Sales Management

Evaluation of Sales Management

A. The beginning era identified as Simple Trade
Era, lasted from the beginning of the marketing
concept to the mid 19th century. In this period
whatever products available were harvested
with limited offerings. Exploration and trade in
resources was the focus of the economic activity
with products as center of attraction.
 Evaluation of Sales Management
B. In the next stage the simple trade era was
replaced by the production era, continued until
the great depression. In this era importance
was given on engineering and production. The
primary objective was to only produce product
and sell it to the market in assumption that
customers have to accept it as alternatives were
not available.
 Evaluation of Sales Management
C. The sales era lasted between 1920’s and 1940’s,
emphasized on different marketing related
aspects rather than product only. As consumer
markets were saturated and competitions were
increasing day by day so it was not easy to sell
product without providing adequate information
about the brand. Here price became one of the
most important features to organizations to get
an edge over their rivals.
 Evaluation of Sales Management
D. During the post Second World War phase, World
featured economic boom resulted a urgent need
of a separate department for marketing called as
Marketing Department Era. Here organizations
experienced that past sales orientation concept
were not sufficient to motivate consumers as
they have more bargaining power in market
place. Business consolidated market related
activities like advertisement, sales promotion,
public relation etc into a consolidated
department and concentrating on brand
positioning.
 Evaluation of Sales Management
E. As the premise of the marketing concept became
widely accepted so the era of marketing
organization emerged to take care of customers’
need. Now customers are the focal point and all
employees became part of the marketing effort. In
the classical theory of marketing evolution this is
the last stage followed by two modified version of
sub-stages.
 Evaluation of Sales Management
i) This sub-stage within marketing concept identified as the
relationship marketing concept. The goal of the
organization is to build-up a long-term relationship with
customers. The general focus has changed to lifetime
customer value and customer loyalty. Customer
relationship management and data-mining become the
buzzwords in recent marketing scenario.
ii) The second sub-stage within the marketing concept is
identified as social/mobile marketing concept. It
summed-up the knowledge and theories of its predecessor
era but focuses on real-time connections and social
exchanges based on build-up relationship driven by the
consumers. In this concept businesses are connected 24/7
to current, future and potential consumers in real time.
Evaluation of Sales Management
 Concept & Definition of Sales
Management
Sales management originally referred exclusively to
the direction of sales force personnel and lately the
term transformed into broader aspect in addition to the
management of personnel selling. In general view
Sales Management refers the management of
overall marketing activities such as advertising,
sales promotion, marketing research, physical
distribution, pricing and product merchandising.
 Concept & Definition of Sales
Management
According to American Marketing
Association sales management refers “the
planning, direction and control of personnel
selling, including recruiting, selecting,
equipping, assigning, routing, supervising,
paying and motivating as these tasks apply to
the personal sales force”.
Concept & Definition of Sales Management
Efforts put forth to attain a company’s sales objectives
through sales management’s involvement with following
activities:
(1) Formulation of sales strategy through development of
account management policies, sales force compensation
policies, sales revenue forecasts, and sales plan,
(2) Implementation of sales strategy through selecting
,training, motivating, and supporting the sales force, setting
sales revenue targets, and
(3) Sales force management through development and
implementation of sales performance, monitoring, and
evaluation methods, and analysis of associated behavioral
patterns and costs.
 THE NATURE AND IMPORTANCE OF SALES
MANAGEMENT

According to Robert N. McMurry in his famous article ‘The

Mystique of Super Salesmanship’ (Harvard Business Review,
March-April 1961, p.114) classified a salesperson’s position
in the organization on following ways:-

•Position where a Salesperson’s job is predominantly to

deliver a product;

•Positions where a salespersons is predominantly an internal

order taker;

•Positions where a salesperson is also predominantly an

order taker but works in the field;
 THE NATURE AND IMPORTANCE OF SALES
MANAGEMENT
•Positions where a salesperson is not expected or
permitted to take an order but is called only to build
goodwill or to educate an actual or potential user;

•Positions where the emphasis is placed on technical

knowledge;

•Positions which demand the creative sales of tangible

products;

•Positions requiring the creative sale of intangible

products;
 THE NATURE AND IMPORTANCE OF SALES
MANAGEMENT
While the role of sales management professionals is
multidisciplinary, their primary responsibilities are:-

(a) Setting goals and standards for a sales-force;

(b) Planning, budgeting, and organizing sales program

to achieve pre-defined goals;

(c) Implementing the program with proper segmentation

and

(d) Controlling the overall program and evaluating the

results.
 Objectives of Sales Management
Sales management necessitates several objectives which are
executed by sales managers. There are three such main
objectives exist in the operational part of the organization:-

[Link] Volume
[Link] to profits
[Link] Growth
 Objectives of Sales Management
• The sales executives in this case are the ones who help implement
these objectives.

• However it is the top management who are responsible to make

skeleton of the organizational operation and has guided the lower
management with full proof strategy to achieve these objectives of
sales management.

• The top management should come out with the idea of new products
which are socially responsible and are marketed in a manner which
meets customer’s needs and expectations.

