Chapter 3: Organisation & Compensation Flashcards
Geographical Organisation Structure
An organisation structure by which the sales staff is divided amongst assigned regions
Pros of Geographical Organisation Structure
- Lower cost (travel expenses)
- Simplicity
Cons of Geographical Organisation Structure
- Limited selling of product variety
- Less product specialisation
- Lack of reporting marketplace changes
Name the different kinds of Product Specialisation Organisation Structures
- By product line
- By new/existing products
Product Specialisation Organisation Structure: By Product Line
An organisation structure by which the sales staff is divided per product
Pros of Product Specialisation Organisation Structure: By Product Line
Good knowledge of products and applications
Product Specialisation Organisation Structure: By New / Existing Products
An organisation structure by which the sales staff is assigned according to product priority
Pros of Product Specialisation Organisation Structure: By New / Existing Products
- Specialisation of selling skills
- Greater attention given to new products
- Eliminates competition within product range of a company and provides clarity of purpose
Cons of Product Specialisation Organisation Structure
- Potential for route duplication (travel costs)
- Buyer called upon by different representatives of the same seller may cause confusion / annoyance
- Territories are bigger than for geographic
- High cost structure
Name the different kinds of Customer-based Organisation Structures
- Market-centred
- Account-size
- New / Existing accounts
Customer-based Organisation Structures: Market-centred
An organisation structure by which sales staff are assigned based on industry / segment
Pros of Customer-based Organisation Structures: Market-centred
Monitoring changes and trends within markets / industries
Cons of Customer-based Organisation Structures: Market-centred
High cost
Customer-based Organisation Structures: Account-size
An organisation structure by which sales staff are tailored to high-value vs. low-value customers
Pros of Customer-based Organisation Structures: Account-size
- Salesforce resources linked to customer value
- Reduces costs of serving small accounts
- Specialisation of selling skills
- Career opportunities for salespeople (promotions)
What are the benefits of high level of resources being targeted at key accounts?
- Close working relationships
- Improved communication and coordination
- Better service
- Deeper DMU penetration
- Higher Sales
Which organisation structure leverages high levels of resources targeted towards key accounts?
Customer-based Organisation Structures: Account-size
Cons of Customer-based Organisation Structures: Account-size
Very high cost of servicing key accounts
Customer-based Organisation Structures: New / Existing accounts
An organisation structure by which sales force resources are allocated by recency
Pros of Customer-based Organisation Structures: New / Existing accounts
- Ensures new accounts get sufficient attention
- Specialisation of selling skills
- Eliminates competition between prospecting and servicing of accounts (clarity of purpose)
Cons of Customer-based Organisation Structures: New / Existing accounts
- High cost
- Potential loss of account when transferred from a new account team to existing account team
Mixed Organisation Structure
An organisation structure that combines multiple structures to adapt to specific markets or to lower costs
Which organisation structure is used most in practice?
Mixed Organisation Structure
Name the factors to establish sales territories
1) Workload
2) Sales Potential
What are the objectives of sales compensation?
- Motivate salesforce
- Attract & hold successful salespeople
- Direct efforts into specific sales objectives
- Ensure costs are in line with changes in sales revenue
Name the types of salespeople according to Darnon’s theory
- Creatures of habit
- Satisfiers
- Trade-off-ers
- Goal oriented
- Money oriented
Creatures of habit (Darnon’s theory)
Salespeople who earn a predetermined amount of money
Satisfiers (Darnon’s theory)
Salespeople who earn the minimum amount required to keep the job
Trade-off-ers (Darnon’s theory)
Salespeople who have a personal ratio between work-life (aren’t influenced by higher earnings)
Goal oriented (Darnon’s theory)
Salespeople who prefer recognition and are sales quota oriented
Money oriented (Darnon’s theory)
Salespeople who aim to maximize earnings, often to the sacrifice of family, leisure & health
Which type of salesperson, according to Darnon’s theory, has the most variable type of earning?
“Money oriented” salespeople
Which type of salesperson, according to Darnon’s theory, has the most fixed type of earning?
“Creatures of habit” salespeople
Name the 3 types of compensation plans
- Fixed salary
- Commission only
- Salary + Commission
