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Part III

SALES FORCE
ACTIVITIES

Chapter 6:

Sales Force
Organization
Sales Force Organization:
Impact

Structure

Compensation
Sales
Management Performance
Role Evaluation
Recruiting/ Training
Selection Program

Figure 6-1: Decisions Affected by Sales Force Organization


Sales Force Organization:
Topics

Strategic
Sales Force Sales Force Emerging
Account Telemarketing
Generalists Specialization Issues
Management
Strategic Account Programs:
Survey Results

49% Today
45% In Five Years

24%
20%
18% 17% 16%
11%

Customer Generalist Product Functional


Lines

Figure 6-2: How Sales Forces are


Sales Force Organization:
Generalist
National Sales
Manager

Central Regional Eastern Regional Western Regional


Sales Manager Sales Manager Sales Manager

Northeast District Mid-Atlantic Southern District


Sales Manager District Sales Sales Manager
Manager

Connecticut New Pennsy- North South


Rhode Maine
Jersey lvania Carolina Carolina
Island

District of
Vermont New York Delaware Georgia Alabama
Columbia

Massachu
New York Virginia Maryland Mississip Florida
setts
pi

Figure 6-3: Geographical Sales Organization


Sales Force Organization:
Product Specialists
National Sales
Manager

Eastern Regional
Sales Manager

Northeast District Mid-Atlantic Southern District


Sales Manager District Sales Sales Manager
Manager

Printer Server Minicomput Programmab Copier Large


Equipment Salesperso er le Salesperso Computer
Salesperso n Salesperson Calculator n Salesperson
n Salesperson

Figure 6-4: Product Specialized Sales Force


Product Specialist
Organization: Analysis
 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
Sales Force Organization:
Customer Specialists
National Sales
Manager

National Accounts Eastern Regional Manager of


Manager Sales Manager Export Sales

Northeast District Mid-Atlantic Southern District


Sales Manager District Sales Sales Manager
Manager

Salesperson Salesperson Salesperson Salesperson


For for Retail for for Bank
Educational Customers Government Customers
Institutions Agencies
Salesperson Salesperson
for for Wholesale
Manufacturers Customers

Figure 6-5: Customer Specialized Sales Force


Customer Specialist
Organization: Analysis
 Advantages
− Consistent with market driven strategy
− Salespeople become customer experts
− Customer segments receive appropriate
resources

 Disadvantages
− May conflict with marketing organization
− Product expertise may be lacking
− More expensive
Sales Force Organization:
Functional Specialists

Division
Marketing Manager

Industry Systems Administrative


Sales Manager Manager Manager

Market
Account System Reps Administrative
Executives (Technical Support)
(Training & Installation)
(Salespeople)

Figure 6-6: Functional Specialization


Functional Specialists:
Alternatives
Alternatives Companies
New Customers American Express
Gillette
Retention Browning-Ferris Industries

End-Users Lexmark International

Sales Engineers 3M


AT&T
Service IBM
Consultants McKesson Corporation
Strategic Accounts:
What is Different about Strategic
Accounts?
Previous New Strategic
Approach Account
Business Plan 3 – 6 2 – 3 years
Duration months

Structure of Tactical Strategic business


Business Plan promotional plan focused on
program growth and
profitability
Personnel Sales reps and Senior management
Involvement purchasing agents from both companies

Figure 6-7 : Changes in Joint Account Planning


Strategic Accounts:
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 desires a long-term,
cooperative working relationship
− The customer expects specialized attention
and service
Strategic Accounts:
Common Problems with Account
Selection
 Too many “strategic accounts”
 “We see them as strategic, but they don’t
even see us on their radar.”
 Too much organizational effort directed
towards big name accounts
 Not thinking enough about return on
relationship investment
 No common process across the organization
 No tracking and reviewing of strategic account
selection
Strategic Accounts:
Alternative Organization Models
 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
Strategic Accounts:
Alternative Organization Model
Effectiveness

Existing Sales Force Least effective


Lowest market performance

Sales Management Somewhat more effective


Slightly better market
performance
Separate Sales Force Fairly effective
Good Market Performance

Cross-Functional Most effective


Sales Teams Best Market Performance

Table 6-1: Doing the Math on Account Management


Strategic Accounts Programs:
Benefits
Increased sale to
national accounts
91%

Increased profits
from national 83%
accounts

Increased 74%
market share

Improved customer
74%
communications

Improved customer
30%
coordination
Strategic Accounts Programs:
Compensation Levels

$124,208
$112,414 $115,905 $117,997
$99,460

Telecom Other Other Chemicals High Tech


Services Mfg
Strategic Accounts Programs:
Insights from Strategic Account
Executives
“Until the customer tell us we’re a strategic
supplier, I can’t believe that they are
in fact a strategic account for us.”

“Strategic accounts bring the opportunities


to you, instead of you always having to try to
push the ideas on them.”