• Thus sales management involves a strong interaction between Sales,

marketing and top management and worked as an integrated unit
under the organization as a whole.
 Emerging trends in Sales Management
•Global Presence- Being a global, it is very necessary to face stiff challenges
from global companies. Due to differences in culture, language and taste and
preferences of customers it is not easy to adopt global condition. So sales force should
have well equipped with improved technology, strategy and operational to upgrade
themselves for international level.

•Innovative technology- Revolution in technology helped companies to

communicate with world-wide customers in ease way. To promote products sales
management on behalf of organization should adopt new innovative technology. So it is
important for sales manager to aware off recent technologies using to get edge in
competitions.

•Better Customer Relationship Management (CRM) - Being a successful

organization in today’s competitive world it is necessary to build long-term relationship
with customers. It is less costly to retain an old customer rather than acquiring a new
one. So building up long term relationship will help the organization to know better
about needs and wants of the customers as referral process is very important for the
organization. It is not only building the brand image but also provide favorable
condition to operate.
 Emerging trends in Sales Management
•Diversity among Sales-force- There is always exist diversity
between sales-force of an organization. Sales manager has to
accommodate himself with people of different background within his
sales-force.

•Team Based Selling Approach- In recent years it is common

approach for the organization to sell the product as a team to build long-
term relationship with potential customers. It is also very useful when
technically complex products are in the process to sell. Generally sales
team consists of top management, inbound and outbound salespersons,
technical specialists etc.

•Multi-channel Operations- in today’s competitive world, multi-

channel operation system is very useful to reach out for potential
customers in different ways. It is very handy for i) lowering channel cost,
ii) customized selling techniques with broad coverage.
 Emerging trends in Sales Management
•Ethical and Social Issues- In recent years it is necessary to abide
social and ethical issues such as legal constraints, provide social values
to customers’ expectations and taking part in events related to corporate
social responsibilities. Sales manager has to understand the complex
nature of the society and take necessary steps to deal impartially with
various social groups.

•Professionalism within Sales-force- Sales manager should have

professional attitude to process sales operation. As customers are well
informed and aware about the market condition thoroughly so it is
necessary to gather knowledge, skills and right attitude to motivate them.
Reliability, professionalism, integrity and thorough market knowledge is
very necessary for today’s competitive world.
Emerging Trends in Sales Management
Customer
&
Orientation
Win Profile
Opportunity Global &
through new Ethical Issues
selling methods

Creating Build
Emerging
Solution through Relationship &
technological Trends in Sales
Customer
innovation Management
Orientation

Situation Identify
Analysis Opportunity

Diversity
 Sales Management

Recruitment & Selection

Then let’s start to learn….

What
is
Recruitment
&
Selection
 Recruitment
Recruitment is the process of locating & attracting job
applicants.
 How to prepare Job Description &
Specification?
i) Title of the Job
ii) Duties and responsibilities
iii) Reporting Methods
iv) Technical Requirements
v) Territory to be covered
vi) Degree of Autonomy
Recruitme
nt
Recruitment
Five Main sources of recruitment are:

[Link]
[Link] within the company
[Link] Agencies
[Link] Institutes
[Link] & Other Industries
 Advertising

Advt. in Newspapers,Magazines & Trade Journals

->Produce Large No. of applicants

->Short span of time
->Low Cost

->Application screening is time consuming

->Applicants may be of questionable
character.
 Recruiting-From Inside

The Organisation’s Own Staff

 Internal Recruitment

•Candidate is familiar to company

•Candidate’s character is known

•No Fresh Talent

•Lack of performance due to surity of promotion
 Recruitment Agencies
Provide Resume of potential candidates for a fee.
Screen applicants on various parameters.
Eg-HR Consultancy firms,Employment Agencies
Educational

Institutions
 Educational Institutions
•Includes Management Institutes,
universities & technical institutes.
•Used for Placement at entry level.

Advantage
[Link] are more adaptable than
experienced.
[Link] are inteliigent
[Link] required technical
qualifications
Hiring from Competitors &
Other Industries
 Competitors & Other Industries

• Salesperson knows the market & its customers.

• Recruiting company knows the ability of candidate.
• Candidate is acquainted with market trends &
customers.
Selection
Procedure
Selection Process

Job Offer

Physical Examination

Reference Check

Psychological Testing

Interview

Application Scrutiny

Hiring Profile
 Selection Procedure
Hiring Profile:
Attract number of qualified candidates.
Neither too less..nor too more..!!

Application Scrutiny
Sales Manager should review the completed
forms he has received.
Identify the candidates who fit the job
Specification & can be called for Interview.
 Selection Procedure
Interview:
Helps in determine if a person is RIGHT for
Job.
Brings out personal characteristics.

Types of Sales Interview:

[Link] or guided interview.
[Link] or Informal interview.
 Selection Procedure

Psychological Testing:
It is designed to measure such skills &
abilities that are essential for job performance.

Types of Psychological Tests:

[Link] Tests:
Measures knowledge or information regarding sales
job.
 Selection Procedure
[Link] Tests:
Measures the skills and abilities already present in the
candidate at the time of testing.

