Designing the Sales Force
Salespeople are the company’s personal link to its customers. In designing a sales force, the company must develop sales force objectives, strategy, structure, size, and compensation (see Figure 17.1).
Sales Force Objectives and Strategy Sales reps need to know how to diagnose a customer’s problem and propose a solution that can help improve the customer’s profitability. The best
FiGURE 17.1 Designing a Sales Force
salespeople go beyond the customer’s stated problems to offer fresh insights into the customer’s business and identify unrecognized needs and unstated problems.18 In performing their jobs, salespeople will complete one or more specific tasks, including prospecting, targeting, communicating about products and services, selling to prospects and customers, servicing customers, information gathering for marketing research, and allocating products when supplies are scarce.
To manage costs, most companies are choosing a leveraged sales force that focuses reps on selling the company’s more complex and customized products to large accounts and uses inside salespeople and online ordering for low-end selling. To maintain a market focus, salespeople should know how to analyze sales data, measure market potential, gather market intelligence, and develop marketing strategies and plans.
Once the company chooses its strategy, it can use a direct or a contractual sales force. A direct (company) sales force consists of full- or part-time paid employees who work exclusively for the company. Inside salespeople conduct business from the office and receive visits from prospective buyers, and field salespeople travel and visit customers. A contractual sales force consists of manufacturers’ reps, sales agents, and brokers who earn a commission based on sales.
Sales Force Structure The sales force strategy has implications for its structure. A company that sells one product line to one end-using industry with customers in many locations would use a territorial structure. A company that sells many products to many types of customers might need a product or market structure. Some companies need a more complex structure and adopt some combination of four types of sales force: (1) a strategic market sales force assigned to major accounts (see below); (2) a geographic sales force for customers in different territories; (3) a distributor sales force calling on and coaching distributors; and (4) an inside sales force marketing and taking orders online and via phone.
“Marketing Insight: Major Account Management” discusses a specialized form of sales force structure.
Sales Force Size Once the company establishes the number of customers it wants to reach, it can use a workload approach to establish sales force size, following five steps: (1) group customers into size classes according to annual sales volume; (2) establish call frequencies (number of calls on an account per year); (3) multiply the number of accounts in each size class by the call frequency to arrive at the total workload, in sales calls per year; (4) determine the average number of calls a sales representative can make per year; (5) divide the total annual calls (calculated in step 3) by the average annual calls made by a sales rep (calculated in step 4) to arrive at the number of sales reps needed.
Suppose the company estimates it has 1,000 A accounts and 2,000 B accounts. A accounts require 36 calls a year, and B accounts require 12, so the company needs a sales force that can make 60,000 sales calls (36,000 + 24,000) a year. If the average full-time rep can make 1,000 calls a year, the company needs 60 reps.
Sales Force Compensation To attract top-quality reps, the company must develop an attractive compensation package. The company must quantify four components of sales force compensation. The fixed amount, a salary, satisfies the need for income stability. The variable amount, whether commissions, bonus, or profit sharing, serves to stimulate and reward effort.19 Expense allowances enable sales reps to meet the costs of travel and entertaining on the company’s behalf. Benefits, such as paid vacations, provide security and job satisfaction.
Fixed compensation is common in jobs with a high ratio of nonselling to selling duties and in jobs where the selling task is technically complex and requires teamwork. Such compensation plans provide a secure income, encourage reps to complete nonselling activities, and reduce
