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Sales force management
30th July , 2013
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Sales Organization:
An organization structure defines relationship among jobs , and
amongst the people in a company.
It gives a framework showing what tasks or activities are performedby the various employees in the sales organization.
Few important terms :
1. Degree of centralization
Centralized structure vs Decentralized structures
A centralized structure has authority and responsibility placed at higher
levels of management.
In decentralized structures the A&R for carrying out tasks are delegated
to lower-level managers.
Decentralized structure based on decision making at lower levels would
enable faster customer service.
2. Degree of specialization
General approach vs Specialized approach
Managers ( leading , training , research) and salespersons ( training ,
merchandising , selling ) are generalists carrying out all activities.
Less effective as the markets , products become more complex.
In specialized approach the individuals become experts by focusing on
few tasks resulting in better performance of the organization. Specialization could be functional , product , market or geographic.
Overview
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Sales Organization:
Few important terms :
3. Line and staff positions
Line managers have authority & responsibility to direct and controlimmediate subordinates.
Staff managers have areas of specialization and expertise wherein they
have staff responsibility i.e advisory & recommending role.
Training manager , M.R manager would have no sales generating
responsibility.
4. Span of control Refers to number of individuals who report to each manager.
Overview
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Organization structures:
Sales organizations can be
classified into 4 basic types :
1. Line sales organization
2. Line and staff sales organization
3. Functional sales organization
4. Horizontal organization
HeadMarketing
SalesManager
ASM 1
Sales
people
ASM 2
Sales
people
ASM 3
Sales
people
Line Sales Organization Simplest structure with all
managers ( Top & middle) having
line authority.
Widely used in smaller firms
Advantages Clear authority &
responsibility ; Low cost ; quick
decision making.
Disadvantages Too dependent
on top ; lack of functional support
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Organization structures:
HeadMarketing
MktgServicesManager
SalesManager
ASM 1
Sales
people
ASM 2
Sales
people
ASM 3
Sales
People
MktResearchManager
PromotionalManager
Line and Staff Sales Organization Group of experts ( functional specialists) are made available to the top sales mgr.
Staff managers donot have the authority to issue directives to salespeople.
Widely used in medium and large sized firms
Advantages Better marketing decisions ; Freeing of top manager time.
Disadvantages Higher cost ;Slower decision making ; Conflict of staff mgr goals.
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Organization structures: Horizontal orgn.
Planning Team
- Strategic planning
- Accounts , finance
- HR , Administration
- Chief Operations Officer
Research & Design Team
- Customer Research
- Product / service design
Service Team
- Service
- Training
- Information
Sales Team
- Sales and Marketing
- Pricing , Promotion
- Channels , logistics
Operations Team
- Production / Operations
- Quality assurance
- Systems engineering
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Organization structures:Horizontal Sales Organization
Cross functional teams are formed by drawing people from various functions like
R&D , Operations , Customer support & Sales. These teams work with customerteams to solve the customers problems.
This structure removes management levels ( hierarchy) & also departmental
boundaries.
The support functions like strategic planning , HR , and finance are looked after by
a small team of senior executives.
Advantages Customer centric; faster turn around time
Specialization within Sales Organization
Many medium and large sized companies expand one of the basic sales orgstructures in some specialized design , in order to increase the effectiveness of their
sales force.
Specialization could be basis :(a) Geography (b) Product (c) Market
(d) Functional and (e) Combination of these factors
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Organization structures:Head
Marketing
Mktg ServicesManager
SalesManager
RSM (N)
ASMs #5
Sales
people
RSM (E)
ASMs #3
Sales
people
RSM (W)
ASMs #4
Sales
People
RSM (S)
ASMs #3
Sales
people
Mkt ResearchManager
PromotionalManager
Geographic specialization Commonly deployed by large organizations with national footprint .
Typically , salespeople are assigned a geographic area and are responsible for all selling
activities within the assigned areas.
Advantages Better market coverage ; Quick response to local conditions and competition ;
Disadvantages Limited specialization of marketing tasks.
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Organization structures:Head
Marketing
Mktg ServicesManager
SalesManager
RSM
(Prod Group A)
ASMs#5(Prod Group A
Sales
People (A)
RSM
(Prod Group B)
ASMs#4(Prod Group B
Sales
People(B)
Product specialization (A) Commonly deployed when product portfolio is large and the product inter-relation is weak (
Type of consumers / Nature of usage / category / Type of outlets )
RSMs & ASMs are line managers and have no staff assistance.
