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Chapter 16 - Managing within Your Company
CHAPTER 16
MANAGING WITHIN YOUR COMPANY
Outline of Chapter
I. Building Internal Partnerships
A. The Importance of Internal Partnerships
II. Company Areas Important to Salespeople
A. Manufacturing
B. Administration
F. Sales
III. Partners in the Sales Organization
A. Sales Management
1. Sales Executives
a. Size and Organization of the Sales Force
b. Forecasting
B. Field Sales Managers
1. Evaluating Performance
2. Training
C. Managing Ethics in Sales
1. Ethics and the Sales Executive
a. Responding to Unethical Requests
D. Salespeople as Partners
1. Geographic Salespeople
2. Account Salespeople
Chapter 16 - Managing within Your Company
Teaching Suggestions
1. If you didn’t do this in Chapter 2, begin by asking students what a sales representative represents.
If you did ask that question back in Chapter 2, that’s ok. Just start out with a quick review. Many
students define sales representative as someone who presents product benefits—the student
represents a product. Actually, the dictionary defines representative as one who acts as a delegate
or agent for another, meaning another person, and a product is usually not a person. Who are
You can then explore the concept of roles, role sending, role clarity (and conversely, role
ambiguity), and role conflict. Examples such as the following can be used to explore roles.
Management wants to clear out the inventory of the Omni-Form fabricator. Accordingly, they
have cut prices 10% and added a 5% commission bonus for every Omni-Form you sell. The
technicians (the ones who install and fix your company's products, including the Omni-Form)
think the Omni-Form is a piece of junk. They told you not to sell it—customers will hate it plus it
2. Forecasting is a difficult topic for students to comprehend because they fail to see the importance
of the link between the forecast and later actions at the field level. Personalizing forecasting can
help. One way is to ask students what jobs they plan to search for, and what industries they expect
to work in when they graduate. What is the basis for those expectations? What you should receive
is a list of judgmental techniques. Where can they go for more solid information (sources of
quantitative forecasts)? They will get into that more in the next chapter but it helps in
Chapter 16 - Managing within Your Company
The same is true for companies and salespeople. They make decisions based on their forecasts
that lock them into certain strategic directions. As time goes on, they may have difficulty
changing their direction. What forecasts do salespeople make? One is total sales for the next
3. Exhibits 16.2 and 16.3 illustrate different compensation plans. It may also help to discuss quotas.
One method would be to put quotas on each area of performance, such as whether a rep had
the minimum number of total sales, but also sales by type of product or whether other things such
as end-of-aisle displays or coop advertising targets were met if selling through retailers.
Commission could be based on total points earned, while bonuses could be paid on achieving
quota in each category. This allows for more prescriptive control (the manager can see exactly
where the salesperson falls short), yet allows for the rep to be rewarded for either total
performance (total point performance) or complete performance (meeting quota in each
category).
Once you have gone through the commission plan differences, ask students why would a
company pay a salesperson a salary? Some companies use very little sales management. They pay
their reps a straight commission and expect that commission, and the forces of natural selection
(the strongest survive) to take care of their management for them. So why would any company
pay a salary?
a. to compensate for non-selling activities such as situations where a lot of technical expertise
and customer support activities are necessary (salary can be used in conjunction with
commission—the commission incents the rep to get more sales, the salary compensates for
non-selling activities)
extra incentive of commission would not change sales greatly)
4. In this chapter, we have tried to provide students with methods of responding to ethical situations
that involve their manager. Provide students with the following scenario:
Your manager tells you to recommend the Deluxe model of your product in a particular account.
The customer's needs are such that the economy model is best suited. The customer trusts you and
Chapter 16 - Managing within Your Company
5. Exhibit 16-7 presents a team selling organization. Your students may have difficulty
understanding the differences between team selling and multi-level selling, and between team
selling and product based and account-based territories. In team selling, the account manager
coordinates all sales activities in the account. Thus the account manager tells the product
specialists and the supply specialists when to call on the account, who to call on within the
account, what strategy to use, etc.
