Marketing bán hàng - Chapter 5: Organising and staffing the salesforce

Chapter 5Organising and Staffing the SalesforceLearning ObjectivesTo understand the concepts of the sales organisation, and the basic types of sales organisationsTo know specialization within the sales organisation, and alternative organizational approaches for major accountsTo determine the size of the salesforce by using various methodsTo understand the major stages of salesforce staffing process, consisting of planning, recruiting, selecting, hiring, socialisation and assimilationTo realise the importance of the various steps included in planning, recruiting, and selection stages Concepts of Sales OrganisationA sales organisation assists the sales manager to carry out needed tasks efficiently and effectively to achieve resultsThe basic concepts of the sales organisation are:Degree of centralisationDegree of specialisationLine or staff positionsMarket orientationEffective co-ordinationBasic Types of Sales OrganisationsSales organisations are generally classified into four basic types:Line OrganisationLine and staff organisationFunctional organisationHorizontal organisationWe shall discuss main characteristics, advantages, and disadvantages of each type of sales organisationLine OrganisationCharacteristics: All managers have line authority to direct and control subordinates. Used in small firms / departmentsAdvantages: Simple organisation, clear authority, quick decisions, low costDisadvantages: No support to line managers from subordinates who have specialised knowledge / skills. Less time for planning / analysisHeadMarketingSales ManagerArea Sales Manager1Area Sales Manager3Area Sales Manager2Area Sales Manager4salespeoplesalespeoplesalespeoplesalespeopleLine and Staff OrganisationCharacteristics: Specialist staff managers are available for senior marketing / sales managers. Staff managers’ role is to assist / advise line managers. Used in medium and large size organisationsAdvantages: Better marketing decisions, superior sales performanceDisadvantages: High cost and coordination, slower decision making, conflict may arise if staff managers’ role is not clearHead-MarketingMarketing ResearchManagerSales ManagerPromotionalManagerCustomer Service ManagerArea Sales Manager-1Area Sales Manager-1Area Sales Manager-1SalespeopleSalespeopleSalespeopleFunctional OrganisationCharacteristics: Each functional specialist has line responsibility over salespeople. Used by a large firm with many products / market segments, minimising line authority to functional managersAdvantages: Qualified specialists guide salesforce, simple to administerDisadvantage: confusion due to more managers giving orders to salesforceHead-MarketingMarketing Research ManagerPromotional ManagerCustomer ServiceManagerSales ManagerArea Sales Manager #4SalespeopleHorizontal OrganisationCharacteristics: Removes management levels & departmental boundaries. Except planning team, all others are members of cross-functional teams. Used by firms having partnering relationships with customers.Advantages: Reduction in supervision, unnecessary tasks, & cost; Improved efficiency and customer responses.Research & Design Team:Customer ResearchProduct / Service DesignPlanning Team:Strategic PlanningAccounts, FinanceHR, AdministrationChief Operation OfficerOperations Team:Production / OperationsQuality AssuranceSystems EngineeringCustomer Support Team:InformationServiceTrainingCustomer Satisfaction Team:Sales & MarketingPricing, PromotionChannels, LogisticsSpecialisation within Sales OrganisationNeeded to increase effectiveness of salesforceDone by expanding basic sales organisationBasis of specialisationGeographyType of productMarket Combination of aboveCriteria for selection – (1) nature of product, (2) salesforce abilities, (3) demands of selling job, (4) customer and market factsGeographic SpecialisationCharacteristics: salespeople, assigned geographic areas, are responsible for all selling activities to all customers within assigned areas. Branch sales managers adjust marketing plan to local needsAdvantages: Better market coverage and customer service, more control over salesforce, quick response to local conditions & competitionDisadvantages: Limited specialisation of marketing tasks. Hence, it is combined with product / market sales organisationHead-MarketingMarketing ResearchManagerGeneral SalesManagerPromotionManagerCustomer ServiceManagerBranch SalesManager-1Branch SalesManager-2Branch SalesManager-3Branch SalesManager-4SalespeopleSalespeopleSalespeopleSalespeopleProduct SpecialisationUsed when the company has many products and / or brandsTwo types of product specialisation(x). Sales organisation with product specialised salesforce(y). Sales organisation with product managers as staff specialistsHead-MarketingMarketing ResearchManagerGeneralSales ManagerSales TrainingManagerPromotionManagerArea Sales Managers –Product Group ‘A’Area Sales Managers –Product Group ‘B’Salespeople – Product Gr. ‘A’ Salespeople – Product Gr. ‘B’Fig. ‘x’ Sales Organisation with product specialised salesforceFig. ‘y’ Sales Organisation with Product Managers as Staff Specialists In fig. ‘x’: Characteristics: Salespeople in each product group sell only the products in that groupAdvantage: Each product gets specialised attention from the salesforceDisadvantage: Sometimes, more salespeople contact the same customer, resulting in customer dissatisfaction and higher costIn fig. ‘y’: Characteristics: Each product manager plans and implements marketing plan, for a product groupAdvantage: Corrects the problem of duplication calls on a customer by salespeopleDisadvantage: Lack of product specialisation by salespeopleHead-MarketingMarketing ResearchManagerPromotionManagerProduct ManagerProduct Gr. ‘B’Product ManagerProduct Gr. ‘A’GeneralSales ManagerArea Sales ManagersSalespeopleProduct Specialisation (Continued)Market SpecialisationCharacteristics: