5 – Sales Organization

Introduction

Once a plan has been developed, the next natural step is to organise a sales force to meet the enterprise’s goals. Decisions must be made regarding the sort of sales tasks to be completed and how the salespeople will be placed together to maximise efficiency and effectiveness. Their sales duty, line authority, and accountability should all be established so that their actions may be well coordinated.

5.1 Definition

A sales organisation is a group of people that work together to fulfil the goal of sales, which is to gain a particular market share while satisfying clients. It is responsible for adequately marketing the undertaking’s products and products purchased for resale. It ensures that products are delivered to clients on schedule, economically, and effectively. It develops restructuring between clients and the organisation on terms agreeable to both the buyer and the seller.

A sales organisation is both a focal point for a collaborative effort and a structure for human interactions. It is a collection of people who work together to achieve qualitative and quantitative goals and have formal and informal relationships with one another. The idea that individual members collaborate to achieve goals is implicit in the concept of a sales organisation. The sales organisation is not a goal but a means to an end for individuals. The existence of a sales organisation involves the existence of patterns of relationships among subgroups and individuals developed to facilitate the group’s goal.

5.2 Need

A sales organisation bridges the gap between the market and the firm’s production capability. Sales functions must be altered if the market size varies, as well as trends, competition, or other external factors. An organization’s job is analogous to the human body’s skeleton. It serves as a framework for functions to take place. While the skeletal function is the same for all humans, it varies by firm. This is because each organisation has its own set of goals, resources, and corporate plans to attain those goals.

5.3 Purpose

5.3.1 Defines Lines of Authority

A good sales organisation defines its personnel in terms of authority, responsibility, and accountability, and it specifies the flow of authority. It allows the salesperson to determine whether they have a line, staff, or functional authority.

Line authority carries the authority to require the execution of commands by people lower in the organisational structure and to make choices about the necessity, place, and time of action in various situations.

Staff authority is the authority to recommend how to carry out an order to individuals with line authority. They provide methodological advice to line executives but have no formal authority to mandate or enforce the implementation of their recommendations.

Functional authority allows specialists in specialised fields, such as technical product service, to enact their directions within a narrow and limited sphere. It also assists executives with general line authority.

All executives must grasp the scope of their control over each part of the organisation; otherwise, conflict will arise. When staff executives, for example, attempt to exercise line authority, they are setting themselves up for conflict with the line executives whose authority is being usurped.

5.3.2 Ensures that all Necessary Activities are Assigned and Performed

The organizing process necessitates identifying all relevant actions that must be completed to attain goals. As the organisation grows, tasks multiply. It must be assured that all relevant tasks are assigned.

In small businesses, sales leaders are in direct contact with customers, but as the company grows, the top executives become increasingly distant from the customers. At this point, responsibility for sustaining such ties should be delegated to an individual.

5.3.3 Establishes Basis of Communication

Lines of communication were once equivalent to lines of power due to the simplicity of organisations. However, due to information overload, business has evolved into a very complicated phenomenon. The information flow is both horizontal and vertical. The organisational structure indicates the sources of information and the recipients of data and may also indicate who is in charge of information generation.

5.3.4 Provides for Coordination and Balance

Coordination and balance are achieved through good organisation. Individuals differ in terms of competency, potential, and effectiveness. We produce a synergistic effect through collaboration (when the sum of a combined effort exceeds the efforts of the same individuals working alone). Motivation is also crucial, achieved through training programmes, indoctrination (teaching), group meetings, and two-way interactions.

5.3.5 Provides Insight into Potential Career Pathways

The employees see the sales organisation as something that will help them progress and improve their careers in the future. The organisational chart, which displays the regular promotion routes of the people, may indicate possible avenues of advancement.

5.3.6 Conserves Executive Time

The sales department grows in size and complexity as an organisation grows. Delegation of authority becomes necessary. This enables executives to devote more time to strategy and less time to operations. The span must be limited for efficient coordination, but this depends on a variety of elements such as the superior’s coordination ability, the subordinate’s attributes, and so on. One of the primary goals of coordination is to save executive time.

