Sales Organisation and Structures.ppt
- 1. ORGANISING SALES FORCE AND SALES ORGANISATION 1
- 2. Sales organization â˘An organization of individuals either working together for the marketing of products and services manufactured by an enterprise or for products that are procured by the firm for the purpose of reselling â˘A sales organization defines duties, roles, rights, and responsibilities of sales people engaged in selling activities meant for the effective execution of the sales function 2
- 3. Setting up a sales organization ⢠Defining objectives ⢠Determination of activities and their volume of performance ⢠Grouping activities into position ⢠Assignment of personnel to positions ⢠Provision for coordination and control 3
- 4. ⢠Organizing the activities and management of the sales force forms a major part of strategic sales planning ⢠Managers are becoming more proactive in restructuring ⢠A strong corporate vision and effective strategic market planning are closely linked with how the organization is structured and how it interacts with its customers Importance of sales organization 4
- 5. ⢠Activities should be divided and arranged in such a way the firm can benefit from the specialization of labor. ⢠The organizational structures should provide for stability and continuity in the firmâs selling efforts. ⢠The structure should provide for the coordination of activities assigned to different persons in the sales force and different departments in the firm. Purpose of Sales Organization 5
- 6. Components of sales force ď Sales department ď Sales Manager ď Sales persons and Agents ď Products ď Distributors ď Targets ď Promotions etc. 6
- 7. Factors influencing sales organizations ⢠Product and Service related factors ⢠Organization related factors ⢠Marketing mix related factors ⢠External factors 7
- 8. Centralization Decentralization Degree of Specialization Market orientation Span of control Basic concepts of sales organization Concepts 8
- 9. Degree Of Centralization & Decentralization ď§ Authority and responsibility placed at higher levels of management ď§ Most of the major decisions are made at the upper levels of the organization. ď§ Conversely, if decision making authority is decentralized, important decisions are often made at lower levels of the hierarchy ď§ Degree of centralization depends on several factors ď§ Most organization prefers decentralization of authority 9
- 10. Centralization Advantages Disadvantages ⢠Easier to implement common policies and practices ⢠Prevents other parts of the business from becoming too independent. ⢠Easier to coordinate and control & greater use of specialization. ⢠Economies of scale and overhead savings become easier to achieve. ⢠Quicker decision making. ⢠More bureaucratic- often extra layers in the hierarchy. ⢠Local or junior managers are likely to be much closer to customer needs. ⢠Lack of authority down the hierarchy may reduce manager motivation. ⢠Customer service does not benefit from flexibility and speed in local decision making. 10
- 11. Decentralization Advantages Disadvantages ⢠Decisions are made closer to the customer. ⢠Better ability to respond to local circumstances. ⢠Improved level of customer service. ⢠Consistent with aiming for a flatter hierarchy. ⢠Good way of training and developing junior management. ⢠Improves staff motivation. ⢠Decision making is not necessarily âstrategicâ. ⢠Difficult to ensure consistent practices and policies (customers might prefer consistency from location to location). ⢠Diseconomies of scale- eg. duplication of roles. ⢠Who provides strong leadership when needed (Eg. in a crisis)? ⢠Harder to achieve tight financial control-risk of cost overruns. 11
- 12. ⢠The degree to which individuals perform some of the required tasks to the exclusion of others. ⢠Effective when companyâs products or market growth is high ⢠Individuals can concentrate on few activities ⢠Individuals can become experts on certain tasks, leading to better performance for the entire organization Degree of Specialization 12
- 13. ⢠When markets are varied and complex ⢠Each market segment can be allocated with a sales team ⢠Market oriented sales team can develop suitable sales strategy for the segments it serves ⢠Also adapt its selling strategy to the changing market conditions Market Orientation 13
- 14. ⢠Refers to the number of individuals who report to each sales manager ⢠Generally span of control to be effective , should be around six or eight ⢠Span of control depends on the job description of subordinates as well as the abilities of the subordinates and sales managers Span of Control 14
- 15. Line Organization Line and staff Organization Functional Organization Horizontal Organization BASIC TYPES OF SALES ORGANIZATIONAL STRUCTURES Organizational Structures 15
