirable practices Fair Compensation Marketable product Legally Conceptually Ethically

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• Managing the Twenty-first Century
  Just in time Computer based materials planning Improved buying proficiencies Sales force automation CRM Increased complexity Face to face selling time will shrink

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• Summary

  The best organizational structure is the one that accomplishes the objectives in the most economical and efficient manner