Sales management chris j noonan

man-The contents of this text should be of interest to: ● senior sales and marketing directors charged with responsibilities for overall development of markets, planning and strategy, an

Sales Management

The Marketing Series is one of the most comprehensive collections of books in marketing andsales available from the UK today

Published by Butterworth-Heinemann on behalf of The Chartered Institute of Marketing, the

series is divided into three distinct groups: Student (fulÀlling the needs of those taking the Institute’s certiÀcate and diploma qualiÀcations); Professional Development (for those on formal

or self-study vocational training programmes); and Practitioner (presented in a more informal,

motivating and highly practical manner for the busy marketer)

Formed in 1911, The Chartered Institute of Marketing is now the largest professional ing management body in Europe with over 60,000 members located worldwide Its primaryobjectives are focused on the development of awareness and understanding of marketingthroughout UK industry and commerce and in the raising of standards of professionalism inthe education, training and practice of this key business discipline

PROFESSIONAL DEVELOPMENT

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(Forthcoming: The CIM Handbook of Strategic Marketing by Colin Egan and Michael Thomas; The CIM Handbook of Service Marketing by Colin Egan)

Sales Management

Chris J Noonan

Linacre House, Jordan Hill, Oxford OX2 8DP

225 Wildwood Avenue, Woburn, MA 01801-2041

A division of Reed Educational and Professional Publishing Ltd

A member of the Reed Elsevier plc group

OXFORD BOSTON JOHANNESBURG

MELBOURNE NEW DELHI SINGAPORE

First published 1998

© Chris Noonan 1998

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to the publishers

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British LibraryISBN 0 7506 3361 1

Typeset by Avocet Typeset, Brill, Aylesbury, Bucks

Printed and bound in Great Britain

Contents

What is motivation? 35

Checklist 4.1: Establishing a hierarchy of objectives 63

Guidelines for managers operating an appraisal system 75

Giving feedback for motivation, appraisal, training and discipline 79

vi Contents

Formal feedback guidelines 79

Checklist 8.2: Preparing a presentation for a meetin 107

Contents vii

Functions of a job description 116

Further considerations in industrial and business-to-business selling 151

viii Contents

A typical induction training programme 157

Checklist 11.2: Guidelines for giving training feedback 176

Historical market and performance data in planning 183

Checklist 12.1: Decision areas in sales strategy development 187

Checklist 12.3: Planning inputs – historical data and assumptions 189

Contents ix

Current demand 197

Tabulating data and projecting trends in moving annual formats 204

Problems in using trend data based on past sales 209

Monitoring monthly sales against territory sales budgets 228

Contents xi

Guidelines for designing forms 272

Advertising and promotional programme information sheets 276

Identifying key result areas and setting performance standards 282Sources of control data and performance information 283

Monitoring performance against territory sales target 285

Checklist 17.1: Management control and performance monitoring 292

Limitations on the supply company’s ability to manage wholesalers 312Developing the partnership and motivating distributors 312

Practical ways to add value to wholesaler relations 314

Checklist 18.3: Managing wholesalers and trade distributors 317

xii Contents

19 Sales promotion 320

Using promotions in the marketing communications mix 321

A decision making framework for evaluating promotion options 323

Appendix 19-A: Typical focuses of sales promotions – examples 344

Merchandising in relation to strategy and communications 353

Checklist: 20.1: Merchandising in retail and trade outlets 366Checklist: 20.2: Creating impact at the point of sale 368

Supporting relationships with a value-adding approach to account management 380

Contents xiii

Agreeing a modus operandi for account management 384

Typical pattern to the annual round of negotiations 386

Follow-up with industrial and commercial key accounts 388

Checklist 21.4: Building relations within key accounts 395

Coverage of small accounts or geographically remote customers 404

Checklist 22.1: Alternative methods of generating sales 409

xiv Contents

Measuring the export marketers’ performance 415

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Sales management is an integral part of marketing management The sales team are the menters of marketing strategy and tactics at the customer interface Modern sales manage-ment is not about leading a team of foot-in-the-door salespersons It is a complex anddisciplined mix of: marketing skills, professional selling and negotiation skills, people man-agement skills (including selection, motivation, communicating and training), sales strategyand tactical planning skills, data management and performance monitoring skills (involving

imple-a high level of numerimple-acy imple-and experience in using computers to imple-advimple-antimple-age in simple-ales imple-and tomer management) The material coverage of this text addresses many of these topics in apractical way that sales managers can use in self-development, or adapt to team developmentneeds

cus-This text is targeted at the professional sales manager, who wants to make the most of themarket opportunities, and develop the productivity of his or her sales team Companies arefacing increasing competition, with threats to many traditional markets and customer bases,

as supply and purchase points in many market segments become more concentrated Totackle the threats and capitalize on opportunities the modern sales manager needs a farbroader range of selling and managerial skills and experience than in past decades The aim

of this text is to provide some skill-developing inputs that will enable the proactive sales ager to build on this material in managing the sales team and sales environment more prof-itably and productively

man-The contents of this text should be of interest to:

