sales force mgmt

7/27/2019 Sales Force Mgmt

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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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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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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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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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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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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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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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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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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.

sales force mgmt

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