Advantages Better product focus ;
Disadvantages Increased selling cost ; Geographical & customer duplication.
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Organization structures:Head
Marketing
MktgServicesManager
Promotional Manager
SalesManager
RSMs #4
ASMs#16
Sales
people
Salestraining
Manager
MktgManager (Prod Group
A)
MktgManager( Prod
Group B)
Product specialization (B) Focus of the organization is on the basic customer need.
Advantages duplicate call problem addressed ; Marketing manager focuses on the brands
thru involvement in planning , promotion , coordination , market visits
Disadvantages Lack of product specialization of salespeople.
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Organization structures:
Market specialization
Basis market specialization or by channel of distribution.
Salespeople carry out selling activities for all products but for specific customer groups each of
which have different buying practices and preferences.
Advantages Customer centric ;
Disadvantages Duplication of territory coverage ; higher selling costs
National SalesManager
Sales MgrComml
ASMsComml.
Sales
people
Sales MgrGovt.
ASMs Govt.
Sales
people
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Tropicana North - snapshot
GM Sales(N)
Delhi SM
ASM 1 -UDS
CE 1
Dist 1
Dist 2
Dist 3
CE 2 CE 3
ASM 2 -UDS
CE 4
CE 5
CE 6
ASM 3UDS
ASM 4 MT& Instt
UP + Raj SMPb + Hy +
HP + JK SM
Hybrid Sales Organization
Geographic + market
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Size of the salesforce: Optimal size of salesforce enables company to balance between
conflicting objectives of maximizing revenue & minimising costs.
Less than optimal size of salesforce would lead to loss of sales &
profits , on the other hand more than required numbers will lead o
increase in sales and costs.
Optimal salesforce size is determined using methods :
1. Workload method
The size of the salesforce is based on the selling efforts required.
Build up method which is based on workload being dependent oncustomer size , customer sales potential and travel time.
2. Sales potential or breakdown method
In this method the sales productivity ( say revenue or volume delivery
capability) of the average salesperson is assumed by the sales
manager.
Also the method is based on the premise that the company salesforecast is accurate.
3. Incremental method.
This method is base on marginal-analysis theory of economics.
Based on the premise that sales & consequent profits should increase
on adding of salespeople.
Salespeople added till incremental profit exceeds incremental cost.
Workload
Sales
pot.
Increme
ntal
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Size of the salesforce: Assume a company sales forecast of Rs100 cr with an average
salesperson productivity being Rs 25 lac per annum. The anticipated
salesforce turnover is 20%. What would be the size of the salesforce ?
N = S ( 1 + T )
P
Where , N = Size of salesforce
S = Annual sales forecast for the company
P = Estimated productivity of the average salesperson
T = Estimated % of annual salesforce turnover on account of
resignations , retirements and promotion.
Sales
potential
method
Incremental
method
A company has 20 salespeople and sales manager has to decide
whether he should add more salespeople.
Sales manager estimates that incremental sales from furthersalespeople would respectively be Rs 12 lacs ; Rs 10 lacs ; Rs 8 lacs
; Rs 6 lacs and Rs 5 lacs on annual revenue basis.
Cost of goods sold is a constant 60% of turnover. The co.
salesperson is paid a salary of Rs 120,000 per year and average
spent on food and travel per salesman works out to Rs 80,000 per
annum. The salespeople are paid annualized incentive of 6% of
Increme
ntal
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Staffing the salesforce:
Proper staffing of the saleforce has strong impact on sales performance &
resultant profits.
Salesforce staffing is amongst the most challenging & criticalresponsibilities of sales management :
Done right - Force multipliers ; Foundation of manager goals being met
Done wrong Objectives unmet ; activities backlog ; manager perf. Impacted
adversely.
Planning
Establishresponsibility
Decide thenumber of
salespeopleneeded
Outline the typeof salepeople
needed
Recruiting
Identify sourcesof sales recruits
Evaluate thesources of
recruits
Selecting
Develop toolsand procedurefor measuring
applicants
Select thesalespeople
Hiring
Make the joboffer
Acceptance ofthe job
Socialisation
Socialisation
assimilation
Salesforce staffing process
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Staffing the salesforce:
1. Establish responsibility
Responsibility for the staffing process are fixed.
