sdm-ch.5 1 chapter 5 organizing and staffing the sales force
TRANSCRIPT
SDM-Ch.5 1
Chapter 5
Organizing and Staffing the Sales force
SDM-Ch.5 2
Concepts of Sales Organisation
A sales organisation assists the sales manager to carry out needed tasks efficiently and effectively to achieve results
The basic concepts of the sales organisation are:• Degree of centralisation• Degree of specialisation• Line or staff positions• Market orientation• Effective co-ordination
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Basic Types of Sales Organisations
Sales organisations are generally classified into four basic types:
• Line Organisation• Line and staff organisation• Functional organisation• Horizontal organisation
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Line Organisation
Characteristics: All managers have line authority to direct and control subordinates. Used in small firms / departmentsAdvantages: Simple organisation, clear authority, quick decisions, low costDisadvantages: No support to line managers from subordinates who have specialised knowledge / skills. Less time for planning / analysis
HeadMarketing
Sales Manager
Area Sales Manager1
Area Sales Manager3
Area Sales Manager2
Area Sales Manager4
salespeople salespeople salespeople salespeople
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Line and Staff Organisation
Characteristics: Specialist staff managers are available for senior marketing / sales managers. Staff managers’ role is to assist / advise line managers. Used in medium and large size organisations
Advantages: Better marketing decisions, superior sales performance
Disadvantages: High cost and coordination, slower decision making, conflict may arise if staff managers’ role is not clear
Head-Marketing
Marketing ResearchManager
Sales ManagerPromotional
ManagerCustomer Service
Manager
Area Sales Manager-1
Area Sales Manager-1
Area Sales Manager-1
Salespeople Salespeople Salespeople
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Functional Organisation
Characteristics: Each functional specialist has line responsibility over salespeople. Used by a large firm with many products / market segments, minimizing line authority to functional managers
Advantages: Qualified specialists guide salesforce, simple to administer
Disadvantage: confusion due to more managers giving orders to salesforce
Head-Marketing
Marketing Research Manager
Promotional Manager
Customer ServiceManagerSales Manager
Area Sales Manager #4
Salespeople
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Horizontal Organisation
Characteristics: Removes management levels & departmental boundaries. Except planning team, all others are members of cross-functional teams. Used by firms having partnering relationships with customers.Advantages: Reduction in supervision, unnecessary tasks, & cost; Improved efficiency and customer responses.
Research & Design Team:•Customer Research•Product / Service Design
Planning Team:•Strategic Planning•Accounts, Finance•HR, Administration•Chief Operation Officer
Operations Team:•Production / Operations•Quality Assurance•Systems Engineering
Customer Support Team:•Information•Service•Training
Customer Satisfaction Team:•Sales & Marketing•Pricing, Promotion•Channels, Logistics
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Specialisation within Sales Organisation Needed to increase effectiveness of salesforce Done by expanding basic sales organisation Basis of specialisation
• Geography• Type of product• Market • Combination of above
Criteria for selection – (1) nature of product, (2) salesforce abilities, (3) demands of selling job, (4) customer and market facts
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Geographic Specialisation
Characteristics: salespeople, assigned geographic areas, are responsible for all selling activities to all customers within assigned areas. Branch sales managers adjust marketing plan to local needs
Advantages: Better market coverage and customer service, more control over salesforce, quick response to local conditions & competition
Disadvantages: Limited specialisation of marketing tasks. Hence, it is combined with product / market sales organisation
Head-Marketing
Marketing ResearchManager
General SalesManager Promotion
Manager
Customer ServiceManager
Branch SalesManager-1
Branch SalesManager-2
Branch SalesManager-3
Branch SalesManager-4
Salespeople Salespeople Salespeople Salespeople
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Product Specialisation
Used when the company has many products and / or brands Two types of product specialisation
(x). Sales organisation with product specialised salesforce
(y). Sales organisation with product managers as staff specialists
Head-Marketing
Marketing ResearchManager
GeneralSales Manager
Sales TrainingManager
PromotionManager
Area Sales Managers –Product Group ‘A’
Area Sales Managers –Product Group ‘B’
Salespeople – Product Gr. ‘A’
Salespeople – Product Gr. ‘B’
Fig. ‘x’ Sales Organisation with product specialised salesforce
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Fig. ‘y’ Sales Organisation with Product Managers as Staff Specialists
In fig. ‘x’: Characteristics: Salespeople in each product group sell only the products in that group
Advantage: Each product gets specialised attention from the salesforce
Disadvantage: Sometimes, more salespeople contact the same customer, resulting in customer dissatisfaction and higher cost
In fig. ‘y’: Characteristics: Each product manager plans and implements marketing plan, for a product group
Advantage: Corrects the problem of duplication calls on a customer by salespeople
Disadvantage: Lack of product specialisation by salespeople
Head-Marketing
Marketing ResearchManager
PromotionManager
Product ManagerProduct Gr. ‘B’
Product ManagerProduct Gr. ‘A’
GeneralSales Manager
Area Sales Managers
Salespeople
Product Specialisation (Continued)
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Market Specialisation
Characteristics: Desirable when customers are classified by type, user
industry, or channel. Salespeople carry out all activities for all products only
for specific customer groups
Advantages: Meets needs of specific customer groups, implements
customer-centred philosophy of the company
Disadvantages: Geographic duplication, high cost
General SalesManager
Sales Manager-International-
Markets
Sales Manager-Commercial
Sales Manager-Consumer Markets
Sales Manager-Government
Area Sales MgrsInternational
Sales Executives
Area Sales Manager-Commercial
Salespeople
Area Sales Manager-Government
Salespeople
Area Sales Mgrs-Consumer Markets
Salespeople
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Combination Sales Organisation
Characteristics: Many firms use some combination of specialisation organisations, called hybrid or combination sales organisation, with a view to minimise disadvantages and maximise advantages of specialisation organisations
Figure above shows combination of geographic and market specialisations
Director – Sales & Marketing
General ManagerSales - North
General ManagerSales - East
General ManagerSales - South
General ManagerSales - West
Regional SalesMgr. – Govt.
