Sales Department Orginization, A complete guide. Must read for Sales Managers

In as much as the salesman comes into immediate contact with, and is an important part of, the sales department, it is important that he possess a clear understanding of its organization and functions. Since the ultimate purpose of the company is that of sales, the sales department is rightly recognized as one of the ma j or departments of the business.
The organization of the sales department will depend, of course, upon the size of the company and the nature of the business. The principles underlying its organization remain much the same, however. The nature of the organization depends somewhat upon whether the salesmen travel out of the home office or from divisional headquarters or branches. In the latter case there will be a general sales manager at headquarters who exercises supervision over the branch sales managers.
The salesman will then be under the direct supervision and control of the branch manager who is in close touch with him and the conditions surrounding his work.
Naturally, in large concerns the organization is likely to be intricate. The salesman will do well, if it be possible, to study carefully a diagram and description of the organization of which he is a part so as to gain a clear idea, not only of the interrelation of its different divisions and- subdivisions but, more important, the personal points of contact with himself.
He should know in detail the nature of his relation to the sales manager, the advertising manager, the sales-promotion manager and the various sales correspondents, with special reference to his duties and responsibilities in relation to each and how he may prepare himself to cooperate.

 

General sales Policies

Every concern which produces something to be marketed must determine upon certain sales policies. The salesman must make himself thoroughly familiar with these. Chief among them are :

• The selection of channels through which the goods are to be distributed—shall they go through jobbers, through retailers, a combination of those, or possibly direct to the consumer?
• The fixing of prices, including a consideration of standardized prices, quantity prices, price maintenance, price control and competitive prices.
• What shall be the terms of sale going into time credits, trade discounts, cash discounts, and exclusive sales?

In theory, at least, sales policies are determined by the board of directors or by the chief executives. The relation of the sales department to general sales policies is simply that of execution. However, this sharp line of demarcation is not always observed.

 

Supervision of sales

Usually sales are under the control of the general manager, to whom the sales manager reports. The sales manager is, of course, in direct charge of all activities of the sales department. It is not unusual for one of the chief executives of a company to be in general charge of sales. "Vice-President in Charge of Sales" is a title frequently met with. Very often the term "sales" includes advertising, and both the sales and advertising managers, coordinate in rank, report to the vice-president in charge of sales. Usually under this plan of organization, the vice-president in turn reports to the president or other general manager.
In some instances the sales manager exercises the function of advertising manager; in others the advertising manager is subordinate ; in somewhat rarer instances the sales manager is subordinate to the advertising manager; and in others there is a separate advertising department whose manager is on an equal footing with the sales manager and reports only to the general manager.
Irrespective of the particular type of organization, there is, or should be, close cooperation between sales and advertising. On this page we shall confine ourselves to a discussion of the functions of sales management and sales promotion, treating it from the standpoint of the salesman.

 

Personnel of sales department

The personnel of the sales department usually consists of a general sales manager, an assistant sales manager, branch sales manager, sales correspondents, statistical clerks and stenographers. The various titles are explanatory of the positions.
An efficient sales manager should possess, among other characteristics : the art of personal , contacts, the ability to make quick and easy adjustments to other personalities ; executive ability, especially in handling men and in office management ; a reasonable amount of selling experience; a knowledge of human nature and ability to size up men; and the ability to organize, instruct and direct others in various sales activities. It is seldom that a sales manager possesses all these qualities in a marked degree, but a reasonable combination of them is often found.

Functions of sales management

The chief functions of sales management are:

• Recruiting and employing salesmen and fixing their compensation and respective territories.
• Training the salesmen in knowledge of the goods and in methods of selling them.
• Supervising and directing the sales activities of the men out in the field, sending them letters and providing helpful information.
• Preparing and furnishing equipment for salesmen in the way of samples, sample cases, price lists, kits, portfolios, or whatever else may be necessary, depending on the nature of the business and the product or service sold.
• Supervising and checking the expense accounts, route lists, detailed reports and daily letters of the salesmen.
• Determining sales quotas, providing bonuses and prizes, conducting sales contests and special sales campaigns.
• Preparing, or directing the preparation of, sales manuals, or salesmen's handbooks, giving detailed information about the company, the products, and the sales principles and methods involved in selling.
• Cooperating with the advertising department by helping the salesmen utilize and sell the company's advertising and aiding them to assist customers to make use of advertising helps, and by obtaining reports from the field concerning the reaction to the company's advertising and that of competitors.
• Cooperating with the production department in the matter of qualities, quantities, containers, packages, sizes and seasonal goods, and reporting their reaction on dealers and consumers.
• Making investigations of the products or offering to discover new uses and new appeals to dealer or consumer.
• Conducting, or arranging for, special market surveys and analysis of territories with a view to discovering new markets for the goods or new methods of developing old markets.

