Novell, inc., Reorganizes for Better

Customer Service

As a firm’s markets mature and its customers’ needs evolve, the sales manager should periodically ask a tough question: “Is our sales force organized to serve customers as well as possible?” The managers at Novell, Inc., recently answered, “No.” Novell, based in Provo, Utah, makes and markets software designed to link different types and brands of computers into networks. With sales of $422 million in fiscal 1989, the firm reported it was the industry leader, accounting for about 70 percent of the installed base of local-area-network operating systems.

Novell sells its software primarily through major computer retailers (e.g., ComputerLand Corp.), distributors, original equipment manufacturers (OEMs) that incorporate it into computer systems they market to their own customers, and other resellers. Its direct sales force is primarily responsible for supporting the sales efforts of those intermediaries, although Novell salespeople also deal directly with about 300 large corporate and government customers.

In the firm’s early years, Novell’s sales force was organized solely on a geographic basis. Each sales rep was assigned a rather small geographic territory and was responsible for servicing all of the local major accounts, OEMs, distributors, and retailers in that area. But as network computing became more widespread among corporations and government agencies during the 1980s, and as customers became more sophisticated and began to identify specific problems and unique needs for their computer networks to address, Novell’s generalist approach lost its effectiveness.

A single sales rep could no longer be knowledgeable about all the applications necessary to solve the different problems and needs of the various customers.

The company reorganized its sales force into three distinct groups, each focused on servicing a different segment of the market. James C. Bills, Novell’s executive vice president of sales, reports the reorganization has improved the firm’s national account marketing by helping the company better serve its major customers’ increasingly sophisticated needs, and it has facilitated joint sales calls with resellers. “By dividing our business along logical and clearly defined market segments,” says Mr. Bills, “we’ve put specialists in charge of areas where they can use their expertise more effectively. It also adds to the support we give to our resellers and distributors, because we’ve dedicated entire sales groups specifically to serve their needs.”

As diagrammed in the exhibit, Novell's reorganized sales force service into three core market segments: major users, OEMs/systems integrators, and resellers. The major users are further divided into four subsegments. The top 60 Fortune 500 companies are categorized as national accounts. The next 240 corporations are considered major accounts. Federal, state, and local governments are treated as a third subsegment because their purchasing procedures, as well as their needs, tend to be different from those of major corporations. And the fourth customer group consists of large educational institutions.

Novell's new OEM/systems integrator sales team works with vendors that incorporate the firm's software into their own hardware and software applications. Among the customers in this segment are firms such as NCR Corp., Wang Laboratories, and Electronic Data Systems.

Novell’s New Sales

The salespeople serving the reseller segment cater to distributors and major retailers, such as Businessland, Inc. This group controls dealer inventories, implements dealer incentive programs, helps train dealer salespeople, and ac companies them on sales calls to potential customers.

A fourth group of people in Novell's sales organization, field management, consists of regional sales managers who coordinate the efforts of the three sales groups within assigned geographic territories. These managers identify opportunities for each of the segment-specific sales groups, plan joint marketing promotions, and provide local support. They are also responsible for planning sales training programs and seminars.

Exercise 5. Answer the following questions.

1. What business is Novell., Inc. in?

2. Is the company successful?

3. How was its sales force organized previously?

4. Why did Novell’s generalist approach become ineffective?

5. How did the company reorganize its sales force?

6. What segment does each group deal with?

7. What does the fourth group of people in Novell’s sales organization do?

Exercise 6. Mark the statements T (true) or F (false) according to the information in the text. Find the part of the text that gives the correct information.

1. Novell produces and distributes special computer software.

2. Novell sells its software only to intermediaries.

3. In the 1980s Novell ‘s business began to work more effectively.

4. The company’s sales force used to be organized on a geographic basis.

5. After the reorganization, each sales force group serviced a different segment of the market.

6. Now their specialists can use their expertise more effectively

Exercise 7. Match the terms with their definitions

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