- 16. ⢠All managers have line authority to direct and control subordinates ⢠Used in small firms / departments Advantages: ⢠Simple organization ⢠Clear authority ⢠Quick decisions ⢠Low cost Disadvantages: â˘No support to line managers from subordinates who have specialized knowledge / skills ⢠Less time for planning / analysis Line Sales Organization 16
- 17. ⢠Specialist staff managers are available for senior marketing / sales managers ⢠Staff managersâ role is to assist / advise line managers ⢠Used in medium and large size organizations Advantages: â˘Better marketing decisions â˘Superior sales performance Disadvantages: â˘High cost and coordination â˘Slower decision making conflict may arise if staff managersâ role is not clear Line & staff Sales Organization 17
- 18. ⢠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: â˘Qualified specialists guide sales force â˘Simple to administer Disadvantage: â˘Confusion due to more managers giving orders to sales force Functional Sales Organization 18
- 19. ⢠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: â˘Reduction in supervision, unnecessary tasks & cost â˘Improved efficiency and customer responses Horizontal sales Organization 19
- 20. Sales Force Structures A company can structure the sales force in three major ways. ďą Firstly, is to hire sales representatives and run everything in the house. ďą Second is to outsource the sales work to outside contractors who work independently. ďą Third is a middle ground between previous two methods- it involves hiring a broker agency that employs and manages sales reps 20
- 21. Geographic Specialization Product Specialization Market Specialization Specialization within sales organization structures Specialization Hybrid Specialization 21
- 22. Geographic Specialization ⢠Simplest and most common method ⢠Individual salespeople assigned to separate geographic territories ⢠Each salesperson is responsible for performing all activities necessary to sell the products, in the assigned area 22
- 23. Geographic Specialization Advantages Disadvantages ⢠It does not provide any benefits associated with the specialization of labor. ⢠Better market coverage ⢠Travel time and expenses are minimized. ⢠Sales administration and overhead costs are kept low. ⢠Quick response to local conditions & competition 23
- 25. Product Specialization ⢠Large number of products or brands ⢠Two types: * Sales organization with product managers * Sales organization with product specialized sales force 25
- 26. Product Specialization ADVANTAGES ⢠Individual salespeople master effective selling methods for single or related products. ⢠Closer alignment of sales and production ⢠Sales management controls the allocation of the selling effort ⢠across the line DISADVANTAGE ⢠Duplication of effort ⢠Customer dissatisfaction ⢠Increased selling cost 26
- 28. Market Specialization ⢠Increasing and important type of specialization ⢠Organizing a sales force by customer type /market segment ⢠Selling based to different customer types * User industries *Channels of distribution *Buying practices & preferences 28
- 29. Market Specialization Advantages ⢠Better understanding of customer needs ⢠Increased familiarity with certain businesses ⢠Increased control over the allocation of the selling effort Disadvantages ⢠Higher selling and administrative costs ⢠Duplication of territory coverage 29
- 31. Hybrid sales organization ⢠Combination of sales organization structures ⢠Strength of one organization structure are the weakness of other organization structure ⢠Choice of specialization may vary from company to company 31
- 32. Customer and Product Determinants of Sales Force Specialization Customer Needs Different Customer Needs Similar Market- Driven Specialization Product/Market- Driven Specialization Geography- Driven Specialization Product- Driven Specialization Simple Product Offering Complex Range of Products 32
- 33. Step 1: Plan your sales team's activities using your sales strategy ⢠Clearly communicate your sales objectives . For example, in relation to new and existing businesses. ⢠Agree how much time is to be allocated for selling different products, to different types of customers, in different areas. ⢠Agree a sales budget. For example, for any promotional material or equipment the sales team require. ⢠Tell about sales margins and pricing. ⢠Policy on incentive pay. Organize a sales force 33
- 34. Step 2: Allocate responsibility for different accounts, products or geographical territories ⢠Negotiate responsibility with individuals in the sales team. ⢠Keep to a minimum the number of people handling each account ⢠Maximize your sales team's productive time by using sales support and customer service employees ⢠Put your best sales people into new sales initiatives, letting you benchmark what can be achieved. ⢠Better communication between sales people handling the same account ⢠Avoid any conflict between team members. 34 Organize a sales force (Cont..)