● senior sales and marketing directors charged with responsibilities for overall

development of markets, planning and strategy, and who may Ànd this a useful referencetext

● Àeld sales managers who may Ànd that much of this text has practical application byadapting the principles as relating to team management into their own environment

● salespersons and students of marketing and sales management, who will Ànd that thetext provides a comprehensive coverage of practical sales management principles thatwill provide a Àrmer base for their entry into sales line management

The reader with international responsibilities, or with a broader interest in marketing aspects

of management, can usefully supplement reading of this work with reference to my

compan-ion volume The CIM Handbook of Export Marketing (Butterworth-Heinemann 1996, ISBN 0 7506

2573 2)

Throughout this text use of the masculine gender can be taken as including the femininegender, without intention to discriminate or imply anything other than that marketers of bothsexes are equal in all respects in selling and sales management

Chris J Noonan E-mail: Noonan@cjn.co.uk

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Part One

Functions and Organization of the Sales Force

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The sales organization, commonly referred to

as the sales force, plays a key role in the

growth, development, profitability and

impact on customers (whether trade or direct

customers) of most companies It may

repre-sent only one department, or division, within

a company organization, and often be

rela-tively small in numbers in relation to total

employees, especially in manufacturing

industries, but it is a critical resource that

must be nurtured, developed and motivated

to fulÀl its potential within the company

organization and the external market place

Key sales and marketing functional activities

The functional activities undertaken by thesales and marketing departments can nor-mally be allocated into one of the three cate-

gories of management, administration or

planning, as illustrated in Figure 1.1, and

expanded in Table 1.2

1

Roles and functions in the sales force

Figure 1.1 The main categories of sales and marketing activity

Management

The functional activities that keep the business running day to dayThose activities

that are really

dealing with past

sales

Those sales management activities that are focused on planning for, and obtaining, future business

4 Sales Management

Table 1.2 Main functional responsibilities in sales and marketing departments

Functional responsibilitiesSales

● Achieving sales volume requirements

● Achieving distribution objectives

● Product display/merchandising

● Call (outlet) coverage

● Sales force recruitment

● Sales force training

● Provision of feedback to sales force

● – bulletins

● – conferences

● – personal contact

● Trade terms

● – financial terms of trade

● – warranties and sale conditions

● – order size and delivery

● Maintaining records on sales force

activity and customer activity

● Sales forecasting

● Pricing policies and profit planning

● Sales promotions and competitions

● Sales force rewards and incentives

● Advertising and promotion

● Packaging supplies (ordering and stockcontrol if not an allocated responsibility ofpurchasing or production functions)

● Production scheduling (if not an allocatedresponsibility of another department)

● Regulatory compliance of product andpackaging in domestic (and export)markets

● Sales & marketing forecasts

● Pricing policies & profit planning

● New product development

● New product test marketing

● Product design (physical attributes, size,shape, packaging)

Functional responsibilities

Administration

Planning Management

Roles and functions in the sales force 5

Sales functional activities

Table 1.1 can be expanded with the following additional commentary on the main sales agement functional activities

man-Achieving sales Once a forecast or target is set or agreed, the sales manager becomes

usu-ally critical to achievement of the company’s Ànancial plans ity, ability to meet operating expenses, etc.)

(proÀtabil-Distribution Product distribution targets may be set independently of sales volume

targets, but higher sales volume is commonly a function of increasingdistribution as well as generating more product offtake or usagethrough existing users or outlets

Product display These are traditional sales force functions in consumer product

compa-and merchcompa-andising nies, compa-and also with some industrial products distributed through trade

stockists Where offtake is a factor of display, the salesperson shouldhave display guide-lines and objectives, possibly for regular shelf space

in the trade outlet (retail outlets, cash and carry stores) and for off-shelfpromotional or feature displays

The merchandising function may be performed by the sales force, or by

a separate team (possibly of part-timers) charged with that responsibility.Many consumer goods companies contract the merchandising to special-ist companies that provide merchandising services to a range of suppliers

