Question

Sales plays an important role in allowing a business to maintain long-term relationships with customers. Sales force structures can be critical in allowing companies to distribute their products to their customers effectively. Typical sales force structures include territorial, customer, or product structures. Each structure has pros and cons. In addition, a sales force should be routinely evaluated to determine how effective it is in reaching company sales goals. The choice of how to compensate a sales force, whether through incentives, bonuses, or even contests, may also impact how effective a sales force is.

Imagine that you are the sales manager for a company that makes cabinet hardware, which it has traditionally sold to large contractors who build homes and offices. Your company has built a solid reputation and grown its business regionally, and it is now looking to sell its products to end consumers through national retailers such as Home Depot and Lowes. Your challenge is to create a sales force structure that will meet the expanding role of sales in your company.

In an essay, explain how you would:

structure the sales force. Explain why the structure you recommend is better than alternative approaches. compensate the sales force.

Explain why the approach you recommend would provide the right incentives for the sales force.

Answer 1

The sales force must be structured in a way that it effectively binds the consumer demands and the market segmentation. This binding is essential for successful performance of the sales force.

I would give a territorial structure to the sales force of the company. Territorial structure is one in which each salesperson is allotted a geographical area based on market segmentation to deal with the customers. This kind of structure gives autonomy to the salesperson to master his region.

The advantages of the territorial structure over other sales force structures are:

• It is a low cost structure
• Territory management ensures that there is no duplication of efforts based on region
• Unique coverage of customers

The job performance based on territorial structure can be easily validated with the number of customers enrolled or covered. Hence this structure facilitates incentivization of the sales force. The incentivization can be done based on the coverage of employees in a particular time period.