6 Organization - Texas Tech University
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Transcript 6 Organization - Texas Tech University
Sales Management 6
Sales Organization
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
Specialization of Labor
Concentrate: Become more proficient at
one thing.
Assign tasks according to ability.
Line/Staff organization is most common.
Stability and Continuity
You can organize around activities, not
around individuals.
The organization survives the individuals
within it.
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.
Internal: Horizontal Structure
Geography: States/Regions, Downtown/Suburban
Product Type:
Customer Type:
Selling Function:
Yard Equipment vs. Power Tools
Industrial/Consumer,
Hospitals/Schools, Wholesalers/Retailers
Prospecting, presenting, servicing
Geography: Urban/Suburban; City/Region/State
Product Type: Lawn Equipment/Power Tools
Customer Type: Industrial/Consumer; Institutions;
Wholesale/Retail
Selling Function: Prospecting, Presenting, Closing
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.
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
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
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
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
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.
National/Key Accounts III
Assign key accounts to top sales executives
Create separate corporate division
Create separate sales force
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.
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.
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
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
Multi-level Selling
Teams call on corresponding management
levels at the customer’s office.
– VP to VP
– Engineer to Engineer
– Technician to Technician
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)
Starbuck’s Board of Directors
Howard Schultz
Starbucks Corporation
chairman
Jim Donald
Starbucks Corporation
president and chief executive officer
Barbara Bass
Gerson Bakar Foundation
president
Howard Behar
Starbucks Corporation
director
William (Bill) Bradley
Allen & Company LLC
managing director
Mellody Hobson
Ariel Capital Management, LLC
Ariel Mutual Funds
president
Olden Lee
PepsiCo, Inc.
retired executive
James Shennan, Jr.
Trinity Ventures
general partner emeritus
Javier Teruel
Colgate - Palmolive Company
vice chairman
Myron Ullman, III
J.C. Penney Company, Inc.
chairman and chief executive officer
Craig Weatherup
Pepsi-Cola Company
retired chief executive officer
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.
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.
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?
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
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
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
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?)