 

The sales-promotion department

In large, well-organized concerns many of the foregoing activities are taken over and carried on in greater detail by a separate division of sales, called the sales-promotion department. Supervision is in the hands of an executive or department head usually designated as the sales-promotion manager.
Sometimes he reports to the sales manager, probably more often to the advertising manager, and frequently he is coordinate with them, reporting directly to the president, general manager or vice-president in charge of sales. There is such a strong tendency in this direction that we discuss here in some detail sales promotion as a separate activity, despite the fact that to do so involves some repetition.
The distinction between sales promotion and sales management is well indicated by the terms. Sales management consists largely of managing the salesmen. That is, directing and controlling the details of their sales activities. Sales promotion is chiefly concerned with devising plans for stimulating sales and methods for putting these plans into operation. Management is mostly occupied with people; promotion with plans and methods.
Naturally, it is only in the larger organization that this distinction can be observed and a separate department of sales promotion set up. In smaller organizations the sales manager or advertising manager usually performs or directs those functions of sales promotion which are in operation. Regardless of whether or not there is a separate department, the present tendency is to enlarge the scope of sales promotion activities.
The reason for this is the need for greater efficiency in sales activities. Most concerns to-day are geared up to a high scale of production. During the past thirty years scientific management has been applied to all departments of business and now is being applied in distribution.
The latter has been comparatively neglected despite the fact that competition has been growing keener than ever. It is now generally recognized that large losses are caused by wasteful 'and inefficient methods of distribution and that these can be eliminated by means of market research, careful surveys and planning—all functions of sales promotion.
Furthermore, the tendency is away from price competition and toward competition in quality and services. The idea is to do more to help the dealer move the goods and help the consumer use them to the best advantage.
This makes desirable, if not absolutely necessary, various services to the dealer and sometimes to the jobber, relating to methods of merchandising, including retail salesmanship, stock display, mark-up, turnover, adjusting complaints, utilizing advertising material and helping consumers understand the various advantages and uses of the product. All this requires constant investigation and experiment which the sales manager cannot very well perform unaided.
Then, too, because of the stress of competition, it has become increasingly necessary to supply salesmen with more assistance in the way of improved equipment, portfolios, kits, sales manuals, bulletins, house organs and advertising booklets; and to provide the stimulus of special sales campaigns and contests.

 

Functions of sales promotion

The functions of sales promotion considered as a separate department of a business are:

• Prospecting territories by investigating and preparing reports upon selected cities, counties, states, or regions, giving the physical layout, transportation facilities, financial resources, population and general market possibilities.
• Prospecting individual buyers or logical customers by investigating and classifying them according to needs, occupations, fitness, financial standing, purchasing power, buying habits and locations.
• Making specific market surveys and analysis, securing detailed and authoritative information regarding the quantities of certain classes of goods sold in given localities, the satisfaction given and sales problems involved, the number of dealers, their advertising and selling methods, and the probable capacity of that market to absorb more goods. Statistical reports, charts and graphs of these surveys are prepared and used as a basis for organizing or reorganizing sales forces, adjusting territories, fixing sales quotas, and finding and developing new markets for the goods.

 

Preparing for and supervising special courses in salesmanship

These include lectures, group discussions, and problem solutions covering the entire subject of salesmanship applied to the company's particular offering. Assigned work is performed and handed in by the salesmen. Such courses are sometimes conducted by correspondence where group meetings are not practicable, and include :

• Studying and analyzing the product with a view to discovering new uses, devising new sizes, shapes and containers and new appeals to dealers and consumers.
• Studying the equipment of salesmen, such as sample kits, models, portfolios, samples of products, and display cards.
• Preparing sales manuals and salesmen's handbooks containing detailed information concerning the company and the product, sales instruction, and solutions of sales problems.
• Preparing sales literature, booklets, pamphlets and special sales letters ; and editing periodical bulletins and house organs sent to the salesmen.
• Devising and handling special sales campaigns and sales contests sometimes involving prizes and bonuses.
• Preparing and conducting programs for conferences and conventions of salesmen.
• Preparing and conducting exhibits in business and industrial shows and general conventions.
• Stimulating sales through established channels and winning back old customers.