Desirable when customers are classified by type, user industry, or channel. Salespeople carry out all activities for all products only for specific customer groupsAdvantages: Meets needs of specific customer groups, implements customer-centred philosophy of the companyDisadvantages: Geographic duplication, high costGeneral SalesManagerSales Manager-International-MarketsSales Manager-CommercialSales Manager-Consumer MarketsSales Manager-GovernmentArea Sales MgrsInternationalSales ExecutivesArea Sales Manager-CommercialSalespeopleArea Sales Manager-GovernmentSalespeopleArea Sales Mgrs-Consumer MarketsSalespeopleCombination Sales OrganisationCharacteristics: Many firms use some combination of specialisation organisations, called hybrid or combination sales organisation, with a view to minimise disadvantages and maximise advantages of specialisation organisationsFigure above shows combination of geographic and market specialisationsDirector – Sales & MarketingGeneral ManagerSales - NorthGeneral ManagerSales - EastGeneral ManagerSales - SouthGeneral ManagerSales - WestRegional SalesMgr. – Govt.Regional SalesMgr. - DealersRegional SalesMgr. - CommercialSalespeopleSalespeopleSalespeopleAlternatives for Major AccountsMajor accounts / customers are called by various names like key accounts, corporate accounts, house accountsThey make up a large share of a firm’s sales volume and profitsFirms use the following alternative approaches to deal effectively with themCreate a position of major / national account managerUse existing territory sales managersCreate a separate divisionCreate a separate salesforceSize of the SalesforceHow many salespeople needed (or salesforce size) to achieve a firm’s sales and profit objectives is a key decisionMethods available to decide optimum salesforce size are as follows:WorkloadSales potential (or breakdown)IncrementalWe shall discuss these methods briefly:Workload MethodAssumption: All salespeople have equal workloadSteps involved to calculate salesforce size are:Classify customers as per their sales potentialDecide time per sales call and call frequencies for each class of customersCalculate total market workload = (1) x (2) in hoursDecide total work time available per salespersonDivide total work time available by different activities per salesperson in hoursCalculate total number of salespeople neededWorkload Method (Continued)Advantages: simple method, conceptually sound, used for all types of selling situationsDisadvantages: Neglects sales productivity & salesforce turnoverSales Potential / Breakdown MethodThe formula used is: , where N=Number of salespeople needed, or salesforce size S=Annual sales forecast for the company in value (Rs. Million) P=Estimated productivity of the average salesperson in sales (Rs. Million) T=Estimated percentage of annual salesforce turnoverAdvantages: Simple and straight forwardDisadvantages: Conceptually weak; lead time needed for a new salesperson to reach average productivity Incremental MethodIt is based on marginal analysis theory of economicsBasic concept: Net profits will increase when additional salespeople are added, if the incremental sales revenues exceed the incremental costsMerit: Conceptually accurate, as it quantifies relationships between salesforce size, sales, costs, profitsDemerit: Can not be used if historical data on sales and costs are not availableSalesforce StaffingIt is one of the most challenging and important responsibilities / activities of sales managementSalesforce Staffing Process includes following stages:PlanningRecruitingSelectingHiringSocialisationWe shall briefly discuss each of the above stagesPlanning StageIt consists of three steps:Establish responsibility for staffing processDecide number of salespeople neededOutline the type of salespeople neededEstablish responsibility for staffing processCompany management decides responsibilities for various stages / activities of staffing processGenerally in a medium / large size company, middle and senior levels H.R. and sales managers are responsibleProper coordination needed between sales, marketing, and HR executivesPlanning Stage (Continued)Decide the number of salespeople neededSteps followed by each territory sales manager to plan requirement of sales people:Decide optimum salesforce size (using methods discussed earlier)Add number of promotions, retirements, transfers out, terminations, resignations expected from existing salespeopleSubtract expected transfers into the territory and existing salesforceMake a total of new salespersons neededTerritory sales managers submit their requirements to national / general sales manager, who calculates the total number of new salespersons to be hiredOutline Type of Salespeople NeededThe steps involved in the process are:Conducting a job analysisPreparing a job descriptionDeveloping job qualifications / specificationsConducting a Job AnalysisIt is done by a person from sales / H. R. department, or a consultant. It consists of two tasks: (1) Analyse environment in which the salesperson would work – E.G. nature of customers, competitors, products. (2) Determine duties and responsibilities of the salesperson. Obtain information from sales managers, customers, etc.Preparing a Job DescriptionIt is a written document developed from the job analysisThe detailed job description is a useful tool for recruiting, selecting, training, compensating, and evaluating salespeopleSome of the points it generally covers are:Job title, reporting relationship, types of products / services sold, types of customers, duties and responsibilities, location and geographic area to be coveredDeveloping Job Qualifications / SpecificationsThese are generally based on job descriptionJob specifications / qualifications include education, sales experience, skills, and personality traitsMany studies done, but no generally accepted job qualifications for selecting salespeople, due to many types of