Suggested Answers to Ethics Problems
1. It took you four months to find a job, and you were almost out of money when you finally landed
your position. But today your boss asked you to do something unethical. You aren’t sure what the
corporate culture is yet because you are new at the company. How do you respond?
2. Your company pays straight commission based on gross margin and you have the ability to
determine price, thereby influencing gross margin. The product, though, is standard and changes
are not made to it when it is sold. What should determine how much you charge someone?
Factors that will influence price in this situation can include:
• Quantity
• Competitive pressure
• Difficulty in serving the customer (which includes a rude customer)
• Customer’s budget (?)
Ah, now we get to the ethics issues! A high maintenance customer should be charged more
because time lost when serving that customer has a price tag. A rude customer, however, may not
Chapter 16 - Managing within Your Company
Suggested Answers to Questions and Problems
1. Reread “From the Buyer’s Seat 16.1.” As a salesperson, what are the implications for how you
might sell to Ben? How could you help Ben to sell to others in his organization? Is his approach
something you would welcome from your prospects or worry about? Why?
2. A company that rents office equipment to businesses pays its salespeople a commission equal to
the first month's rent. However, if the customer cancels or fails to pay its bills, the commission is
taken back, even if the customer cancels 10 months later. Is this policy fair? Why or why not?
Why would the company have this plan?
3. Reread the chapter-opening profile of Kristen Scott and “Building Partnerships 16.1.” What
have they done to make their performance easier in working within their organization? What are
some other things you can do to build stronger internal partnerships?
Answers will vary greatly from student to student, in part because of the assumptions made about
4. What is the role of the geographic salesperson in a national or strategic account? Assume that
you were a NAM.. What would you do to ensure the support of geographic reps?
Geographic reps are the implementers of sales strategy, customer service reps, and the eyes and
ears of the NAM. They make the calls on local decision makers to present the sales strategy
Chapter 16 - Managing within Your Company
How would that support differ if you were a product specialist and worked in a team situation?
As a product specialist, how would you get the support of the account manager?
5. Consider your own experience in group work at school. What makes groups effective? How can
you translate what you have learned about group work into working as part of a sales team?
We hope that one thing students learn is that groups are more effective when the members share
the same goals, grading is based on team performance, and there is an opportunity for team
member feedback. Sales teams are also more effective when goals are shared and compensation
plans support cooperation.
Read Sales Technology 16.1. What do you think are the characteristics of effective sales teams
that have to operate virtually? Could you make use of any technology tools to collaborate in
school work groups more effectively?
6. Some companies are using contact management software to observe salespeople’s activities and
to supervise salespeople more closely. Some salespeople, though, are not supervised closely—as
long as they close enough sales, the company is satisfied. To what extent should salespeople be
allowed to manage themselves? What risks do you take as a sales manager when you allow self-
management among salespeople? How can you minimize those risks?
One issue is maintaining appropriate ethical behavior. One factor to consider is the extent to
which other mechanisms can monitor ethics. For example, EdwardJones has a very tight
Chapter 16 - Managing within Your Company
7. A sales manager gets one too many complaints about pushy salespeople, poor follow-up after the
sale, and a lack of customer care, and wonders if the compensation plan is to blame. What can a
manager do with compensation to promote greater customer service? Are there other ways to
motivate good customer service?
8. Many wise people, such as Steven Covey, say to worry about the things you can control and not
to worry about the things you can’t control. What does that mean for a salesperson, when so
many promises a salesperson makes are actually fulfilled by someone else?
9. An experienced salesperson argues against salaries: "I don't like subsidizing poor performers. If
you paid us straight commission, we'd know who could make it and who couldn't. Sure, it may
take a while to get rid of the deadwood, but after that, sales would skyrocket! Explain why you
agree or disagree with that statement.
Salaries are appropriate in certain situations:
a. to compensate for non-selling activities such as situations where a lot of technical expertise
and customer support activities are necessary (salary can be used in conjunction with
commission—the commission incents the rep to get more sales, the salary compensates for
non-selling activities)
10. Salespeople are paid more than just about everyone in the company. This compensation
difference can create jealousy, particularly among those who don’t trust salespeople anyway and
think salespeople just play golf and entertain their way to the big bucks. How can you combat
these misperceptions? Does it really matter what others think about sales, or will the need to
serve customers and thereby serve the company be enough?