Regional SalesMgr. - Dealers
Regional SalesMgr. - Commercial
Salespeople Salespeople Salespeople
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Alternatives for Major Accounts
Major accounts / customers are called by various names like key accounts, corporate accounts, house accounts
They make up a large share of a firm’s sales volume and profits
Firms use the following alternative approaches to deal effectively with them• Create a position of major / national
account manager• Use existing territory sales managers• Create a separate division• Create a separate salesforce
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Size of the Salesforce
How many salespeople needed (or salesforce size) to achieve a firm’s sales and profit objectives is a key decision
Methods available to decide optimum salesforce size are as follows:• Workload• Sales potential (or breakdown)• Incremental
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Workload Method
Assumption: All salespeople have equal workload Steps involved to calculate salesforce size are:
1) Classify customers as per their sales potential2) Decide time per sales call and call frequencies for
each class of customers3) Calculate total market workload = (1) x (2) in hours4) Decide total work time available per salesperson5) Divide total work time available by different activities
per salesperson in hours6) Calculate total number of salespeople needed
)5(
)3(
nsalespersoperavailabletimesellingtotal
workloadmarkettotal
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1) Classify customers as per their sales potential
‘A’ class =500 number
‘B’ class = 1000 number
2) Decide time per sales call and call frequencies for each class of customers
Class ‘A’ : 60 minutes per call x 36 calls a year = 36 hours/year
Class ‘B’ : 30mintues per call x 12 calls a year = 6 hours / year
3) Calculate total market workload = (1) x (2) in hours
500 customers x 36 hours = 18000 hours
1000 customers x 6 hours = 6000 hours
total = 24000
4)Decide total work time available per salesperson
40 hours per week , 45 weeks per year
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5) Divide total work time available by different activities per salesperson in hours
selling activities : 40 %= 720 hours
Non-selling activities30 %= 540 hours
Traveling 30%= 540hours
100%= 1800 hours
6) Calculate total number of salespeople needed
24000/ 720 =33.3
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Workload Method (Continued) Advantages: simple method, conceptually sound, used for
all types of selling situations Disadvantages: Neglects sales productivity & salesforce
turnoverSales Potential / Breakdown Method
The formula used is: , whereN=Number of salespeople needed, or salesforce sizeS=Annual sales forecast for the company in value (Rs. Million)P=Estimated productivity of the average salesperson in sales (Rs. Million)T=Estimated percentage of annual salesforce turnover
Advantages: Simple and straight forward Disadvantages: Conceptually weak; lead time needed for a
new salesperson to reach average productivity
)1( TP
SN
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Sales Potential / Breakdown Method
Firm sales forecast is Rs 50 million for next year , productivity for the average salesperson is Rs 2 million ,sales force turnover 20%
N= 50,000,000/2,000,000X (1+0.20) = 25X1.20=30 salespeople
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Incremental Method
It is based on marginal analysis theory of economics Basic concept: Net profits will increase when
additional salespeople are added, if the incremental sales revenues exceed the incremental costs
Merit: Conceptually accurate, as it quantifies relationships between salesforce size, sales, costs, profits
Demerit: Can not be used if historical data on sales and costs are not available
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Salesforce Staffing
It is one of the most challenging and important responsibilities / activities of sales management
Salesforce Staffing Process includes following stages:
• Planning
• Recruiting
• Selecting
• Hiring
• Socialisation
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Planning Stage It consists of three steps:
• Establish responsibility for staffing process• Decide number of salespeople needed• Outline the type of salespeople needed
Establish responsibility for staffing process• Company management decides responsibilities
for various stages / activities of staffing process• Generally in a medium / large size company,
middle and senior levels H.R. and sales managers are responsible
• Proper coordination needed between sales, marketing, and HR executives
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Planning Stage (Continued)Decide the number of salespeople needed
Steps followed by each territory sales manager to plan requirement of sales people:
1) Decide optimum salesforce size (using methods discussed earlier)
2) Add number of promotions, retirements, transfers out, terminations, resignations expected from existing salespeople
3) Subtract expected transfers into the territory and existing salesforce
4) Make a total of new salespersons needed Territory sales managers submit their
requirements to national / general sales manager, who calculates the total number of new salespersons to be hired
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Outline Type of Salespeople Needed
The steps involved in the process are:• Conducting a job analysis• Preparing a job description• Developing job qualifications / specifications
Conducting a Job Analysis• It is done by a person from sales / H. R. department, or
a consultant. It consists of two tasks:
(1) Analyse environment in which the salesperson would work – E.G. nature of customers, competitors, products.