sales jobsSome methods used for developing job specifications are as under:Study job description. Useful for a new companyAnalyse personal histories of salespersonsAsk customersRecruiting SalesforceRecruiting include activities to get individuals who will apply for the jobThe general purpose of recruitment is to get enough qualified candidates, to enable company select the right personsH.R. and sales managers must update information on government employment regulationsRecruiting stage / process includes following activities: Finding the sources of sales recruitsEvaluating and selecting recruiting sourcesContacting candidates through the selected sourceFinding the Sources of Sales RecruitsFor identifying prospective candidates, firms use internal and external sources. They include:Internal SourcesExternal Sources Employee referral programmes Current employees Promotions and transfers Advertisements in newspapers and journals / magazines The Internet (job sites) Educational institutions Employment agencies Job fairs Other companiesEvaluating and selecting Recruiting SourcesRecruiting sources are evaluated based on the database built over number of yearsEvaluating factors are:Performance rating of salespeople, after 2 years workingPercentage of salespeople retained, after 2 years workingTotal cost of recruitingSelecting most effective source of recruiting at least costFor a new company, selection depends on costContacting candidates through the selected source is done by H. R. departmentSelecting SalesforceSelection process consists of seven major selection steps / toolsCompanies differ in using selection tools, depending on expenditure budget and time availableMajor selection tools / steps are:Screening resumesApplication blankInitial interviewIntensive interviewTestingReference checkPhysical examinationScreening ResumesIt is done when the company receives many resumesThis step / tool not required, if somebody else like employment agency does initial screeningInitial screening of resumes are done by comparing with job specificationsApplication BlankWidely used, it is a methodical way of collecting relevant information from the applicantAdvantages of using application blank (also called “formal application form”) are: (1) Easy comparison of many applicants (2) Useful for asking question during interview sessionsInterviewsWidely used selection toolA good predictor of the candidate’s performanceInitial interviews are used for screening candidatesIntensive interviews are conducted to get indepth view of candidatesInterview structure / type of interviews:Structured / patterned / guided interviewsUnstructured / non-directed / informal interviewsSemi-structured interviewsBehaviour and performance based interviewsStress interviewsPurpose is to decide a candidate’s fitness for a jobTestingMany firms use tests as a selection tool – EG P&G, IBMPurpose of testing: To find whether applicants have traits / characteristics that lead to success in sales jobType of selection tests:Aptitude tests measure ability for selling and learning Intelligence tests find out mental intelligence or intelligence quotient (IQ)Interest tests find out level of interest in a sales careerKnowledge tests measure knowledge of products, markets, etcPersonality tests find out attitude or traits like empathy, self-confidenceTests must have reliability and validityTests should be one of the selection tools and not the only toolReference ChecksThey are important due to possibilities of resume frauds and false personal informationThey are done by letters / e-mails, telephones, or personal visitsInstead of candidate’s references, previous employers / customers to be included for reference checksPhysical ExaminationObjective is to find a physical problem that may prevent job performance of an applicantMost companies want their prospective employees to undergo physical examinationIncreasing number of firms ask applicant to complete the health information form without seeing a medical doctorHiring StageAfter completing selection process, a list of candidates to be hired is madeIn hiring stage, two activities are performed: (1) The company making the job offer (2) Persuading the applicant to accept itSocialisation StageIt is the process through which new salespeople learn values, norms, attitudes, and behaviour of people working in the firmSocialisation process starts before the new salesperson accepts the job offer and continues until the person is assimilated into the company cultureAssimilation is the second stage of socialisation processCompanies have this process, in order to retain new salespeopleKey LearningsA sales organisation assists a sales manager to carry out needed tasks efficiently and effectivelyBasic types of sales organisations are : (1) line, (2) line and staff, (3) functional, (4) horizontalSpecialisation within sales organisation, which are needed to increase effectiveness of salespeople, are: (a) geographic, (b) product, (c) market, (d) combinationCompanies use alternate approaches to deal effectively with major accountsMethods available for deciding optimum salesforce size are: workload, sales potential, and incrementalKey Learnings (Continued)Salesforce staffing process includes five stages: planning, recruiting, selecting, hiring, socialisationPlanning stage includes (1) establishing responsibilities, (2) deciding number of salespeople needed, (3) profiling the type of salespeople neededRecruitment stage consists of (a) finding sources of sales recruit, (b) evaluating and selecting recruitment sources, (c) contacting candidatesSelection process consists of seven steps / tools: (1) screening resumes, (2) application blank, (3) initial interview, (4) intensive interview, (5) testing, (6) reference check, (7) physical examinationHiring stage includes (a) making the job offer, (b) persuading applicant to accept itSocialisation stage is required to retain new salespeople