Call coverage This is the actual process of making physical calls on customers Where

a company has a stable customer base, calling might be scheduled atsome regular frequency relating to actual or potential sales (see latersections on journey planning), or to the amount of stock a customer can(or will) carry

Sales recruitment The identiÀcation of suitable persons for a selling position, and their

and training subsequent training, must be a fundamental responsibility of sales

man-agers Clear job speciÀcations and job holder proÀles should be oped, based upon qualities and skills known to be relevant toperformance in the company’s trading environment

devel-Once suitable persons are identiÀed and recruited, there are three els of training that the sales manager needs to incorporate into his or hermanagement activities:

lev-● initial induction training, likely to include industry and product edge, as well as basic selling skills

knowl-● ongoing field sales training

● supporting training provided at sales meetings and conferences

Provision of It is essential to communicate achievements, objectives, plans,

Sales managers typically hold (area or national) sales meetings at lar frequencies to provide a feedback forum and to give sales teammembers a chance to interrelate, and these can be supplemented bysales bulletins or newsletters

company’s trade terms The sales manager should be the expert on thecustom and practice within his or her markets, knowing industry

6 Sales Management

norms, and constantly reviewing competitive pricing, trade terms, andpromotions

Performance Statistical sales performance measures must relate sales achievements

feedback to salespersons Performance statistics need to be brokendown to give measures for each territory and customer, and, whereverpractical, should be benchmarked against comparable external data, e.g.for the industry or product category Comparative Àgures for perfor-mance against plans often cover:

● sales volumes by product and customer

● sales values by product and customer

● profitability by product and customer (not measured often enough!)

● call coverage achieved versus the scheduled or optimum coverage as

related to sales

● product distribution achieved by product and sales territory, or by

tar-get market sector

● display achievements by product, territory, etc., where this is a

rele-vant measure for consumer products

Credit control This functional responsibility is often shared with a section of the

Ànance department In the Ànal analysis, however, it must be accepted

as a sales management responsibility to collect overdue payments, asthe sales force are involved in selecting customers and advising on theirsuitability for credit

reminded by a letter serving as a polite reminder, followed subsequently if payment is not made by more terse chasers In some markets salespersons

traditionally collect payment while calling on customers, but this is notideal as it distracts from the salesperson focusing on selling, and maybring a negative atmosphere into what should be a positive environment

Customer service This function has grown in importance over recent years, as suppliers

but to exceed them This may include a very broad range of activities,from providing product leaÁets and information, to answering queriesabout where orders are in a supply pipeline, to provision of after salesservice and technical support

Order processing This activity also might Àt within a sales organization, within customer

service, or possibly a separate distribution department Wherever it isplaced as an activity, its function impacts on the selling activities, assalespersons and their customers clearly have particular concerns aboutthe speed and accuracy of processing orders, and the management oforder processing from all stages through collection (by a sales call ortelephone call) to delivery and payment

Maintaining The sales force needs to have information on its customers and its own

activity records activities Most companies have a customer record system, such as a

customer card where the salesperson records all customer details andsales history, call dates, etc Salespersons should have information thatshows when calls are scheduled or have been made, and the results, aswell as recording sales objectives for each customer

Typical job functions in a sales

organization

The sales manager or sales director

This is the person who is head of the sales

organization, by whatever title Frequently

he will either sit on the company board or

executive committee, or, at least, report

directly to it In some companies the sales

manager comes within a combined sales and

marketing department, possibly reporting to

a marketing director or commercial director

Here we are less concerned with titles than

with job functions The main functions of the

position would include:

● forecasting potential sales volumes and prices

● identifying, setting, and achieving sales

objectives, targets, budgets and profit

● designing and developing a salesorganization and structure to achievecompany plans and objectives, and suited

to the company, industry and markets (andwhich might include selection of agents,distributors, etc.)

● developing motivational reward andincentive packages

● converting overall plans and objectivesinto specific standards of performance,sales targets, and programmes forsubordinate functions and managers,including regional/area managers and

Roles and functions in the sales force 7

Sales forecasting While this is a function that often overlaps with marketing, sales

man-agers do have a key contribution to make to the forecasting and ning process, notably in relation to sales volume and value estimates, inestablishing distribution and display objectives, and in setting budgetsfor a sales organization that can achieve its objectives

plan-Pricing policies The marketing and sales departments will both be closely involved in

developing and implementing market pricing policies, to ensure correctpositioning versus competitors’ products while also satisfying companyproÀt objectives

Sales promotions While a marketing department might initiate much tactical

promotion-and competitions al activity, in support of strategic objectives (e.g aimed at increasing

dis-tribution, display, and user/consumer trial), some promotional activityaimed at improving performance against the same key result areasmight be under the control of the sales manager alone, such as salesforce incentives and competitions

