As a general rule, most businesses spend between five and 10 percent of sales on their sales force. Larger businesses often spend more.
You will have two types of costs when it comes to your sales force: compensation and expenses. Compensation can take the form of salary, commission, or a combination of the two.
You will also have to cover the expenses your salespeople incur as they carry out their jobs (such as transportation costs, any meals they have with prospects, etc.).
If they have enough money, most businesspeople prefer to hire an in-house sales force and marketing staff. The main advantage to doing so is that you have a high degree of control over your sales team.
This allows you to train your salespeople your own way and to oversee and direct their activities. Hiring an in-house sales staff also ensures that all of your salespeople will focus on your products exclusively.
If you chose to work with an independent sales representative, that representative might represent a number of other clients in addition to you. You might, in a sense, have to compete with these other clients for your rep’s attention.
Before you can build a sales force, you need to define what kind of sales and marketing functions your company needs to perform to meet its sales objectives.
This means defining the positions which you will need to fill, how each position works with the others, and how you will structure the sales and marketing force.
Defining the department positions
In most cases, the sales force comprises a number of different positions. To decide which positions you need to meet your goals, take into consideration how much money you can devote to sales, how you will provide your product or service to your clients, and, indeed, whether you will sell a product or service in the first place.
Some positions require salespeople to make cold calls and persuade prospects to buy, while others only require them to take orders from customers who have already decided to buy, and know exactly what they want to buy.
There are seven broad types of sales positions:
Delivery Persons. These employees don’t generate sales but are responsible for the prompt and safe delivery of the product. They are, therefore, important to the sales force in that they need to provide excellent service to their clients.
Inside Order Takers. These are passive salespeople who are present to assist the customer and make the buying experience a pleasant one.
Outside Order Takers. These are passive salespeople who service customers in a specific geographic territory.
Public Relations Salespeople. These employees are responsible for carrying out promotional activities and providing other services for the customer.
Technical Salespeople. These people have a great deal of technical knowledge as well as superior selling skills. They can discuss the product or service in-depth with the customer. They can perform product demonstrations if necessary.
Creative Sellers of Tangibles. These kinds of employees conduct outside sales of a physical product line using creative selling techniques to educate customers and persuade them to buy. Persuasiveness, product knowledge, honesty, and the ability to pinpoint and meet a customer’s needs are crucial for this position. Depending on the technical complexity of the product, this position can overlap with that of the technical salesperson.
Creative Sellers of Intangibles. These employees are similar to creative sellers of tangibles except they work with products which prospects cannot easily see, such as insurance, advertising, and consulting services.
The marketing force
Depending on your needs, your budget, and the size of your company, you might not hire a separate employee to perform each function. On the other hand, you might need to hire more than one employee to carry out a given function.
Marketing. The marketing director or coordinator manages all marketing efforts, controls the workloads of all marketing associates, and manages their schedules.
Market Research. Market research personnel acquire and manage all the research supporting marketing and sales efforts. They work closely with marketing to make sure their efforts are useful and timely.
Creative. These personnel manage all of the artistic aspects of a marketing effort, including ads, flyers, brochures, etc. They work closely with marketing to ensure the art meets the specifications of the marketing effort.
Production. These personnel carry out assignments for various departments. They work closely with either the creative director to create ads, brochures, etc.; or with the research director to create and administer surveys, or conduct market research.
Product Manager. This employee manages the advertising and promotion of one or more products, and serves as a technical spokesperson for the item(s).
Media Manager. This person manages the media relations between the company and outside media such as newspapers, magazines, radio, and television.
Copywriter. This person produces writing samples or copy for all marketing efforts, such as ads, speeches, sales letters, technical manuals, etc.
Art Director. This person designs art pieces for marketing efforts, which the production artist will execute. The art director works closely with the creative director to ensure the art piece meets the marketing department’s specifications.
Production Artist. The artist creates and lays out art for any advertising project, such as brochures, letterhead, display ads, etc.
Developing an organisational plan
Once you have decided which positions you will have on your sales force, you must develop an organisational plan for them.
This plan should serve to define communication channels, the flow of authority, and how the sales force will be organised.
