💰How To Build a Sales Force: Mastering Structure & Strategy
We define sales force management as the analysis, planning, implementation, and control of sales force activities. It includes designing a sales force strategy and structure and recruiting, selecting, training, compensating, supervising, and evaluating the firm’s salespeople.
Table of Contents
Designing Sales Force Strategy and Structure
Marketers need to consider several issues relating to sales force strategy and design.
These are: structuring the salespeople and their tasks, size of the sales force, mode of working alone or in teams with other people in the company, and working in the field or by telephone.
We will now discuss these issues.
Sales Force Structure
A company can organize its sales force in several ways. The most common types of sales force structures are territorial sales force structure, product sales force structure, customer sales force structure, and complex sales force structure. So, the sales force structure can be discussed in the following subsections:
Territorial Sales Force Structure
A territorial sales force structure is a sales force organization that assigns each salesperson to an exclusive geographic territory. That salesperson carries the company’s full line of products or services. This sales organization offers many advantages.
It specifically defines the salesperson’s jobs and responsibilities; it improves the salesperson’s selling effectiveness and involves a relatively low cost. Many executives manage a territorial sales organization at the various levels of the company.
Product Sales Force Structure
A product sales force structure is a sales force organization under which salespeople specialize in selling only a portion of their products or lines.
For example, a company producing consumer and industrial products uses two sales force sets to deal with these two products. Companies emphasizing product management use a product sales force structure.
Customer Sales Force Structure
A customer sales force structure is an organization where salespeople specialize in selling only to certain customers or industries. Xerox classifies its customers into four major groups, each served by a different sales force.
The top group consists of large national accounts with multiple and scattered locations. These customers are handled by 250 to 300 national account managers.
Next are major accounts that, although not national in scope, may have several locations within a region; these are handled by one of Xerox’s 1,000 or so major account managers.
The third customer group consists of standard commercial accounts with annual sales potential of $5,000 to $10,000; account representatives serve them.
Marketing representatives handle all other customers. Customer sales force structure helps a company develop a closer relationship with customers.
Complex Sales Force Structure
Companies selling a wide variety of products to many types of customers located in a wide geographical area often combine several types of sales force structures.
Sales force can be specialized by customer and territory, product and territory, product and customer, or territory, product, and customer. The effectiveness of a particular type of structure varies from company to company and from situation to situation.
In selecting a sales force structure, the company must be convinced that it best serves the customers’ needs and is compatible with its overall marketing strategy.
Sales Force Size
After setting the structure of the sales force, the company decides on its size. The size of the sales force has both cost and size volume implications.
The larger the size of the sales force, the higher the cost and sales volume. For determining the sales force size, many companies follow the workload approach.
Under this approach, the company groups account for different size classes and then determine the number of salespeople required to call on them the desired number of times.
For example, a company has 500 Type-A accounts and 1,000 Type-B accounts. Type-A accounts need 26 calls a year, and Type-B accounts need 13 calls a year. Here, the number of calls (workload) the sales force must make per year is 26,000 calls [(500 x 26) + (1000 x 13) = 13,000 + 13,000 = 26,000].
Let us assume that an average salesperson can make 500 calls a year. Thus, the company will need 52 salespeople (26,000 / 500).
Sales Force Strategy and Structure Issues
Sales management has to make two important decisions;
- who will be involved in the selling effort, and
- how various sales and sales-support people will work together.
Outside and Inside Sales Force Structure
A company may have an outside sales force/field sales force, an inside sales force, or both.
Outside salespeople undertake traveling to call on customers, while inside salespeople perform their jobs from offices via telephone or prospective buyers’ visits. Inside salespeople include technical support people, sales assistants, and telemarketers.
Inside salespeople are increasingly using telephones to conduct their job, which is called telemarketing. Telemarketers use the phone to locate new leads and qualify prospects for the field sales force. Telemarketing can be cheap and effective for many types of products and selling situations.
As products are becoming more complex, and the customers are growing larger and becoming more demanding, an individual salesman’s effort is proving inadequate to accomplish the selling task.
This has led to the emergence of team selling. Teams of people from sales, marketing, engineering, finance, technical support, and even upper management serve large, complex accounts.
Through team selling, salespeople coordinate company efforts to build a rewarding relationship with important customers.
Recruiting and Selecting Salespeople
Proper recruitment and selection account for a satisfactory performance level of the sales force. Moreover, poor recruitment and selection methods may result in the departure of a portion of its sales force and poor turnover.
Such a situation is undesirable, and the company should be very careful in recruiting and selecting the members of its sales force.
To this end, the company should keep in mind the traits of a good salesperson. Even though different products require salespeople with different qualities, we can generalize a successful salesperson’s attributes.
