Let's try to answer the following questions:
♦ Why do we need an organizational structure for the sales department?
♦ What influences its characteristics?
♦ What types of organizational structures exist?
♦ How to test and consolidate the organizational structure?
♦ How to implement changes in the organizational structure?
As Peter Drucker wrote in one of his books, “Good organizational structure by itself will not bring success... but bad organizational structure makes success impossible, no matter how good the individual managers.”
Why do you need an organizational structure for a sales department?
Since not all sales divisions of Russian companies have a clear organizational structure, let us first determine why it is actually needed:
♦ shareholders (owners) - for them, the presence of a transparent and meaningful organizational structure in the sales department is a guarantee that the company will be able to fulfill the sales plan, which means that shareholders can count on receiving planned income. The lack of organizational structure in the sales department is likely to be viewed by shareholders as a serious risk;
♦ company managers (directors, heads of departments) - for them, the result of the sales department’s work is the result of the company’s activities as a whole, in this regard, heads of other departments must be sure that the efforts of their employees will be supported by the good work of the sales department. Often, executive salaries are tied to the company’s sales volume, and therefore to the results of the sales department’s work;
♦ the head of the sales department - in general, he should need the organizational structure of his own department most of all, so that he can effectively manage employees, and as a result, devote less time to turnover, and more to issues of improving work efficiency;
♦ sales managers - for a qualified employee, understanding what he is responsible for, what powers he has, to whom he reports and what resources he can use is important for two reasons. Firstly, having such information, he can influence the results of his work, and therefore count on a promotion in the company. Secondly, understanding exactly what he is NOT responsible for and what he DOES NOT have authority for, he has the opportunity to demand from the manager solutions to those issues that affect the results of his activities.
Each group of people sees their own interests in the organizational structure, and for the company as a whole, the organizational structure (including the sales department) is a component simply necessary for productive work. In other words, an organizational structure is needed so that a company can operate as efficiently as possible.
To determine the optimal structure of the sales department, you must first answer the following questions:
1) who else, besides your company’s employees, can sell your products;
2) how are your products sold?
Having ultimately determined which intermediaries (external companies, people) and how they can take part in the sale of your products and comparing the options for performing such work on your own, you will be able to determine the amount of work that will have to be performed directly by the sales department of your company. And based on this information and information about the specifics of sales of your products, you will design the organizational structure of the sales department.
Do we sell directly or through intermediaries?
Selling through intermediaries is a type of outsourcing. (English: Out source – attracting external specialists or companies to perform certain types of work.)
A possible difference is that you usually pay intermediaries upon the sale, that is, only at the moment when you yourself receive the money. But there is nothing strange about this - you pay when the work is completed, and the work in this case is the sale of your products.
When selling directly, you don't always have complete control over who or how your product is sold to. This reduces the ability to get information from customers about how well your products meet their needs.
Now that you have analyzed the advantages and disadvantages of selling through intermediaries and have concluded that the partnership option will be more effective and profitable for your company, it’s time to move on to a more specific issue.
Apparently, if no one approaches you with an offer to become your dealer or distributor, your products really are not so attractive that intermediaries could be interested in them. In this case, you should think about the popularity of your company and its products and get used to the idea that at the initial stage you will have to bear all the costs of creating a market for it yourself.
You must specify exactly:
♦ how your products (or your company as a whole) can be attractive to partners;
♦ what kind of profit and at what level of investment partners can actually receive from cooperation with you;
♦ how long such a partnership can be;
♦ Are there similar examples of partnerships in your industry in the market? In related industries?
If you are sure that working directly will be more profitable for you, then “leave” this direction to yourself; if not, then plan how you will organize work through partners.
How should your products be sold?
Some types of products can simply be put up for sale in the right place at an attractive price, and the products will start selling without additional effort. In such a situation, it is only necessary to deliver the products to the maximum number of points of sale and ensure the seller’s interest in its sale.
When selling weapons, you will have to develop a huge number of auxiliary materials, advertise the products at various exhibitions, establish a system of constant work with potential customers (the list of which will fit on one sheet of paper), provide support in various government bodies, etc., etc. .
If you are an insurance company and all your services are essentially similar, then to sell long-term life insurance policies you will need to get in touch with a huge number of potential clients, arrange more than one presentation for those who are interested, and only a few will ultimately agree to conclude an agreement with you. But to sell civil liability insurance policies for motorists, you again just need to ensure a competitive price level and locate sales offices in places where it will be convenient for customers to get to.
The specifics of sales will be determined by:
♦ size of the target audience - how many customers can potentially become buyers of your products;
♦ ease of localization of real buyers - that is, how many initial contacts you need to make in order to get a certain number of interested buyers;
♦ the number of documents that need to be prepared to formalize the sale - what additional knowledge is needed to formalize the relationship between your company and the client, and how long it will take;
♦ the level of required qualifications at different stages of sales - for example, it is possible that high school knowledge is sufficient to establish the first contact, but discussing the terms of the supply contract requires the involvement of the general director of your company;
♦ the specifics of customer segments - for example, if you sell equipment that can be used in various industries, then it is quite possible that you need highly specialized specialists in each industry to increase the level of trust on the part of the client and due to the need for special industry knowledge;
♦ the specifics of your product range - even if a client simultaneously buys both cars and their maintenance services from you, he is unlikely to believe that you have the same specialist who is well versed in both issues;
♦ the specifics of consumption of your products - for example, if when selling communication services payment is made monthly, then this imposes specific requirements on the company that decides to become an intermediary.
Simple structure of the sales department. In the simplest case, all of your potential customers are interested in the full range of your products, and your products are not so complex that one person cannot master them perfectly.
In this case, each of the sales managers is responsible for selling all products. This is good for the manager - he always has the opportunity to offer the client the widest possible range, and good for the client - one person can tell him about all the products of your company.
The main advantage of this structure is its simplicity. It is often used in large manufacturing companies that offer homogeneous products on the market intended for a very specific customer segment.
Sales specialization by product or consumer groups
What to do if:
♦ one or more groups of products require special deep knowledge in the subject area - for example, if you sell household appliances and computers at the same time;
♦ potential clients are divided into several segments, with each of which it is necessary to apply specific methods of work - for example, government agencies and small businesses?
In each case, it is necessary to make a decision about whether to allocate a separate employee to work on a specific product line or a specific customer segment.
The same case applies to the specialization of managers on a geographical basis - the most common specialization in companies conducting their operations at the federal or international levels.
Often, managers responsible for sales in a certain region have under their subordination managers responsible for sales of product groups.
Specialization by sales stages
A situation often occurs when, to promote, for example, a new product, it is necessary to communicate by phone with a large number of customers so that at least 1% of them agree to get to know the product better. If such work is performed by one employee, then most likely he will spend no more than 5% of his time on product presentations, which means that the quality of the presentation is unlikely to be at its best, since in fact this is not the main job of this employee.
It is more effective in such cases to break the sales process into two parts:
- from searching for a client to the client’s consent to get acquainted with the products (telemarketing)
- from presentation to payment and shipment (direct sales).
As a result, the previous structure of the sales department may change. Also, the following stages of the sales process can be distinguished as specialization:
♦ searching for information about clients and compiling lists for primary contacts;
♦ registration of necessary documents (back office);
♦ conducting a product demonstration.
Let's consider the advantages and disadvantages of specializing employees in different stages of sales. It is clear that the criterion for the feasibility of such specialization in all cases should be the economic efficiency of such activities.
Specialization in attracting and retaining clients
Some Russian companies have recently begun to separate the activities of finding new clients and retaining existing ones. If the former are focused on expanding the client base, then the task of the latter is to obtain maximum profit from working with the client in the long term.
From the point of view of work technology, the manager who made the first sale to a new client introduces him after signing the contract with another employee - the “personal” manager of this client - and switches to searching for new clients.
How to Set Performance Goals for Sales Managers
If the sales structure is not important to you, then goals for employees can be set exclusively in monetary terms.
Having a diagram of the organizational structure and goals established for each area of work (if there are several) will help you determine the required number of employees and the required level of qualifications.
Testing the organizational structure. The organizational structure must be tested for strength even before its official implementation. Such testing can be carried out through a special meeting with the participation of several company executives and key sales managers. You should pay attention to the following points:
♦ are responsibilities and powers clearly distributed among employees;
♦ whether each specific employee has enough authority to achieve the goals of his work;
♦ how in such a structure the distribution of responsibility will occur in the event of ineffective work in one of the areas.
First of all, we test the organizational structure for the absence of potential conflicts, assuming that if we manage to create optimal working conditions for the employee, then he himself will be interested in the result. It is the employees with a similar attitude to work who achieve the best results in sales, which means they are the ones we will be looking for.
How many people can one person manage?
The number of employees subordinate to the manager is limited by the following human characteristics:
- limitation of the capabilities of the human brain (a person is able to effectively interact with 3–6 similar “brains”);
- limitation on the number of probable interactions (with an increase in the number of subordinates, the number of probable interactions increases by almost an order of magnitude);
- limited capabilities of a person’s attention (the number of elements to which a person is able to pay attention at a particular moment in time is limited, which means that as the number of elements increases, some of them will inevitably fall out of attention);
- decreasing marginal efficiency (each additional element of coverage reduces the average efficiency of working with each of the elements).
When determining the manageability coverage in your case, it makes sense to focus more on the requirements that the coverage must satisfy:
- provide the opportunity for the head of the sales department to communicate personally with employees directly subordinate to him;
- provide necessary training opportunities for individual employees;
- enable the creation and maintenance of optimal two-way communications.
Consolidation of the organizational structure. The developed organizational structure must be formally secured with the help of orders and orders from the company's management in order to exclude different interpretations. It should be reflected in the staffing table and job descriptions.
When preparing such documents, you will have to once again analyze the final options, and, most likely, you will find quite a few “slippery” points that will need additional elaboration.
Evolution and revolution of the sales department organizational structure
Having fixed the current version of the organizational structure, you can be quite sure that over time you will still have to change it. The organizational structure can change in two ways:
♦ evolutionary - often, especially in developing companies, the most talented manager manages to develop his direction so much that the company is forced to give him additional employees to help him, and then often rebuild the structure for a specific person. Evolutionary changes occur when one of the company's areas declines and the corresponding salespeople are transferred to other areas or released to other companies;
♦ revolutionary - such changes usually occur in companies that have begun to stagnate, as evidenced by a decrease in growth rates (or decline) in sales, the departure of key specialists, a slowdown in the pace of development, etc. In this case, there is a radical restructuring of work technologies, which results in reorganization. Often, it is changes in the organizational structure that are economically unjustified, but allow for the least painful personnel rotation in the company. Another reason for the “revolution” is a change in the owner of the company or restructuring of business areas.
When determining the organizational structure, it is worth focusing on possible evolutionary changes, but you should not take revolutionary ones into account - in this case, it is easier to simply redo the structure from scratch and develop a set of measures for the transition to new working conditions.
The organizational structure of the sales department should reflect the marketing orientation of the company. Sales are only part of a system such as an organization. In addition, it should be remembered that no one structural unit should become more significant than others without serious reasons. Sales is the final component of the work of all structural divisions and the entire team of the organization. S. Beer's law states: improving the performance of one element of the system does not lead to improving the performance of the system as a whole. Therefore, no matter how efficiently the sales department works, without the coordinated work of all departments it is impossible to achieve the desired performance results.
Improving the work of one of the structural divisions of the organization may not lead to improvement of the organization as a whole. Therefore, in managing an organization, effective coordination is necessary not only between the sales department and other marketing departments of the firm, but also between non-marketing departments.
The result of the sales department's work is connected with the work of almost all departments of the organization. Let's list some points that can hinder the growth of sales volumes when the department is operating efficiently: production does not produce the received order in a timely manner, the logistics department did not manage to deliver the order to the client in a timely manner;
errors in document flow when placing an order and issuing an invoice, and the customer’s employees cannot contact the sales department, since due to the transition to 1P telephony, all telephone lines were busy. Obviously, the order may be lost due to problems arising from the fault of other departments.
In some companies, the sales department is an independent unit, in others it is part of the marketing department. In our case, we will consider an organizational structure with an independent division, when the sales department functions as an independent division. If the sales department operates separately, it will interact with all departments that are, in one way or another, related to the sales organization process.
Here are examples of such interaction:
- sales department - production divisions: the sales department provides production with information on the forecast of sales volumes, on the basis of which production forms a product release schedule;
- sales department - economic planning service: these divisions jointly control product prices and work with accounts receivable;
- sales department - marketing department: jointly forming a customer base; The sales department acts as a customer of marketing services: design of points of sale, market analysis, development of information and advertising materials, sales analysis.
In practice, the interaction between the sales department and the marketing department is most difficult to build. The main reason is the lack of understanding by the employees of these departments that their goals are common, but the means to achieve these goals are different.
The marketing department can and should impose on the buyer the need to purchase the product; The sales department can and should help the buyer realize his need to purchase the product. And the goal of their activities is common: increasing the sales volume and profit of the organization. It is possible to establish effective communications and relationships between the marketing department and the sales department if the following conditions are met:
- 1. Effective communications between departments (timely response to submitted requests, clear regulation of communications, joint meetings, joint planning of promotions and marketing events).
- 2. In the regulations on the marketing department and the sales department, where the powers and areas of responsibility are prescribed (mandatory), interaction with other departments.
- 3. Criteria for evaluating the activities of each department are fixed and used.
- 4. Department employees are motivated by the end result, not the process.
- 5. The management of the organization is aware of the need for the work of both departments and their contribution to the final result.
The main areas of interaction between the marketing department and the sales department are presented in table. 5.3.
Areas of interaction between the sales department and the marketing department
Table 5.3
|
Information flows “marketing department - sales department” |
Information flows “sales department - marketing department” |
|
Information on the state and forecasts for the development of demand for products in the domestic and foreign markets;
and maintaining the required quantity of goods in warehouses;
|
in goods distribution networks;
|
The following models of interaction between the sales department and the marketing service can be distinguished:
Inner loop. The sales and marketing departments focus on their area of responsibility, goals are not consistent, and the departments carry out project and other activities independently.