Chapter 16 - Managing within Your Company
It really does matter what others think about sales and salespeople. If others in the company feel
you are overpaid and underworked, they’re going to be less likely to try to help you. And since
you are often the one who brings the voice of the customer, it may not buy into that “it’s all for
Suggested Answers to Case Problems
Case 16-1: Energy Master Controls
Questions:
1. Evaluate the district’s performance. Draw conclusions (where are we doing well? Doing
poorly?) but don’t fix anything yet. Justify your conclusions.
2. Compare the performance of Smith and Longoria. What are some possible explanations for the
poor Smart Meter sales?
Both reps are making more than enough calls, compared to quota. Smith has put more effort into
3. The VP of sales says the problem is compensation plan problem. How would you fix it?
Focusing on compensation is not the correct solution, because reps are making the calls on the
4. The company is planning to create a new position of product specialist. This salesperson will
work with territory managers and will have a sales quota for Smart Meters only. The product
specialist will work with one sales team (8 to 12 salespeople) and once a territory rep has
identified a Smart Meter prospect, the rep will bring in the product specialist. How should the
compensation plan be adjusted? Why?
Assuming that the points are as high as they can go, then the rep will need to be paid fewer
Chapter 16 - Managing within Your Company
5. The VP of sales managed to get the product specialist idea approved by the CEO, even though
the CEO argued that the salespeople were just too lazy to make the effort to sell the Smart Meter.
Lower the compensation on it to the territory reps and everyone will sell the FlexMeter at its
lower price, the CEO says. The best way to get more Smart Meter is to cut compensation on
FlexMeter to 20 points. What do you think should be done? Why?
Case 16-2: IKOH Products
Questions:
1. Answer Rick’s questions as if you were Karen. To help you with your answer, consider that she and
the service reps are in Kansas City, distribution is in St. Louis, and the corporate office (where credit,
payroll, and other such functions are located) is in San Francisco. Regarding KHR, would it matter
to your answer if they were a new customer versus a long-time customer? Why or why not, and if so,
how?
His two questions were: How will you fix KHR and how will you fix your problems that no one else
seems to have?
To fix KHR, it’s more important to get the product shipped than to fix the original problem or assign
blame. She needs to appeal to the Credit person on behalf of the company and customer – it is time to
beg for help. If she has damaged the relationship too much, she needs to ask Rick to step in and help
her out.
2. What should or could Rick do to help her? Assume her sales performance is pretty good and he
doesn’t consider firing her an option.
Rick should help her develop a strategy for building relationships with the other areas in the firm. He
Chapter 16 - Managing within Your Company
END OF CHAPTER ROLE PLAY
Chief Engineer
Today a salesperson is going to ask you to set up some kind of kiosk. Your objections are as
follows:
1. I have no budget for any special features for any customer.
2. We have some serious bugs in the current release that I have my team working on – they
have no time for this.
Also, ask who will design the kiosk? This isn’t important, you are just curious.
Engineering has taken a hit in terms of reputation over these bugs that your team is now working
on. You’d like an easy victory of some kind, like this kiosk thing to help get a large account, so
Legal Department
Today a sales rep wants you to change a contract. Listen to everything, then say no – it has to go
through all kinds of approval processes and it just isn’t worth it. Plus the new language has to be
written and the costs of the new terms have to be run through the
CFO’s office to make sure that the company can still turn a profit on the deal. The best the rep
can hope for is that you will run it by the CFO and see what they say.
Chapter 16 - Managing within Your Company
EXERCISE 16-1 SALES FORCE STRUCTURES
Your assignment is to locate and interview the sales managers of two sales organizations. One
organization should be large, the other should be small. The purpose of the interviews is to explore the
sales forces' structures; how many salespeople are managed by one manager, what types of territories do
they have, how many regional, district, and field sales managers are there, and so forth. Ask about
previous structures, how the company changed over time and why. How does the structure reflect the
company's strategy?
