Span-of-control organization

Firms that use one or more of the other bases of division may combine them with span-of-control organization. This form of organizational structure is predicated on the assumption that there is some ideal or desirable span of control for a field sales manager. The determined number is considered a reasonable maximum for optimizing field sales manager’s performance relative to the selling efforts of salesmen. More than this number and the field sales manager will not have sufficient time for each of the salesmen assigned to his jurisdiction.

One manufacturer has determined that the ideal span of control for their district sales managers is ten salesmen. There is no stated number above ten when splits are made. Rarely, however, will a district be allowed to get any bigger than 15 salesmen. Future sales prospects have a lot of influence of the timing of the split at a lower number than might otherwise be the case.

The main drawback is the inverse relationship of the span of control to the number of tiers of sales management. The narrower the span of control, the more likely will be the necessity of another level of dales management. This increase in executive overhead raises disproportionately selling expenses as a percent of sales. A second drawback is the difficulty that may be experienced in determining when a new sales unit should be broken out.

Customer organization

In our last post we have discussed on sales force management and product organization. Today we are going to talk on customer organization which is most important part of any small business. To orient the field sales organization to the market a firm may make use of a customer basis. The type of industry corresponding to SIC category and the channel of distribution are two widely used classes of customer. For example, if it is for blinds industry where they are selling different products like vertical blinds, roman shades online, than for them channel of distribution is different. While for Instant term life insurance rates company who are providing life insurance quotes online, channel of distribution is different. What a firm seeks to achieve in limiting a salesman’s efforts to selected group of customers is specialization in servicing their particular needs. Market factors conducive to the use of a customer base include:
(1) geographical concentration to facilitate the equating of customer sets with geographical assignments;

(2) substantial sales and profits to justify the assignment of sales personnel; and

(3) distinctiveness in needs to permit differentiation between customer segments.

Organizing of the basis of customers rather than products offers the practical advantage of less territorial overlap with specialization. There is still the added costs of some territorial overlap plus the possibility the salesman may be called upon to sell a diverse range of products.