5.4 Developing the Sales Organisation

The sales organisation evolves in response to market and business demands. The formation or development of a sales organisation occurs through a sequence of processes. These are the actions to take:

1. Establishing the goals of the sales organisation.

2. Defining the numerous activities that must be carried out to attain these goals and estimating the cost and volume of each.

3. Organization of activities and positions.

4. Personnel assignment to positions

5. Formal and informal modes of control and cooperation

Step 1

Setting qualitative goals is part of defining the sales goal. This can be accomplished by asking the company what it hopes to achieve in terms of:

1. Growth/survival

2. Market share

3. Market leadership

4. Customer relations.

The sales organization’s objectives must be set in light of long-term (qualitative) and short-term (quantitative) business objectives. Sales management sets personal selling objectives, both qualitative and quantitative. Quantitative personal selling goals are defined with a focus on the qualitative flow of sales revenue in mind.

Steps in Sales Organisation Development

Aids in the establishment of quantifiable goals. Survival necessitates profit; thus, another quantitative goal is to earn profits by creating miraculous sales and reducing the expenditures and expenses of many departments. Another critical qualitative goal is to achieve long-term growth in sales and profitability.

The three overarching goals are sales, profit, and expansion. Qualitative personal selling goals are turned into quantitative goals, such as growing market share by 20%. When goals are clear and defined, time and effort are better used, and progress is more fluid.

Step 2

The examination of the type and volume of activities necessary will result in an assessment of how many executive and operational roles are required and how these positions will connect. This also aids in determining the duties and obligations of the individuals who hold these jobs. Modern sales organisations engage in similar activities. The differences between departments are in the details and in the proportional emphasis placed on individual effort and performance. These distinctions are more visible than genuine.

Step 3

This includes the following tasks:

1. Identifying positions to whom these activities could be assigned.

2. Classify and combine closely linked activities, and assign them to the same slots.

3. Establish an activity hierarchy by identifying the level at which each action will be conducted. This will depend on the relevance of the activity; for example, in an organisation attempting to market a new product through middlemen, dealer contacts become critical and must be assigned a greater position in the sales organisation.

Step 4

Assigning employees to positions entails making two decisions. First and foremost, to hire, select, or recruit specialists to fill the positions so that the organisation has the best personnel in its armour who will perform the jobs admirably, and secondly, to modify the positions so that existing personnel can be used after training and development to fit into the requisite positions. An organisation can choose between the two options. When no talent in the organisation meets the job criteria, the organisation may hire or recruit personnel from outside. This might also be done if the management needs new blood. Furthermore, if the individual possesses the necessary skills and abilities, the job may be adapted or changed to accommodate them. In general, planners aim, when possible, to have individuals grow into specific tasks rather than having jobs built up around them.

The following activities are involved in the assignment of people to positions:

1. Defining the relationship between positions—how many people report to a specific superior—and the breadth of control.

2. Establishing the nature of authority in each position (delegation of authority, lines of authority, lines and staff).

3. Assigning employees to jobs.

Step 5

Control and coordination can be done formally and informally in a sales organisation. It can be accomplished using a documented job description, rules, regulations, and procedures. A written job description is an essential formal tool for coordination and management. It describes the many characteristics of each position, such as reporting connections, work objectives, performance assessments, and duties and responsibilities. Informally, it can be accomplished through the sheer force of personality combined with the ability to attract and retain followers’ loyalty.

The chain of command is one way of coordinating. We also try to plan for future development, flexibility, and control. An organizational chart is another tool for control because it specifies many details. It depicts the formal links that exist between various roles. It aids in understanding the nature of each personnel’s authority and responsibility in each area of the operation. This helps to avoid the friction that would have occurred if it had not been present.