“If our products and services aren’t critical


to our customer’s performance and results,
it is silly to call them ‘strategic accounts’.”
Strategic Accounts Programs:
Insights from Strategic Account
Executives
“Before a real strategic account would
[make a particular decision],
they would ask us for inputs, knowing our
interests and theirs were aligned.”

“The best strategic accounts are willing to


open the door, allow us to help them.
There is an ongoing invitation to bring
expertise into their firm.”
Strategic Account Programs:
Survey Results
Are training programs for the strategic
account manager different?

Different No difference in
training training for
for strategic account
strategic
account 26% managers or other
sales staff
managers 37%

37% Provide no
training for
strategic account
managers
Strategic Account Programs:
Survey Results
Do your strategic account managers carry
an assigned sales quota?

No
Yes Response
3%
No
68% 29%
Strategic Account Programs:
Survey Results
Do strategic account managers have formal
authority over the rest of the sales
organization?
No Response
May assemble
7% temporary
“virtual” sales
24% teams that report
Sales team directly to the
reports 22% strategic account
directly to manager
the
strategic
account
47% No formal
manager authority over
others in the
sales
organization
Strategic Account Programs:
Survey Results
How do you measure the success
of a strategic account program?
Sales Volume 80%
Customer Satisfaction 53%
Profitability 45%
Volume of Recurring Revenue Stream 29%
Incremental Orders from Existing Accounts 22%
Number of Customer with Strategic 11%
Account Agreements
Number of Transactions/Orders 6%
Number of Products Shipped 6%
Sales Force Organization:
Cost Analysis

Field Rep Telemarketing


Sales calls per day 5 25
Sales calls per quarter 325 1624
Sales calls per year 1300 6500
Salespeople required 6.5 1.2
Cost per sales call $250 $15
Cost per year $1,998,75 $117,000
0
Sales Force Organization:
Scope of Telemarketing
Activity Description
Companies provide customers provide
Customer customers with a number they can call if
Service they have questions.

Firms are taking a proactive approach to


Prospecting and prospecting by having telemarketers call
Lead prospects or qualify them for face-to-face
selling.
Qualification
Selling secondary product lines or service
Account small customers by phone, thereby freeing
Management their salespeople to concentrate on larger
customers and strategic product lines.
Develop newspaper and magazine ads
Promotion that feature either a local or an 800
Support number to get additional product
information or place an order.

Figure 6-8: The Scope of Telemarketing Activities


Sales Force Organization:
Telemarketing Advantages and
Challenges
Advantages
 Low cost per sales call
 Profitably serve small to medium customers
 Speed/time saving of telephone ordering

Challenges
 Acceptance by field salespeople
 Management
 Role of the Internet
Sales Force Organization:
Economic Analysis of Sales
Agents

Independent
Total
Agents
Selling
Costs
Own Sales Force

Break-Even
Sales

Sales Volume

Figure 6-9: Total Costs of Independent Agents vs. Own Sales


Sales Force Organization:
Market Conditions Favoring Sales
Agents
 The market is fragmented  The products are easily
and customers are understood commodities
difficult to find or that have been around for
understand. a long time.
 Buying is decentralized.  The selling cycle is short
and orders are typically
 Local knowledge and local
small.
distribution is important.
 It is not necessary to
 The company is selling
tightly control the selling
only a few products.
effort.
 There is a good potential
 Ongoing support activities
sales agency who has
are not important and the
significant marketing
company does not need
expertise in the industry.
customer information.
 The company is not well
known and has little
equity in the market.

Figure 6-10: Market Factors Favoring the Use of Sales


Sales Force Organization:
Selecting a Sales Agency
1.Define the ideal market focus.
2.Identify compatible principles.
3.Specify the necessary technical
background.

LOCATING AGENTS: Rep. Directories


Customer References
Compatible Manufactures
References from Current
Agents
Trade Shows
Sales Force Organization:
Sales Agent Decision and the Product Life Cycle

Disengagement
Decision Re-engagement Manufacturer
Decision Re-employs
Rep firm to
lower fixed
sales costs

Introduction
Global Account Success Keys

1. The company’s value proposition must be


right.

2. Global account teams must be cross-


functional

3. Account teams must be driven from the top.

4. A mindset of constant improvement is key.


Sales Force Organization:
Key Account Sales Teams at Ericsson
Country President

V.P. Business Operations


Key Account Team

Director of Director Global Accounts


Sales Director
Operations Product Support Director

Account Product Account


Project Managers
Managers Managers Managers

Account Technical Support Account


Coordinators Engineers Coordinators

Figure 6-11: Sales Team Organization at Ericsson


Sales Force Organization:
Evaluating Organizational
Structure
 Financial performance -- must consider
BOTH costs and revenues
 Adaptability
External Internal
− New competitors − Company goals
− Changing technology − Management philosophy
− Modification to channel − Production capabilities
systems − Technical resources
− Industry life cycle

 Integration -- subunits of sales


organization must work in harmony

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