One survey suggests that good salespeople have enthusiasm, persistence, initiative, selfconfidence, and job commitment. They are committed to sales as a way of life and have a strong customer orientation.
Another study suggests that good salespeople are independent, self-motivated, and excellent listeners.
Still, another study advises that salespeople should be a friend with the customer and persistent, enthusiastic, attentive, and – above all honest. They must be internally motivated, disciplined, hardworking, and able to build strong customer relationships.
However, in finding salespeople, the company should look for persons with traits that suit its requirements.
The recruitment of salespeople begins by looking for persons with needed traits. The company’s human resources department/personnel department invites applications from current salespeople and employment agencies through classified ads and through contacting college and university students.
For effective recruitment, recruiters must counter negative notions about selling, such as selling is a job, not a profession.
Salespeople must be deceitful to be effective; selling involves too much insecurity and travel, and women are not suitable for selling jobs. To create interest in selling jobs, recruiters now offer high starting salaries and income growth and emphasize career opportunities in selling.
The method of selecting appropriate salespeople from the interested applicants can vary from a single informal interview to lengthy testing and interviewing.
Formal tests are often given to sales applicants. Tests measure sales aptitude, analytical and organizational skills, personality traits, and other characteristics.
It is claimed that tests reduce turnover, and test scores correlate well with new salespeople’s later performance. Still, it is criticized that test scores reveal only one piece of information, including personal characteristics, references, past employment history, and interviewer reactions.
Companies must give training to salespeople before sending them into the field.
For this purpose, companies design training programs that fit their specific needs and requirements. The duration of training programs can vary. The goals of training programs need to be set clearly.
Salespeople must know the company and identify with it.
Therefore, the training programs should describe the company’s history and objectives, organization, financial structure and facilities, and main products and markets. Salespeople are required to have a thorough knowledge of the company’s products.
So, as a part of the training program, trainees are made familiar with the production process.
To provide the trainees with the knowledge of customers’ and competitors’ characteristics, the training program educates them about competitors’ strategies and different types of customers and their needs, buying motives, and buying habits.
Salespeople are also trained in the principles of selling to acquire the art of effective presentations. Salespeople should have a clear understanding of field procedures and responsibilities. They learn to utilize time, use an expense account, prepare reports, and communicate effectively.
A company must have an attractive compensation plan to draw people for its sales force. Such compensation plans vary from company to company and from industry to industry. The compensation level should be as close as possible to the “going rate” for the nature and type of sales job and required skills.
The elements consisting of compensation are;
- a fixed amount (salary),
- a variable amount (commissions or bonuses based on sales performance),
- expenses allowances (job-related expenses) and,
- fringe benefits (paid vacations, sickness or accident benefits, pensions).
The firm must determine the most appropriate mix of these elements for each sales job. We find four basic types of compensation plans in practice.
These are straight salary, straight commission, salary plus bonus, and salary plus commission.
The sales force compensation plan may have two objectives – motivating salespeople and directing their activities. The compensation plan should guide the sales force toward activities that will help accomplish the company’s overall marketing objectives.
Supervision of new salespeople is important because of proper supervision results in better performance. Supervision has two dimensions – directing and motivating salespeople.
The task of directing is to determine the degree to which sales management should help salespeople manage their territories. It depends on many factors ranging from the company’s size to the experience of its sales force.
Thus, the method of supervising salespeople varies from one company to the other.
Developing Customer Targets and Call Norms
Customers are often classified based on sales volume, profit, and growth potential. After making such a classification, companies set call norms.
Salespeople may call once a week on accounts with large sales or potential, and calls may be infrequent on small accounts.
Besides account size and potential, call norms may also be set considering other factors such as competitive call activity and account development status. Companies also set prospecting standards for better performance of their sales force.
Efficient Use of Sales Time
Companies try to ensure efficient utilization of time by their sales force. Two major tools used for this purpose are an annual call plan and time-and-duty analysis. The annual call plan shows which customers and prospects to call on in which months and which activities to carry out.
Such activities include participating in trade shows, attending sales meetings, and conducting marketing research. The time-and-duty analysis shows, besides time spent selling, salespeople’s time for traveling, waiting, taking breaks, and doing administrative jobs.
Companies are looking for time-saving ways to use phones instead of traveling, simplifying recordkeeping forms, finding better call and routing plans, and supplying more and better customer information.
Information and computer technology improvements are also helping companies significantly in their attempts at time-saving. The extensive use of computers has led to sales force automation systems.
Salespeople use computers to profile customers and calls, enter orders, check inventories, and order status, prepare sales and expense reports, process correspondence, and carry out many other activities.