An organisational manual that includes the company, as well as the departmental chart, is a complement to the organisational chart. The organisational manual is a supplement to the organisational chart. Job descriptions and specifications and summaries of significant corporate and departmental objectives and policies are often included in the organisational manual. The organisational manual also consists of a wealth of information that assists users in learning and comprehending the nature of their responsibilities, authority, and relationships with others.

5.5 Sales Organizational Centralization vs. Decentralization

In a centralised system, recruitment, training, remuneration, and assessment are all managed centrally, but in a decentralised system, field sales managers handle most of these responsibilities. The operation’s size, cost-effectiveness, and competitive requirements also play a role in determining it. The corporate office may be more efficient and productive when a company is small and only has a few salespeople. Branch offices appear gradually as the scale of the organisation grows. In this scenario, decentralisation gives the sales manager more latitude, allowing him to demonstrate greater initiative and managerial skills.

The majority of medium—and large-sized businesses combine the benefits of centralised and decentralised operations. Decentralized sales offices improve customer service, although training and recruitment may be centralised.

With increased growth, the benefits of decentralised sales force management offset the more significant costs. Among these benefits are:

1. Increased sales volume to offset fixed costs.

2. The market is being intensively cultivated.

3. There is substantially greater provision for improving client services due to the excellent control of sales employees.

4. Travel expenditures and allowances have significantly decreased.

5. A well-managed channel structure provides a suitable training environment because executives widely recognise its flaws.

6. The sales force’s motivation and morale improve.

7. It improves supervision, provides effective control, and boosts sales productivity.

The level of centralization and decentralisation is also influenced by managerial philosophy towards delegation and control. The increased usage of computers has also had an impact on this concept. Because data can be analysed faster, it has resulted in more centralised decision-making.

5.6 Fundamental Organizational Structures

The structure of the sales department varies according to the business’s needs. Many companies have different organizational structures depending on their demands. Company size, rival tactics, marketing channels, customers, and employee personalities and abilities all impact organizational structure.

5.6.1 Organization of Sales Lines

It is the most basic type of sales organisation, with a chain of command going from the highest sales executive to the salesman level.

Because the chain of command is vertical, executives at each level are generally autonomous of all others at the same level. Typically, responsibilities are defined by the assignment of quotas or sales targets. Jagatjit Industries’ liquor segment is an example of a line sales organisation. Scalar lines of command connect each level to a subordinate level.

Lines organisation is widely employed in smaller businesses or those dealing with a certain product line or selling in a specific geographical area. It places a significant strain on the time and talents of the senior sales executives, as all field reporting is finally directed to them. The operational intricacies of managing the sales department consume a considerable portion of the time of line executives. He is sometimes obliged to make decisions without appropriate planning.

In the case of a quickly growing organisation or one with a large sales team, line organisation becomes ineffective since the growing department needs extra layers of executives.

Line Marketing Organization

5.7 Customer Channel Line Authority Division

When the line authority becomes a burden due to the increasing number of employees to supervise, the organisation has numerous options. One option is to hire a general-line assistant. Another alternative is distributing line authority according to the client or marketing channel.

When almost identical products are supplied in the market and promoted to distinct customers, customer division of line of authority is appropriate. It is also done while selling difficulties to different types. When the same or nearly similar products are offered to multiple industries, they frequently find other applications in each. Customers have distinct wants, and various purchasing impulses influence them. As a result, dedicated sales forces sell to each leading customer group.

Sales Department with Line Authority Subdivided by Type of Customer

5.8 Organizational Structure of Line and Staff Sales

As the scale of the operation rises, so does the organisational structure of line and staff sales. It is typically found in medium and large businesses with sizable sales teams selling a variety of product lines. Staff are experts in their respective fields, including sales training, service, sales analysis, dealer relations planning, sales promotion, sales staff development, and so on. A pool of experts is formed to assist in specialised domains.

