Transcript Organization - Southern Methodist University

The Sales Organization
Variations in Selling
Organizational Structure
Marketing 3345
Fundamental
Principles
Sales Force
Specialization
Sales Force
Alternatives
Sales Force
Size
Emerging
Issues
Unity of Command
Each person should report to only one
boss. A clear and unbroken chain of
command should link every person in
an organization with someone a level
higher.
Stability and Continuity
Activities should be assigned without
regard for the talents and preferences
of current employees.
Coordination and
Integration
Activities of salespeople should be
integrated with customer needs,
coordinated with activities of other
departments, and coordinated with
tasks of all salespeople.
Fundamental Organization Principles
National
Sales Manager
Central
Regional
Sales Manager
Eastern
Regional
Sales Manager
Western
Regional
Sales Manager
Northeast
District
Sales Manager
Mid-Atlantic
District
Sales Manager
Southern
District
Sales Manager
Connecticut
and Rhode
Island
Maine
New
Jersey
Vermont
New York
Massach
usetts
New York
Pennsylvania
North
Carolina
South
Carolina
Delaware
District of
Columbia
Georgia
Alabama
Virginia
Maryland Mississippi
Geographical Sales Organization
Florida
Organization:
Geographical Organizations
• Advantages
– Tends to achieve lowest costs
– Travel time and expenses are minimized
– Sales Administration and overhead costs are
kept low
• Disadvantages
– It does not provide any benefits associated with
specialization of labor
National
Sales Manager
Eastern
Regional
Sales Manager
Northeast
District
Sales Manager
Dictation
Equipment
Salesperson
Typewriter
Salesperson
Mid-Atlantic
District
Sales Manager
Minicomputer
Salesperson
Southern
District
Sales Manager
Programmable
Calculator
Salesperson
Product Specialized Sales Force
Copier
Salesperson
Large
Computer
Salesperson
Organization:
Product Specialization
• Advantages
– Allows focusing of sales effort
– Expertise developed in limited number of
products
• Disadvantages
– More expensive to operate
– May result in duplication of sales calls to
clients
National
Sales Manager
National
Accounts
Manager
Eastern
Regional
Sales Manager
Manager
of
Export Sales
Northeast
District
Sales Manager
Mid-Atlantic
District
Sales Manager
Southern
District
Sales Manager
Salesperson
for Educational
Institutions
Salesperson
for Retail
Customers
Salesperson
for Government
Agencies
Salesperson
for Manufacturers
Customer Specialized Sales Force
Salesperson
for Bank
Customers
Salesperson
for Wholesale
Customers
Organization:
Customer Specialization
• Advantages
– Consistent with market driven strategy
– Salespeople become customer experts
• Disadvantages
– More expensive
Division Marketing
Manager
Industry Sales
Managers
Systems
Manager
Administrative
Manager
Account Executives
(salespeople)
Systems reps
(technical support)
Market
Administration
(training and installation)
Functional Specialization
Organization:
Functional Specialization
Focus on phases in customer relationship:
• Initial sales
• Follow-up technical support and
service
• Promotion efforts specialist
WHO ARE STRATEGIC ACCOUNTS?
• WHEN A CUSTOMER PURCHASES A
SIGNIFICANT VOLUME AND EXHIBITS ONE OR
A COMBINATION OF THE FOLLOWING:
• MULTIPLE PEOPLE ARE INVOLVED IN THE
BUYING PROCESS
• PURCHASING IS CENTRALIZED
• THE CUSTOMER DESRIES A LONG-TERM,
COOPERATIVE WORKING RELATIONSHIP
• THE CUSTOMER EXPECTS SPECIALIZED
ATTENTION AND SERVICE
Organization
Strategic Account Organization
Alternatives
• Existing Sales Force - Low risk; little change
• Management Sell National Accounts -- keeps
management close to customer
• Separate Sales Force -- more aggressive; more
expensive; alternative to sales management for
promotion for sales staff
• Sales Teams - use when selling process is
complex
BENEFITS OF STRATEGIC ACCOUNT
MARKETING
Increased sale to
national accounts
91%
Increased profits
from national
accounts
83%
Increased market
share
74%
Improved customer
communications
74%
Improved customer
coordination
30%
Survey Results: Strategic Account
Management
Are training programs for the strategic account manager different?
Provide no training
37% for strategic account
managers
26%
37%
37%
Different training for
37% strategic account
managers
No difference in
training for strategic
26% account managers or
other sales staff
Survey Results: Strategic Account
Management
Do your strategic account managers carry an assigned sales quota?