Informing. Joint meetings are held, unspoken rules for preventing conflict situations have been developed, and positions on common issues are agreed upon.
Collaborative moderation of development. There are clear but flexible boundaries of areas of responsibility and authority, joint planning and coordination of ongoing events, and the marketing service accompanies the sales process.
Full integration of business processes. Actively use information and analytical systems; there is a general system of motivation and incentives; divisions work towards a common goal, achieving a synergistic effect; share responsibility for the result.
Information interaction between structural divisions of an organization is traditionally a problem area for most of them. And even a high degree of informatization in an organization does not always allow solving the problem of building effective interaction between organizational units. All horizontal connections between departments must be specified in job descriptions. In the course of its activities, the sales department has to interact with other departments of the organization (see Table 5.4).
Thus, when carrying out activities to evaluate the activities of the sales department and improve its work, it is necessary to answer the following questions:
- What impact do certain organizational units have on the effectiveness of sales management?
- How coordinated are the departments in achieving the planned performance parameters?
Answers to these and similar questions, which are not always clearly visible, can be obtained by conducting an audit of the organization's sales.
During an audit of the sales management system, it is often possible to identify conflicts that impede the organization’s effective sales (see Table 5.5). Ignoring or misunderstanding conflicts that have arisen leads to direct losses or lost profits.
Effective sales management requires the organization of established channels of interaction between all services, departments, and divisions that accompany the sales process. This presupposes the use of a unified marketing concept when forming a sales strategy, when choosing the composition, structure, and sales management mechanism.
Table 5.4
The procedure for information interaction between the sales department and the main structural divisions of the organization
|
Incoming flow to the sales department |
Outgoing stream |
|
Planning, economic and financial services Prices and system of discounts for the entire product range Financial plan and cash budget broken down by period and information on the implementation of planned indicators Inventory of finished products on the rocks Current information on the availability of products in warehouses Working capital standards for finished products Information on customers who failed to meet payment deadlines Providing accounting of finished products Information on the costs of organizing the sales process |
Sales budget (plan) Analysis of sales and their structure. Conducting factor analysis of sales profits Sales analysis by distribution channels Waybills and documents for shipment of finished products Information about the shipment of finished products Statements for transport tariffs Service Cost Project Information on concluded contracts for the supply of products Plans for shipment of commercial products Document flow for shipped products Data on discounts provided and changes in individual conditions of forms and methods of payment |
|
Production Services Product release schedule Production plan by periods by product groups. Data on achieved production volumes Technical characteristics of products to be sold Data on product reliability and operating conditions. Information about the discontinuation of obsolete products A set of regulatory technical documentation required for pre-sale, warranty and post-warranty service Production plans in a detailed assortment by period and data on its actual implementation |
Reports on the implementation of business indicators and sales volumes Projects of estimates for work and services performed by the Department of Estimates for the maintenance of the distribution network and service centers Information and reports on the reliability level of products about identified defects and failures Proposals for improving or changing manufactured products, improving consumer characteristics of products Statistics on warranty costs Marketing research data obtained from the distribution network regarding product quality |
End of table. 5.4
|
Incoming flow to the sales department |
Outgoing stream |
|
Action plans for the development of new products, modernization, and improvement of product quality. Plans for technical re-equipment of production, development of new types of products or reduction in volumes (discontinuation of production) of certain types of products, transition to new types of packaging and packing R&D Services Information on the development of new products Data on product technical characteristics, description of benefits, testing information Plan for preparing the production of new products Logistics service Information on the organization of transportation, warehousing and storage of products Information about the organization of delivery, its timing and cost Information about the passage of products on the way to the customer Plans for shipment of products by all modes of transport |
Information about a decrease in sales due to product obsolescence or the emergence of more advanced analogue products Requests for technical information Proposals for product modernization, development of new products Proposals for expanding the possible range of product applications based on an analysis of consumer preferences Proposals for creating product modifications for individual market segments Applications for shipment of finished products Shipping plans for applications for supply of containers and vehicles Proposals for optimizing logistics flows Recommendations for improving the warehouse logistics system |
|
Proposals for optimizing material and information flows taking into account logistics requirements Plans and schedules for the supply of components and spare parts to warehouses Product supply plan under concluded contracts by territory Human Resources Department Long-term plans for personnel requirements Proposals for improving the qualifications of department employees and organizing internships Formation of a favorable socio-psychological climate and development of a code of corporate ethics |
Reports on issues of movement, selection, placement and training of personnel Proposals to nominate management personnel to the reserve Applications to meet personnel needs Applications for manager training sales, professional development of department employees |
Table 5.5
Conflicts between the sales department and structural divisions of the organization,
their causes and methods of elimination
|
Cause of occurrence |
Resolution method |
|
|
Refusal of other departments to cooperate with the sales department |
Authorities and zones are not clearly defined responsibilities of the sales department and interaction between departments |
Formalization of all business processes and communication of information to all structural divisions |
|
Complaints from the marketing department to the sales department regarding inflating customer expectations from products |
Insufficient qualifications and experience of sales managers, poor interaction with the marketing department and production services |
Detailed analysis of situations that have arisen, additional training for sales managers |
|
Claims from the sales department against departments supplying products or providing services, resulting in violation of the sales process organization |
Lack of clearly delineated responsibility for the results of work, ineffective communications with the logistics department and production |
Identification and analysis of the causes of situations that have arisen, development of appropriate measures of organizational influence with their communication to all structural divisions |
|
Sales department employees refuse to interact with the marketing department because disagreements have arisen regarding sales policy issues |
Lack of effective cooperation between sales and marketing departments, departments working in isolation from each other, interpersonal conflicts among employees |
Identifying the causes of disagreements at the level of department heads, developing measures to improve interaction and establish communications |
The possibility of coordinating the interaction of the sales department with the structural divisions of the organization is predetermined both by the organizational structure itself and by the totality of its individual parts and existing stable connections and relationships. Disruption of connections between the sales department and structural divisions can lead to interruptions or complete cessation of interaction, which reduces the effectiveness of sales management. Therefore, the development of an organizational structure, fixing the boundaries of areas of responsibility and authority, and the formation of principles of interaction between departments must be accompanied by an analysis of the vertical and horizontal, linear and functional connections of the organization.
In a highly competitive environment in dynamically developing markets, a company must set clear goals and determine ways to achieve them. The tasks of the sales department are based on satisfying customer needs and successfully competing in the market. Planning the activities of a sales department requires taking into account many factors, primarily the characteristics of the sales market, the number and geographical location of potential consumers, market share of competitors, marketing strategy for product promotion and many others.
Organizing the activities of the sales department is an important component of planning the activities of the entire organization as a whole. Despite the fact that in large companies sometimes it is not so much about creating a sales department, but about its reorganization, however, in both the first and second cases, the company’s management must do the following:
- formulate the goals of the sales department;
- develop an optimal organizational structure;
- determine the specifics of working with clients;
- establish criteria for evaluating the activities of the sales department.
This chapter is devoted to issues of organizing sales in a company, although we will also touch upon issues of outsourcing, i.e. attracting external contractors.
Goals and objectives of the sales department
The organizational structure of any company is a way of managing the activities of a group of people united by a common goal, which is aimed at obtaining the final result. The purpose of creating an organizational structure is to distribute responsibilities and coordinate the activities of group members so that they act as one team when performing assigned tasks. When it comes to creating a sales structure, the tasks of the corresponding department are formulated based on the company’s marketing goals.
When creating a sales organizational structure, keep the following in mind:
- division of labor and specialization of employees must be beneficial for the company;
- The sales organization must ensure stability and continuity of the company's sales;
- The sales organization must ensure coordination of different types of sales activities performed by individual employees or divisions of the company.
Two centuries ago, Adam Smith emphasized that the specialization of workers is directly related to labor productivity. Segregation of duties and specialization leads to increased productivity as each employee focuses on a clear set of job responsibilities. However, this statement is not always true in relation to personal sales, when a sales representative has a very wide range of functions - this may be due to the peculiarities of marketing the goods produced by the company or the need to sell a full product range or serve all the company’s clients in a certain region. True, in some companies sales are quite complex, and labor specialization can lead to a significant increase in the efficiency of the department as a whole. In these circumstances, management's task is to create an organizational structure with an optimal distribution of sales activities that will bring maximum benefit to the company.
It is customary to distinguish two main sales organization schemes, which will be discussed in detail below.
The horizontal structure reflects the division of the company's target activities into separate tasks and functions and their integration into separate divisions. As will be shown below, this structure is based on four basic principles, each with its own advantages and disadvantages.
The vertical structure reflects the hierarchy of the organization. The more levels of management between top management and ordinary employees, the more complex the organization's structure. As a company grows, the number of hierarchical levels in it increases, and accordingly more effort is required to coordinate their activities.
Despite the fact that many companies base their sales organization on the principles of division of labor and specialization of sales personnel, they often ignore the fact that it is not people who need to be organized, but activities. In other words, the types of activities - or functional responsibilities of the sales staff - should correspond to certain positions, and not to the personal qualities of certain employees. After developing the optimal organizational structure for a given company, it should be implemented in practice, i.e. recruiting personnel from among our own trained employees or inviting outside specialists. Over time, lower-level workers, having gained experience and qualifications, will be able to move up the career ladder, ensuring stability and continuity of the structure.
The division and specialization of employee labor necessitate the coordination and integration of their efforts aimed at achieving the goals of the organization. The more organizational tasks different specialists have to solve, the more difficult it is to coordinate their work. If sales are carried out by external agents or intermediaries, the difficulties increase, since the manager cannot directly manage their work and cannot always control their actions.
Coordination and integration of the activities of employees of the organization’s own sales department should be based on the following principles:
- focus on the needs and interests of the company’s clients;
- interaction with other departments of the company (production, design bureau, logistics, financial department, etc.);
- coordination of tasks between specialized groups performing various functions within the same sales department.
Horizontal structure of the sales organization
The organizational structure of sales should be a flexible tool for achieving the company's goals. But the structure can be modified when current tasks, strategies or external factors change, so it is impossible to offer an ideal option for distributing the functions of each employee or group of employees in the sales department. However, the first question that needs to be answered is formulated as follows: should the company create its own sales system or does it make sense to turn to the services of third-party sales structures?
Outsourcing
It is not always profitable for a company to create its own sales structure; sometimes it is advisable to turn to the services of independent companies specializing in sales of relevant products. The transfer by an organization of part of business processes or functions to some other company specializing in the relevant field is called outsourcing. Outsourcing allows a company to reduce the costs and labor of its operations and concentrate on its core activities without being distracted by secondary ones. This is especially true for companies that operate in regions with a relatively small number of clients or low sales potential, i.e. where maintaining your own sales department is financially unprofitable. Companies often resort to a combined method: creating their own small sales department and attracting independent agents.
The decision whether to create your own sales department or outsource sales is made taking into account many factors, but the following four are among the most significant:
- economic expediency;
- the need for control and coordination;
- transaction costs;
- strategic flexibility.
Economic expediency
When choosing between creating your own sales system and outsourcing this function, it is useful to analyze and compare the costs associated with both options. The comparison results are shown in Fig. 1.
Rice. 1. Costs of maintaining your own sales department and outsourcing
The graph shows that up to a certain point, maintaining full-time sales personnel is more expensive than hiring contractors. This is due to low overhead costs for third-party agents, no need for payroll and other costs. But outsourcing costs rise as sales volume increases because agents typically earn large commissions on deals. Consequently, there is a point (V b in the figure), after which it is more profitable for the company to form its own sales structure. This explains why outsourcing is used, as a rule, either by large companies in small territories, or by small firms whose sales volumes are so small that creating their own sales department is economically unjustified. Relatively low costs for the services of independent sales agents increase the attractiveness of outsourcing when a company expands into new regions or when introducing new products to the market. At the same time, the company’s expenses in case of an unsuccessful outcome are minimal, since the outsourcer (contractor) will not receive remuneration until it sells the goods.
On the other hand, you should take into account how much sales volume the company’s own sales department can provide and how much can be provided by an outsourced company. Management often believes that creating a full-time sales department is more effective because:
- sales personnel are engaged in selling only the company’s products;
- employees may receive special training to work with specific customer groups or product categories;
- It’s easier to motivate your own employees;
- customers prefer to deal with the manufacturer of the product rather than with an intermediary.
However, it should be considered that external sales agents with extensive experience and high qualifications, specializing in a particular area, can bring more value than an in-house sales system - especially when the company is expanding into a new geographic region, introducing a new product to the market, or is a start-up company with There is no own sales structure.
Control and coordination
The ability to control and coordinate sales in accordance with the current goals and objectives of the company is another argument in favor of creating your own sales department. The fact is that external agents, pursuing their own short-term goals, may refuse to participate in the strategic activities of the customer company, the return on which is possible only in the long term - for example, in searching and attracting new customers, in working with small clients with significant growth potential, in after-sales service, in promoting new products to the market. In addition, outsourcers may resist strict control on the part of the customer company, which employees of the company’s own sales department will not allow themselves to do.
The customer company can refuse outsourcing at any time, but it is not always possible to objectively analyze and formulate the reasons for dissatisfaction with the relationship with the contractor. These reasons can be both objective (for example, the outsourcer neglecting its responsibilities) and subjective (unfavorable market conditions). It should be taken into account that if customers become accustomed to an external agent, if they are replaced by an in-house sales representative, the relationship between the supplier and the customer may suffer. It is easier to control and coordinate the actions of your own sales staff; for this purpose, there are different ways in the arsenal of managers - selection and training of new employees, establishment of internal business regulations and policies, application of evaluation and remuneration methods, etc. up to the dismissal of employees who showed unsatisfactory results at the end of a certain period.
Transaction costs
According to the theory of transaction costs, the costs of cooperation with outsourcers exceed the costs of maintaining an in-house sales department when sales require significant investments. The reason is simple: agents often pursue their own interests to the detriment of the interests of the manufacturer, for example, they formally approach issues of after-sales customer service and ignore the needs of small clients, because such transactions do not bring tangible profits. The customer company cannot control such agents and influence their actions, especially if the choice of such services on the market is limited. In such circumstances, transaction costs are high. However, if both the manufacturer and the outsourcer are committed to long-term and mutually beneficial cooperation, strong business relationships are established between them.
