Module 4 Sales Organization Structure and Salesforce Deployment

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Module 4Sales Organization Structure and
Salesforce Deployment
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Sales Organization ConceptsSpecialization

• Degree to which salespeople and sales managers
  concentrate on specific sales or sales-support
  activities, specific products, and/or specific
  customers.

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

• Degree to which important decisions and tasks are
  performed at higher levels in the management
  hierarchy.

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Span of Control vs. Management Levels
Flat Sales Organization
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
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Line vs Staff Positions
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• Generalization
• Centralization
• Tall Organizations

• Specialization
• Decentralization
• Flat Organizations

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Selling Situations that Affect Specialization
Decisions

• Selling Effort vs. Selling Skill
• Environmental Characteristics
• High uncertainty
• Low uncertainty
• Customer Needs and Product Complexity

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Selling Situation Contingencies Customer and
Product Determinants of Salesforce
Specialization
Customer Needs Different
Product/Market- Driven Specialization
Simple Product Offering
Complex Range of Products
Customer Needs Similar
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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)
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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)
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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)
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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)
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Major Accounts

• Large accounts
• Complex needs
• National Accounts
• Global Accounts

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Sales Organization StructuresMajor Account
Options
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Comparison of Sales Organization Structures
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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
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Salesforce Deployment

• Allocating selling effort
• Determining salesforce size
• Designing territories

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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?
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Allocation of Selling EffortAnalytical Approaches

• Single Factor Model
• Portfolio Models
• Decision Models

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Allocation of Selling Effort Single 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 not considered
  in assigning sales call coverage

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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
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Allocation of Selling Effort Portfolio Models

• Account Opportunity
• Competitive Position

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Allocation of Selling Effort Portfolio Model
Segments and Strategies
Competitive Position
Strong
Weak
Segment 1
Segment 2
High
Account Opportunity
Segment 4
Segment 3
Low
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Allocation of Selling Effort Decision 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

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Sales Force SizeKey Considerations

• Sales Productivity
• Ratio of sales generated to selling effort
  employed
• Salesforce Turnover
• Costly
• Manage pipeline

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Sales Force Size Analytical ToolsBreakdown
Approach
Forecasted Sales
Sales Force Size
Average Sales per Salesperson

• Assumes an Accurate Sales Forecast
• Advantage
• Easy to use
• Disadvantages
• Conceptually weak sales determine sales

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Sales Force Size Analytical ToolsBreakdown
Approach
Forecasted Sales
Sales Force Size
Average Sales per Salesperson

• 50,000,000 / 2,000,000
• 25 salespeople

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Sales Force Size Analytical ToolsWorkload
Approach

• Integrates the salesforce size with account
  effort allocation strategies
• Advantages
• Easy to develop
• Sound conceptually

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Sales Force Size Analytical ToolsWorkload
Approach
37,500 sales calls needed

500 annual sales calls per salesperson

• 75 salespeople

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Sales Force Size Analytical Tools Incremental
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

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Designing Territories

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

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Territory Design Procedure

Assess Territory Workload
Analyze Planning and Control Unit Opportunity
Select Planning and Control Unit
Form Initial Territories
Finalize Territory Design
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Assigning Salespeople to Territories

• Farmers or Hunters

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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

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"People" Considerations