One of the first things you need to decide is who will handle which prospects and customers. You might use one of these three methods to organise a sales force:
Territories: The most common way of organising a sales force is by geographic territory. Each sales representative works with prospects or customers in a particular territory.
The first step in organising your sales force by territory is, as you might guess, dividing your market into territories. In doing so, you must make sure that all districts are roughly equal in sales potential. You should also try to ensure that all sales representatives have a roughly equal workload. This will prevent reps from feeling that they don’t have a fair chance to make money and jealousy among reps.
If all of your reps work under similar conditions, furthermore, it will also be much easier for you to evaluate the performance of individual reps. In establishing your territories, take into account factors such as the buying power of the population, the number of businesses in an area, trading areas within the territory, etc.
Product line: Organising the sales force by product line makes sense for companies that offer a mixture of diverse products or services. By devoting each member of your sales force to a specific product line, you ensure that each type of product receives the attention it needs for high sales.
Type of customer or size of the account: Organising your sales force by customer or by size of account would work well if your company dealt with only a few major accounts which represented large portions of your business. By assigning salespeople by account or customer, you can give each major customer the attention and service they need.
Organising the sales force
You may want to organise your sales staff using a combination of the methods.
Since most small businesses have limited resources, many rely on the expertise of their salespeople. Suppose one of your salespeople has extensive expertise in a very specialised and important product you sell to a few major accounts.
Suppose, also, that the rest of your products are more consumer-oriented and require less expertise to sell.
A good way to organise your sales force would be to assign the salesperson familiar with the specialised product to the major accounts which purchase it, and to assign the rest of the salespeople to territories to handle the other consumer-oriented products.
For another example, if one of your salespeople is more comfortable handling large accounts while another is more effective with smaller accounts, organise your sales force to take advantage of these strengths; you’ll experience greater sales.
Your goals when organising your sales force are first, to market your product or service economically and effectively, and second, to ensure that all of your salespeople have the chance to make a decent living. You must evaluate your sales objectives and how much it will cost to meet them.
After doing so, you can choose the organisational method that would be simplest and most efficient, given the nature of your product, your industry, and your customer base.
Structuring sales territories
Choosing a method to organise your sales force is but one step on the road to effective sales. Once you have decided on an organisational method, you need to define exactly how you will assign a group of customers to each sales rep.
This can take a great deal of time and research, but you should end up assigning those territories or customer groups to your salespeople that will allow them to generate the sales that will produce a satisfactory income.
When structuring territories or customer groups, you need to consider several factors. These include:
Current sales and customers: By reviewing your current sales and customers, you can measure a variety of factors that will influence how you structure a territory, such as size of accounts, location, demographics, any shifts or trends in sales and customer characteristics, number of calls needed to service an account, and number of accounts per territory.
In order to conduct an analysis of your current sales and customers, refer to internal records such as customer files, sales reports, financial statements, etc. This should provide you with a detailed picture of how sales are currently distributed, which customers account for those sales, and the amount of effort it takes to service those accounts.
Potential sales and customers: In order to determine potential sales and customers, you need to compile research which can illustrate the market opportunities for your product or service.
You can usually determine the sales potential within a specific market by analysing the area’s spending characteristics, purchasing power, present sales volume of the type of product or services you will be offering, and the proportion of the total sales volume you can reasonably obtain. You can turn to many sources of previously-compiled information to determine your sales potential.
Transportation: Another important factor is transportation. How easily can you service a territory? Say you’ve structured your sales force by account and a salesperson has three clients: one in Melbourne, another in South Australia, and still another in Tasmania.
All of the accounts are major customers and this particular salesperson has a great deal of expertise regarding the product the company sells, yet the transportation costs of providing personalised customer service are tremendous. If the costs prove too burdensome, you are going to have to take control and reorganise that particular salesperson’s group of customers so that they don’t need to travel so much.
This approach doesn’t just apply to air travel. Check the highways within territories to determine ease of access. For instance, if you were organising territories in New South Wales, you might choose to divide it into two regions: North and South.
The traffic in Sydney is so congested that it could take hours for a salesperson to travel from the northern part to the southern portion. By keeping the salespeople concentrated in specific areas, you can decrease the time they spend on the road.