Sales force rewards The sales manager (often with advice from a human resources and incentives ment) will have responsibility to ensure that rewards and incentives

depart-promote a high level of morale, motivating achievement of goals andobjectives, encouraging excellence, and developing loyalty amongst thegood performers While this could be seen as a management function, Iprefer to assign it to planning, as reward packages have a great bearing

on future success

Sales management While many sales managers recognize the need for training their sales

train-ing, to meet the future needs of the business and demands of sales agement jobs, is a key activity A well-trained team of sales managerswill contribute to their own further self-development, to company per-formance, and to the morale and training of salespersons

man-key account executives, ensuring that each

is allocated a fair share in relation to

historical performance or potential

● developing systems of monitoring sales

performance at all levels of the

organization and for all trade sectors,

including systems for benchmarking

company performance versus competitors’

performance and trade/customer

expectations

● developing a head office sales support

organization that may include:

– operational planning and forecasting;

– sales recruitment and sales training;

– sales performance monitoring and

performance feedback reporting;

– sales promotions department (planning

promotions, in liaison with the

marketers, and providing all sales aids

including product literature, display

aids, samples, etc.);

– customer service departments;

– order processing departments;

– tele-sales departments;

– product distribution (if this responsibility

is under the sales function);

– production scheduling (if this

responsibility is under the sales function)

● selecting and training all subordinate

managers and salespersons

● setting terms of trade, including basic

prices (in conjunction with marketing),

scale discounts and allowances,

promotional allowances, etc

● communicating with the sales force and

with customers as necessary (including

agents and distributors as appropriate) on

matters concerned with plans,

programmes, policies, and performance

feedback

● assisting with the test marketing of new

products

● building good internal relationships and

liaising with all other departments

concerned with forecasting and planning,

marketing, production, finance,

distribution, etc

The field sales manager

The Àeld sales manager is the person with

speciÀc responsibility for the Àeld tation of the marketing programme Largercompanies have a network of Àeld sales man-agers, often entitled area managers or districtmanagers, leading smaller teams usually offrom six to ten salespersons The Àeld salesmanager:

implemen-● accepts responsibility for achievingassigned objectives, targets, forecasts,budgets, etc., with and through the team

● liaises with salespersons and superiors insetting sales performance targets,objectives, standards of performance, etc

by territory

● plans and monitors call coverage tooptimize effective frequency of calling inrelation to potential

● implements field programmes supportingcompany marketing plans

● maximizes the sales effort by providingtraining, counselling and feedback

● exercises control and maintains teamdiscipline

● interprets and filters company policies

● communicates effectively with salespersonsthrough regular sales meetings andbulletins

● selects, trains, manages, motivates andcontrols his or her sales team

● advises superiors on market intelligence,competitive products, promotions, terms oftrade

● liaises between head office departmentsand field personnel

● ensures each of his or her sales teamachieves high job satisfaction through:– job content

– team spirit and membership– management

– monetary and non-monetary rewards– recognition of achievements

– quality of products sold– the company as a good employer

8 Sales Management

The effective Àeld sales manager will work to

accomplish his or her goals and maximize

sales team performance by:

● ensuring he or she is well briefed on

company policies, objectives and activities

● putting subordinates first in his or her

priorities

The key account manager

Management of the company’s business and

relations with major customers will normally

be the responsibility of a key account

man-ager who:

● liaises with Sales Director and marketing

departments in setting customer

targets/forecasts, which would be broken

down by product and branch or use

location (depending on whether the

supplier is offering industrial inputs or

products for resale through trade

distribution channels)

● liaises with buyers to agree annual sales

volume forecasts, and to negotiate any

ongoing supply contracts

● advises on setting terms of trade for each

key account, and then manages the

business to these trade terms

● conducts negotiations on products

(standard products or special production

runs such as customized industrial

products or private label retail products),

quantities, prices, promotions, special

offers, etc

● implements the company’s sales and

marketing programme at the key account

level

● negotiates special distribution

requirements

● monitors key account profit performance

and achieves satisfactory profit

contributions from accounts

● recommends key account special

promotional activity to senior managers

● reports market intelligence concerning the

key account’s own strategies and

performance, and that of competitors with

the account

● follows up at individual locations of branch customers to ensure programmeimplementation, ensuring that all branchlocations receive adequate directcoverage (either personally or throughother members of the sales team)

multi-● develops relationships with other keyaccount personnel influential in the buyingprocess (e.g users, specifiers, budgetcontrollers, other authorizers, etc.) – thisnetworking within major accounts isnormally critical to successful businessdevelopment