Companies must motivate their salespeople to do their best. Sales forces’ morale and performance can be enhanced through the company’s organizational climate, sales quotas, and positive incentives. A brief discussion is given below;
Organizational climate indicates salespeople’s feelings about their opportunities, value, and rewards for good performance.
A company’s attitude toward its salespeople affects their behavior. If the salespeople feel that the management properly values them, there is less turnover and higher performance. The opposite is also true.
Especially important in this regard is the treatment from the salesperson’s immediate superior. To motivate salespeople, the sales manager should act as the salesperson’s boss, companion, coach, and confessor.
Sales quotas are the standards set for salespeople, stating the amount they should sell and how sales should be divided among their products. Companies often relate compensation with quotas. Sales quotas are set at the time of preparing the annual marketing plan.
After making reasonably achievable sales forecasts, the company plans production, workforce size, and financial needs based on such forecasts. Sales quotas are then set for regions and territories.
Usually, sales quotas are set higher than the sales forecast. The objective is to encourage sales managers and salespeople to put in their best effort.
To enhance sales force effort, companies use many incentives.
For example, sales meetings as incentives provide social occasions, breaks from routine, opportunities to meet and talk with “company brass” and opportunities to air feelings and identify with a bigger group. Another incentive is a sales contest which a company sponsors to increase the sales force’s selling effort.
Companies’ incentives are honors, merchandise, cash awards, trips, and profit-sharing plans for outstanding sales performance.
After spelling out the sales force’s selling task in terms of goals and providing motivational means, the company evaluates the performance of its salespeople. To evaluate salespeople’s performance, the company requires good feedback, which means getting regular information from salespeople.
Sources of Information
Several sources can be located from which information about salespeople can be gathered. A sales report is the most important source of information.
Other information sources are personal observation, customers’ letters and complaints, customer surveys, and talks with other salespeople.
Sales reports consist of plans for future activities and writeups of already performed activities.
The work plan is the best example of a plan for future activities that salespeople submit in advance weekly or monthly. The work plan shows intended calls and routing from which the sales force plans and schedules activities.
Companies also ask their salespeople to draft annual territory marketing plans to outline their plans for building new accounts and increasing sales from existing accounts.
Some territory plans include general ideas on territory development, while others describe detailed sales and profit estimates. Sales management review these territory plans, offer suggestions, and utilizes these plans to develop sales quotas.
Salespeople write up their already performed activities on call reports. Call reports to inform the sales management of the salesperson’s activities. These reports also show what is happening with each customer’s account and provide information that might be useful in later calls.
Salespeople also prepare expense reports for which they are partly or wholly repaid. Some companies also ask their sales force to prepare reports on new, lost, and local business and economic conditions.
Different forms of sales reports discussed above provide the raw data from which sales management can evaluate sales force performance. These reports provide the management with the answers to many important questions;
- Are salespeople making too few calls per day?
- Are they spending too much time per call? Are they spending too much money on entertainment?
- Are they closing enough orders per hundred calls?
- Are they finding enough new customers and holding onto enough old customers?
Formal Evaluation of Performance
Management formally evaluates the performance of the sales force members by using sales force reports and other information. Such evaluation gives four benefits.
First, management needs to develop and communicate specific standards for evaluating performance.
Second, management must gather complete information about each salesperson.
Third, salespeople get valuable feedback needed to improve future performance.
Finally, salespeople are motivated to perform satisfactorily as they know that they will have to explain their performance to management.
Comparing Salespeople’s Performance
One type of performance evaluation is done by comparing and ranking different salespeople based on their sales performance.
Such comparison can be confusing as performance may vary because of differences in territory potential, workload, competition level, company promotion effort, and other factors.
Moreover, sales are not always accepted as the best indicator of achievement. Rather, each salesperson’s contribution to net profits should be considered more important. This calls for looking at each salesperson’s sales mix and expenses.
Comparing Current Sales with Past Sales
Evaluation can also be done by comparing a salesperson’s current performance with past performance—such a comparison is supposed to show a salesperson’s advancement over time.
Qualitative Evaluation of Salespeople
We have discussed the above quantitative evaluation of sales force performance. Management can also adopt a qualitative method for evaluating salespeople.
A qualitative evaluation generally considers a salesperson’s knowledge about its products, customers, competitors, territory, and tasks.
Personality traits such as manner, appearance, speech, and temperament can also be considered for a salesperson’s rating. The sales manager can also examine any problems with motivation or compliance.
Each company must be sure of things that it needs to know. The company then should make the sales force aware of these criteria, which will give them a better understanding of the method used to evaluate their performance. This will help them improve their performance.