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5
Sales Organization Structure
and Salesforce Deployment
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Sales Organization ConceptsSalesforce SpecializationContinuum(Figure 5.1)
GENERALISTS
All selling activities
and all products to
all customers
SPECIALISTS
Certain selling activities
for certain products
for certain customersSome specialization
of selling activities,
products, and/or
customers
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Sales Organization Concepts
Centralization
Degree to which importantdecisions and tasks are
performed at higher levels inthe management hierarchy
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Span of Control vs Management Levels(Figure 5.2)
Span of Control
Flat Sales Organization ManagementLevels
District
Sales Manager
District
Sales Manager
District
Sales Manager
District
Sales Manager
District
Sales Manager
National
Sales Manager
Span of Control
Tall Sales Organization
M
anagementLevels
District
Sales Manager
District
Sales Manager
District
Sales Manager
District
Sales Manager
District
Sales Manager
District
Sales Manager
Regional
Sales Manager
Regional
Sales Manager
National
Sales Manager
District
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Line vs Staff Positions(Figure 5.3)
Sales Training Manager
Sales Training Manager
Salespeople
District Sales Manager
Regional Sales Manager
National Sales Manager
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Selling Situation Contingencies
Consideration of Specialization Empirical support for the notion that:
A generalized salesforce should be used whenselling effort is more important than selling
skill A specialized salesforce should be used when
selling skill is more important than sellingeffort
Consideration of Environmental
Characteristics, Task Characteristics,and Performance Objectives
Consideration of Customer Needs andProduct Complexity
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Selling Situation ContingenciesCustomer and Product
Determinants of SalesforceSpecialization(Figure 5.4)
Customer Needs Similar
Customer Needs Different
Simple
Product
Offering
Complex
Range of
ProductsGeography-Driven
Specialization
Product-Driven
Specialization
Market-
Driven
Specialization
Product/Market-
Driven
Specialization
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Geographic Sales Organization(Figure 5.5)
Sales Training Manager
Salespeople (100)
District Sales Managers (20)
Zone Sales Manager (4)
Eastern Regional Sales Manager
Salespeople (100)
District Sales Manager (20)
Zone Sales Manager (4)
Western Regional Sales Manager
National Sales Manager
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Product Sales Organization(Figure 5.6)
Salespeople (100)
District Sales Manager (10)
Office Equipment Sales Manager
Salespeople (100)
District Sales Manager (10)
Office Supplies Manager
National Sales Manager
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Market Sales Organization(Figure 5.7)
Sales Training Manager
Salespeople (50)
Dsitrict Sales Managers (25)
Zone Sales Managers (4)
Commercial Accounts Sales Manager
Salespeople (50)
District Sales Managers (10)
Government Account Sales Manager
National Sales Manager
Broad Market Specialization Consumers and/or Industrial
Specific Industry Specialization Government agencies, educational institutions, distributors,
and retailers, OEMs
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Functional Sales Organization(Figure 5.8)
Salespeople (160)
District Sales Managers (16)
Regional Sales Managers (4)
Field Sales Manager
Salespeople (40)
District Sales Managers (2)
Telemarketing Sales Manager
National Sales Manager
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Sales Organization StructuresIdentify Major Accounts(Figure 5.9)
Complexity of Account
Simple Complex
Large
Small
SizeofAccount
Large
Account
Regular
Account
Complex
Account
Major
Account
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Sales Organization StructuresMajor Account Options(Figure 5.10)
Assign Major Accounts to Salespeople
along with Other Accounts
Assign Major Accounts to
Sales Managers
Develop Major Account Salesforce
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Comparison ofSales Organization Structures
(Exhibit 5.2)Organizational
Structure Advantages DisadvantagesGeographic Low Cost
No Geographic Duplication
No Customer Duplication
Fewer Management Levels
Limited Specialization
Lack of Management Control Over
Product or Customer Emphasis
Products
Product Salespeople Become Experts inProduct Attributes and
Applications
Management Control over
Selling Effort Allocated to
High Cost Geographic Duplication
Customer Duplication
Market Salespeople Develop Better
Understanding of UniqueCustomer Needs
Management Control Over
Selling Effort Allocated to
Different Markets
High Cost
Geographic Duplication
Functional Efficiency in PerformingSelling Activities
Geographic Duplication
Customer Duplication
Need for Coordination
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Hybrid Sales Organization
Structure(Figure 5.11)
Major AccountsSales Manager
WesternSales Manager
EasternSales Manager
FieldSales Manager
TelemarketingSales Manager
Regular AccountsSales Manager
Commercial Accounts Sales Manager
Office EquipmentSales Manager
Office SuppliesSales Manager
Government Accounts Sales Manager
National Sales Manager
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5
Salesforce Deployment
Sales management decisionsinvolved in allocating sellingeffort, determining salesforcesize, and designing territories
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Interrelatedness of Salesforce
Deployment Decisions(Figure 5.12)
Allocation of
Selling Effort
Salesforce
Size
Territory
Design
How much selling effort is needed to cover accounts
and prospects adequately so that
sales and profit objectives will be achieved?
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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5 Allocation of Selling EffortAnalytical Approaches to Allocationof
Selling Effort(Figure 5.13)
Portfolio
Models
Decision
Models
Single FactorModel
Easy to Develop and Use
Difficult to Develop and Use
LowAnalytical
Rigor
HighAnalytical
Rigor
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Allocation of Selling EffortSingle Factor Models
Easy to develop and use/lowanalytical rigor
Accounts classified into categories
based on one factor, such as marketpotential
All accounts in the same category areassigned the same number of sales
calls Effort allocation decisions are based
on the analysis of only one factor anddifferences among accounts in the
same category are notconsidered inassigning sales call coverage
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Allocation of Selling Effort
Portfolio Models
Account Opportunity - anaccounts need for and ability to
purchase the firms products Competitive Position - the
strength of the relationship between
the firm and an account
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Allocation of Selling Effort
Decision Models
Simple Basic Concept - to allocatesales calls to accounts that promisethe highest sales return from thesales calls
Optimal number of calls in terms of
sales or profit maximization
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Sales Force Size
Key Considerations
Sales Productivity - the ratio ofsales generated to selling effort
employed Increase in # of Salespeople =
Increased Sales, but not in a directlinear relationship
Salesforce Turnover
Is very costly
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Sales Force Size
Analytical ToolsBreakdown Approach
Assumes an Accurate Sales Forecast
Advantage
Easy to use
Disadvantages Forecasted Sales
Conceptually weak; sales determine sales
Sales Force Size =Average Sales per Salesperson
Forecasted Sales
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Sales Force SizeAnalytical ToolsWorkload Approach Integrates the salesforce size with
account effort allocation strategies
Total selling effort need variesdepending upon whether singlefactor, portfolio, or decision modelswere used to calculate the allocationof effort
Advantages Easy to develop
Sound conceptuallyTotal Selling Effort Needed
Average Selling Effort per Salesperson
# of Salespeople =
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Sales Force Size
Analytical ToolsIncremental Approach
Advantage
Quantifies the important relationships between
salesforce size, sales, and costs Disadvantages
Difficult to develop
Development of response functions requires
historical data
Optimal # of Salespeople is where:
Marginal Profit from Added Salesperson = Marginal Cost of That Salesperson
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Designing Territories
Territory - consists of whateverspecific accounts are assigned to aspecific salesperson
Work unit for a salesperson Territory Considerations Trading areas
Present effort
Recommended effort
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Assigning Salespeople toTerritories
Farmers or Hunters
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"People"Considerations