● liaises internally with all departments andcolleagues involved in supplying orservicing the key account

● monitors performance of the key account

in terms of sales volumes, turnover,profitability, usage/distribution, and anyother relevant criteria, comparingperformance with plans agreed with theaccount head office buying team, givingbreakdowns for branches/subsidiaries,providing feedback and promotingcorrective action to counter any deviationsfrom plans

The territory manager (or salesperson)

The person who most frequently provides thedirect interface with the mass of customers isthe territory salesperson, who

● agrees with his or her field sales managerthe individual customer and territoryobjectives, targets and programmes,breaking down the larger territory target

by product and customer, for eachmeasured time period or journey cycle

● agrees additional business developmentobjectives for the territory or for individualcustomers to encourage growth beyondthe normal levels expected

● develops a professional rapport andbusiness relationship with all buyers andinfluential contacts

● develops his or her professional sellingskills, not just relying on relationshipselling

● maintains planned call coverage

Roles and functions in the sales force 9

● develops a programme of

prospecting/pioneer calling to identify

new worthwhile customers on the assigned

● avoids out-of-stock situations, checking

stock in all outlets, and sells in product to

satisfy demand and offtake

● achieves maximum levels of sales and

distribution in current and potential outlets

● achieves optimum levels of product display

for retailed products in all appropriate

outlets

● motivates and trains customer staff to

promote company brands against

competition, giving them guidance in any

necessary technical knowledge, and

helping them understand and

communicate the product features and

benefits

● provides market intelligence feedback on

competitive activity

The merchandiser

This role is primarily a function in consumer

product companies, where goods are offered

for resale through a network of retailers or

trade distributors, and where there is

consid-erable competition for display space and

dis-play impact on consumers who face a mass of

similar competing products Typically the

merchandiser, whether directly employed by

the supplier or engaged through a contract

merchandising company, will work to:

● locate products and display material at

key selling spots within any product

category (where the merchandiser can

arrange this locally)

● maximize display of company products in

assigned retail outlets

● tidy any displays, ensuring damaged

product is not left on display

● ensure products in retail outlets are

correctly priced according to the retail

outlet’s pricing structure (and can advise a

store on competitor pricing where anindividual branch manager has anyauthority to vary prices)

● rotate products according to any sell bycode

● support products on promotion throughconstruction of feature displays andplacement of promotional point of sale(POS) material

● motivate retail outlets to re-order companyproducts as necessary to maintain stocklevels avoiding out-of-stock situations

● report on competitive activity

Product promoters

When a supplier is running certain types ofpromotional activity with trade dealers orretail customers it is sometimes appropriatefor them to place product promoters at thecustomer’s locations to communicate prod-uct features and beneÀts directly to cus-tomers These promoters can fulÀl a usefulrole, if suitable persons are selected andtrained, by:

● promoting consumer trial through:

– sampling/demonstrating products– direct customer contact

– supporting promotional activity at thepoint of sale

● motivating display retention throughpresence and activity

● providing a direct interface between thedistribution company and the customer,reporting on attitudes, reactions, etc

● cementing relationships between thedistribution company and on or off traderetailer

Here we have only reviewed some of the ical Àeld selling job functions within a sellingorganization These will be supported by arange of specialist functions or departments

typ-to ensure that they can perform optimally,possibly including order processing, tele-sales, customer service, sales training, salesplanning, sales promotions, with additionalclerical support There is no deÀnitively cor-rect sales organization, as it must be designed

10 Sales Management

to reÁect the needs of the company, the trade

channels, the products, and Ànal

users/con-sumers This will be looked at further in

Chapter 2

Sales management qualities

While the later chapter on sales personnel

selection will look in more detail at qualities

of persons suited to selling, at this early stage

it is perhaps worth a comment on some basic

personal qualities appropriate to sales

man-agers He should be:

● a good organizer and administrator, able to

plan, implement and monitor sales activity

● a good communicator, with colleagues,subordinates, customers and tradecontacts at all levels

● decisive, thereby inspiring colleaguesand subordinates with a sense ofleadership, direction and

confidence

● fair, objective and impartial in allocatingobjectives and dealing with business andpersonnel issues

● a team leader, with that intangibleleadership quality that inspires others tofollow and take direction, with initiative toidentify and take advantage of

opportunities, and not given to panic intimes of adversity but cool-headed inworking towards corrective action

Roles and functions in the sales force 11

12 Sales Management

A sales manager’s personal audit

As a short self-analysis exercise take a moment to assign a rating against each of the questions listed below This is not all-comprehensive, but will serve to alert you to your strengths and development areas, and act as a prompt in planning self-develop- ment

Factors you are weaker on should score lower, and factors you consider your strengths should score high How would your subordinate salespersons rate you on each of these factors? You can then either sit with your own line manager and discuss the rat- ings versus the importance of each of the factors in the job, or use your notes to assess personal training needs objectively

● Provide leadership?

