Designing and Managing a Sales Force

Designing and Managing a Sales Force

Introduction

U.S. businesses spend over $140 billion annually on personal selling (Anderson, 1995 and Dalrymple, 1994). This is more than they spend on any other promotional method. Furthermore, over 11 million Americans are employed in sales and related occupations (Anderson, 1995 and Dalrymple, 1994). Sales forces are found throughout the business environment from the insurance industry to college

recruiting -- and just about everything in between.

According to author Philip Kotler, sales personnel serve as the company’s personal link to its customers (p. 620). Kotler asserts that “the sales representative is the company to many of its customers” since it is the salesperson who delivers information to the customer (p. 620). Therefore, a company must carefully consider how to design and manage its sales force in order to be successful in the marketplace. This paper discusses how businesses should design a sales force and how managers can effectively manage that sales force.

Designing a Sales force

When designing a sales force, a company must thoroughly deliberate several issues in order to establish an efficient sales system. These issues are: the development of sales force objectives, strategy, structure, and compensation of the sales force (Kotler, p. 620).

Sales force objectives are the specific goals that companies expect their sales representatives to achieve (Kotler, p. 620). A typical example of how companies delineate an objective is the establishment of sales quotas for their sales representatives. Sales quotas inform a salesperson of exactly what their objective should be for a given period of time.

Additionally, besides quotas, there are other ways of delineating sales objectives. For example, objectives commonly defined by companies in addition to quotas are: prospecting (searching for leads), targeting (deciding how to allocate a salesperson’s time), communicating (communicating information about the company’s product), selling (approaching and promoting), servicing (providing various services to the customer), information gathering (conducting market research and doing intelligence work), and allocating (deciding which customers will get scarce products during product shortages) (Kotler, p. 621). Essentially, companies must clearly define the specific objectives they want their sales force to achieve and, if these objectives are met, it will lead to product sales for the company.

With respect to strategy, companies must use sales representatives strategically so that they approach customers at a time when they are most likely to buy. There are several approaches that can be used by salespeople depending upon which best fits the situation (Kotler, p. 622). For example, an individual sales representative can approach a particular individual buyer or a buyer group. Or, a sales team can approach the individual buyer or buyer group. Also, sales representatives can employ a technique called seminar selling, where a company team conducts an educational seminar for the customer company about state-of-the-art developments (Kotler, p. 622).

Once the company decides on a sales approach, it should maintain a market focus. This means that salespeople should know how to analyze sales data, measure market potential, gather market intelligence, and develop marketing strategies and plans (Kotler, p. 622). Finding the right resources to accomplish these goals is something that should be taken into account when designing a sales force.

Additionally, when designing a sales force strategy, one must take into account sales force structure. One sales force structure that is commonly used when designing a sales force is the “territorial structure” (Kotler, p. 623). In a territorial structure, each sales representative is assigned an exclusive territory. This type of structure has three main advantages. First, there is a clear definition of the salesperson’s responsibilities. Second, being assigned to a particular territory motivates a salesperson to cultivate personal relationships with the local businesses and individuals in the territory. Third, travel expenses are limited because the size of the sales representative’s territory is limited (Kotler, p. 623).

Sales representatives are one of a company’s most expensive assets (Kotler, p. 624). So, after strategy and structure have been determined, a company should determine what the sales force compensation should be. A company must develop an appealing compensation package if it wants to attract the best salespeople. Typically, sales representatives are attracted to companies that provide “income regularity, extra reward for above-average performance,