The primary activities of sales force management in the rural context consist of having a sales organization geared to serve villages, accompanied by the HR functions of recruitment, compensation, training, supervision, evaluation and career growth. Unfortunately, most companies use the centralized HR located in their head office to manage rural activities. This does not quite work. Rural sales management requires a completely different approach, one that starts firmly from the villages.
For companies that serve rural markets from their existing urban channels, the sales organization stops at the level of the city wholesaler and sometimes at the retailer in a town. From there, the dealers use their own sales force to supply goods to villages. The disadvantage in this structure is that goods are supplied only to villages that the wholesaler finds easy to cover, so penetration suffers. To have deep penetration in villages, a company must have a separate organization that can cater to village clusters through its salesmen.
A report by Bain and Company says that achieving growth targets profitably requires a repeatable, high-return model for selling solutions. This calls for judicious investing in sales resources. A differentiated capability to deploy selling resources helps. The report found that companies which had built capabilities around market opportunities performed better than those that had not. It further says that overhauling sales models is greatly beneficial. Large, cumbersome sales organizations not only erode margins, but also miss the biggest opportunities.
It is therefore important that there are not too many layers of managers but the structure should have more salesmen. This can be achieved by designing a flat rural sales organization as far as possible.
The company can use two approaches in designing its sales organization:
1. The top-down approach.
2. The bottom-up approach.
1. Top-Down Approach:
A top-down approach consists of determining the sales volumes expected from each area, then establishing targets for each district and then going down to each village cluster. In this approach, the company sets the target for each district, which is broken down to the target of the sales depot. It then distributes the targets to salespeople to cover village clusters and to cover all areas.
2. Bottom-Up Approach:
A bottom-up approach works in the opposite direction. It consists of estimating sales potential in each village, then going up to village clusters to area to district, accumulating the figures as we go up. This approach depends on sales estimates of salesmen of their clusters, which are accumulated for the rural hub and thereby for the whole district. In this way, one arrives at the organizational sales targets. This method is usually much more accurate than the top-down approach as it gets inputs from the ground.
The important thing here is to identify village clusters so that companies can build depots that can easily serve these clusters. If volumes are not large, smaller sub-depots can be created that are easier for local salespeople to visit and restock. Each depot or sub-depot must serve a village cluster. It should be at a convenient location so that village distributors can easily visit and replenish stocks.
Identifying Rural Clusters:
Sales management is aided if rural clusters are identified. Clusters consist of groups of villages that can be covered by a salesman or a sales office. They can either be manufacturing hubs, as in Taobao villages of China, or simply areas that are close together for designing a sales route plan.
Village clusters can be identified by various methods. In China, some 20 to 30 villages were grouped and called Town and Village Enterprises (TVEs). The TVEs manufacture goods for companies like Alibaba. For example, a food processing company will organize villages into TVEs, procure the raw material from the village and process it there. This eliminates transportation costs. The Chinese government encouraged these rural hubs in a big way. The result has been development of a large number of rural hubs in China.
In India, the basis of clustering can be proximity, only since there are few rural business hubs in the country. Clusters can be identified on the basis of geography, on the main agricultural crop and sometimes on the basis of livelihoods. Another way is to identify villages along the main roads, but this ignores those villages that are located deep in the hinterland. Such villages can serve as rural hubs from where a number of interior villages can be covered in one go. Villages along an irrigation source, like a canal, can also serve as rural hubs.
Sales Route Plan:
One of the objectives of identifying clusters is to reduce travel time of salespeople while ensuring coverage of all villages. Ideally, clusters should be such that covering villages is facilitated while spending as little time in travelling as possible. Several methods have been suggested such as a circular route and a clover leaf route, which reduce travel time and cost of travelling for salespeople.
In the first method, the route plan is conceptualized in the form of a circle, with several villages lying on its circumference. A salesperson goes along the route and returns to his home. If distances are large and local dealers exist, the route is made of 22-25 days, which gives a rest of 5-8 days at home. The disadvantage is that each market gets covered only once a month.
If distances are small or frequent coverage is required, then the circle consists of five stops, giving the salesperson two days at home. In this case, markets are covered once a week. The route can be modified by placing the salesman in the centre from where he/she can cover markets in the manner of spokes in a wheel. In this case, the prospect of night stay at the markets is eliminated.
In the second method, the route is conceptualized as a clover leaf. The salesperson is placed in the centre. He or she makes a tour of five days along each leaf, A, B, C and D, and returns for two days’ rest at home. In this method also, markets are covered once a month unless the clover leaves are designed for a weekly tour.
The method a company uses depends on its objectives, which can be-(1) minimizing travel time and cost, (2) giving adequate rest and family time to the salesperson, or (3) increasing frequency of coverage of markets.