● Motivate your team?

● Set goals and objectives?

● Develop sales strategies and tactics?

● Prepare forecasts, plans or set targets?

● Develop promotional programmes?

● Recruit the right people?

● Provide training to meet job and individual needs?

● Take decisions promptly?

● Exercise good judgement?

● Develop corrective action programmes?

● Manage resources cost effectively?

● Delegate effectively?

● Develop organizational structures to suit the

company business and trading environment?

● Develop or cooperate with sales support functions?

● Develop control systems and procedures?

● Have all the necessary skills for your job?

● Recognize the need for motivating reward

programmes?

Considerations in organizing the

sales force

The sales organization, as illustrated in

Figure 2.1, should be designed to take

account of certain key factors, such as:

– arget market sectors;

– marketing communications reaching the

target market (prospective customersinfluenced by advertising andpromotion must have a means to tryand buy the product)

● sales strategy– identifying and servicing tradecustomers or product users;

– market coverage objectives;

– sales volume/value objectives (to meetmarketing objectives)

● distribution channels– needs of each level of the distribution chain;– market distribution infrastructure

● product needs

2

Sales structures and organization

Figure 2.1 Key factors impacting on sales force organization design

SALES ORGANIZATION

Marketing

strategy

Sales strategy

Distribution

channels

Product needs

Developing a structure

Geographical, horizontal, vertical factors

A field sales organization is normally

designed to reÁect the geographical spread of

outlets in any market In addition it will grow

both vertically, with tiers being added, and

horizontally as development demands the

introduction of more specialized positions In

addition, account must be taken of trade

channel structures for the market sectors

being serviced by the sales teams

Geographically

Sales and management responsibilities could

be divided by geographical area (possibly

based on population locations or customer

locations), so that certain functions are

pro-vided within a deÀned area Typically sales

territories are assigned on a geographical

basis, and with some organizations a

net-work of regional distribution centres is

strate-gically located to service customers In a

larger sales organization sales support

ser-vices might also be split geographically, e.g

with a network of regional sales trainers, or

customer service staff with a speciÀc regional

responsibility

Horizontally

Functions are mutually exclusive as a

depart-mental sub-activity, e.g sales training,

cus-tomer service, sales planning,

Vertically

Within a department, as workload grows

beyond the capacity of existing personnel,

functional responsibilities are delegated

downwards, with new tiers of management

and non-management functional positions

appearing Each new level should have

clearly defined responsibilities, objectives

and standards of performance

Trade channel structures

In some organizations that sell products in

several market sectors a different sales team

is developed to handle sales activity in rate trade channel market sectors withgreater specialization, e.g in the wines andspirits trade it is common to have separatesales teams servicing the ON trade (hotels,restaurants, food service and institutionalcustomers) and OFF trade (supermarkets,liquor stores) Pharmaceutical companiescommonly develop separate sales teams tosell into pharmacies and hospitals, and tobrief doctors Suppliers of components mighthave one sales team servicing other manufac-turers who would use the components asoriginal equipment in another Ànished prod-uct, and a separate team servicing the (larger)network of replacement parts dealers

sepa-Management span of control

Consideration will also have to be given to

the span of control limits of each manager to

manage, motivate, train and control sons, which is dependent on:

salesper-● the nature of work being performed(skilled or unskilled)

● the knowledge or experience of thepersons involved in managing or beingmanaged

● the physical proximity of jobs

● the similarity of content of the jobs beingmanaged

● the time available and required fortraining, planning, communicating andsupervising

There is a general view that any single ager is limited in the number of persons he orshe can supervise directly, and in the number

man-of different functions he or she can manageeffectively Typically a manager might super-vise four to six functions (sub-departments)

In managing a sales team experience showsthat Àrst line Àeld sales managers (area ordistrict managers) can only supervise effec-tively between six and ten salespersons, pro-viding all the inputs to management, control,training, performance monitoring, planning,communicating, etc While some companies

