1. Part III SALES FORCE ACTIVITIES
Chapter 6:
Sales Force Organization

2. Structure Sales Force Organization: Impact Compensation Sales
Management
Role
Performance
Evaluation
Recruiting/
Selection
Training
Program
Figure 6-1: Decisions Affected by Sales Force Organization

3. Sales Force Organization: Topics
Generalists
Specialization
Strategic
Account
Management
Telemarketing
Emerging
Issues

4. Strategic Account Programs: Survey Results
Today
In Five Years
49%
45%
24%
20%
18%
17%
16%
11%
Customer
Generalist
Product Lines
Functional
Figure 6-2: How Sales Forces are Organized

5. Figure 6-3: Geographical Sales Organization
Sales Force Organization: Generalist
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
Rhode Island
Maine
New Jersey
Pennsy-lvania
North Carolina
South Carolina
Vermont
New York
Delaware
District of Columbia
Georgia
Alabama
Massachusetts
New York
Virginia
Maryland
Mississippi
Florida
Figure 6-3: Geographical Sales Organization

6. Figure 6-4: Product Specialized Sales Force
Sales Force Organization: Product Specialists
National Sales
Manager
Eastern Regional
Sales Manager
Northeast District Sales Manager
Mid-Atlantic District Sales Manager
Southern District Sales Manager
Printer
Equipment
Salesperson
Server Salesperson
Minicomputer Salesperson
Programmable
Calculator
Salesperson
Copier
Salesperson
Large Computer
Salesperson
Figure 6-4: Product Specialized Sales Force 1

7. 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 3

8. Figure 6-5: Customer Specialized Sales Force
Sales Force Organization: Customer Specialists
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 Bank Customers
Salesperson for Manufacturers
Salesperson for Wholesale Customers
Figure 6-5: Customer Specialized Sales Force 1

9. 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 4

10. Figure 6-6: Functional Specialization
Sales Force Organization: Functional Specialists
Division
Marketing Manager
Industry
Sales Manager
Systems Manager
Administrative
Manager
Account Executives (Salespeople)
System Reps (Technical Support)
Market
Administrative
(Training & Installation)
Figure 6-6: Functional Specialization 1

11. Functional Specialists: Alternatives
Companies
New Customers
American Express
Gillette
Retention
Browning-Ferris Industries
End-Users
Lexmark International
Sales Engineers 3M
AT&T
Service Consultants
IBM
McKesson Corporation 5

12. Strategic Accounts: What is Different about Strategic Accounts?
Previous Approach
New Strategic Account
Business Plan Duration
3 – 6 months
2 – 3 years
Structure of Business Plan
Tactical promotional program
Strategic business plan focused on growth and profitability
Personnel Involvement
Sales reps and purchasing agents
Senior management from both companies
Figure 6-7 : Changes in Joint Account Planning

13. 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

14. 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 8

15. Alternative Organization Models
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 8

16. 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 Sales Teams
Most effective
Best Market Performance
Table 6-1: Doing the Math on Account Management 8

17. Strategic Accounts Programs: Benefits
Increased sale to
national accounts
Increased profits
from national
accounts
Increased market share
Improved customer
communications
coordination
91%
83%
74%
74%
30%

18. Strategic Accounts Programs: Compensation Levels
$124,208
$115,905
$117,997
$112,414
$99,460
Telecom
Other Services
Other
Mfg
Chemicals
High Tech

19. 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’.”

20. 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.”

21. Strategic Account Programs: Survey Results
Are training programs for the strategic account manager different?
Different training for strategic account managers
No difference in training for strategic account managers or other sales staff
26%
37%
37%
Provide no training for strategic account managers

22. Strategic Account Programs: Survey Results
Do your strategic account managers carry an assigned sales quota?
No Response
Yes 3% No
68%
29%

23. Strategic Account Programs: Survey Results
Do strategic account managers have formal authority over the rest of the sales organization?
No Response
May assemble temporary “virtual” sales teams that report directly to the strategic account manager 7%
24%
Sales team reports directly to the strategic account manager
22%
47%
No formal authority over others in the sales organization

24. 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 Account Agreements
11%
Number of Transactions/Orders 6%
Number of Products Shipped

25. 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
$1,998,750
$117,000

26. Figure 6-8: The Scope of Telemarketing Activities
Sales Force Organization:
Scope of Telemarketing
Activity
Description
Customer Service
Companies provide customers provide customers with a number they can call if they have questions.
Prospecting and Lead Qualification
Firms are taking a proactive approach to prospecting by having telemarketers call prospects or qualify them for face-to-face selling.
Account Management
Selling secondary product lines or service small customers by phone, thereby freeing their salespeople to concentrate on larger customers and strategic product lines.
Promotion Support
Develop newspaper and magazine ads that feature either a local or an 800 number to get additional product information or place an order.
Figure 6-8: The Scope of Telemarketing Activities

27. 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 10

28. Figure 6-9: Total Costs of Independent Agents vs. Own Sales Force
Sales Force Organization:
Economic Analysis of Sales Agents
Independent
Agents
Total
Selling
Costs
Own Sales Force
Break-Even Sales
Sales Volume
Figure 6-9: Total Costs of Independent Agents vs. Own Sales Force

29. Sales Force Organization:
Market Conditions Favoring Sales Agents
The market is fragmented and customers are difficult to find or understand.
Buying is decentralized.
Local knowledge and local distribution is important.
The company is selling only a few products.
There is a good potential sales agency who has significant marketing expertise in the industry.
The company is not well known and has little equity in the market.
The products are easily understood commodities that have been around for a long time.
The selling cycle is short and orders are typically small.
It is not necessary to tightly control the selling effort.
Ongoing support activities are not important and the company does not need customer information.
Figure 6-10: Market Factors Favoring the Use of Sales Agents

30. 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

31. Sales Force Organization:
Sales Agent Decision and the Product Life Cycle
Disengagement
Decision
Manufacturer
Re-employs
Rep firm to
lower fixed
sales costs
Re-engagement
Decision
Introduction

32. Global Account Success Keys
The company’s value proposition must be right.
Global account teams must be cross- functional
Account teams must be driven from the top.
A mindset of constant improvement is key.

33. V.P. Business Operations
Sales Force Organization:
Key Account Sales Teams at Ericsson
Country President
V.P. Business Operations
Key Account Team
Sales Director
Director of
Operations
Director
Product Support
Global Accounts
Director
Account
Managers
Project Managers
Product
Managers
Account
Managers
Account
Coordinators
Technical Support
Engineers
Account
Coordinators
Figure 6-11: Sales Team Organization at Ericsson

34. Sales Force Organization: Evaluating Organizational Structure
Financial performance -- must consider BOTH costs and revenues
Adaptability
Integration -- subunits of sales organization must work in harmony
External
Internal
New competitors
Changing technology
Modification to channel systems
Industry life cycle
Company goals
Management philosophy
Production capabilities
Technical resources