Naturally, many of these activities will be much more effectively handled by a separate department of sales promotion than would be possible by the sales manager and sales department alone.
Let us now consider these various policies and activities from -the standpoint of the salesman and his customers.

 

Sales channels

The routes and factors through which goods pass from producers to consumers were formerly pretty well standardized as shown by the following elementary chart:

1. Manufacturer
2. Wholesaler or jobber
3. Retailer
4. Consumer

It was formerly considered to be bad business ethics for the manufacturer to deal directly with either the retailer or the consumer. However, the growth of large retail organizations such as department stores, chain stores and cooperative associations of retailers and consumers which bought in wholesale quantities induced the manufacturers to sell direct to them.
The development of selling direct to the retailer trade also induced direct dealings with individual consumers and the growth of "house-to-house" selling by the manufacturer and the jobber.. At the present time the old standard method of distribution is no longer exclusive. The entire market is an open one although the standard method is still a common one and possesses advantages which will prevent it from being abandoned.

 

Jobber distribution

Where the manufacturer distributes through the jobber exclusively, the following advantages accrue to the salesman and his customers. The jobber (customer) is protected by the manufacturer from his own competition and is often aided by his specialty or missionary salesmen who sell direct to the dealer and place the orders with the jobber. The salesman for the manufacturer is relieved from such prospecting. His customers are easy to locate.
The type of buyers is of a higher grade. This develops a higher type of salesmanship. There are few losses from poor accounts. Most jobbers discount their bills. There is very little collecting to be done. There is not so much hardship in travel. The salesman can confine his work to the larger towns.

 

Retail distribution

Where the manufacturer distributes through the retail trade, the customer (retailer) gains an advantage in prices; the salesman can specialize on his proposition in a way that a jobber's salesman cannot or will not do ; he is nearer to the ultimate consumer and can gain a better knowledge of consumer needs and demands and of the retailer's problems in handling his line. He can effectively meet competition by performing special services in helping to move the goods.

 

Consumer distribution

There are many products and services which from their nature cannot be jobbed or retailed. Office appliances, household machines, gas and electric service, insurance and educational courses, constitute some examples. These must be sold directly to the user.
Among the advantages to the salesman in this form of distribution are: Less direct competition; a better chance for specialty salesmanship and a more numerous class of prospects. It is desirable that the salesman, especially the man new to selling work, have some knowledge of how the sales manager ordinarily works and just what he does to kelp in touch with the salesman's work and to keep the salesman in touch with the home office and with his associates in the selling organization. This knowledge should help the salesman know approximately what cooperation to expect and how he can best cooperate with the sales manager. The same advantages, in lesser degree, exist in house-to-house selling. In this latter form of selling the average sale is usually small.
Nevertheless, this type of salesmanship affords good training for higher grades of specialty selling. It also offers a steady employment for those who are not qualified for more important selling work.

 

Standard prices and price maintenance

When a company standardizes its prices and maintains a fair measure of price control, the customer is protected to a considerable extent from cut-price competition. The salesman also gains the same advantage. He will occasionally lose orders by reason of not being able to meet lower prices, but the gains are greater than the losses. Standardized prices compel the salesman to sell on the merits of the product or service instead of price. This promotes a higher grade of salesmanship.

 

Policies and activities of the sales manager

The following sections provide a survey of the main policies and activities of the sales manager in his relations to the salesman:

• Sales letters and reports. In most concerns the sales manager keeps in daily contact with the salesman by means of letters, inspirational suggestions, market reports and the like. The purpose is to keep the salesman in close contact with the department and keep him fully advised concerning goods, markets, and general sales activities.
  He will be told what other salesmen are doing and how they do it. He will be complimented on good work and corrected on poor work. The sales manager, if he be truly a sales manager, will take a personal interest in the salesman and endeavour to encourage and assist him. On the other hand, the salesman will usually be expected to communicate daily with the sales manager. This takes the form of a letter and orders, if any, and a detailed report on his activities. A report sheet is supplied for that purpose.
  There is a twofold effect in this report : To keep the sales manager advised as to the details of the salesman's work, and to require the salesman to review his activities each day. These details are sometimes irksome to the selling type of mind, but the practice is valuable. It compels the salesman to review and pass judgment upon his work. It also enables the sales manager to do so.