14 Sales Management

will try to run with much larger teams, the

normal result is a Àre-Àghting approach to

Àeld sales management, with a negligible

focus on training, and very little time being

spent with any individual A good rule of

thumb for a Àeld sales manager would be to

spend at least half a day to a day with each

salesperson in his or her team each two

weeks

From this commentary we see that the size

of a sales force will vary with the number ofmanagement tiers, and effective span of con-trol at each level Figure 2.2 and Table 2.1illustrate how an organization might grow aslevels are added In these examples I haveassumed that the span on control reduces thehigher the position, as the higher the level ofmanagement the more time must be given toactivities such as planning, rather than Àeldsalesperson management Very large sales

Sales structures and organization 15

Figure 2.2 Adding management tiers as the sales force grows in size

Divisional managers Regional managers

Area managers

Field salespersons

Span of control 3–4 regional managers

Span of control 4–6 area managers

Span of control 6–10 salespersons

Table 2.1 Relationship between sales force size and span of control

Span of control of first Span of control of first Span of control of first line manager (area line manager (area line manger (area manager) = 6 manager) = 8 manager) = 10 Required number of field Hierarchical Hierarchical Hierarchical

salespersons to cover management management management

customer base organization required organization required organization required

AM = Area manager RM = Regional manager DM = Divisional manager

It is assumed for the calculation that the regional manager can manage six area managers, and the divisional manager can manage four regional managers.

Span of control of first Span of control of first Span of control of first line manager (area line manager (area line manger (area manager) = 6 manager) = 8 manager) = 10 Required number of field Hierarchical Hierarchical Hierarchical

salespersons to cover management management management

customer base organization required organization required organization required

forces are more commonly found in

devel-oped markets for consumer products and

some service industries (such as insurance)

rather than in industrial products, as the

for-mer normally have a much greater potential

customer base to contact and service than do

industrial product suppliers

Other organizational considerations

There are some other considerations in

plan-ning the organization structure, including

those listed below

● Workloads of individuals The number of

positions at any level depends on the

workload capacity of individuals within

each functional activity in the sales force

● Functional activities It is necessary to

identify the functions requiring separate

management input, control and

development to improve the quality and

quantity of output

● Communications within the sales

organization Effective communications are

essential to provide feedback, motivation,

planning, recognition, and achievement of

common objectives through coordinated

activities

● Flexibility The sales organization should

be flexible enough to adapt to changing

market conditions Barriers to flexibility

should be avoided or removed

● Role clarification Avoid internal conflict

and non-functioning by ensuring each

person in the sales team is very clear on

his/her role, and avoid duplication of

functional responsibilities, assign clear

responsibilities, and promote good formaland informal communications

In a Àeld selling organization managementcontrol and motivation are more likely to beeffective in an environment of ‘one person,one boss’ One salesperson is normallyresponsible for all sales through an account

or, at least, of a clearly deÀned product gory Various forms of functional or matrixmanagement structures that might work inthe ofÀce environment often result in confu-sion and under-performance if introduced to

cate-a Àeld selling orgcate-anizcate-ation Any fcate-actor thcate-atcan introduce confusion into the Àeld man-agement equation may need to be addressed.For example, companies that introduce therole of Àeld sales trainer, to supplement thework of the area Àeld sales managers, usuallyÀnd that those trainers rapidly become aware

of the need not to usurp the authority of theline managers and be seen as an ‘alternativemanager’

Some typical evolving organization structures

Developing a basic structure

Readers in medium to larger companies mayhave quite substantial selling organizations,and perhaps forget how the sales organiza-tion developed from its embryonic begin-nings, when there were probably fewcustomers and products, and very few per-sonnel managed by a single sales manager,illustrated in outline in Figure 2.3

Sales office manager

Figure 2.3 A basic sales organization structure

As the sales volume increases, or the

prod-uct range or prodprod-uct complexity grows, a

larger, more sophisticated organization will

be required to handle workloads or provide

additional support functions, possibly along

the lines illustrated in Figure 2.4 A number of

the job functions do not have line

manage-ment responsibility over Àeld selling

opera-tions, but provide essential support A formal

job evaluation process will need to be

devel-oped at this point to fairly assess the relative

values in terms of contribution to sales

divi-sion goals and objectives, and seniority of

each position In this illustration, the

func-tions reporting to the sales planning manager

would be quite different, but would all work

in close proximity to him or her and eachother, therefore being a manageable mix offunctions

A further stage of development typicallyoccurs as sales grow to new levels, and it isfelt necessary to split sales and marketingfunctions Workloads might also be increas-ing, product ranges further expanding, mar-ket infrastructures changing, and targetsegments becoming more defined, withgrowing product service needs The structureadopted will vary according to the nature ofthe market, i.e whether consumer goods,industrial goods, or consumer services orbusiness-to-business services are being pro-vided

