Sales Force Structure

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The sales force strategy has implications for the sales force structure. If the company sells one product line to one end-using industry with customers in many locations, it would use a territorial sales force structure. If the company sells many products to many types of customers, it might need a product or market sales force structure. Table 5.13 summarizes the most common sales force structures.

Major accounts (also called key accounts, national accounts, global accounts, or house accounts) are typically singled out for special attention. The largest accounts may have a strategic account management team consisting of cross-functional personnel who are permanently assigned to one customer and may even maintain offices at the customer's facility. For example, Procter & Gamble assigned a strategic account team to work with Wal-Mart at its Bentonville, Arkansas, headquarters. This arrangement has saved P&G and Wal-Mart $30 billion jointly through supply chain improvements, while boosting profit margins by about 11 percent.6

Established companies need to revise their sales force structure as market and economic conditions change. IBM, for instance, lost market share in the computing industry because its marketing and sales organization had lost touch with customers. The company's worldwide marketing and sales were organized geographically, with sales reps covering customers in a wide range of industries. Although IBM was known for educating customers about technology—focusing solely on IBM's products—its "one-size-fits-all" presentations became a turn-off to increasingly computer-savvy customers. Ultimately, lost market share and the huge cost of maintaining its sales force made IBM slim down and reorganize its sales force vertically along 14 industry-specific lines, such as finance, petroleum, retail, and e-businesses.7 This step created a mix of industry and product specialists. In another change, IBM sales reps have taken on an active role as consultant and now seek to create customer solutions, even if doing so sometimes means recommending a competitor's technology.

Table 5.13 Sales Force Structures

Territorial: Each sales representative is assigned an exclusive territory.This structure results in a clear definition of responsibilities and increases the rep's incentive to cultivate local business and personal ties.Travel expenses remain relatively low, because each rep travels within a small area.

Product: The importance of sales reps' knowing their products, together with the development of product divisions and product management, has led many companies to structure their sales forces along product lines. Product specialization is particularly useful for product lines that are technically complex, highly unrelated, or very numerous. Kodak uses one sales force for its film products that are intensively distributed, and another sales force to sell complex products that require technical support.

Market: Companies often specialize their sales forces along industry or customer lines. IBM set up a sales office for finance and brokerage customers in New York, another for GM in Detroit, and still another for Ford in Dearborn. Market specialization helps the sales force become knowledgeable about specific customer needs, but the major disadvantage is that customers are scattered throughout the country, requiring extensive travel. Complex: When a company sells a diverse product line to many types of customers over a broad geographical area, it often combines several structures, with sales forces specialized by territory-product, territory-market, product-market, and so on.A sales representative might then report to one or more line and staff managers. Motorola has four types of sales forces: (1) a strategic market sales force composed of technical, applications, and quality engineers and service personnel assigned to major accounts; (2) a geographic sales force calling on customers in different territories; (3) a distributor sales force calling on and coaching Motorola distributors; and (4) an inside sales force handling orders via phone and fax.

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