MKT 363: Sales Mgmt - Chapter 12

Organizing Members of the Firm’s Salesforce

1) Establish the size of the salesforce needed to achieve max sales potential.

2) Determine the type of sales rep you need (specialist or generalist). 

3) Establish a key account structure to support large enterprise sales that generate large sales volume.

4) Establish the inside sales structure for inbound customers and support the outside sales organization.

The Size of Salesforce

Divide forecasted sales revenue by the average amount of sales dollars generated by a salesperson

• Forecasted Sales / Avg. Sales per Salesperson 

Workload Method

Incorporates the firm’s strategy and the work salespeople are expected to do

Specialists vs. Generalists

Generalist Salesforce: sells the firm’s entire product line to a group of customers who use the products similarly 

Specialist Salesforce: specializes in one product or product line. Offers dedicated expertise and a skill set advantage over a generalist sales force. Organized to address specific buyers’ needs, such as tech support or industry expertise/knowledge

Sales Structures: Geographic

Based on physical boundaries or territories and organized with customer accounts; interacts with buyers as generalists

• PROs: easy to design, salesperson is assigned to each customer, more efficient, territory can be divided/combined to respond to market conditions

• CONs: work best when product line is simple, can be inefficient, multiple reps may be needed to cover specific area if there is concentration in certain areas 

Sales Structures: Product

Sales activities are organized around related product lines or manufacturing divisions; interacts with buyers as a specialist

• CONs: can be confusing for buyers with multiple product and geographic sales reps calling on the same account. 

Sales Structures: Market

Reps are assigned to customers based on markets or the product they sell; reps learn more about customers’ specific business needs and offer customized solutions

• PROs: effective when penetrating a new market, allows firms to vary allocation of sales efforts to specific industries, and allows firms to offer specialized training 

• CONs: high selling expenses & multiple reps calling on the same client

Sales Structures: Functional

The selling process is divided into two or more steps performed by specialists with multiple skill sets. CRM system can simplify coordination problems

• PROs: job expertise

• CONs: coordination issues

Sales Structures: Combination

Salesforce is organized around a mixture of products, markets, and geographical factors; can be expensive. 

• PROs: better representative customer and market knowledge

• CONs: economies of scale issues & more complex to manage duplicate sales efforts

Key Accounts

Customers that are large in sales and profits that are strategically important for the future of a firm’s sales success

80/20 Rule

80% of a firm’s total business and profits are derived from 20% of its customers, which generally comes from large key accounts

Key Account Structures

Existing Force: structure is simplified; all accounts are managed under a single organizational structure

Assign Executives: assigning sales/marketing executives to manage key accounts makes sense for smaller firms that cannot afford a separate sales team

Separate Division: create separate sales structures to serve most important customers; integrate marketing and sales for key accounts under one structure

Telemarketing

Use of telecommunications by an inside salesperson to communicate with an established or potential customer to sell products/services

Line Organization

All salespeople, from highest to lowest, report to a single manager

• PROs: chain of command is clear & actions can be implemented quickly/easily

• CONs: reps need greater authority to make quick decisions

Line-and-Staff Sales Structure

Using line structure for core sales functions, then placing its supporting activities into centers or departments that reside outside the line structure. 

• Geographical, product, and market structures are examples.

Span of Control

Number of individuals who report directly to the sales manager (usually 10-12)

• Technical and industrialized products require customized customer solutions, which result in narrower spans of control

• Routine and telemarketing activities allow a broader span of control