• The organisation is directed by a managing director, who is supported by line managers known as regional managers and staff managers who oversee the staff functions. The manager reports to him.
• The customer service manager is in charge of inputting data and facilitating customer service sales promotions.
• The Sales Promotion Manager advises the organization’s sales promotion efforts and coordinates promotional needs with the Regional Sales Manager.
• Regional managers are the line managers in charge of the operational results in their respective regions and the administration of their field workers.

Problems with the line and employees are essentially one of the coordination reports. Furthermore, recommendations take time to compile, and a time lag makes active coordination difficult. Various interpersonal relationship issues develop as well. Staff may occasionally have the authority to issue commands and directions. This results in dual subordination, which can be avoided if authority and responsibility are explicitly set down.

 

5.9 Organization for Functional Sales

F. W. Taylor established a functional sales organisation that considers that all executives and employees should have as many activities as feasible. The goal of a functional sales organisation is to maximise the benefits of specialisation. In violation of the principle of unity of command, all sales workers receive guidance and are accountable to various executives for different elements of their work.

The majority of organisations use this type of organizational structure because it not only provides a platform for increased performance through specialisation but also facilitates coordination among functional executives.

Functional organisation is not always possible in different types of organisations. In its current state, it is inefficient and ineffective. Small and medium-sized businesses find it neither viable nor financially feasible to use a high degree of specialised. Large organisations, on the other hand, find it suited for stable operations because there are no limits in terms of budget, labour, or specialised executives. Large corporations with stable sales operations are the exception, not the rule.

Functional Type of Sales Organization

 

 

 

 

 

 

 

 

 

 

 

Source: http://jijonq.com/image/picture/jijonq_chart_organization_en.gif

5.10 Vertical and Horizontal Sales Organization

There are several levels of management in this type of organisation. All personnel report to their next level upward (i.e., all report vertically upwards).

Vertical Sales Organization

 

 

 

 

 

 

 

Horizontal Sales Organization

Although the number of management levels in this style of sales organisation is limited, the number of managers at each level is enormous.

Horizontal Sales Organization

 

 

 

 

 

Vertical sales organisations have a small scope of control, whereas horizontal sales organisations have a broad span of control. The number of subordinates a superior can effectively manage is called the span of control.

A field sales organisation is a group of salespeople who regularly meet with retailers and customers. Some specialists send reports to the company. They can be important specialists, product specialists, or coordinators of these forces. These forces can be organized based on a product, market, or consumer, or they can be mixed.

Product-based Sales Organization

 

 

 

 

 

 

 

 

 

This is used in giant corporations where the area to be covered is a vast number of product lines to be marketed.

Because salespeople only deal with one product, they gain in-depth expertise and specialisation. Activities are replicated in this sort of organisation.

Customer-based Sales Organization

The organisation can also be customer-focused, with salespeople catering to various customers. For example, a computer company can have salespeople who cater to government offices, commercial establishments, homes, and individuals (businessmen, doctors, students, etc.).

 

 

 

 

 

 

 

 

 

 

In such organisations, the salesperson learns more about the consumers, their problems, and purchasing techniques. Builds long-term relationships that bear fruit when the customer is satisfied with the product and service. The drawback is that facilities and resources are duplicated. Maintaining a large sales team necessitates additional costs.

Combined Base Organization

In this sort of organization, two or more bases are merged to build an organizational structure. This may overcome the issue of individual sales organizations.

The framework of different people’s relationships in the enterprise is known as the sales organisation. It aims to offer an efficient, cost-effective, and adaptable administrative structure to facilitate the timely transfer of items from warehouses to consumers.

The following factors can be used to assess the importance of a sales organisation:

1. To make a purchase plan.

2. To establish a demand pattern for the products.

3. To process the orders that have been received.

4. To collect the monies owed.

5. Resolve the complaints.

6. Handle personnel management responsibilities.

A sales organization can take many different forms. It can be a line organization, a line-staff organization, or a functional organization. The structure can also be vertical or horizontal. Various organisations choose their organizational structure based on their needs and requirements.