Strategic flexibility
Strategic flexibility is an important criterion that must be taken into account when choosing between creating your own distribution system and turning to an outsourcer. An unstable, rapidly changing market or competitive environment, the regular introduction of new technologies and long product life cycles dictate conditions in which it is more profitable for companies to work with external agents. This allows them to maintain flexibility in their distribution channels and compete successfully in the market. The main reason is that it is more difficult to quickly reorganize your own vertically integrated sales system than to find a qualified sales agent, especially if you do not need to invest additional funds or sign long-term contracts to sell the products. In other words, working with outsourcers makes sense when maintaining your own sales department is even more troublesome than dealing with poorly managed independent agents.
Classification and criteria for selecting intermediaries
If a company decides to outsource its sales, it will have to turn to intermediaries, who can be divided into four general categories:
- sales representatives of the manufacturing company;
- sales agents;
- distributors;
- dealers.
Sales representatives sell the manufacturer's products on the basis of a long-term contract. They are neither the legal nor the physical owners of the goods sold; their task is solely to sell the products. Representatives do not have the right to change the sales policy of the manufacturing company, on the basis of which the pricing strategy, sales conditions, etc. are formed. As payment for their services, they receive only commissions from concluded transactions. As a rule, representatives operate in a strictly limited territory and specialize in several interrelated, but not competing product lines from different manufacturers. This approach provides representatives with a number of benefits.
- You can establish long-term relationships with several potential clients in your territory.
- You can thoroughly study the entire range of products sold.
- It is possible to significantly reduce costs by distributing distribution costs across products from several manufacturers.
- You can establish a flexible remuneration scheme, since the amount of commission directly depends on the volume of products sold.
Sales agents also sell products and receive remuneration in the form of commissions, without being the legal or physical owners of the products sold. They differ from representatives in that they usually sell the entire range of customer products. Consequently, the agent not only represents the company's goods in a specific territory, but also performs the functions of its entire sales staff. As a rule, the sales agent receives certain powers and can adjust prices and terms of sale. In addition, he has the opportunity to influence the sales and sales promotion programs of “his” customer.
A distributor is usually a legal entity or individual who purchases wholesale quantities of goods and sells them on regional markets. Unlike a representative and agent, a distributor purchases products at his own expense and resells them to other buyers. But a distributor is not just a wholesaler who is not bound by any obligations to the manufacturing company. The distributor enters into an agreement with the customer company, in which the customer sets a minimum sales volume for a certain period of time; if actual sales are lower, the company may terminate the agreement with the distributor. Sometimes the customer grants his distributor the exclusive right to sell, voluntarily leaving the market and pledging not only not to enter into competition with him, but also to provide all possible assistance in promotion and advertising; provides the right to use its trademark, provides assistance in organizing staff training and after-sales service. The responsibilities of a distributor may also include collecting information and analyzing the market, advertising, searching for dealers and working with them, organizing and stimulating sales channels, logistics, adapting goods to customer requirements, providing technical and warranty service.
A dealer is most often a small company or entrepreneur who purchases goods at wholesale prices from manufacturers or distributors and sells them to end consumers. They operate on the basis of contracts with manufacturing companies and, as a rule, participate in their advertising campaigns.
Distributors and dealers are engaged in the resale of goods, with dealers being closer to the end consumer and distributors being closer to the manufacturer. Dealers and distributors receive compensation in the form of the difference between the purchase price and the resale price. The interest of the customer and the outsourcer here is mutual. Manufacturing companies are expanding their sales network and entering new markets, and intermediaries, purchasing goods at prices below market prices, earn a substantial profit from their sale.
Organization of sales within the company
If a company believes that the cost of maintaining a sales force will pay off, it creates its own sales department. Moreover, its organizational structure is built on one or more basic principles:
- geographical;
- by product categories;
- by types of clients;
- by sales functions.
Organization of sales by geographical principle
This is the simplest and most common method of organizing the work of a company's sales staff. Its essence lies in the fact that
Each sales representative is assigned a separate region or territory. The responsibilities of a sales representative include selling the entire range of products manufactured by the company to all categories of potential customers in a given territory.
Advantages of this approach:
- cost minimization;
- reduction of levels in the decision-making hierarchy;
- direct interaction with clients.
The vast territory is divided into regions, and each region is assigned a sales representative. This saves time and travel expenses. In addition, the number of managers at different levels coordinating the work of sales personnel is reduced, which reduces overhead costs and simplifies management. Another advantage of this approach concerns the company's relationship with customers: since each client communicates with only one sales representative, all organizational and other issues are addressed to him.
The main disadvantage of the geographical principle of organizing sales is that the advantages of division of labor and specialization remain exploited. Thus, the sales representative must sell the entire product line of his company to all categories of potential customers, i.e. be a jack of all trades. Employees are given more freedom of action in carrying out their duties, but sometimes they take the path of least resistance and focus on the most simple or profitable areas - for example, working only with a certain group of products or only with large clients, which usually runs counter to the strategic goals of the company and its customer policy. To avoid such situations, the company's management strives to strictly control the activities of regional sales departments or uses carefully thought-out incentive schemes.
Despite the inherent disadvantages of this method, due to its simplicity and cost-effectiveness, it is widely used in small companies that produce a limited range or simple products. Larger companies usually use this approach in combination with others. For example, a sales department has two divisions that sell multiple product lines, each organized geographically.
Organization of sales by product categories
Companies that produce a wide range of goods build their sales system on the classification of goods into groups. The features of this approach are:
- specialization of the sales department;
- close interaction between sales and production;
- effective sales management.
One of the main advantages of this approach is that each salesperson becomes a specialist in the company's products, having a good understanding of the technical characteristics of a particular group of products, how to use them and the most effective methods of sales. Organizing production by product category (when each type of product is produced by a separate enterprise) promotes closer cooperation between production and sales departments. This interaction is especially beneficial for personalization or for attracting and retaining customers who need strict adherence to production and delivery schedules. Finally, this approach allows you to respond in a timely manner to changes in strategy and simplifies the coordination of the activities of the sales department. If it is necessary to increase the sales volume of a particular group of products, management can concentrate most of the sales staff on this area.
The main disadvantage of this organizational principle is the risk of duplication: sales representatives of different product categories work in the same territory and contact the same customers, which causes dissatisfaction among the latter. In addition, compared to organizing sales on a geographical basis, this approach is more expensive. Since it is necessary to clearly coordinate the activities of different departments, it is necessary to increase the number of management staff, and the costs of its maintenance increase accordingly.
Organization of sales by types of clients
The organization of sales by customer type is widespread, when a company creates several sales divisions to serve different groups of customers - large and small, corporate and individual clients, etc. The advantages of this method include:
- close relationships with clients;
- non-standard promotion methods;
- flexible policy regarding sales personnel.
The focus of sales personnel on meeting the needs of “their” group of clients allows them to better understand the specifics of their activities and assess their expectations. This way of organizing sales serves as a natural extension of modern marketing and market segmentation. By training sales personnel in a variety of selling techniques, a company can more successfully implement its marketing and promotion programs. In addition, knowing the needs of their customers can give sellers interesting and unexpected ideas about creating fundamentally new products or services, marketing approaches that will allow the company to differentiate itself from its competitors and provide an undoubted advantage in the market. In addition, organizing sales by customer groups allows you to correctly set sales goals in different markets and accordingly change the number of specialized sales personnel of the company.
The disadvantages of such a sales organization are the same as those built by product categories. The company's salespeople work with different clients in the same territory, which leads to increased sales and administrative costs. Moreover, large companies operating in different markets are unhappy when they have to contact different representatives of the same company for different issues.
In general, the advantages of a customer-centric sales organization are considered to outweigh the disadvantages, which is why it is quite widespread. It is especially relevant for two types of organizations: those that produce different types of products aimed at different markets, and those that use different methods of selling to different types of clients (for example, in the public and private sectors). Additionally, specializing by customer type is effective when a company enters a new market.
Organization of sales by sales functions
If the seller has to perform various tasks that require special experience, knowledge and qualifications, it is advisable to build the sales structure based on the functional responsibilities of employees, i.e. on the specialization of sales personnel. Example: One group of sales representatives specializes in finding and developing new customers, while another group specializes in follow-up.
The disadvantage of this scheme is that it often causes customer dissatisfaction. Typically, companies involve the most competent, experienced and energetic employees in searching and developing customers, after which new customers are transferred to other employees whose attitude and level of service may not be liked by customers. It happens that rivalry begins between two functional groups, making it difficult to control and coordinate the work of the department as a whole.
In the industrial goods market, many companies successfully implement another form of functional specialization. We are talking about the so-called “sales developers” who are involved in the development of new products and the initial stages of sales. “Developer salespeople” conduct market research, assist their company’s research and development departments, and sell innovative products. These specialists are employees of the company's research or design bureau rather than the sales department. They are attracted to the development of new products with high potential demand because they are not only intimately familiar with the operations and needs of their customers, but also with the technical and production capabilities of the organization.
Telemarketing
Recently, one form of specialization in sales functions has gained wide popularity, which involves the parallel activities of two groups of sales personnel. The first group works with existing communication channels - telephone, Internet, mobile communications, e-mail (to put it simply, “they are on their phones”). Their activities are called telemarketing. The second group of employees are outside sales representatives who work in the field. The two groups face different challenges. While it is clear that a variety of communication channels cannot replace actual sales, telemarketing plays a significant role in the following activities.
- Search and classification of potential clients; information about them is then transferred to field sales staff for further work. To simplify the search for new potential clients, all advertising materials of the company, its products and packaging indicate the toll-free telephone number of the call center. By calling there, the client can receive detailed information about the goods or services offered by the company.
- Quick response to customer problems (one form of service is a “hotline” that customers can call if difficulties arise).
- Organizing repeat purchases by the company’s customers when a personal visit by a sales representative is not economically feasible - for example, small companies that bring in too little profit and/or distantly located companies.
- Quickly and timely informing customers about important news and changes in the sales program (for example, the availability of new or long-awaited products), special sales promotion programs, or changes in operating conditions.
Telemarketing has become widespread because, firstly, it is convenient for both parties, and secondly, it increases the efficiency of sellers. From the customer's perspective, centralization of purchasing activities and an oversupply of products and potential suppliers increases the cost of purchasing agent time. Therefore, in order to save money, calling by phone is preferable, especially when it comes to solving routine issues, for example, placing repeat orders, informing about special sales programs, offering discounts, etc. A telephone call takes much less time than a personal visit.
From a sales company's perspective, combining in-house and outside sales activities with a well-designed mix of other activities, such as targeted advertising, direct mail, consumer hotlines, and a proactive website, increases the overall sales force's effectiveness. The combination of telemarketing with other promotional measures can significantly reduce the costs of routine sales operations and concentrate the efforts of more expensive outsourced salespeople on activities that provide maximum returns in the long term (for example, finding new and servicing large existing customers).
Due to its effectiveness, telemarketing is especially useful when the corporate policy of interaction with clients provides for the distribution of labor of sales personnel among different categories of clients depending on the size and purchasing potential of the latter. Thus, previously, some companies did not approve of the work of their salespeople with small clients, since the purchasing potential of the latter not only did not bring significant profits, but did not even cover the costs of a commercial visit. Today's development of communication channels makes it possible for sales personnel to work with such clients directly from the office at much lower costs, which allows the company to reach the segment of small buyers.
At the same time, it must be taken into account that the creation of two or more specialized groups in the sales structure (for example, in the case of using in-house personnel and third-party agents) poses additional tasks for management. Different functions require different policies and different action plans for each group. In order to make the most of telemarketing opportunities, it is necessary to develop standard scenarios for employees communicating with clients by phone and online. Field sales representatives can enjoy greater flexibility and tailor their presentations to the needs of specific clients. In other words, the combined approach requires the preliminary preparation of appropriate training and remuneration programs for different groups of employees.
Organizing sales to key clients
Regardless of the overall sales force structure, many companies develop their own organizational approaches to meeting customer needs. This is done to achieve a level of service that would attract and retain the largest and most important customers, in other words, key customers. A sales representative responsible for servicing key accounts should be not just a salesperson, but a manager. This means that he must be able to find ways to adapt products to the needs of specific customers, have a good understanding of the strategies and goals associated with the company's key customers, and draw up and implement business plans for working with key customers. The technical complexity of modern products, industry concentration and trends towards centralized purchasing mean that commercial success in both industrial and consumer markets is ensured by a relatively small number of major customers. Moreover, in an ever-expanding global market, key customers often become global and demand greater coordination from their suppliers. In this environment, companies tend to establish and maintain strong relationships with only a few suppliers.
When a company is developing a program to attract and retain key customers, the question of who will serve these customers is very important. Most companies do not provide for special regulations, and the same salespeople who serve other clients work with large clients; No additional administrative or sales costs are planned. This is not the most effective approach, because servicing key clients requires experienced and highly qualified personnel, because such clients often require special attention and prompt resolution of emerging issues.
Realizing this, many companies are developing special sales policies for key customers. Sales personnel have two main tasks: generating sales and establishing strong and lasting relationships with such customers. The loyalty of key customers provides the seller with a significant share of orders, increases profitability and reduces labor costs. At the sales department level, a special policy regarding key clients is that each of the employees serving them must pay maximum attention to them. Often this approach involves:
- assigning key clients to the company's sales managers;
- creation of a special division within the sales department;
- formation of a special group of sales employees who are engaged in servicing only the most important customers.
Serving Key Accounts by Sales Managers
It is common practice to assign responsibility for servicing key accounts to sales or marketing managers. It is especially often used in small companies that do not have the resources to create a separate division or a special group of sales personnel. This approach is also used in cases where the company has few large customers. The advantage of this approach, in addition to low costs, is that key customers are served by individuals occupying a sufficiently high position in the organizational hierarchy that allows them to make decisions (or at least influence their adoption) on the allocation of production capacity and inventory, as well as pricing policy. All this allows us to be flexible in our approaches to key clients and provide a high level of service.