In larger organizations typically the sales manager is responsible for deciding the
number and type of people needed ; selecting and making the job offers to thesalespeople. The other stages are handled by HRD.
2. Deciding the number of salespeople needed
Size of optimum salesforce is decided by using one or more of the 3 methods.
Need = Size + ( Promotions + Retirements + transfers out + Resignations ) (
Transfers in )
Need assessment needs to happen in advance so as to allow for time to recruit ,
select , hire , assimilate & train.
3. Outline the type of salespeople needed
A detailed job description & specifications of the salespeople is essential to
selecting the right profile of salespeople.
The steps involved in process of developing the ideal profile are :
a) Job analysis Company identifies job duties , responsibilities and critical activities to be
performed for the job success.
b) Job description is then prepared. JD are formal , written statements describing the job
in detail. Include Title of job ; Reporting relationship ; Types of products ; Types of
customers ; Duties and responsibilities ; Job demands ; Technical requirements ;
Location
c) Duties & responsibilities are utilized to determine the desired traits and abilities needed
to attain job success.
Traits - Empathy , Ego drive ; Comfortable working in teams ; Risk taking ; Innovative
Attitude Never-say-die ; Persistent ; Handle pressure well ;
Planningstage
1
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Staffing the salesforce:
The purpose of Recruitment is to provide a pool of job candidates from
where a company selects the right persons. Recruitment includes :
1. Finding or identifying the sources of sales recruits
Prospective candidates are located by using internal and external
sources.
Internal sources include Employee referral programs ; current
employees ; promotions and transfers.
External sources include Advertisements ; Internet ; Educational
institutions ; Employment agencies ; Job fairs ; Other companies.
Employee referral programs typically incentivize employees who
provide successful referrals. Assures better cultural fit .
2. Evaluation of recruiting sources
Various sources are evaluated over the years for quality as denoted by
;
a) Performance rating of the salesforce over 2 yearsb) % Retention
c) Cost of recruiting
Once data is built the company identifies & uses the source(s) which
permit most effective hires at least cost.
Recruitment
stage
2
S ffi h l f
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Staffing the salesforce:
1. Develop tools and procedure for measuring
applicants
Applicants are measured against the job specificationsthat were developed in the planning stage.
Selection process consists of number of filters which are
progressively applied to screen out applicants not
matching the job specifications.
All the 7 steps are used by a very few organizations.Most use filters basis information needs & expenditure
budget.
2. Selecting the salesperson
Selection criteria prioritizes few selection criteria withobjective of better fitment.
Each applicant is ranked on qualifications and potential
in relation to the selection criteria .
Selectionstage
3
SelectionProcess
S l ti P
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Selection Process:Step 1
Screeningresumes
Step 2
Application
Blank
Step 3
Initialinterview
Step 4
IntensiveInterview
Step 5 Testing
Step 6 Reference
Check
Step 7
MedicalCheck
Re
jecting
Screening Resumes
Advertisements or education institutions yield large number
of resumes which are screened basis job specifications.
Application Blank
Relevant information ( Resume may lack in certain details)
laid out in a particular order
Interview
Properly conducted interview is a good predictor of the
candidates performance .
Interview structures may vary from structured to
unstructured or semi-structured.
Candidate made comfortable thru open ended qs on
educational & family background. Focus on listening.
Behavior based interviews / performance based interviews
Testing
Selection tests are designed to measure aptitude ,
intelligence , creativity , interests , knowledge and
personality of salespeople.
The purpose of testing is to decide whether applicants have
traits , knowledge , attitude for success.
Reference check Also known as background checks with previous employers
are helpful in validating applicants ability and character. Qs
such as would you rehire him? Why did he leave ? helpful.
Assessment Centers
Typically used by companies for promotions & development
but can also be used as a tool of selection process.
Conduct simulated exercises such as role playing ,
business games , case analysis & individual presentations.
St ffi th l f
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Staffing the salesforce:
1. Company makes the job offer
Job offer includes remuneration details.2. Acceptance of the job offer by the applicant
Join date & agreement to terms & conditions of employment.
Hiringstage
4
Assimilat
ion
5
1. Socialisation
The new salesperson is familiarised with values , culture of the
organisation and also the attitudes , behaviour of people who
are already working in the organisation.
2. Assimilation Is the 2nd stage of socialisation the new salesperson is socially
integrated into the new environment.