Sales Force Structures

Sales force structures are critical for every company. Sales force structures allow companies to distribute their products to their customers effectively. How a company compensates its sales force is just as important as how the company structures the sales force. In order to meet the expanding role of sales in the cabinet hardware company, a territorial sales force structure and a salary plus bonus commission plan should be used.
A territorial sales force structure “assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company’s full line” (Armstrong and Kotler 407). A territorial sales force structure should be used for this company because the company sells one product line and has grown regionally. …show more content…
This type of structure is typically used if a company has multiple and complex product lines. However, in this situation, the company only has one product line. Since the company only has one product line, cabinet hardware, it would be ineffective to use a product sales force structure. A customer sales force structure would also be ineffective compared to a territorial sales force structure. A customer sales force structure organizes the sales force along customer and industry lines. A customer sales force structure is typically used in organizations that sell various products in different industries. Since the company in this situation only sells one product line in one industry, a customer sales force structure would not be as effective as a territorial sales force structure. Finally, a product sales force structure or a customer sales force structure would cost more compared to a territorial sales force structure. Within a product sales force structure and a customer sales force structure, the sales representatives would travel to numerous regions, resulting in high travel expenses. However, within the territorial sales force structure, the sales representatives would only travel within his or her designated region, which would result in lower travel expenses and lower overall costs for the company. In this situation, the territorial sales force structure would go best …show more content…
In this particular situation, it would be best to provide the sales force with a high salary and a medium size new-account bonus. The company is looking to sells its products to end consumers through national retailers such as Home Depot and Lowes. This commission plan would provide bonuses to the sales force every time they bring in a new account with companies such as Home Depot or Lowes. By incentivizing the sales force with new-account bonuses, the sales force will be driven to develop new accounts with national retailers. It is important that the company does not utilize a high commission system because this type of system often drives the sales representatives to make short-term grabs for the company. A medium size new-account bonus will prevent the sales representatives from ruining customer relationships. Having a high baseline salary for the sales force is also important. It is important because a high baseline salary maximizes current account profitability. A salary plus bonus commission plan consisting of a high baseline salary and a medium size new-account bonus for the sales force would allow the company to meet its expanding role of