One of the disadvantages of this approach is that managers serving key accounts may misunderstand the company's marketing goals. This is manifested, for example, in the fact that they allocate additional resources to “their” clients from the company’s general fund at the expense of smaller, but nevertheless quite profitable buyers. In other words, some managers strive to get the most out of their large customers without caring at all about how this will affect the company's overall sales, operations, and profits. Another problem is that customer service provided by sales managers takes away the time needed to perform managerial functions. This may have a negative impact on the control and coordination of the company's sales and marketing activities as a whole.
Separate division for working with key clients
If a company has one or more customers that account for such a share of total sales that fluctuations in their purchases could seriously affect the production plan, inventory and resource allocation of the company, then it is advisable to form a separate sales division that will deal with servicing only these clients. Some shoe manufacturers, for example, create separate divisions to produce models sold under the brand name of a wholesaler or retailer. This structure allows for close interaction between production, logistics, marketing and sales.
The main disadvantage, as in organizing sales by product category and customer type, is duplication of sales and additional costs caused by focusing the production process and marketing policy on one or several large buyers. In addition, such an organization is associated with a certain risk, since the success or failure of this structure largely depends on the policies and activities of clients.
Key Account Team
It is not necessary to create an entire department to service large clients; you can do it easier by forming a special group of sales employees that will deal with working only with key clients. This approach has a number of advantages. Firstly, this group will include the most experienced and qualified employees, which guarantees a high level of service to customers that are important to the company. Secondly, by focusing on working with a few customers, employees will be able to thoroughly study their needs and satisfy them as much as possible, which will ultimately lead to increased customer loyalty. In addition, such a sales organization creates additional incentives for company personnel: since the most competent and experienced employees are selected to work with key customers, transfer to such a group is tantamount to promotion and can be used to motivate and reward the best employees.
Disadvantages also include duplication of activities within one sales department, which leads to increased overhead and administrative costs.
Team sales
In modern conditions, increased demands are placed on sales employees. They are expected not only to have a deep knowledge of the specifics of the activities and needs of clients, but also to be able to ensure stable and beneficial interaction with them for the company, i.e. high level of service. Working as a team gives the company a number of advantages, in particular, it allows you to serve customers without delays and ensures continuity of the process - for example, if one of the team members is not available, any other employee can easily replace him.
However, to organize team selling, it is necessary to take into account the needs of clients, so the team leader
manager and employees of the company's functional departments (research, design, production and finance) - often expanded to include one or more representatives of the client company. Today, many organizations create sales centers, which include representatives of functional departments (marketing, service, sales, design, etc.). The purpose of the sales center is to work closely with sales personnel to improve efficiency. Sales centers ensure the collaboration of multidisciplinary specialists to improve the quality of customer service.
Team selling is suitable for working with large clients who bring high profits to the company. Most often, teams of specialists are used to attract new clients, but sometimes they are involved in working with existing clients (albeit, this involves lower-level personnel). To best meet customer needs, the team also includes representatives from production and forwarders.
Multi-level sale
Multi-level selling is a type of team selling. It involves a team of representatives from different management levels who can communicate on equal terms with managers of the same rank in the purchasing company. For better coordination of actions with the client, such a group can operate on an ongoing basis, but more often it is created temporarily and used to find the optimal solution in a specific situation; at the same time, employees are responsible for interaction with the key client at their functional level, but are not part of a separate specialized team and act independently.
This approach meets the requirements of organizational etiquette, because each member of the sales team is in contact with an employee of the buying company of equal status and authority. It is very important that senior managers are involved in establishing relationships with prospective clients, since they do not need special approval to make concessions in the negotiation process and adjust other conditions that may convince a potential buyer to become a regular client.
Marketing Alliances
In some industries, including high-tech ones such as computers and telecommunications, buyers often purchase a product that consists of several components, which are also supplied by different manufacturers. However, manufacturers also use independent intermediaries to combine their products with those of other suppliers and create products that meet the needs of the end user. This type of activity is practiced in the information technology industry when software is added to off-the-shelf hardware. Suppliers often form marketing alliances, developing joint marketing and sales programs for complex systems or innovative products directly to the end consumer.
Even competitors create marketing alliances in order to attract missing resources. For example, if a company is introducing a completely new product to the market without having the infrastructure to market it, it can enter into a partnership agreement with a company that does have such an infrastructure. Such an alliance will be led by a group of representatives from both companies. Sometimes such cooperation leads to a subsequent merger of member companies of the alliance.
An alliance allows both parties to gain additional benefits through access to the partner's resources and capabilities, such as markets, better technology, financial or human resources. Promising new companies are seeking to create alliances with larger and more well-known companies, wanting to gain access to their marketing and sales channels and reputational support. In traditional industries, alliances are formed to expand sales territory, reduce costs, reduce production costs, etc. However, the decision to create an alliance must be carefully weighed and calculated.
Alliances in logistics
Another interesting innovation in recent years, observed in various industries, is the formation of alliances in logistics, as a result of which electronic ordering systems are formed. Such a system allows large regular customers to place and process orders directly into the supplier's computer system.
Logistics alliances for automatic replenishment of inventories are created by well-known supply companies and large supermarket chains that sell a huge range of consumer goods. Information from cash register scanners goes directly to the supplier’s information system and is processed by a special computer program, which then automatically generates orders and schedules deliveries directly to retail stores. This approach virtually eliminates errors when placing an order, simplifies document flow between organizations, optimizes product inventory in the warehouses of the buyer and seller, reduces service costs and ultimately increases profits.
Such systems are used by manufacturers not only of standard consumer goods, but also of goods for the industrial market. The creation of logistics alliances is especially important for companies involved in personalization and customization. Receiving orders directly into the supplier’s electronic system allows him to timely draw up and change production schedules, speed up the production process and minimize finished product inventories in warehouses.
For the buyer, an electronic ordering system has a number of advantages: convenience, flexibility and time saving when placing an order. For the seller, the use of electronic systems in working with key clients helps to “tie” them to a given supplier and increase the share of purchases.
The widespread use of such systems raises questions about the future role of sales personnel in customer service. The experience of companies using electronic ordering systems shows that freeing sellers from routine operations of receiving, processing and tracking orders allows them to concentrate on sales, searching and establishing relationships with new potential customers.
Vertical structure of the sales organization
As mentioned at the beginning of the chapter, any sales requires a clear organization, both horizontally and vertically. The vertical structure defines the powers and job responsibilities of employees at management levels, which ensures effective integration and coordination of sales. The most common are two types of vertical structure.
- Linear organization means that orders are passed along a chain from the leader to the subordinates. Moreover, each employee reports to only one manager, located at the nearest higher level of the hierarchical ladder, and performs only those functions that are provided for this level.
- Line-functional organization is more common in medium and large organizations. It differs in that some sales management activities, such as personnel selection and training or distributor relations, are assigned to specific sales specialists from the company's headquarters.
When developing the vertical structure of a sales organization, two important points must be taken into account:
- number of management levels;
- number of employees subordinate to each manager, i.e. controllability standard.
The interrelation of these factors is obvious. The higher the standard of control for a given number of sales personnel, the fewer levels of management (and, accordingly, managers) the organization needs. It is believed that the fewer levels between top management and ordinary employees, the closer their interaction and the easier it is to control the work of subordinates. In addition, a flat structure has lower administrative costs because there are fewer managers. However, there is another opinion: “flat” management schemes create additional burden on top management, and savings are just an illusion, since the small number and low quality of managers’ work reduce the efficiency of the organization as a whole.
Considering the above, it is difficult to propose a uniquely optimal management structure and controllability standards for all companies, however, some recommendations can be made.
- It is possible to increase the number of management levels with a decrease in the standard of control under the following conditions:
- The sales department faces truly difficult challenges;
- there is a connection between the profit received by the company and the labor productivity of each of the sales employees;
- The sales staff is highly qualified and remunerated.
- In other words, the more complex the functions of the sales department, the higher the need for sales personnel to receive attention from the organization's management.
- Control standards should be reduced at higher levels of sales management, since top managers have to perform management functions, analyze activities and make decisions. In addition, top managers are usually directly subordinate to qualified and experienced specialists who independently cope with quite complex tasks.
Another general rule that applies to all sales management organizational structures: the more important the decision being made, the higher the management level at which it must be made.
In addition to the question of the number of employees subordinate to the sales manager, it is necessary to determine the terms of reference of each manager in relation to subordinates and appoint an employee (employees) responsible for hiring, firing and evaluating the performance of ordinary sales employees. In some companies, lower-level managers are given the right to hire (under their own subordination) new employees. As a rule, this is done by companies that have many low-paid ordinary employees who perform simple tasks in selling products. In organizations where sales employees are professional and skilled salespeople who perform complex tasks and have a significant impact on the firm's performance, senior level managers are usually responsible for hiring and firing. This is especially true for organizations in which the position of an ordinary sales representative is considered as a springboard for career growth and obtaining the position of sales or marketing manager.
Job responsibilities of a sales manager
In addition to performing their immediate duties related to coordinating the activities of subordinates and implementing
company policies, many sales managers - especially at the field or regional level - continue to be actively involved in sales management. If a manager received a promotion after recognition of his merits in the rank of an ordinary salesperson, it is not profitable for the company to lose the high qualifications and experience of such an employee. Therefore, good salespeople, when promoted to sales manager, are often allowed to serve the largest and most significant accounts and are even encouraged to do so.
This practice benefits managers because they receive commissions on sales and maintain direct contact with the market by actively participating in actual sales. The disadvantage of this approach is that managers sometimes spend too much time on sales to the detriment of fulfilling their direct responsibilities - managing subordinates. In large companies, where control and coordination of the activities of numerous sales personnel require the close attention of management, the participation of managers in sales is limited.
Sales related functions
Many companies operate in markets where competitiveness directly depends on the level of customer service. For example, companies selling electronic components, in order to increase competitiveness, must provide their customers with services for the development and design of related products, clothing and footwear manufacturers must ensure fast fulfillment and delivery of orders, the sale of industrial equipment must be accompanied by services for its installation, assembly and maintenance . But these services must be integrated into the company's marketing and sales. Loyalty from satisfied customers provides a company with a strong market position, which is usually one of its strategic goals.
But here the question arises: the head of which department should control functions directly related to sales? The answer depends on the specific features, product features, and customer requests. Timely processing and delivery of orders are not very noticeable, but very important functions of sales. In some companies, order processing is viewed as part of the sales process and accordingly controlled by sales management, while in others it is considered an inventory management or data processing function and is the responsibility of production managers.
In practice, if fast processing and delivery of orders is critical for the company, it makes more sense to entrust them to sales managers. In some companies, repair and maintenance services are under the responsibility of the sales department, while in others they are subordinate to the production department. The first option is more convenient when, when selling a product, the possibility of its improvement or modification is offered to better meet the client’s needs. Sales departments do this if they are tasked with attracting and retaining potential customers.
If the additional functions considered are not among the direct responsibilities of the sales department, team selling allows them to be effectively coordinated. This is especially true for serving large clients, because in this case the costs associated with using this approach are completely justified. Therefore, although the manager responsible for working with certain clients does not formally have the right to control the representatives of other divisions of the company that are part of the team, he must organize the work so that all members of the sales team work with maximum efficiency.
New technologies and their impact on the activities of the sales department
Any organizational structure, including vertical, undergoes changes over time, causing the emergence of new communication technologies and methods of information processing. New technologies make it possible to increase the productivity of employees in many departments, not excluding sales. CRM - customer relationship management systems that manage the entire process of attracting and retaining a client, allowing you to improve business processes and analyze performance results - have become widespread. CRM allows companies to maintain a strong position in a highly competitive market, maintain constant contact with their customers and create a special customer-oriented culture.
The role of head office specialists and outsourcing
In many large companies, some sales department employees also perform functions not directly related to sales. For example, a head office manager performs administrative tasks that require specialized knowledge that the average sales manager simply does not have the time to acquire. He is responsible for several specific tasks, can provide assistance in collecting and analyzing information necessary for line managers to make decisions, but is not vested with the authority of line sales managers. Typical functions performed in the sales department by head office specialists include hiring, training, and sales analysis.
The advantages that specialization and division of labor provide make it possible to more efficiently use the qualifications, knowledge and experience of head office managers, reduce the number of the company's sales staff and increase the efficiency of the organizational structure of sales management, while simultaneously reducing costs. Moreover, the personnel reserves of the head office can be used as a basis for training top-level sales managers.
At the same time, it should be noted that the presence of head office specialist positions in the sales structure is justified only if the company’s activities require their effective use. However, increasingly, even the largest companies doubt the advisability of such personnel policies. More and more companies are turning to outsourcing. Activities that are not within the organization's core competencies (i.e., do not require special assets to perform operations) can be effectively performed by external (third-party) specialists on a contract basis.
Part of distribution logistics is the creation in the company of an organizational structure that carries out effective sales of products, and then the constant development, improvement, and adaptation of this division to changes in the market. Typically this structure is called the “sales department”.
Sales department- a key division of any enterprise. Having an effective sales team is necessary not only in sales organizations, but also in all other businesses that make money through the sale of their goods or services. At the same time, the essence of the sale is the joint search by the seller and the buyer for solutions to a significant problem of the client.
The enterprise receives public recognition of the results of its activities and financial remuneration for them after the buyer pays for the products he purchased. We can say that all employees of the company are provided with work only due to the fact that sales managers (sellers) sell products to customers. This fact should instill in the company's employees a sense of respect for sellers and an understanding of the role they play in the life of the company.
Foreign researchers believe that if a person did not stand face to face with the buyer, did not make an effort to sell the company’s goods, did not participate in the difficult process of “proving to the market” the usefulness of what it produces, he cannot be a business leader. In this regard, F. Kotler argues that the efficiency of the company depends on what kind of employees the sales department will be: “Sales personnel is one of the most productive and expensive assets of an enterprise” (Kotler F. Marketing according to Kotler. How to create, win and keep the market: translated from English (M.: Alpina Business Books, 2007. P. 214).
