Sales Force Design For Strategic Advantage

The success of any company depends on its ability to acquire and retain customers. Sales forces are particularly good at helping a company accomplish this in many ways. For example, salespeople sell complex products and solutions into large key accounts with a high degree of control over the sales process. Salespeople provide two-way communication and social interaction with customers; they listen, assess needs, provide solutions, reduce complexity, handle objections, create value, and provide long-term continuing service. Salespeople are flexible; they can customize the product offering and message to a specific customer’s needs and buying process, they can smooth out rocky relationships, work cooperatively with other selling partners, and engender customer loyalty. Because of their close, personal relationship with customers, salespeople are an important information gathering resource for the firm.

Sales forces play different roles in connecting companies with their customers. Consider the cosmetics industry. Avon has almost 4 million independent sales representatives selling its wide range of cosmetics, skin care, fragrance, and other personal care products directly to consumers in over 140 countries. Revlon, on the other hand, reaches its customers through partnerships with retail outlets around the world. Revlon’s salespeople work with buyers at retail chains on issues such as product mix, logistics, and pricing. Revlon’s consultants and merchandisers spend their time in retail outlets demonstrating products, restocking merchandise, rearranging shelves, and setting up displays.

Sales strategy defines who a firm sells to, what the customer offering is, and how the selling is done. Successful sales strategies define effective yet efficient sales processes that deliver the right products and services to the right customers.

Chapter 3 presented a framework for determining a firm’s sales strategy, including the right product and service offering and sales process for each type of customer. Next, the firm must decide which sales and marketing channels are best suited to deliver this sales strategy. This is the firm’s go-to-market strategy, as illustrated in Figure 4.1.

Sales force structure answers two central questions: how to divide up all the sales activities among different types of salespeople, and how to coordinate and control the activities to meet the firm’s goals. Sales force structures are often represented by organization charts with accompanying job descriptions for the various roles.

Every sales force structure specifies roles for the selling organization. Some structures consist primarily of generalist sales roles, in which each salesperson performs all selling activities for all products and all customer types. Companies that have homogeneous customers, few product lines, and simple selling processes find the use of generalists easy and efficient. As diversity and complexity along these dimensions increases, companies migrate to multiple specialized sales force roles. Many companies have several different specialists performing separate sales roles. In almost every organization the Pareto Principle applies, meaning that a large percentage of the company’s sales come from a small percentage of the company’s accounts. For example, many consumer goods firms see 20 percent or more of their business come from a single account — Wal-Mart. This concentration of opportunity suggests that large accounts need to be treated differently from small accounts by the selling organization. Major accounts deserve a dedicated resource with an appropriate role — the major account manager.

Every sales force has a size, defined by the number of salespeople. That size changes over time as the company evolves its products and adapts to different market conditions. Companies use many different rules and approaches to determine the size of their sales force. Some of these rules and approaches often lead to poor decisions. Do any of these examples sound familiar?

Sales territory alignment is strongly connected to sales force performance. For example, consider two sales territories from the Midwest region of a large company. The Chicago territory leads the region in sales and as a result, the salesperson earns high commissions. The salesperson works hard and seems to be always on the road visiting customers. Yet many prospective customers from the territory have never been contacted and some existing customers complain that they are not getting sufficient service. Sales to existing customers have remained almost flat and sales to new customers are low.

This book has focused on sales force design. Sales force redesign is a major decision for most companies. It usually takes a significant event for a company to initiate a redesign. Earlier chapters described the types of triggers — the five forces — that spur resizing or restructuring of a selling organization. A company that has not achieved its forecast for several years because the sales force is not delivering sales will redesign. Market dynamics, such as customer consolidation and commoditization, will render a current structure obsolete. Companies will create a new sales force as they enter new markets with new products. An aggressive competitor can re-energize an entire industry by expanding its sales forces. Very rarely do companies redesign when productivity improvement is the only benefit for the change. The disruptive nature and the potential risks associated with change usually make companies defer the redesign decision until a significant event actually requires that change occur.

For every company, there are dozens of good sales force designs but millions of bad ones. Once a company discovers one of the good designs, there are hundreds of ways to make it work, but millions of ways to make it fail. A good design cannot work effectively without good implementation. This chapter discusses how a sales force can make the transition successfully from one sales force design to another.