Sales Organization: Definition, Importance, Principles, and Types

What is Sales Organization?

The sales organization is a vehicle that a selling firm owns especially to achieve sales objectives in the best and most profitable way. Different sales personnel are being constructed in a group having contemporary selling skills to achieve qualitative and quantitative sales objectives of the firm.

In fact, the sales organization also called sales organizational structure is a group of sales-related people who strived jointly to nurture the sales goals of the selling company. It is a part of the whole selling organization, which is mainly concerned with effective handling of the customer’s requests, proper distribution, and reaching objectives.

In addition, this is not limited to a sales company, sometimes a company produces products itself and makes a contract with the organization solely involved in selling and has a good market coverage, thus it is also called a selling organization.

Sales organization structure consists of formal and informal relations among the group of people. These people have to cooperate with each other as said by the sales manager to achieve set sales goals.

The sales manager has a crucial role in this organization in activities such as hiring quality talent, giving proper training, assigning roles and responsibilities, effective planning, and so forth. He needs to have him skills to manage these people properly. It needs to have the flexibility and built-in adaptability to respond appropriately to uncertain future circumstances.

Importance of Sales Organization

The sales organization structure is the foundation of the selling companies to effectively execute the sales personnel and sales programs. The more effectively the sales organization is handled the more profit a sales company will generate.

As part of the selling company, the other departments of the company are responsible for the production of goods and services, and it is mainly responsible for the proper management of the sales process and satisfaction of the customers. With the support of different promotional tools – advertising, personal selling, mass as well as small consumer market are effectively served.

The sales manager is at the top to effectively design the sale organization that best respond to the shifting competition, shifting marketing practices, shifting technologies, shifting business environment, and shifting consumers’ taste & preferences. This is best designed considering the capacity and objectives of the selling firm and likely future events which is very important to perform well in the future.

Principles of Sales Organization

Although selling organization itself is an effective vehicle, to further make it more effective and result-oriented it is guided by the following principles.

Principle of Executive Time Economy

Sales organizations should be designed to save time for executives while managing salespeople in compliance with the established structure. This means that all salespeople and sales leaders should have clearly defined jobs, responsibilities, and functions.

Principle of Objectives

Each sales organization has its own set of goals to achieve. As a result, sales managers and executives must strive to achieve these goals through a well-managed framework.

Principle of Grouping Activities

Depending on the departmental system of working, each sales organizational structure should be directed by the principle of grouping activities. Advertising salespeople, people reporting to the general sales manager, people reporting to the assistant sales manager, and so on.

Principle of Position Assignment

Every sales organizational structure also should be abiding by the principle of position assignment. For example, G.M., sales manager, assistant sales manager, director of sales training, territories sales manager, etc.

Principle of Activity Performance

This principle focuses on the salespeople’s activity performance. It should not be a structure for the sake of being a structure. This means that directions should be issued from the top down, and performance reporting should be done from the bottom up.

Principle of Balance

All sales organizations should be guided by the principle of coordination/balance among the salespeople and senior body. Otherwise, conflict may arise and sales performance would be adversely affected.

Principle of Developing Specialists

This principle states that if a salesperson performs well in his or her assignments, there should be enough room for him or her to be promoted. From a salesperson to a supervisor, for example.

Principle of Authority

All sales organizational structures should be guided by the principles of authority. Only assigning duties, responsibilities, and accountability can not bring excellence in the performance of salespeople. Therefore, matching the level of position, salespeople should be provided with the adequate authority of making the assignment-related decisions by themselves.

Types of Sales Organization Structure

The basic types of sales organizational structure are mentioned below.

Line Sales Organization Structure

This is the first, oldest, and simplest form of sales organization where the chain of command goes verticle from top-level to the salespeople (bottom level). Every salesperson is guided by one person i.e. the next higher level to them and respond to do assigned assignments.

This form of organization structure best fits the small selling companies but there seems hard for it to work well where the company is big and the concerns are growing rapidly.

Line and Staff Sales Organizational Structure

When the company starts to grow in terms of sales, products lines, market coverage, it is somewhat hard for alone line organization, thus other staff (specialists) are needed to be introduced in the company. This serves to relieve sales executives to do well their paper works and staff are responsible to make it done effectively in ground level.

This organization is largely used in medium and large-sized firms and best works for work specialization, however, it is costly since management of more staff is needed to be assumed.

Functional Sales Organizational Structure

This is the fullest extent of the principle of work specialization. In this, everyone such as executives, salespeople are given distinct duties to perform.

This sales organizational structure is best to boost the performance of executives or salespeople since everyone is assigned duties by closely looking to their capacity. However, sometimes due to failure on effective coordination conflict may arise.

Committee Sales Organizational Structure

This is the sales organization structure where no basic rules exist, however, for the betterment of the performance of the firm the committee is formed either of sales executives, salespeople, or mixed.

It helps to build a better co-understanding in the committee, but, sometimes conflicts arise in the decision-making process due to role conflicts.

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