- 35. Step 3: Set clear ground rules for the level of responsibility and freedom: ⢠Agree whether they decide when to contact customers, or if they have to follow a set call plan. ⢠Outline how far sales people can plan and carry out customer contacts independently ⢠Set out what budgets are available for travel and customer entertainment. ⢠Tell sales people what freedom they have to negotiate discounts. Organize a sales force (Cont..) 35
- 36. Step 4: Appoint sales person to manage overseas territories ⢠Grow export business by appointing one or more sales representatives to manage your business in important overseas territories. ⢠If global export sales represent a significant part of your business, setting up a sales organization based on marketing territories Organize a sales force (Cont..) 36
- 37. Step 5: Review your product range to determine the most appropriate sales structure ⢠Set up a product-based sales structure ⢠Appointing or recruiting sales representatives with good product and technical knowledge. ⢠Also organize the sales force to specialize in different market sectors. ⢠Analyze which customer sectors represents large share of the total sales ⢠Appoint sales representatives with a good understanding of the business issues and challenges in your target sectors. Organize a sales force (Cont..) 37
- 38. Step 6: Organize and communicate information ⢠Share news and discuss problems ⢠Get sales people to complete weekly sales activities reports ⢠Hold weekly team meetings, monthly for field-based employees ⢠Get sales people to report back customer comments, enquiries and complaints ⢠Agree priorities for the next week or month, including specific objectives ⢠Allow sales people to access sales information using an extranet or internet service such as www.salesforce.com/uk Organize a sales force (Cont..) 38
- 39. Step 7: Focus on important customers ⢠Include a key account manager in your sales-force structure. ⢠Takes responsibility for managing relationships with important customers and ensuring that they receive a high standard of service ⢠Protecting key accounts is vital, because the loss of a large customer could damage your business. ⢠If retailers or distributors are important to the business, appoint a member of the sales force to work with them. ⢠The representative takes responsibility for placing products in distributor network and for working with distributors to help them increase sales of your products to their own customers. Organize a sales force (Cont..) 39
- 40. Step 8: Assess your sales resources ⢠Review the skills and experience of sales team to determine their levels of product knowledge or understanding of specific market sectors. ⢠Identify representatives with skills in winning new business and those who are skilled in managing relationships with existing customers. ⢠Build flexibility into your sales force structure. Organize a sales force (Cont..) 40
- 41. Step 9: Establish a management structure for the sales force ⢠If you have a small sales team, you may be able to set goals and manage the team yourself. ⢠Expand the sales representatives as your business grew. ⢠You may prefer to delegate management to a senior member of the team or recruit an experienced sales manager. Organize a sales force (Cont..) 41
- 42. ⢠A company must take numerous factors that are related to its sales forecast. ⢠Some of these factors are: *Past Demand *Lead time of product *Planned advertising or marketing efforts *State of the economy *Planned price discounts *Actions that competitions have taken How to forecast a sales force size 42
- 43. Forecasting Sales Force ⢠A systematic attempt to probe future with the help of known facts. ⢠It is the âanalysis and interpretation of future conditions in relation to operation of enterpriseâ. ⢠Thus , its the process of predicting future systematically. The result of this is called forecasts. 43
- 44. 44
- 45. ⢠New Customers A trend analysis can be used to measure the ability of each sales person to acquire new customers over a specified period of time ⢠Product Sales Record the product number of each item sold, the price of each product and the employee number of the sales person responsible for each sale Tools for sales force analysis 45
- 46. ⢠Customer Segmentation Customer segmentation is a tool designed to help you understand which category of customers are responsible for the greatest profitability for your company ⢠Repeat Sales A number of factors are used to quantify the effectiveness of your sales force in bringing in repeat sales Tools for sales force analysis 46
- 47. Sales forecasting Methods Quantitative â Time series analysis Using and interpreting market research data, test marketing. Qualitative â Delphi technique, brainstorming, intuition. 47
- 48. Other methods of Sales Forecasting 1. Survey method 2. Expert opinion 3. Market test methods 4. Sales force opinion 5. Statistical method * Trends method * Graphical method * Time series method *Regression line 48
- 49. ⢠Forecasting the sales force is an essential element of planning. ⢠Businesses use sales forecasts in order to predict cash flow requirements, enhance effective inventory management, allow for better procedures to understand the markets and prepare for contingencies ⢠Contribute to profits and attain long term goals Conclusion 49
- 50. 50