Since the sales department is a structural division of an enterprise, on whose activities the financial position of the company directly depends, close attention should be paid to its organization and work.
Organization of the sales department begins with the selection of a leader and determination of his powers, on which the status of the decisions he makes depends. Then, together with him, the company's management formulates the goals of the department and develops a sales system aimed at their implementation.
Sales department management- this is, first of all, people and the organization of their work: the selection of sales managers and their training, the organization of interaction between departments involved in customer service. In this regard, the core of sales management is a reliable and qualified sales force.
Sales department management tasks
Sales department management consists of the following blocks of tasks.
Sales planning
In order to manage sales, you need to have clearly defined goals. The main goal of sales management is to achieve planned sales and make a profit. Correctly set goals will serve as an effective tool in working with sales personnel, who must be convinced that the goals set are realistic and achievable, take into account all the specifics of the business and contribute to a fair assessment of the work of each employee.
Creating an optimal organizational structure
The organizational structure determines with what forces the company will fulfill its sales plans and implement the chosen sales strategy.
Organizing conditions for successful work of employees
This block of tasks includes not only providing the department with the necessary resources, but also the development of internal documents regulating the implementation of the “Sales” business process.
Monitoring and evaluating the performance of the department and its employees
Monitoring the implementation of planned tasks by the department. Development and implementation of a system for assessing, motivating and monitoring the activities of sales department employees.
Without regular implementation of this set of measures, it is impossible to achieve stable performance by the sales department of the functions and tasks assigned to it. Like the entire company, the sales department must constantly evolve in response to changing conditions of the external (market) and internal (company) environment.
Stages of development of the sales department
Researchers identify the following stages of development of the sales department (Kondrashov V.M. Sales Management. P. 80–81.).
Entrepreneurial stage
It is characterized by the fact that it contains a minimum of rules and regulations, i.e. the process of selling manufactured products to clients is practically not formalized. The main hopes are placed on the quality of the goods sold and the abilities of managers, and not on a well-developed sales technology.
Stage of developed corporate practice
Assumes the existence of a classification of buyers; specialization of managers by territories and market segments; implementation of sales technology for different types of clients, enshrined in the form of a special guide; development of planned indicators (number of sales to customers, number of new customers, etc.). The role of sales process control is to ensure that these indicators are met by each employee and the department as a whole.
Algorithmization of the sales process
As they gain professional experience, sales workers find and consolidate successful methods and techniques for serving customers. Basic algorithms for attracting and retaining customers are formulated, which are enshrined in a special sales manual (see section 10.5). This area is especially important for enterprises that sell in various ways (Internet, telephone sales, personal sales), in various methods (active and passive), to various clients (individuals or legal entities, end customers or sales intermediaries).
Tasks of sales staff
Analyzing numerous publications devoted to sales management, we can identify the main tasks of sales department employees:
- good sense of situation on the market, with competitors and in your own company (trends, market conditions in general and in specific cities, regions) in order to quickly take advantage of emerging opportunities to increase sales;
- have a clear strategy sales: who are the company’s target clients, whose needs the company is able to satisfy at the proper level and with whom cooperation will be mutually beneficial, how to win your target client, find new niches and develop in them;
- manage company sales: wisely choose distribution channels, number of channels, participants within the channel; plan, motivate, control channel participants;
- develop and implement sales conditions, interesting and mutually beneficial for target clients and the company itself;
- develop relationships with clients: maintain ongoing relationships; expand customer purchasing volumes; to form their loyalty and commitment;
- attract new clients with the help of active, well-trained, motivated personnel who love and know their products (services) and the company; comply with company customer service standards, etc.;
- vary pricing depending on the market situation, competitors, purchasing power of the population, the general economic situation in the country and other external environmental conditions;
- study needs wholesale and retail buyers, take into account customer wishes and suggestions, complaints; whenever possible, shape their needs.
Increased sales are influenced by the image and reputation of the company, maintaining constantly high quality products, accuracy and regularity of deliveries, advantageous placement of products in retail outlets (merchandising), professional management and personnel of the company, optimized business processes, investments in sales development.
Thus, in any enterprise there are many resources and opportunities to improve the performance of the sales department. Unfortunately, they are often used unsystematically, which does not give the required effect. Only an integrated systematic approach to the organization and management of the sales department will provide conditions for its reliable operation in the present and create the prerequisites for long-term development.
Sales department structure
A systematic approach to organizing a sales department involves designing its internal structure and business processes, as well as determining its relationships with other departments of the company. This section discusses the internal organization of the sales department, the distribution of functions and responsibilities between its employees.
Stages of designing a sales department structure
Areas of work of the sales service
First, it is necessary to justify the directions of work of the sales service. This work is carried out based on the company’s distribution logistics strategy. It is clear that the composition and volume of work performed is decisively influenced by which distribution channels the enterprise will use (direct, through intermediaries, or both channels). The direct channel requires the creation of large sales departments with a branched and complex structure. On the contrary, in the case of using resellers (especially large ones), even a small sales department staff is able to achieve high volumes of product sales.
The goals set in the strategy for developing a channel (for example, increasing sales in the regions) or, conversely, reducing its importance (for example, reducing its own retail network) will also affect the structure of the department.
Defining the functions of the sales department
The next step is to determine the functions of the sales department. At this stage, functions are distributed between the sales department and other departments of the company: marketing department, transport service, warehouse, accounting, etc. The mechanism of their interaction is determined (see section 10.3). Performing a number of functions requires the joint efforts of departments, so it is necessary to clearly distribute tasks. For example, close ties between the sales department and the marketing department will increase the efficiency of both departments: on the one hand, the results of marketing research will be complete if sales personnel are involved in data collection; on the other hand, sales will increase if the marketing department provides the sales staff with the necessary marketing tools.
Sales department organizational structure models
Based on the definition of the functions of the department, you can begin to build its structure. Based on the experience of large companies, the following models of the organizational structure of the sales department are distinguished.
Functional structure
The functional structure involves the identification of two main functions: attracting new customers and ensuring sales to existing ones. To convince a new buyer of the benefits of purchasing goods from this company and not from a competitor, a sales manager needs a high level of skill. To maximize the potential of talented salespeople, they are freed from other work. Thus, a division appears in the structure of the department, whose employees are only engaged in attracting new customers and making their first sales to them. They then pass their clients on to the ongoing sales service division. The current sales function takes up a significant portion of time, but does not require talent or high qualifications. Here, to a greater extent, it is necessary to follow the procedure for servicing customers clearly stated in the department’s documents.
The functional structure is more suitable for a newly created company entering new markets, or used in cases of urgent need to expand its customer base.
Commodity structure
The advantages of this structure are: the possibility of strengthening product assortment policy, a more effective product credit policy, in-depth knowledge of the sales manager of his group of goods, better selection of resellers for the sale of certain types of goods, improved interaction between sales managers and production departments. However, this structure may be inconvenient for certain categories of buyers (primarily small and medium-sized ones) who find it difficult to work with several sales managers.
Client structure
Assigning managers to specific groups of customers is used when the specific needs and other characteristics of customer behavior have a decisive influence on the technology of their service or form the strategic direction of sales. Buyers can be classified according to different criteria. For example, using time as a basis, we can distinguish between one-time and regular customers. Managers involved in transactional sales and partner sales are subject to different requirements, different motivation systems are used, and they require different competencies.
The advantages of the client structure of the sales department are: the ability to flexibly adapt to the characteristics of clients, better take into account and satisfy their requirements, and monitor the development prospects of individual groups of buyers. The positive aspects are especially evident when the task is to serve large purchasing organizations. The disadvantage of this structure is the weak consideration of the territorial specifics of the market and the peculiarities of working with different groups of goods.
Territorial structure
The territorial structure involves assigning managers to certain regions of the country or abroad (if the enterprise imports products). This is a frequently used structure option, since it has the most advantages that are important for a country with such a large territory as Russia. Managers study their regions in detail. On this basis, they more fully take into account the various characteristics of regions and cities, manage local trade intermediaries more effectively, and have the opportunity to establish effective connections with regional authorities.
Despite all the advantages, the specialization of sales managers has disadvantages:
- additional costs for sales personnel are required;
- sometimes the buyer has to work with several company representatives;
- it is difficult to organize effective interchangeability of workers;
To overcome some of these disadvantages, many companies use a structure mixed type, which also provides a significantly higher level of adaptation to the rapidly changing tasks of the sales department and to the uncertainty of the external environment. With a mixed structure, two or more signs of specialization of sales managers are used.
For example, a sales department can be divided into four divisions: a sales group for Moscow trading enterprises, a regional sales group (territorial); group for working with VIP clients (client attribute); sales group of experimental goods (trademark). Mixed structures are an attempt by a trading company to quickly adapt to the increasing complexity of the external environment in general and the market in particular.
Since enterprises are very different in size and functions in the distribution channel (wholesale, retail), it is impossible to offer some optimal and suitable sales department structure for all occasions. When forming a structure, it is always necessary to take into account the characteristics of the company. For example, a wholesale trading company constantly encounters customers who are unprofitable for it, since they purchase in small quantities. The company cannot refuse them due to strategic development, but they divert significant resources, so a separate structure can be organized to work with such clients, for example, a general sales sector.
The number of employees in the sales department can be calculated based on the number of customers served. To do this, you need to determine how many clients one sales manager can serve efficiently. For example, the following options are possible:
- 30 to 40 small and medium-sized clients;
- from 10 to 15 medium and large clients;
- from 1 to 3 particularly large clients.
The organizational structure of the sales department must be documented by order of the company management in order to exclude different interpretations. Then it should be reflected in the staffing table and job descriptions of department employees.
At the same time, the structure of the sales department cannot be created once and for all; it must change in accordance with the dynamics of changes in the external environment and the company's strategy. In order to see the need for changes in a timely manner, you should regularly test (evaluate) the organizational structure, during which you analyze:
- How clearly are responsibilities and powers distributed among employees?
- whether there are unreached market segments, whether there is unnecessary competition or conflicts between employees;
- whether each employee has enough authority to achieve the tasks assigned to him.
The organizational structure requires monitoring its effectiveness. Assessing the effectiveness of the sales department structure made according to the following main criteria:
- rational division of management functions;
- optimal number of links and levels of management;
- rational distribution of powers and responsibilities, quick adoption of management decisions, etc.
The developed and tested functions and structure of the sales department must be reflected in documents, i.e., the sales department is being documented (development of Regulations on the department, job descriptions of its employees, etc.).
Head of Sales Department
The head of the sales department is a very important position in the field of distribution logistics. Briefly, the essence of his work can be expressed in the following words: organizing the implementation of all necessary work for the department team to achieve the main goal - increasing product sales.
Both outsiders and people who have made a career within the company become heads of sales departments. The second option is preferable when creating a unit from scratch. It is better to invite a person from outside the existing department, as this will help to avoid conflicts and familiarity that arise when the status of one of the department employees changes when he is appointed head.
If a sales manager becomes the head of a department, then he must realize that he is responsible not only for his decisions and actions, but also for the team entrusted to him. The functioning of an entire department depends on his work, and coordinating the actions of even two people is already quite a difficult task. In this position, the manager receives a number of powers and is directly involved in important events for the company: planning, discussing decisions to increase or reduce the department’s team, in marketing and sales promotion programs, etc.
The responsibilities of the head of the sales department largely depend on the specifics of a particular enterprise. As a rule, they are spelled out in the job description very fully. Rights are specified more sparingly, so here is a typical set of them:
- make proposals to senior management to improve the work of the department;
- appeal the unlawful actions of your immediate superior to a superior;
- receive information to the extent necessary to solve assigned tasks;
- endorse documents of management activities within the scope of their competence;
- provide employees with the necessary explanations on issues within their job competencies;
- require performers to finalize documents prepared in violation of the established rules for their preparation and execution.
Tasks of the Head of Sales Department
The head of the sales department is a middle-level manager: he manages his subordinates and defends the interests of his department to management. Let's consider the tasks that the head of the sales department must solve in his activities.
Strategy development
Developing a strategy for finding new clients, which should specify: who the target clients are, where to look for them, and by what parameters to evaluate the prospects of cooperation. The manager must determine in which direction sales managers need to search for clients of one type or another, and what technologies to use in order to attract them to the company.
Employee training
Training of department employees - active participation in the selection, hiring, adaptation and professional training of sales managers, organizing mentoring in the department.
Informing about the market situation
Informing the company about the market situation. Not all companies have a marketing department. And even if it is available, the head of the sales department must supplement the marketing information with information about the results of daily communication between sales managers and customers. It is equally important to draw the attention of managers to the compliance of the trading services provided by the company with the ever-increasing requirements of customers.
Maintaining discipline
Maintaining discipline in your department. Without discipline, it is impossible to ensure the implementation of plans and the achievement of the goals set for the department. At the same time, the independence of sales managers should not be suppressed so that they do not turn into uninitiated performers. You need to find a middle ground between freedom of action and organization.
Distribution and setting of tasks
Setting tasks for department employees. The manager must distribute tasks among subordinates in such a way that they clearly understand what needs to be done now and next. Objectives must be quantifiable, realistic, and specifically indicate expected results and criteria for achieving them.
Evaluation and control of results
Without the use of effective control, an objective assessment of employees is impossible.
Employee incentives
The manager must be able to fairly distribute incentives so that employees retain positive motivation, carefully select incentives taking into account the individual characteristics of employees and the general interests of the department team.
Improving business processes
Optimization of business processes - development, implementation and adjustment of sales regulations. The manager must look for new opportunities to improve the operations that make up the “Sales” business process. This is an important factor in increasing the efficiency of the department.
Dealing with complaints and conflicts
Dealing with customer complaints often goes beyond the competence of the sales manager and requires the involvement of the department head. In addition, complaints are an important source of information that allows you to identify weaknesses in the work of the department and the company as a whole. When dealing with a complaint, it is necessary to maintain cooperation with the client and draw conclusions to avoid its repetition.
Help in finding clients
The manager must determine search directions and methods for establishing relationships with customers.
