SNS

Sales Organogram

Organizing the Sales Force

Types of Sales Organizations

Typical Methods of Organizing the Sales Force

Line Organizations (& Line/Staff) Functional Organizations Specialization Organization Sales Activities Geographic Areas Products Customers

A Simple Line Organization

Sales Manager

Salesperson A

Salesperson B

Salesperson C

A Two-Level Line Organization

Sales Manager

Region A Sales Manager

Region B Sales Manager

Region C Sales Manager

Salesperson

Salesperson

Salesperson

Line Organizations
Characteristics
Authority/responsibility for planning/implementing sales activities lie in hands of sales manager. Each person has only one boss.

Line Organizations
Advantages Very simple to understand and use. Easy to trace accountability. Relatively inexpensive (only a few highly-paid executives are necessary) Quick action possible since decision-making is in hands of relatively few people.

Line Organizations
Disadvantages As organization size increases, problems become more complex. Specialized skills often needed. Many sales managers cannot keep on top of all functions that relate to sales. Lack of trained replacements.

Line Organizations
Implications Best used by small organizations where operations can be clearly divided into basic functions of sales, finance, and production.

Line and Staff Organizations

Characteristics Same as line organization except staff positions added Staff positions dont have authority over line positions Advantages Staff provide sales manager with specialized skills Allows sales manager to be more efficient/ effective. Doesnt dilute his/her authority/contact w/salespeople.

A Line & Staff Organization

Sales Manager

Market Forecaster

Region A Sales Manager

Region B Sales Manager

Region C Sales Manager

Training Director

Salespeople

Salespeople

Salespeople

Line and Staff Organizations

Disadvantages Can be more expensive than a line organization. Conflicts may arise between line & staff executives. Staff executives may attempt to exert authority over line personnel. Line executives may ignore the counsel of the staff

Line and Staff Organizations

Implications
If sales managers find themselves spending less time working with subordinates and more time performing planning & evaluating functions, may want to consider this organization

Functional Organizations
Characteristics Organization divided by function. Functional specialists have line authority. Salespeople report to multiple bosses. Advantages Specialist ensure their functions are carried out. Should improve performance in each functional area due to the specialization.

A Functional Organization
Sales Manager

Region A Sales Manager

Region B Sales Manager

Training Director

Region C Market Forecaster Sales Manager

Salespeople

Salespeople

Salespeople

Functional Organizations
Disadvantages Breakdown in the unity of command due to conflicting orders Each salesperson is no longer accountable to only one boss Implications Typically used in large firms that feature numerous functions and that have the need for several specialists.

Centralized vs. Decentralized? Factors That Influence

Size of Sales Force As sales force size increases, the need to decentralize increases. Span-of-control problems emerge More field managers will be necessary Decentralization more feasible

Organizing by Sales Activities

Characteristics Usually employ simple line organizations Separate selling functions (present account maintenance and new account development)

Advantages Allows salespeople to become proficient in their respective sales functions. Places special emphasis on searching out and selling new accounts.

Line Organization Structured by Sales Activities

Sales Manager

Account Development Manager

Account Maintenance Manager

Salesperson A Salesperson B Salesperson C Salesperson D Salesperson E

Organizing by Sales Activities

Disadvantages
Customers may resent being turned over to a different salesperson. Salespeople may want to cultivate the accounts they have developed.

Organizing by Sales Activities

Implications Use when there is a large turnover of customers Use when there is a significant difference in the skills needed in each separate area Use when fast growth through new account acquisition is deemed necessary

Organizing by Geographic Areas

Characteristics
Sales force is reorganized on a geographic basis Salespeople sell all the companys present products to all customers within their assigned territories

Line Organization by Geographic Area

N a tio n a l S a le s M a n a g e r

W e s te rn R e g io n S a le s M a n a g e r

C e n tra l R e g io n S a le s M a n a g e r

E a s te rn R e g io n S a le s M a n a g e r

D a lla s D iv is io n S a le s M a n a g e r

C h ic a g o D iv is io n S a le s M a n a g e r

N e w Y o rk D iv is io n S a le s M a n a g e r

S a le s p e o p le

S a le s p e o p le

S a le s p e o p le

Organizing by Geographic Areas

Advantages Salespeople and managers become more familiar with their territories Local problems may be solved more quickly Sales force can rapidly react to changes in the local competitive environment Can provide better service at lower cost Lower chance for customer confusion

Organizing by Geographic Areas

Disadvantages Diversity/magnitude of product line may limit salespersons knowledge of any one product Duplication of overhead expense Greater level of salesperson control (which products to push, which customers to service) Implications Best used if product line is relatively homogeneous Best used if customers are widely dispersed

Organizing by Products
Characteristics Sales force is reorganized on a product basis Salespeople specialize in particular products carried by the sales organization

Sales Force Organized by Products

Sales Manager

Advertising Manager

Product A Sales Manager

Product B Sales Manager

Marketing Services Manager

Product A Salespeople

Product B Salespeople

Organizing by Products
Advantages Each product line receives a higher degree of specialized attention Allows for decentralization of both authority & responsibility for each product line Allows decisions to be made closer to the problems with any particular product line

Organizing by Products
Disadvantages
If specialization occurs above salesperson level, additional overhead expense may be suffered. More than 1 salesperson may be calling on customers Difficult to maintain a consistent image

Organizing by Products
Implications Best used if product line is relatively heterogeneous Best used if have a wide variety of customers with quite different needs Best used if products are technically complex Broad, in-depth knowledge of product essential for the sales task

Organizing by Customers

Characteristics

Sales force is reorganized on a customer basis Salespeople specialize in selling to/ servicing particular customer types

Sales Force Organized by Customers

Industrial Sales Manager

Retail Sales Manager

Industrial Manager Industrial Manager Industrial Manager Farms Construction Mining

Retail Manager JC Penney's

Retail Manager Sears

Organizing by Customers
Advantages Most consumer oriented approach Organization of sales force is based on customer needs Control remains at the management level (which customers to call on, etc) Allows salespeople to specialize in customer needs

Organizing by Customers
Disadvantages Potential for overlapping territories is high Hence, overhead costs may rise Salespeople must become knowledgeable about companys entire line of products

Organizing by Customers
Implications Customers in a given market buy several different products/lines from single supplier Same buying factors apply across product lines Significant proportion of income is derived from a small number of accounts who require high service levels