68% Yes
29%
29% No
68%
3%
3%
No Response
Survey Results: Strategic Account
Management
Do strategic account managers have formal authority over the rest of
the sales organization?
No formal authority
47% over others in the sales
organization
7%
47%
24%
22%
Sales team reports
24% directly to the strategic
account manager
May assemble
temporary “virtual”
22% sales teams that report
directly to the strategic
account manager
7%
No Response
Survey Results: Strategic Account
Management
How do you measure the success of a strategic account program?
Sales volume
80%
Customer satisfaction
53%
Profitability
45%
Volume of recurring revenue stream
Incremental orders from existing accounts
Number of customer with strategic
account agreements
29%
Number of transactions/orders
Number of products shipped
22%
11%
6%
6%
Table 8-2: Ranking of Customers’ Wants
Contact with outside salesperson
Frequency and speed of delivery
Price
Range of Available Products
Capable inside salesperson
1980
1990
2000
1
2
3
4
5
3
1
2
5
4
8
2
4
3
1
SCOPE OF TELEMARKETING’S
ROLE
• Customer Service
• Prospecting and
Lead
Qualification
• Sales Support
• Advertising and
Promotion
Doing the Math on Account Management
Sales calls per day
Sales calls per quarter
Sales calls per year
Salespeople required
Cost per sales call
Cost per year
Field Rep
Telemarketing
5
325
1300
6.5
$250
$1,998,750
25
1624
6500
1.2
$15
$117,000
MAJOR BENEFITS OF TELEMARKETING
Percent of
Respondents
CUSTOMER BENEFIT
•Speed of communication to customer
•Timeliness of contact
•Ease/Convenience to customer
•Customer relations
•Frequency of contact
65.2%
21.5
14.2
10.8
10.2
8.5
COST EFFECTIVE
DIRECT CONTROL
MARKETING RESEARCH
PROVIDE TECHNICAL SUPPORT
43.7
1.4
4.8
1.1
Organization: Telemarketing
Advantages
• Low cost per sales call
• Profitably serve small to medium customers
• Speed/time saving of telephone ordering
Challenges
• Acceptance by field salespeople
• Hiring, motivating & retaining good
telemarketers
PROJECTED GROWTH IN SALESPEOPLE
AND TELEMARKETERS
Telemarketers
Average Number per Company
Five Years Ago
21.99
Today
+27.9%
28.11
Five Years from Now
+29.9%
36.49
Field Salespeople
Average Number per Company
Five years Ago
41.64
+27.5%
Today
53.07
+12.5%
Five years from Now
59.66
Source: Geri Gantman, “Exclusive Survey,” Business Marketing, (September, 2007), p. 64. 353 companies in survey.
EVOLUTION OF SELLING METHODS
OLD
Stage in Selling Process
Prospect/
Qualify
Large
Account
Size
Medium
Small
Present/
Close
Service/
Reorder
Face-toFace
Selling
(FTF)
FTF
FTF
FTF
FTF
FTF
FTF
FTF
TM
EVOLUTION OF SELLING METHODS
NEW
Stage in Selling Process
Large
Account
Medium
Size
Small
Prospect/
Qualify
Present/
Close
Service/
Reorder
National
Account
Management
(NAM)
NAM
NAM
Telemarketing
(TM)
FTF
FTF
&
TM
TM
TM
TM
Total selling costs
Independent
agents
Own sales force
Breakeven
sales
Sales volume
Total Costs of Independent Agents vs. Own Sales Force
HIRING INDEPENDENT AGENTS
DEVELOPING THE “IDEAL” AGENT PROFILE
1.
2.
3.
Define the ideal market focus.
Identify compatible principles.
Specify the necessary technical
background.
LOCATING AGENTS:
Rep. Directories
Customer References
Compatible Manufactures
References from Current Agents
Trade Shows
HIRING INDEPENDENT AGENTS
DEVELOPING THE “IDEAL” AGENT PROFILE
• Six Cs of Finding the Right Mnfr Rep
–
–
–
–
–
–
Compatible Lines
Compatible Territories
Compatible Customers
Credibility of the Rep
Capabilities
Credit Worthiness
Agent Decision and the Product Life
Cycle
Disengagement
Decision
Introduction
Re-engagement
Decision
Manufacturer
Re-employs
Rep firm to
lower fixed
sales costs
Re - Organization
Evaluating Organizational Structure
• Financial performance -- must consider
BOTH costs and revenues
• Adaptability
– External
• New competitors
• Changing technology
• Modification to channel
systems
• Industry life cycle
- Internal
- Company goals
- Management philosophy
- Production capabilities
- Technical resources
• Integration -- subunits of sales org must work in
harmony