Maintaining documentation and reporting
Without documentary recording, it is impossible to control the sales process, but the number of documents must be justified, without compromising the main function of the sales staff - to serve customers.
Organization of technical support
The better technically (software, use of new means of communication, etc.) the sales staff is provided, the more effective their work will be.
Monitoring employees
Monitoring employees' performance of job duties. Well-organized control ensures the efficiency of the department.
Working with VIPs
Working with key clients - the largest and most profitable for the enterprise.
Working “between two fires”
Acting as a buffer between the company's management and sales managers in order to coordinate interests and not aggravate the opposition of the parties: management is always dissatisfied with sales, and the sales staff with wages and the amount of work.
Requirements for the head of the sales department
The listed tasks show that the head of the sales department must have a certain set of qualities or, more correctly, competencies, i.e. personal abilities to solve a certain class of professional tasks (Sukhanova I.M. What competencies should the head of the sales department have // Sales Management. 2007. May . P. 21.).
The first group consists of managerial competencies necessary to fulfill the role of a leader. These include: leadership (i.e. the ability to achieve results through managing people, resources and processes), employee development, as well as self-development and customer focus. Customer orientation is the anticipation and satisfaction of the customer's needs and expectations in such a way that the company benefits as a result.
Competencies that characterize the level of intelligence of a sales manager include: problem analysis and solving, goal orientation, decision making, creativity or innovation. The head of the sales department often has to deal with problems that do not have a clear solution. It is in such cases that the competencies of this group are most clearly demonstrated.
The competencies necessary to improve the effectiveness of their professional activities are very important for a manager. This is confidence in one’s capabilities, taking initiative, admitting mistakes and working to prevent them.
No less important for a manager’s activities is his own development: continuous learning and flexibility. Continuous training is especially important for a sales manager. Quite often, a person who has reached the level of head of the sales department begins to think that he already knows everything and can do everything. However, nowadays knowledge becomes outdated very quickly. Flexibility implies the ability to quickly adapt to innovations, switch from one activity to another, and keep diverse department matters and problems in focus.
Sales Manager
The main figure who carries out the process of selling products to different types of buyers (companies or individuals) is the seller. The word “salesperson” refers to a huge number of workers performing different tasks at different stages of the movement of goods in the distribution channel. Experts identify the following types of sellers (Brizhasheva O.V. Trade Marketing. P. 172–174.).
Order taker
One of the most common and simplest types of sellers. Order takers receive calls from buyers, conduct preliminary negotiations and agree on a purchase and sale transaction.
Consultant
Consultants are used in one of the most important areas of work - at points of sale (sales floors of stores), where customers make decisions and make a purchase of goods. A consultant helps them in this by explaining or demonstrating the benefits of products, trying to encourage them to make a purchasing decision.
Merchandiser
The merchandiser is responsible for the display of goods on the sales floor of the store, which ensures their greatest attractiveness to the buyer. As a rule, he does not come into contact with customers, so the cost of preparing and training merchandisers is much lower.
Sales Manager
A sales manager typically works for manufacturing and wholesale companies and sells products to resellers or buying organizations. Employees in this category are characterized by performing all stages of the sales process: planning, searching for clients, negotiating and presenting goods, overcoming customer objections, concluding a purchase and sale transaction.
Key Account Sales Manager
This category of sellers spends most of their time maintaining and developing relationships with key clients. Their task is to gain an important competitive advantage for the company in the form of loyalty from profitable customers. Specialists of this type are highly valued in the labor market.
In this article we will characterize only one type of salesperson - a sales manager. There are also differences within this category, determined by the specifics of different markets and companies. For example, the work of a sales manager is seriously influenced by the state of the market in which he works. The market is a stable market, long divided between the main competitors, in which the main buyers and their capabilities have been identified. In these conditions, the most important task of a sales manager is customer retention. New, rapidly growing segments may emerge. A seller operating in this market segment must concentrate on attracting new customers.
Despite the different working conditions and tasks performed, all sellers are united by common professional goals: meeting the needs of customers for the goods offered by the company on the market, and achieving sales growth on this basis.
The role of a sales manager in a company
A sales manager, providing trading services to external (customers) and internal (company divisions) clients, performs the following roles.
Consultant
Consultant - advises buyers on issues related to the goods offered, terms of purchase and services accompanying the purchase; advises company employees, providing them with information about market demand, customer requirements, new trends, competitor behavior, etc.
Integrator
A sales manager is a representative of the company through whom all communications between the buyer and the supplier of goods are carried out.
Analyst
By analyzing the dynamics of the industry as a whole, as well as trends in the behavior of buyers and competitors in the market, a sales manager can predict purchases, choose methods of customer service, etc.
Manager
An important component of the work of a sales manager is self-management, i.e. independent decision-making, planning, organization, regulation and control of one’s activities. In addition, the manager’s tasks include managing the sales process: planning work with customers, organizing relationships with them, monitoring the implementation of decisions made - both by his company in relation to customers, and by customers in relation to the company. The manager manages conflict situations with clients and looks for ways out of them.
Salesman
The sales function is the main one; all previous ones are subordinated to it. Making a purchase is possible when the buyer is offered not just an assortment of goods, but an individually formed set of goods and services that meets his interests. The manager must be able to draw up a competent commercial proposal, which reflects the features, values and advantages of the proposed goods in comparison with the products of competitors. In addition, he needs to know the client’s needs, his psychological and other characteristics well in order to effectively offer products.
Only a talented type, or at least a well-trained salesman, can combine all of the above roles. Talented salespeople are not easy to find, so businesses need to not only look for talent, but also create a system for training and supporting sales managers.
Responsibilities of a Sales Manager
The job responsibilities of a sales manager depend on the specifics of the company's activities. However, the most common ones can be identified, which include the following:
- ensures effective communication with clients, studies their requirements, causes of conflicts, takes measures to resolve them and maintain business ties;
- takes the necessary steps to conclude new contracts and renew old ones (drafting, coordination with a lawyer, accounting department, head of the sales department, signing the contract);
- provides clients with recommendations and advice;
- complies with the rules of document flow, shipment or return of goods, execution of contracts and accompanying documents;
- monitors the client’s compliance with the terms of the contract regarding receipt of goods and payment;
- ensures that the interests of customers are observed when their orders are fulfilled by divisions of the enterprise;
- prepares documents (invoices, invoices, invoices, acceptance certificates) and prepares a set of necessary accompanying documents for shipping goods to customers (certificates, instructions, powers of attorney);
- forms and maintains a customer database, makes changes to it in a timely manner;
- makes proposals to management to improve customer service;
- prepares reports reflecting sales results and customer wishes.
To perform professional tasks, a manager must have the appropriate qualities and skills. The necessary personal qualities of a sales manager are a positive perception of people, a tendency to communicate and help, and optimism. He must inspire confidence in customers with a sincere desire to solve their problems.
Professional qualities, first of all, include good knowledge of products, i.e. knowledge of how, with the help of the proposed items, the needs of the buyer can be satisfied. For the intermediary buyer, this need is to sell the product profitably; for the end user - satisfaction of personal needs for the product he needs. In all cases, the sales manager looks at the product through the eyes of the client and looks for advantages that are important to him.
Professional skills of a sales manager include: the seller’s ability to create an atmosphere of trust, speak the buyer’s language, listen, ask questions competently, convince the buyer, correctly offer the product and effectively complete the sale.
Remuneration and evaluation of sales personnel
The management of a manufacturing or trading company strives for the prosperity of its enterprise, and therefore, to increase sales. The latter directly depends on the sales staff. To improve the efficiency of staff, it is necessary to pay special attention to their motivation. Motivation serves to bring employees' goals closer to the company's goals. Thoughtful employee incentives will help reduce staff turnover, increase their loyalty to the company and, most importantly, increase work efficiency.
Typically, employees are dissatisfied not so much with the amount of their salary, but with the lack of connection with the results of their work, their unfair assessment, and the sharp difference in the salaries of similar specialists at different enterprises. Dissatisfaction with pay leads to staff turnover, team instability, the enterprise’s losses in training constantly renewed employees, etc.
Problems of material incentives are acute where the level of remuneration of sales personnel is low. Therefore, the limited funds that the company can allocate for labor costs need to be used very effectively.
The basic requirements for remuneration of personnel, including sales personnel, are as follows:
- perform the function of stimulating sales personnel to provide quality service to customers and perform other tasks assigned by management;
- provide a fair assessment of the performance of sales personnel;
- promote the attraction of high quality employees and the commitment of the company's sales force;
- be flexible and stable at the same time. Flexibility is necessary in order to meet changing requirements and market conditions. At the same time, the basis of the remuneration system must be stable;
- be simple and understandable to employees so that they can easily predict their income. The number of indicators influencing the amount of payment should be small, they should be related to the main tasks of the sales staff.
In order to develop a system for remunerating sales personnel (or redesign an existing one), it is necessary to complete the steps described below (Spiro R.L., Stanton W.J., Riya.G.A. Sales Management. pp. 345–351.).
Development of a payment method
The first stage of developing a remuneration system is a thorough study of the job descriptions of sales department employees. Job descriptions reflect the functional responsibilities and requirements for professional competencies of employees.
Next, based on the distribution logistics strategy, requirements for the payment system are established. In addition to the above general requirements, a specific enterprise at a certain stage of its development has specific goals. For example, increase sales of a particular product category; reduce product delivery costs; develop sales in a new territory, etc.
Determination of the level of remuneration. At this stage, the average income of a sales manager for a certain period is established. Here it is important to take into account the industry average salary level, as well as the level of payment for similar categories of employees in other areas. If sellers feel they won't earn enough, they likely won't be attracted to the job, regardless of the payment method used.
Three methods of remuneration are widely used:
- Fixed salary. Salary is direct monetary compensation for performing specified duties over a specified period of time.
- Direct commissions. A commission is a regular payment for completing a certain amount of work. Therefore, commission is a variable element that directly depends on the results of work received by the employee.
- A combined system consisting of two parts: salary and commission (bonus).
The combined remuneration system is used most often, so let’s look at it in more detail. This system assumes that the employee receives a fixed part of the payment (salary), and if he reaches or exceeds the established indicators, he is paid a commission (bonus).
Salary
The salary is set either depending only on the position held, or taking into account the length of service and qualifications of the employee. The second option involves stimulating the loyalty of the company's sales staff.
Premium part
The indicator that influences the bonus part of sales staff salaries is usually sales volume. However, this approach only stimulates sales growth, which may be unprofitable for the company. For example, sales managers provide a large volume of sales, but achieve this by providing high discounts to customers, as a result of which the company's profit decreases. In this regard, it is recommended to take into account the sales volume indicator in conjunction with the provided profitability of sales.
Additional indicators that influence the size of the bonus for sales managers can be used: attracting new clients; average purchase size; volume of accounts receivable; number and nature of claims (complaints).
In order for sales personnel to work to achieve the company's strategic goals, management must bring the remuneration system in line with these goals. For example, at some point it is strategically important for a company to introduce new products to the market, or expand distribution channels by attracting new resellers, or retain customers and increase the profitability of each of them.
If there are more than three or four indicators in the bonus system for a sales manager, then it becomes complex and contradictory for the distribution of his professional efforts. The employee must understand: what he must do; for which actions he is paid a salary, and for which - a bonus; for what actions (or inactions) he is fined.
Quite often, business managers set an upper limit that the salesperson's salary should not exceed. This is always demotivating. In this case, the employee will sell just enough to get maximum pay, and no more.
After developing a system for remunerating sales personnel, it is necessary to test its effectiveness. To do this, the employee’s goals (to receive the maximum amount of payment) are compared with the goals facing the sales department and the company as a whole. If the manager is not motivated to act in the interests of the company, then the payment system needs to be improved. The system should also motivate the cooperation of sales managers and the rejection of unhealthy competition, and not allow an employee to receive payment for the results of the work of other sellers.
Evaluation of employee performance
Remuneration of an enterprise's sales personnel is closely related to the assessment of employee performance.
When assessing work results, you must:
- Compare actual results with planned results and identify discrepancies.
- Find out what factors are causing the discrepancies.
- Take steps to avoid future unfavorable sales force performance.
The assessment procedure should form the right attitude towards the business in the sales manager. When a person knows what is required of him and understands the criteria for assessing his performance, he feels more confident. Fair evaluation helps employees understand their strengths and weaknesses, which should motivate them to improve their performance.
A well-conducted assessment of the performance of sales personnel helps solve the problems of promoting employees, developing a training program, etc.
Evaluation indicators can be divided into two categories.
Seller performance indicators (sales volume, profit, number of orders received, etc.) allow you to compare the work of one seller with the work of others, the results of the seller’s work for the current and past periods, etc. Quantitative indicators minimize the possibility of subjective assessment and bias by the inspector. They are also relatively easy to measure.
Effort measures help you understand why one manager's performance differs from that of another. This group includes indicators such as the number of meetings with customers, calls, consultations, etc. With their help, actions that provide service and development of relationships with customers are assessed. The value of these indicators is that they reveal weaknesses in the seller's work. As a result of the assessment, it is determined what skills specific sellers need to develop to improve the quality of their professional activities.
Sales staff training
In a competitive environment, an enterprise needs to have high-quality human resources to maintain and strengthen its position. Success in the market largely depends on how a production or trading company uses and develops its personnel. An important part of the development of sales personnel is in-house training.
In-house training is a system of training and development of sales personnel, carried out on the territory of an enterprise with the involvement of in-house or external teachers and aimed at solving problems specific to a given organization. Training should ensure the improvement of professional knowledge, skills and abilities of employees based on the strategic goals of the company. On this basis, in-house personnel training contributes to the growth of profits and competitiveness of the organization.
By involving its own managers and specialists in training as teachers, the company ensures the continuity of knowledge and experience, which has a beneficial effect on the corporate culture, the internal climate in the organization, and contributes to the creation of a cohesive team.
Purpose of personnel training
The main typical goals of in-house training for employees of the organization:
Organizational profit growth
Provide employees with the knowledge, skills and abilities necessary to perform high-quality work, which contributes to profit growth and improvement of other economic indicators of the organization.