Sales and marketing director

Field sales

manager

Sales planning manager

Marketing manager

Area sales

managers

Product managers

Key accounts managers

Market research manager

Sales training

manager

Display and promotions manager

Customer service manager

Information and planning manager

Figure 2.4 A developing organization structure

Any particular organization structure

should have scope for Áexibility to take

account of and develop with environmental

changes For example, the buying needs and

practices of retail or industrial customers

might change (buying may be consolidated at

fewer buying points within large customer

organizations), product distribution patterns

might change (e.g the advent of a growing

direct marketing and home shopping

cul-ture)

The Ànal organization should reÁect skills

of individuals and accountabilities of

man-agers For example, in Figure 2.5, the position

of sales training manager could, logically,

report to the national sales manager (in that

the outcomes of the job impact directly on his

or her responsibilities and key performance

indicators); but he or she may have neither

the skills, time, nor be well located to manage

the function on a day-to-day basis Figure 2.5

illustrates examples of geographical,

hori-zontal and vertical specialization

A geographically organized sales force

As has been mentioned, a common way to

organize a sales force is with some

geograph-ical split of responsibilities, breaking the

country into similar sized areas and

territo-ries, where the size comparison might consist

of population bases, number of outlets or

customers, or the relative turnover values or

potential Figure 2.6 illustrates a typical basic

geographical structure

Trade sector specialization

In many fast moving consumer goods and

industrial product companies more than one

sales force emerges over time to serve

differ-ent trade sectors with the same product range

(albeit the products may be presented and

packed slightly differently to better suit each

trade sector) The various trade sectors may

have very different service needs, or

require-ments for promotional support, and require

different inputs of selling time to develop

business optimally Figures 2.7 and 2.8

illus-trate some example structures

An example of the same products ing more than one sales force to serve differ-ent trade sectors is the wines and spiritstrade The retail (off-trade) sector will require

requir-a more requir-aggressive selling style in requir-a very petitive retail environment, product merchan-dising, in-store promotional displays andconsumer promotions encouraging a take-home trial, with selling activity taking placeduring normal daytime hours But the on-trade (bars, clubs, etc.) will require a differentselling style (less aggressive, perhaps, withemphasis on relationship development withowners/managers), probably a sales team thatcalls on customers when they are open fortrade (which in many markets will not be untillate in the day or the evenings), different for-mats of promotional support during peakevening opening hours, not with major featuredisplays, but perhaps with sponsored eventsand theme nights Other examples follow

com-● Food companies frequently have productssold through more than one type of outlet(e.g supermarkets and smaller

independent general stores orconfectionery/tobacco/news stores)

● Pharmaceutical companies and othersuppliers of over-the-counter remedies arefrequently supplying to pharmacies,sundry non-pharmacy outlets (such as drugstores), and to hospitals and medicalcentres, while also needing to have aspecialist team for briefing the medicalprofessions (who will not be orderingpersonally for resale)

● An industrial manufacturer of paintstypically would develop a separate sellingstructure to service the very different enduse markets, likely to include industrialmanufacturers of equipment that requirespainting (e.g by dipping or spraying), theprofessional decorating trade, as well asthe home do-it-yourself market

● A manufacturer of electrical components,such as switches, connectors, plugs,sockets, etc., might have quite a variety ofpotential trade sectors to supply (seeFigure 2.8), and all might require differentservice formats, and product variations

18 Sales Management

National accounts manager

Market research manager

Product group managers

Sales training manager

National account executives

Planning and information manager

Product managers

Market research executive

Promotions and display manager

Customer service manager

Figure 2.5 Separate sales and marketing organizations

Divisional sales manager – west

Divisional sales manager – south

Regional sales manager 5

Sales operations and planning manager

National accounts manager

Regional sales manager 3

Regional sales manager 4

National accounts executives

Training manager

Area sales manager E

Area sales manager B

Area sales manager C

Area sales manager D

Customer service manager

Territory salesperson

Territory salesperson

Territory salesperson

Territory salesperson

Planning manager

Figure 2.6 Development of a geographical sales organization structure

Sales director

Regional sales managers

Sales

training

manager

National accounts manager

Regional sales managers

National accounts manager

Market researchers

Product managers

Marketing director

Sales operations

manager – grocery and

drug store sectors

Market research manager

Group product managers

Area sales managers

Customer

service

manager

Key account executives

Area sales managers

Key account executives

Planning and

information

manager

Territory salespersons

Territory salespersons

Figure 2.7 Organization developed to service different trade sectors