The grouping of activities into positions and the charting of relationships of positions cause the organization to take on a structural form. When the sales department is set up in an organization it follows one of these general structures – Line, Line and Staff, Functional and Committee.
Structure of sales organizations
An advantage of this form of organization is its simplicity. Each salesperson is assigned a territory over which to have sole responsibility for sales achievement.
Their close geographical proximity to customers encourages the development of personal friendships which aids sales effectiveness. Also, compared with other organizational forms, e.g. product or market specialization, travelling expenses are likely to be lower.
A potential weakness of the geographical structure is that the salesperson is required to sell the full range of the company’s products. They may be very different techniques and sell into several diverse markets.
In such a situation it may be unreasonable to expect the salesperson to have the required depth of technical knowledge for each product and be conversant with the full range of potential applications within each market. This expertise can only be developed if the salesperson is given a more specialized role.
One method of specialization is along product lines.
Conditions that are conducive to this form of organization are where the company sells a wide range of technically complex and diverse products and key members of the decision-making unit of the buying organization are different for each product group.
If the company’s products sell essentially to the same customers, problems of route duplication and customer annoyance can arise.
Inappropriate use of this method can lead to a customer being called upon by different salespeople representing the same company on the same day.
The problem of the same customer being served by product divisions of the same supplier, the complexity of buyer behaviour, which requires not only input from the sales function but from other functional groups, centralization of purchasing, and the immense value of some customers have led many suppliers to rethink how they organize their sales-force.
Companies are increasingly organizing around customers and shifting resources from the product or regional divisions to customer-focused business units.
Another method of specialization is by the type of market served. Often in industrial selling, the market is defined by industry type.
Thus, although the range of products sold is essentially the same, it might be sensible for a computer firm to allocate its salespeople based on the industry served, e.g. banking, manufacturing companies and retailers, given that different industry groups have widely varying needs, problems and potential applications.
Specialization by market served allows salespeople to gain greater insights into these factors for their particular industry, as well as to monitor changes and trends within the industry that might affect demand for their products. The cost of increased customer knowledge is increased travel expenses compared with geographically determined territories.
Some companies structure their sales force by account size. The importance of a few large customers in many trade and industrial markets has given rise to the establishment of a key or major account sales force.
The team comprises senior salespeople who specialize in dealing with large customers that may have different buying habits and demand more sophisticated sales arguments than smaller companies. The team will be conversant with negotiation skills since they are likely to be given a certain amount of discretion in terms of discounts, credit terms, etc., to secure large orders.
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