 

Sales conferences and sales training courses

In most concerns a system of sales conferences is organized and conducted by the sales manager. The main purposes are to bring salesmen into touch with each other, analyze sales problems, suggest solutions, improve methods of selling, and gain a better knowledge of goods and markets. These conferences should encourage, stimulate and inspire the sales force. In concerns where the sales force is a local one, such conferences are held weekly; in others they are monthly; and in some aggressive specialty selling organizations, brief meetings are held each business day morning. In most large organizations with branches there are regional conferences held quarterly. In others the entire sales force is convened at headquarters once or twice each year.
The programs will depend upon the nature of the business. They are mostly instructional with some inspirational features. The modern tendency is to eliminate purely "pep" features and make the conference a business gathering for business purposes. Such conferences as these offer the salesman an excellent opportunity to tie in with his sales organization and gain useful information.
In many concerns the salesmen are taken through a sales training course. Almost every well organized, progressive concern today provides an effective training course for new men. A smaller number provide one at intervals for its older men. This practice has been found effective and is rapidly growing. The course will usually consist of ten or twelve sessions at such intervals as may be practicable. Instruction will be given in general principles and methods of salesmanship together with practical applications to the particular product sold.
The course will be conducted preferably by some one in the sales department who is specially qualified. It is sometimes conducted by an expert from outside. When properly handled it will greatly benefit the entire sales force. Experienced salesmen as well as the new salesman benefit from it. The sessions consist of short lectures, discussions, solutions of actual sales problems and, when practicable, some actual training on the job.

 

Sales quotas

It is a common practice for sales managers to prepare an estimate or a budget of the amount of business which ought to be obtained from the salesman's territory. It is usually large enough to act as a constant stimulant to the salesman, but not so large as to discourage him. As a rule it is fair and equitable and is based upon careful comparisons and estimates. It affords a valuable check-up for the salesman and prevents carelessness and waste of time. The ambitious salesman will welcome this opportunity to measure his achievement against expectations and will constantly spur himself on to equal or exceed his quota.

Sales contests, bonuses and prizes

Special sales campaigns and contests are frequently conducted by the sales department. Bonuses and prizes are offered and are so adjusted as to come reasonably within the reach of diligent salesmen. Such campaigns offer to the salesmen the interest and excitement of a contest and tend to break up monotony. They afford the satisfaction of being a prize winner, and of gaining something extra in the way of compensation. If not carried to excess they are a useful means of stimulating sales and are profitable to both the company and the salesmen.

 

Sales manuals and portfolios

Most concerns furnish salesmen with a sales manual or "salesman's guide." It is usually constructed with great care and covers the salesman's entire needs and requirements. It handles in detail such matters as the company, the products, the sales policies, terms, credits, adjustments, reports and the like.
Some manuals contain a brief survey of the principles and methods of salesmanship as applied to the company's particular offering, giving special attention to objections, methods of anticipating objections and sales resistance encountered. It brings to the salesmen the ideas and experience of the sales executives and star salesmen of the company. A good sales manual is a valuable aid to the salesman and he can make daily use of it in his work.
Some concerns which do extensive advertising provide the salesmen with a special advertising portfolio containing illustrations and discussions of the advertising. This is a substantial aid to the salesman in presenting his talk on the advertising. We shall discuss this subject in greater detail in "Utilizing The Company's Advertising." Frequently, there are numerous other portfolios furnished; for example, those containing endorsement letters and samples or facsimile reproductions of sizes, shapes and colors. These are carefully prepared with a view to aiding the salesman in his presentation.

 

House organs and bulletins

In many concerns a periodical house organ or bulletin is published and sent at regular intervals to the salesmen. In some cases it is a weekly publication, in others a monthly. It usually contains interesting news concerning what is going on inside the organization as well as out in the field. It will contain special articles along the line of products and sales. It will include interchange of ideas, sales experiences, and much news of a personal nature.
A well-edited house organ will keep the salesman in closer touch with the company and }pore especially with the sales organization. It will promote a fellow feeling among the salesmen and stimulate a sense of loyalty to the company. The modern tendency is to make the house organ more of a business sheet and less of a "hip-hurray." However, the news and personal elements predominate. It is a valuable adjunct to sales efficiency.