A critical element of businesses which is often overlooked is salesforce organization. In its essence, salesforces organization seeks to manage and allocate sales resources in the most optimal way to meet the sales and marketing objectives. An effective salesforce organization covers a wide variety of markets/consumers, minimizes wasted resources, and seeks to achieve the best sales quota outcomes. Businesses may adopt a wide variety of organizations based on their available resources and general sales and marketing strategy. This case study investigates a potential transition by Impact Packaging Inc. (IPI) of its salesforce organization to meet its needs.
IPI Salesforce Organization by Product Line
The salesforce organization should consider a company’s specializations. Salesforce organization by product line is commonly employed for complex or technical products. In these instances, sale representatives should have a high familiarity and technical knowledge of the specific product as to sell or provide high level of technical service to the consumer (Ingram et al., 2015). IPI provides packaging services to a variety of vendors, likely for a wide range of products. While some knowledge of the product is necessary to meet the consumer demands, there is no high level of technical specialization to justify organization by product line.
In fact, it presents a situation where resources are wasted since sales representatives are offering one product to multiple consumers/vendors, which are likely looking for multiple types of packaging as an example. Consumers are forced to maintain contact and orders with multiple sales representatives because of the by product line organization. It is inefficient and other types of organization are more applicable for IPI in this scenario.
Therefore, yes it would be best for IPI to reevaluate its salesforce organization. Solely, because IPI seems to have significantly more customer types than specific products, and to ensure the optimal distribution of its sales team, the focus should be on specific groupings of consumers (whether by region of origin, sector, or type of consumer). By transitioning the salesforce organization to customer specialization rather than by product line, IPI can better and most efficiently meet the needs of consumers and distributors.
As mentioned previously, assigning a sales representative to a consumer, enabling them to purchase multiple products is far more effective and likely profitable rather than consumer having to track down salespersons based on each specific product they need. IPI can introduce general training to ensure that sales representatives are familiar with all their products, and if for some reason more technical expertise is needed, a specialized representative can be contacted. This approach is more seamless for consumers, reducing time and improving offerings, while also benefiting the company by reducing complexity of various other organizational capacities such as order fulfillment, distribution, and logistics.
Advantages and Disadvantages of Organizing IPI Salesforce by Product Line
The salesforce organization by product line is a system where significant product expertise is developed by staff. The sales representatives acquire vast and technical knowledge of the specific product which allows for better understanding. Therefore, they are more likely to market the product effectively and respond to inquiries from consumers. There are situations when this approach offers an advantage, such as penetrating a new market or working with highly technical or nuanced products, making for effective sales solutions (Salonen et al., 2020). Furthermore, there is the advantage that management teams are able to control selling efforts more closely within the said product lines.
Management can guide the selling efforts and offer insight on the measures or performance of salesperson. It allows for vertical integration with positions in the top management. As a result, the by product line approach helps to avoid errors such as overlap in products offered or indirect production issues by implementing controls (Samaraweera & Gelb, 2014). However, there are major disadvantages, the primary of which is requiring customers to target specific salespersons for a specific product. This is known as duplication efforts which makes it more difficult for consumers to aggregate products under the same account or check (Ingram et al., 2015).
Advantages and Disadvantages of Organizing the IPI Western Region by Customer Type
The salesforce organization aimed at specific types of customers is more fitting for IPI because it allows to address needs of the consumers effectively. The salesperson understands their customer, including their individual needs, their purchasing habits, and financial capabilities, thus being able to offer a tailored approach in marketing and sales to meeting their specific order needs at the most optimal cost. This will not only improve customer satisfaction and relationships but provide higher quality of service to ensure returning consumers and better reputation (Fatima, 2017).
However, the disadvantage in this case is the fact that IPI has more customer types than products, there is a shortage of sales staff. The company would have to hire additional staff to effectively maintain service but also ensure customers are satisfied or maintain the same staff but increase pressure on individual salespersons, which is not sustainable in the long-term (Ingram et al., 2015). Also, the shift in approach from product lines to customer type will require training for sales staff in the both the needs of their particular consumer type as well as general knowledge about all the products, not just the expertise of the specific one they oversaw, along with likely changes to operations, marketing, and management structures within the company that best fit the new model.
Grocery Chains and Food Co-ops
Grocery chains and food co-ops are the primary sellers of food products in urban and suburban communities. These are major players in the market and due to the wide variety of their product sales, they require multiple packaging products which IPI offers including offering from food packaging, institutional and agricultural product lines. Therefore, this consumer type will benefit significantly from the new organizational salesforce since a sales representative can cooperate and guide them on placing larger orders within the spectrum of IPI’s product offerings. It is increasingly more convenient than having to track down multiple representatives. Furthermore, this consumer type likely requires a continuous supply of packaging, with the sales representative recognizing these needs and establishing a consistent relationship with the customer’s warehousing department to continue order fulfillment on a continuous basis.
Similarly, distributors require goods from multiple product lines including food packaging, institutional, and garment. IPI works through distributors to sell its products in bulk usually which are then redistributed as appropriate according to the industry needs. Distributors are key partners placing large orders. They are the foundation of IPI’s business model, and the company attempts to sell to distributors whenever feasible. As partners, distributors will benefit from a customer-centered approach, which similar to grocery retailers will aid in placing large bulk orders. By establishing a salesperson for distributor to connect with directly, it helps to address their requests and concerns effectively and ensuring that long-term needs are met.
Arguably end users benefit the least from the transition from product lines to customer types in the organizational force. End user sales for IPI seem to be highly specific, mostly within the two product lines of agricultural and garment. Therefore, they benefitted from the product-specific expertise and identifiable sales representatives based on their required product line. However, end users seem to represent the smallest portion of IPI’s business, given that the company even establishes particular sales volume criteria that have to be met. End users can still benefit from the efficiencies and customer-centered approach offered by the new system.
Market salesforce organization significantly influences the ability of a business to sell the product to its consumers in a more effective as well as efficient manner. Based on this case study, it is evident that the product line approach by IPI is lacking effectiveness sincere there are more customer types than product lines, leading to artificial barriers for consumers and redundancies in the process. By organizing the Western Region by customer type as its primary salesforce organization will allow maximum aggregation of products across product lines, and in turn, profitability, with relatively little challenges.
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Ingram, T. R., LaForge, R. W., Avila, R. A., Schwepker Jr., C. H., & Williams, M.R. (2015). Sales management analysis and decision making (9th ed.). New York: Taylor & Francis
Salonen, A., Terho, H., Böhm, E., Virtanen, A., & Rajala, R. (2020). Engaging a product-focused sales force in solution selling: Interplay of individual- and organizational-level conditions. Journal of the Academy of Marketing Science, 49(1), 139–163. Web.
Samaraweera, M., & Gelb, B. D. (2014). Formal salesforce controls and revenue production: A meta-analysis. Journal of Personal Selling & Sales Management, 35(1), 23–32. Web.