(2) Determine duties and responsibilities of the salesperson. Obtain information from sales managers, customers, etc.
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Preparing a Job Description
It is a written document developed from the job analysis
The detailed job description is a useful tool for recruiting, selecting, training, compensating, and evaluating salespeople
Some of the points it generally covers are:
• Job title, reporting relationship, types of products / services sold, types of customers, duties and responsibilities, location and geographic area to be covered
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Developing Job Qualifications / Specifications These are generally based on job description Job specifications / qualifications include education,
sales experience, skills, and personality traits Many studies done, but no generally accepted job
qualifications for selecting salespeople, due to many types of sales jobs
Some methods used for developing job specifications are as under:
• Study job description. Useful for a new company
• Analyse personal histories of salespersons
• Ask customers
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Recruiting Salesforce
Recruiting include activities to get individuals who will apply for the job
The general purpose of recruitment is to get enough qualified candidates, to enable company select the right persons
H.R. and sales managers must update information on government employment regulations
Recruiting stage / process includes following activities:
• Finding the sources of sales recruits
• Evaluating and selecting recruiting sources
• Contacting candidates through the selected source
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Finding the Sources of Sales Recruits
For identifying prospective candidates, firms use internal and external sources. They include:
Internal Sources External Sources Employee referral programmes Current employees Promotions and transfers
Advertisements in newspapers and journals / magazines The Internet (job sites) Educational institutions Employment agencies Job fairs
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Screening Resumes It is done when the company receives many resumes This step / tool not required, if somebody else like
employment agency does initial screening Initial screening of resumes are done by comparing with
job specifications
Application Blank Widely used, it is a methodical way of collecting relevant
information from the applicant Advantages of using application blank (also called
“formal application form”) are:
(1) Easy comparison of many applicants
(2) Useful for asking question during interview sessions
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Evaluating and selecting Recruiting Sources Recruiting sources are evaluated based on the
database built over number of years Evaluating factors are:
• Performance rating of salespeople, after 2 years working
• Percentage of salespeople retained, after 2 years working
• Total cost of recruiting• Selecting most effective source of recruiting at
least cost• For a new company, selection depends on cost
Contacting candidates through the selected source is done by H. R. department
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Selecting Salesforce
Selection process consists of seven major selection steps / tools
Companies differ in using selection tools, depending on expenditure budget and time available
Major selection tools / steps are:• Screening resumes• Application blank• Initial interview• Intensive interview• Testing• Reference check• Physical examination
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Interviews Widely used selection tool A good predictor of the candidate’s performance Initial interviews are used for screening candidates Intensive interviews are conducted to get indepth
view of candidates Interview structure / type of interviews:
• Structured / patterned / guided interviews• Unstructured / non-directed / informal
interviews• Semi-structured interviews• Behaviour and performance based interviews• Stress interviews
Purpose is to decide a candidate’s fitness for a job
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Testing
Many firms use tests as a selection tool – EG P&G, IBM Purpose of testing: To find whether applicants have traits /
characteristics that lead to success in sales job Type of selection tests:
• Aptitude tests measure ability for selling and learning • Intelligence tests find out mental intelligence or intelligence
quotient (IQ)• Interest tests find out level of interest in a sales career• Knowledge tests measure knowledge of products, markets,
etc• Personality tests find out attitude or traits like empathy,
self-confidence Tests must have reliability and validity Tests should be one of the selection tools and not the only tool
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Reference Checks They are important due to possibilities of resume frauds and
false personal information They are done by letters / e-mails, telephones, or personal
visits Instead of candidate’s references, previous employers /
customers to be included for reference checks
Physical Examination Objective is to find a physical problem that may prevent job
performance of an applicant Most companies want their prospective employees to undergo
physical examination Increasing number of firms ask applicant to complete the
health information form without seeing a medical doctor
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Hiring Stage After completing selection process, a list of candidates to be
hired is made In hiring stage, two activities are performed:
(1) The company making the job offer
(2) Persuading the applicant to accept it
Socialisation Stage It is the process through which new salespeople learn values,
norms, attitudes, and behaviour of people working in the firm Socialisation process starts before the new salesperson
accepts the job offer and continues until the person is assimilated into the company culture
Assimilation is the second stage of socialisation process Companies have this process, in order to retain new
salespeople
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“Your most unhappy customers are your greatest source of learning.”
BY:-
Bill Gates