Designing the Sales Force

Two critical decisions determine the design of sales force: sales force size and sales force organization.

Sales Force Size

Sales force size is decided by workload approach. Workload approach is based on calculation of total annual calls required per year divided by the average calls per year that can be expected from one salesperson. It is done in following steps:

(a) Customers are grouped into categories according to the value of goods bought and their potential for future.

(b) Call frequency, i.e. the number of calls per year to an account is assessed for each category of customers.

(c) Multiply the call frequency by number of customers in each category, add the sum for all categories to get the total number of calls that would be required.

(d) Average number of calls that can be expected from a salesperson is estimated.

(e) Number of salespersons = c/d

Sales Force Organization

The following forms of sales force organizations are employed by companies:

Geographic

The sales area is broke down into territories based on workload, i.e. number of calls that a salesman would be required to make, and sales potential of the territory. A salesperson is assigned to each territory to sell all products of the company.

This provides a clear territory to each salesperson and there is proximity to customers as the salesperson spends considerable time in the territory, enabling efficient handling of customer orders. But when products are technically different, the salesperson cannot be knowledgeable about all products and their applications.

Product

A salesperson is responsible for selling one or only a few of the products that the company sells. Specialization is effective where a company has a diverse product range selling to different customers. It allows each salesperson to be well informed about a product line, its application and customer benefits. But if products sell to the same customers, problem of route duplication and multiple calls on the same customer can arise.

Customer based

Salespersons can be organized along market segment, account size, or new versus existing account lines. Computer firms organized their sales force on the basis of industry served like banking, retailing and manufacturing, in recognition of their varying needs, problems and potential applications. Salespersons gain in-depth knowledge of customers and are able to monitor trends in the industry.

Key account management

An increasing trend in many industries is towards key account management which reflects fewer but larger customers. The company maintains special relationships with customers who place large orders. The supplier relies on repeat purchases from these large customers. It is very important for suppliers to retain these accounts.

There are many advantages of key account management. Some of them are:-

• A close working relationship is developed with the customer. The salesperson knows who makes what decisions and who influences various players involved in the decision. Technical salespeople can call upon technical staff of buyers and there is greater interaction between the functional specialists of the two companies.

• The customer knows that a dedicated salesperson exists, so it is clear who to contact when a problem arises.

• The extra resources devoted to a key account means that there is more time to follow up and provide service after a sale has been made.

• It enables more in-depth penetration of the Decision Making Unit. The salesperson can pull the buying decisions through the organization from users, deciders, influencers to the buyer rather than the more difficult task of pushing it through the buyer into the organization. The supplier has more influence with the people who determine the choice of suppliers. Sales have risen after following this approach.

Emerging trends in sales force organization

Some companies adopt a three-tier system with senior salespeople handling key accounts, sales representatives selling to medium-sized firms, and telemarketing teams dealing with small accounts. A tiered salesperson system with key account selling at the top provides promotional opportunities for salespersons as they have more time to spend with customers allocated to them. It also allows them to tailor their activities according to the type of customers that are allocated to them.

Another trend is regarding the new versus existing accounts. One team focuses on tasks of prospecting while the other team services existing customers. This avoids neglect of opening of new accounts by salespeople who may view their time as being more profitably spent with existing customers.

In practice, a combination of structures may be used to gain economies of geographic form with specialization inherent in product or customer-based systems. A company having two product lines may divide the country into geographically based territories with two salespersons operating in each territory with each salesperson handling one line.

Sonia Kukreja

I am a mother of a lovely kid, and an avid fan technology, computing and management related topics. I hold a degree in MBA from well known management college in India. After completing my post graduation I thought to start a website where I can share management related concepts with rest of the people.
Sonia Kukreja