Professionalism and interchangeability of personnel
Maintain the professional level of employees, train new technologies and methods of selling goods, inform about changes occurring in the market. Prepare employees to replace colleagues during vacations, illness, business trips, etc. For the company to operate successfully, some of its employees must be trained in skills that allow them to replace absent colleagues.
Promotion or reassignment of personnel
Prepare employees for reassignment or promotion. The organization must carry out planned work to train promising employees in order to prepare them for possible promotion to higher positions or horizontal movement (rotation).
Staff motivation and loyalty
Create and maintain in employees a sense of involvement in the activities of the enterprise, familiarize them with its strategy, development plans, introduction of new services, changes in trading process technologies. On this basis, the level of work motivation, employee commitment to their organization and involvement in its affairs increases.
Maintaining a positive attitude among staff
Maintain a positive attitude towards work among employees. To achieve this goal, the social importance of their activities should be emphasized and company managers should be involved in training events, which actually demonstrates their concern for personnel development.
Comply with legal requirements
The Labor Code of the Russian Federation provides for mandatory training of all workers in occupational safety and health regulations. In addition, a number of professions and specialties require regular certification.
In order to develop a training plan for enterprise employees, you need to know the types and forms of in-house training, as well as their features.
Induction training is conducted for new employees and should include a number of training modules:
- information about the organization, its structure, culture, internal rules, main clients, partners, etc.;
- main assortment groups - informing about the categories of goods that the organization sells, developing customer consulting skills;
- training in the process of customer service, organization of a liability system, safety precautions, rules of conduct in conflict situations, etc.;
- training that facilitates the newcomer’s integration into the team and understanding of the culture of interaction with other employees.
An effective method of training newcomers is the mentoring method, when each new employee is assigned a mentor (appointed from among the best specialists in the organization).
Maintenance training is provided to permanent employees. It can be dedicated to different topics and used for different purposes:
- developing skills to work with new product groups;
- provision of new trade services (for example, accepting orders for goods that are not on sale);
- activating employee skills, increasing their motivation, etc.;
- developing techniques for using different standards for displaying goods;
- developing skills to serve different categories of customers.
Training for employees who are experiencing a problematic situation with their enterprise (sales decline, emergence of strong competitors) is called problematic. In this case, in-house training is designed to give employees the tools to help overcome a problematic situation.
Advanced training is most often carried out with the aim of forming a management reserve in the company, as well as to prepare for the introduction of new trading technologies.
Advanced training is mainly carried out by fairly experienced people. Methods such as thematic seminars, participation in projects, and quality circles are suitable for them. During advanced training, methodological materials (teaching aids, programs) are created, which are then used for other types of training.
Curriculum development
In order to organize a system of in-house personnel training, a training program is being developed, which contains a list of training modules, and the resources necessary for training sales personnel (material, time, personnel) are determined.
A curriculum is created for each training group, formed on the basis of the same training needs (entrance training, training in a new computer program, business etiquette, etc.).
Before drawing up a program, it is advisable to answer the following questions that will help create the most effective teaching methodology:
- what are the key learning objectives;
- changes in what knowledge, skills and abilities will be the result of training;
- what logical connections exist between training modules;
- what teaching methods will most effectively help achieve learning goals and objectives;
- what resources are needed to apply these methods.
The curriculum establishes a relationship between theoretical and practical parts. This ratio is determined by the nature and content of the problems that a sales worker faces in his activities. The more narrow the tasks an employee solves, the less often he resorts to theoretical knowledge and the higher the need for practical skills. And vice versa, the more uncertain the problems, the less standardized their solutions, the more attention should be paid to theoretical knowledge.
The training module usually includes: a theoretical part, descriptions of practical situations (cases), exercises to practice skills, assignments and questions. The training module must be written in such a way that reading and working with it are interesting for the student; examples stemmed from theory and were taken from real professional activities; exercises and tasks practiced skills and abilities that are important for the employee.
In the process of in-house training, the following methods are used: lectures, seminars, trainings, discussions, mentoring, case studies, video analysis, business games, distance learning, self-learning and self-development. For each category of students, the most suitable types and methods of training are selected.
An important part of the training module is the workbook in which students complete tasks. The workbook makes it possible to track the success of an employee’s completion of the training program and, on this basis, adjust the process of his training.
It is advisable to issue the training module to the student in printed and electronic form (post it on the computer network of a production or trade organization) so that he can work with it at a time convenient for himself.
During in-house training of sales personnel, it is recommended to implement the following requirements:
Relevance
Training sessions must be directly related to the professional activities of students.
Participation
Students must actively participate in the learning process and directly use the acquired knowledge, skills and abilities.
Repetition
Helps to consolidate knowledge in memory and turn skills and abilities into a habit.
Feedback
Students should be constantly provided with information about how much progress they have made. The presence of such information allows them to adjust their behavior to achieve better results.
In the process of in-house training, new knowledge, skills and abilities must be acquired by already established people who have previously been taught something and who have formed certain habits. In this regard, when teaching an adult, they usually encounter resistance from previous stereotypes of thinking and behavior. This greatly complicates the educational process and requires teachers to have knowledge of psychology and special tact in dealing with students.
Experts note the following features of adult education:
- The adult plays a leading role in the learning process.
- An adult strives for independence, self-realization, and self-government in all areas of life, including educational activities.
- An adult has experience that can be used during his learning.
- An adult learns to solve an important life problem and achieve a specific goal.
- The adult expects immediate application of learning results.
- An adult student has many limitations in learning (social, time, financial, professional, etc.).
- The learning process of an adult should be organized in the form of joint activity between the student and the teacher.
At the initial stage, it is necessary to gain trust and position employees for training. To do this, it is necessary to explain to employees the goals, objectives, and benefits of training. Employees must understand that by training personnel, the company is helping them, since they will be able to perform their work with higher qualitative and quantitative results, in which both the employees themselves and the management of the enterprise are interested.
An organization's plans for employee training must be consistent with its own professional development plans. Employees should be involved in identifying training needs and setting goals. In this case, they will treat learning as an element of career planning, which will significantly increase their motivation.
Monitoring learning results
An important part of organizing in-house training for sales personnel is monitoring the results. As a rule, the following components are controlled.
Opinions of training participants regarding whether it achieved its objectives and was useful. To make the assessment more accurate, you can offer to fill out questionnaires.
Knowledge is the amount of information acquired by the employee. To evaluate it, each student undergoes testing. There are two options: tests before and after training or one final test at the end of training.
Behavior. Have there been significant changes in the employee's behavior? Changes are assessed by a manager who has the opportunity to directly observe the salesperson in action.
Practical results of the work - whether the acquired knowledge is transformed into an increase in the number of sales, a higher percentage of retained customers, an increase in the number of orders, new customers, etc.
Interaction with other departments
To achieve the goals and objectives of distribution logistics, effective interaction between the sales department and other departments of the company is important. Successful sales are impossible without the well-coordinated work of sales personnel with employees of production departments or the purchasing department (in a trade organization), as well as accounting, transport and warehouse, service services, etc. First of all, we are talking about the effective exchange of information and rational methods of discussing problems.
Poor communication with other departments reduces the productivity of sales managers. Instead of working with customers, they are forced to look for ways to influence employees in other departments so that they perform their duties well.
In table 16 shows some conflicts that arise between the company's structural divisions in the sales process, as well as the reasons for their occurrence and possible methods of elimination.
Properly organized interaction of the sales department with other departments involves the provision of services by each participant in the “Sales” business process to its other participants. At the same time, together they must provide high-quality service to product buyers. The marketing department provides information about supply and demand in the market, research data, and sales managers provide marketers with information about sales and customer requirements. The same information is transferred to the advertising department so that they can analyze the effectiveness of the advertising activities carried out. The advertising department works closely with the sales department, since in order to plan and evaluate the effectiveness of an advertising campaign it is necessary to have information about customers. In addition, the sales department is closely linked with accounting and legal services.
Constant meetings are required with the participation of specialists from the sales, marketing and advertising departments, and production departments regarding the release of new products. Everyone should be aware of the products being released and planned for release in order to jointly look for new directions and ways to sell goods. It is necessary to jointly look for ways to improve the quality of products so that they more closely meet customer demand.
* 70 - Vertogradov V.A. Sales management. 2nd ed. St. Petersburg: Peter, 2005. pp. 104–105.
Responsibility for working with customers, sales volumes and cash flow should not only rest with the sales department. It must be correctly distributed among all divisions of the company involved in sales. Quite often, the efforts of sales managers do not achieve their goals due to incorrect attitude towards clients on the part of lawyers, accounting or warehouse workers. This may be untimely execution of documents, unnecessary claims to customers, delays in delivery of goods, etc.
In practice, quite often sales managers do not have complete information (for example, about the availability of goods in warehouses, delivery times, etc.) that they need to satisfy customer demand. As a result, the buyer receives poor quality service, and the company loses profit. At the same time, none of the participants in the “Sales” business process sees the situation as a whole and cannot influence the entire cycle of this process. Each participant, at best, strives to do his work well and is guided by his own criteria for assessing its quality.
High-quality customer service depends on the coordinated work of all departments, so it is necessary to develop and implement corporate customer service standards. Internal regulations are a powerful tool for regulating the work of employees involved in the sales process.
Nowadays, the company that is competitive in the market is the one that maintains or increases sales volume while reducing costs. Today you need to work not more, but better, more efficiently, so it is important that the work of the sales department is harmoniously combined with other business processes of the company.
The effectiveness of an enterprise's sales department is the ability to increase sales while simultaneously reducing consumed resources. The main indicators used to evaluate the effectiveness of the sales department are:
- dynamics of growth in product sales;
- increasing the number of clients, including regular ones;
- average transaction amount;
- ratio of overdue accounts receivable to total sales;
- the share of the number of transactions with discounts, increased deferred payment and other preferential conditions in the total number of transactions;
- cost of sales.
Sales planning
Sales department management is revealed in its functions: planning, organization, motivation, control.
Sales planning is the process of defining sales goals and ways to achieve them. The key point of planning is to link sales and production of products, sales and customer demand, sales and transport, sales and warehouse activities.
Sales planning involves:
- study of customers (demand, development dynamics, behavior);
- determination of the company’s strategic and tactical objectives in the field of sales (including in monetary terms);
- developing a program of action in relation to customers;
- planning the work of all departments of the company to ensure the implementation of the sales plan;
- organizing the implementation of the plan by the sales department (distribution of work, instruction, etc.);
- monitoring the external environment in order to clarify plans;
- summarizing the implementation of the plan (including analysis of the quality of planning, unaccounted factors, quality of marketing information, etc.).
Sales planning is a complex job that requires a powerful information base. It should be based on market research and the results of sales managers working with customers.
From the point of view of organizing the planning process, experts identify three methods of sales planning (Brizhasheva O.V. Trade Marketing: a textbook. Ulyanovsk: UlSTU, 2007. pp. 134–135.).
Planning from below. In this case, sales department employees plan their sales for a certain period of time and transfer calculations to the head of the department. Based on the documents received, he forms a sales plan for the entire department, which is approved by the general director.
When planning from above The plan is first formed and approved at the level of the company's senior management, and then transferred to the sales department. After this, the department head distributes the received volumes among his subordinates, taking into account work experience, the number of clients, assigned territory, and previous sales of each of them.
Combined method planning involves the use of the two methods indicated above. In this case, the planning process proceeds from two sides. After analyzing both draft plans, a decision is made on adjustments taking into account the received data both from below (from subordinates) and from above (from managers).
The advantages and disadvantages of planning methods are given in table. 17.
As can be seen from the table, the combined method has the greatest number of strengths. It allows you to avoid mistakes, take into account the opinions and interests of various specialists - from senior management to sales managers. With the combined planning method, a comfortable psychological climate is created in the team, which is extremely important for fulfilling the sales plan and achieving the company's goals.
Two methods are used to calculate sales targets:
Planning from what has been achieved
This method is quite simple: the sales results of the previous year are transferred to the planned year, taking into account a small increase, which is determined by the management of the enterprise. This method has the right to exist if the planned increase in sales is carefully justified. Its main disadvantage is that, as a rule, new opportunities that have arisen both in the field of product production and in sales are not taken into account. This hinders the development of the company, as it continues to use established techniques and means.
Planning from buyers (from the market)
Application of this method includes the following steps:
- developing a list of wholesale buyers of products, collecting information about them, analyzing their purchasing behavior;
- analysis of the possibilities of changing the volume of purchases by existing customers, growth (decrease) of the company’s share in customer purchases;
- preparing a sales plan, as well as plans for working with existing and new customers;
- coordination of the plan with other departments of the company (production, financial, etc.).
The buyer planning method is more flexible, as it takes into account the dynamics of market development and changes in purchasing behavior. The sales plan is not only the sales figures for goods. It must establish resources to ensure the achievement of the planned sales volume.
A sales plan is a written agreement between the sales department and enterprise management regarding three key elements of activity:
- sales plan: sales department employees undertake to fulfill planned indicators (sales volume, profitability, price, commercial credit policy, discounts, etc.);
- sales department budget: the company undertakes to finance sales activities in the established volumes;
- wage system: The company’s management determines and communicates to the staff the system of remuneration for sales department employees.
The sales plan is the basis for the formation of all other plans of the company and, first of all, its financial plan. This happens because an enterprise can develop steadily and solve its problems only through financial resources received from the sale of its products.
Documents regulating the activities of the department
Many companies are dissatisfied with the performance of their sales departments and are constantly looking for more effective sales managers. On the other hand, many sales managers are dissatisfied with their job and are thinking about how to change it. This situation is largely explained by the lack of clear documents in companies regulating the activities of sales personnel. For example, unclear job descriptions for sales managers allow employees to be burdened with responsibilities that are not typical for them. Perhaps this allows you to save on hiring additional sales personnel, but in the end it results in low efficiency of the main process - selling goods.
The absence or poor development of regulations for the sales department leads to:
- to the erosion of responsibility for sales results between divisions and employees of the company;
- loss of the company's competitiveness due to the lack of clear management of the sales department;
- employees' reluctance to take responsibility;
- lack of understanding among sales personnel of the relationship between wages and their responsibilities, which demotivates them and makes them want to quit.
The main documents regulating the work of the sales department and its employees are: Regulations on the sales department, job descriptions of the head and employees of the department, Sales Book, regulations on individual components of trading activities. Let's look at these documents in more detail.
The base document is Regulations on the sales department. This document typically includes the following sections:
- General provisions.
- Department structure.
- Activities.
- Functions of the department.
- Rights.
- Responsibility.
The content of each section is largely determined by the specifics of the activities of a particular enterprise. The “Activity Areas” section reflects the key business processes of the sales department. For example: creating and updating a customer database, searching for potential clients, conducting negotiations, drawing up and concluding sales contracts, fulfilling orders, etc. The areas of activity for which the company’s sales department should be responsible are recorded here.
The next section, “Department Functions,” answers the question: what should the department achieve? For example: an increase in the profitability of concluded contracts, an increase in the number of large buyers, high-quality and timely preparation of documents, etc.
The “Rights” section records the rights of sales department employees: to request from company employees information, documentation and materials necessary to perform the functions of the sales department; submit proposals for improving the activities of the sales department for consideration by the immediate manager; participate in the selection of department employees; participate in the preparation and approval of plans and budgets; determine the functions and responsibilities of sales department employees.
In the “Responsibility” section, as a rule, it is indicated that the head of the sales department is responsible for the proper and timely performance of the functions provided for in the Regulations.
The job description of the head of the sales department has the following sections: general provisions, job responsibilities, rights 213 and responsibility. When developing it, it is advisable to use a standard form.
Job descriptions for the sales manager and other department employees have similar sections.
When drawing up job descriptions, it is necessary to take into account that managers need some freedom of action to make independent decisions, but there must also be clear rules. On the one hand, no document can describe all the nuances of an employee’s work. On the other hand, in the absence of fixed rules, an enterprise can turn into an amorphous entity where no one knows their responsibilities and rights.
The job description, specifying the functions of each employee, facilitates his adaptation. This document makes it easier to resolve discipline-related problems. The use of disciplinary sanctions and rewards becomes justified.
As you know, an employee’s production behavior consists of three components: “need” - “can” - “want”.
« Necessary"- reflects the employee's understanding of what production behavior is correct. Typically, a description of such behavior is recorded in the job description.
« Can"- reflects the potential, qualifications of the employee, his professional knowledge, skills and abilities.
« Want“- reflects the employee’s desire to comply with correct production behavior, realizing his professional potential.
The financial position of the company largely depends on the professionalism of the sales department employees, so its management needs to do everything to make it easier for them to carry out the sales business process. A significant role in this can be played by the development and description of the procedure for performing the operations that make up the sales process. To do this, experts recommend creating a Corporate Sales Book.
Book of Sales Standards
A corporate book of sales scenarios (or standards) is an internal document of the company containing information about the rules of work in the sales department, techniques, methods of work of sales personnel, methods of serving customers, offering them goods and services. Naturally, like the content of all other internal documents of the company, the content of the Sales Book is largely determined by the specifics of the enterprise. However, based on the experience of many companies, experts provide recommendations on the structure, content and methods of developing this document.
A corporate book of sales scripts (or standards) is:
- a set of rules and regulations for customer service adopted by the company;
- a collection of language forms and norms of behavior of sales personnel in the sales process;
- a textbook with theory and practice for the company's sales personnel.
The corporate sales playbook describes:
- unique characteristics of the organization that inspire confidence and favor with the buyer;
- features of the company’s product offerings that motivate the client;
- unique characteristics of goods that attract the buyer and arouse his sympathy;
- argumentation of the reasons prompting the buyer to purchase the company’s products or purchase them from this particular trading structure.
In contrast to the situation when each seller himself searches for and establishes sales techniques and methods, an enterprise develops standards common to all employees of a given company. Experts emphasize that with the help of the Sales Book it is possible, without attracting significant resources, to improve the sales system and accordingly increase the company’s profit. Its use reduces the adaptation time of a new salesperson in the workplace by 30–50%. The sales book helps build training for sales personnel, based on known standards and rules of sales, as well as conduct certification of salespeople.
The structure of the Sales Script Book can be as follows:
- About the company: mission and values; market positioning; facts about the company that will give it credibility.
- Company products: description of goods by area; competitive advantages of a product (group of products); target audience of the product (group of products); reasons to buy your product; reasons to buy a product from your company.
- Company clients: groups and features of working with each group of clients.
- The company's competitors: their strengths and weaknesses.
- Negotiations and correspondence: rules for working with clients; telephone etiquette; preparation of commercial proposals; conducting electronic correspondence.
- Description of sales stages: establishing contact; identifying needs; presentation and argumentation; work with objections; completion of the transaction; leaving contact.
- Seller's Dictionary: practiced phrases of greeting and farewell to the client; ready-made phrases for each stage of sales; words and expressions that increase sales; prohibited words and expressions; questioning technique.
The sales book must be constantly updated and supplemented with new experiences in interacting with customers; it must be a working tool for sales personnel.
In addition to the Sales Book, if necessary, separate documents are developed that regulate areas of trading activity that are particularly important for a given company. Here are examples of such documents:
- regulations for working with a new buyer;
- regulations for re-selling;
- procedure for documenting the sale of goods;
- position on working with VIP clients, etc.
The main task of the regulations for performing a certain work is to formalize the experience accumulated during its repeated execution. The regulations are drawn up not only based on the requirements of the company management for the quality of work. First of all, information about the techniques and methods of work of the best sales managers is used.
We will indicate the main results of the implementation of regulatory documents in a trading company.
Employees achieve desired results faster. The regulations are an effective tool for the adaptation of new employees to the team, their involvement in the customer service process, and their achievement of the required professional level.
Saving. Costs for recruiting and training sales personnel are reduced.
Customer trust. Work regulations bring order to the business, and this, in turn, gives clients confidence that the company's employees perform their functions accurately and reliably.
The knowledge necessary for staff remains in the organization, is enshrined in regulations and is transferred to new employees.
Control and motivation. It provides the opportunity to control the sales process, customer service and other work of employees, as well as create a motivation system, since the standards are directly related to the assessment and training of personnel. Once fixed on paper, the regulations become an official document of the company. By consulting it, the employee always knows what to do in a given situation. This brings stability to his work and saves time and effort.
An important aspect of managing a sales department is control.
Sales control is a system that makes it possible to know what is happening in the field of sales: how many contracts have been concluded, at what stage the negotiations are, how productive the employees are, etc.
When implementing control, it is necessary to answer two questions: what to control and how to control. Only the most important indicators that allow monitoring results are subject to control, otherwise the costs of control will be incommensurate with its effect.
When controlling sales, two levels of control should be applied: systemic (sales indicators in general) and personal (employee indicators). The system level allows you to move towards the planned sales volume and see the whole picture, and timely notice market trends. The personal level allows you to evaluate the effectiveness of each employee and, if necessary, make adjustments to his work.
Sales control can be external and internal. Internal control is control carried out by company employees (regular reports from sellers, production meetings, etc.). To control the quality of work of sellers, sometimes there are not enough internal resources, then external ones are brought in. This could be a “mystery shopper” method, test calls, visits, etc.
Control will only be effective when it is unavoidable. To do this, you need to record all tasks and instructions to employees, their obligations, and then regularly check implementation and be sure to draw conclusions based on the results of control.
It must be emphasized that it is unacceptable for a manager to control something that has not been agreed upon in advance. This disorients subordinates.
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Let's remember how you started your business. Most likely, at first, you sold your goods or services in the company on your own.
Since you were the founder and owner of the business, you needed money, and you dealt with attracting clients yourself, and with all the paperwork at the same time.
By the way, we had the same thing. I still laugh and remember my first cold calls, which we made from a cafe when we didn’t have an office yet.
And if you did everything correctly and clients appeared, then money appeared accordingly.
The volume of work increased and you could no longer sell on your own; you had to devote time to marketing and perform management functions.
Naturally, sooner or later everyone was faced with the question of creating a sales department.
And most likely you have created a sales department “like everyone else.” But has it become effective with this scheme?
Soooo, now we will create
Let me tell you about the structure of the sales department and its functions. I’ll show you an example of what the organizational structure of a sales department might look like in different businesses.
Why You Need It?
Sometimes a business needs a small cog to make it work much faster.
And perhaps the knowledge from this article, the diagrams that I will show you, will become just such a gear. You will change your approach to marketing, document flow and management in general.
The most important part of the business
No, this is not accounting (although you definitely need to pay taxes! The question is just the amount;)) and not the document flow of the enterprise, and not even marketing.
The most important part in any business is this! There will be sales, the business will prosper and grow. Therefore, the issue of organizing the structure of your sales department always arises.
Please note, this is the sales department, not the customer service department, as is often the case in large companies.
There are quite enough clients and sales managers work with existing ones, while occasionally closing new deals from incoming clients.
Well, at best, they do it occasionally. That is, they do marketing, accounting, closing documents, but sales are the last thing they do! And this is all with the approval of management!
Oh my God! In this article we will talk specifically about organizing sales at your enterprise.
Types of structures
Let's deal with each sales department in turn, where we will look at its differences and main features:
1. Sales representative
Sales Representative Preface. If suddenly you don’t know, then ROP is. Oh, these professional terms!
What business is it suitable for?– Retail (corporate sales), network marketing, services, b2b.
There is a head of the company who himself performs the role of manager and ROP, or he has a separate person in this position. He has several sales representatives under his command.
A simple example. The enterprise of one of our clients, which is engaged in the wholesale sale of building materials in Siberia (4 branches).
There is a general director to whom the ROP reports (in the main branch), and the ROP has from one to five sales representatives subordinate to him.
As a rule, the division of sales representatives in such a scheme occurs either on a territorial basis or by product range.
2. “Like everyone else”
Sales Manager Preface. The position “sales manager” implies not only big business, such as wholesale companies.
This concept also includes retail store salespeople and, possibly, company dispatchers who provide services and simply receive incoming calls.
For me, the position of sales manager is comprehensive and is automatically given to the person who is responsible for sales in the company :)
Why is it like everyone else? Yes, because we see a similar example of building sales departments all the time, because it is universal and suitable for any business.
A slight difference from the first one is that there are one or more sales managers/salespeople/dispatchers subordinate to them, who, for the most part, sit at their desks or occasionally go to meet with clients.
One more example. Our client who sells special equipment in Russia (5 branches throughout the country).
There is a general director who is in charge of basic management; in each ROP branch and under him there are from one to ten sales managers who sell special equipment worth tens and even hundreds of thousands of dollars, without even leaving the office.
What business is it suitable for?– Retail (only if your sellers simply accept incoming calls), services, b2b and online stores (incoming calls).
3. Three-stage
Three-stage Preface: I’ll say right away that these names are not generally accepted. I wrote the names in simple and understandable language.
But if the first 2 examples of managing a sales department are known and understandable to everyone, then this and the next one are rare and their construction can be done in any way.
For example, experienced consultants will charge a wholesale company from 500 thousand rubles (and we will not be an exception, since the work process is indeed very complex).
I even foresee your question: “What is Lead Generation, Lead Conversion, Account Management?” I agree, anyone can throw around clever terms, so I prepared what each of these mysterious people does.
- Lead Generation– generation through cold calls and active sales. In fact, searching and collecting a database of potential clients.
- Lead Conversion– those same familiar “sales people” or sales managers who meet with the client and directly try to close him on a deal.
- Account Management– not very common, but extremely necessary people in the company. After the contract is concluded and payment is made, they arrive. These are people who directly lead the client to the completion of the project/receipt of the desired product.
What business is it suitable for?– Services, b2b (especially when selling expensive products or a long transaction cycle).
Example: Companies that sell CASCO/MTPL. In the evening, students come to the office (or a call center is hired) and call clients using a prepared database, selecting potentially interested ones.
Naturally, they do all this using template sales scripts. Next, the list of potentially interested clients is transferred to sales managers.
Who already conclude a deal, process the client and all his objections and invite him to the office, where the client is served by completely different people.
They calculate the insurance, conclude an agreement and take money from the client, that is, they do not sell, but simply arrange it. It's all so interesting and simple!
Any advantages?
At least one and very important, in the first 2 examples of sales departments you will always have one or two sales representatives or sales managers.
The so-called “stars” who, having developed their own client base, contacts with suppliers and others, will immediately leave you in 2-3 years.
And they won’t be afraid that there is no built-in system for attracting clients, for example, marketing (“there are clients who buy, I’ll just offer a lower price!”); the desire to stop “working for someone else” will always win.
In this same model, turnover is not excluded, but “business loss” is excluded, at least because you do not employ generalists, but narrow-niche specialists.
The caller (the one who makes cold calls) is excellent at calling, but at the same time does not know how to sell at a meeting, etc. I think you understand the main idea.
4. Four-stage
Four-stage structure What business is it suitable for?– Services, b2b (especially for companies when selling expensive products or a long transaction cycle).
What is the difference from 3-stage?
Another type of people is being added, namely Lead Development. Look who it is below 😉
Employee functions Lead Development– these are people who, after you and the client have closed a deal and he has received his product/service, call him, remind him of himself, increase loyalty and try to make repeat sales.
Example. The most commonplace and understandable for everyone is business – car dealerships.
Where some call and make appointments, others hold meetings and finalize the deal, others guide the client during the warranty period, and others deal with repeat sales and receiving feedback.
Briefly about the main thing
It was logical to end this article with such advice, in the style of “Here are examples for you. Here are the pros and cons. Choose which sales department structure you like best!”
But no, I’ll just add a couple of phrases on my own – a 3-position department, in my opinion, is ideal for complex businesses, or for very ambitious and focused ones.
With its devilishly complex implementation, it can be used to scale many times faster.
If you are just starting out, then you should choose the “Like everyone else” scheme, and when you see that it is time to increase efficiency, you will switch to a 3 or 4-stage sales department.
But it’s fair to say that no sales department will work effectively without the right tools to do so. For example, such as sales scripts.