[Link] Tests:
Measures whether or not the individual has the
capacity or latent ability to learn the job quickly.

[Link] Exercises:
A test which duplicates many of the operations &
problems confronting the sales job.
 Selection Procedure
Reference Check:
Secure information that is not available from
application & verification of information from external
sources.

Physical Examination:
Physical Examination reveals whether or not
the candidate possess the required stamina,strength
& tolerance needed under hard working conditions.
Handle job without delay on health grounds.
 Selection Procedure
Job Offer:
After all steps,company decides whether it
should hire the candidate or not.

If yes,the company gives offer letter.

It must be in writing for the protection of

recruit & company specifying all details.

Sometimes,salespople may have to sign a job-

contract too.
Training &
Development
Objectives of training and development
• Improving quality of work force
• Enhance employee growth
• Prevents obsolescence
• Assisting new comer
• Bridging the gap between planning and
implementation
• Health and safety measures
Building Sales Training
Program
Five Decisions
Aim, Content, Method, Execution, Evaluation

Defining Training Aims

Deciding Training Content

Selecting Training Method
Group Method
Individual Method

Execution of Training
Who is to be trained?
Who is to train?(Sales Executives, Personnel department,)
When will training take place?
Where will training take place?
Instruction Material & Training Aids
Evaluating Training Program
Coca-Cola was founded in May 1886 by Dr. John
Pemberton. Frank Robinson named a drink Coca Cola.
Coca-Cola was first sold to the public in Atlanta at
Jacob’s Pharmacy
Only 9 servings of the soft drink were sold each day
Sales for the first year were only $50
In 1888 As Griggs Candler bought the company and
sales increased over 4000%
•Special training is given to employees, New employees
also are placed with old ones to learn work and the values
prevalent in the company.

•Two cups tea are free for every employee daily this
represents the hospitable nature of the company, This
factor keeps the employees motivated as they are taken
well care this fact is clear by the physical actions took by
the company

•The company working environment is really a good

blend of Asian and western values
Job analysis and designing
Coca cola company HR department has its own job
description and job analysis in which they get the
information about employees work activities, human
behavior, performance standard, job context and human
requirements and also other information related to this
conduct.
Planning and Forecasting
Coca cola HR department involves in company
strategic planning and they also make sufficient
planning for hiring new employees in the future.
 They forecast for the expected employees needs
in the organization.

They forecast of employees on the change

technology and increasing in productivity.
Coca Cola’s recruitment process is well
established .First of all HR Department give
ads in news papers, company website,
institutions etc. Then application form, from
candidates with required documents and CV
is asked.

Recruitment is both-

Internal recruitment

External recruitment
After recruiting the fresh employee ,they are
trained for three months and also pay them
salaries after three months they become part
of a firm .

Coca Cola also give training to existing

employee depending upon the condition

for example if new technology is introduced

first of all ,full training is given about new
technology then they are allowed to start
their job .a
Coca cola performance appraisal is on the
annual basis. Hr manger says “we appraise our
employee on their performance.

We set the goals in the beginning of year and tell

the employees about the goal if the employees
achieve this goal we appraise the employees.”
Basic salary

Bonus

Medical facility

Pick and drop

Gratuity fund

Social security
Coca-Cola Company is creating a system of
mentoring programs that include, one-on-
one mentoring, group mentoring and
mentoring self-study tools.

These programs promote trusting

relationships for networking, coaching,
career counseling and life lessons

Mentoring increases the flow of

information across organizational lines and
encourages diverse thinking and cross-
functional learning.
In this business environment where there is Cut
throat Competition each and every Company
Organization, firm, etc should maintain the
effective team of Sales force..by maintain their sale
force effectively. This can be done only by

Recruitment
Training
Development process etc…

Consequence of these can be seen in sales graph or

Market share Resulting …

Open Happiness
Territory Management
Dr Earl Stevens, October 2009
 Nature of Territory Management
• Salespeople are not only responsible for individual customers
(account management) but also responsible for a group of accounts
(territory management).
• It is defined as planning, implementation, and control, of sales
persons activities with the goal of realizing the sales and profits
potentials of their assigned territories.
• Although geographic considerations play a role in setting
boundaries, sales territories are primarily based on customer
grouping.
• Should the sales executive assigned a territory on the basis of the
geographically area or customer base?
– What if a customer has multiple plant location?
– Or the client shifts its business area?

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 Types of Accounts
Major Accounts
• Customers whose significance to the company’s business requires special
attention and experience.
• Major accounts are also termed as ‘key accounts’
• They are usually called on either by special sales people “senior sales
representative” or “key accounts manager”, or by regional or district sales
managers.
Direct Accounts
• Large accounts involving special arrangements in terms of pricing, credit
or product design. For e.g. central buying offices of a multinational firm.
• These are also called “House” or “National” accounts those served by
home office personnel or executives.

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 Territory Activities

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 Sales Territory Design
• Designing sales territory involves breaking down a
firm’s customer base so that accounts can be well
served by individual sales persons.
• Poor territory design can lead to inadequate market
coverage, unequal workload, lack of control over the
workforce and depressed morale.
• A company's sales territory represents basic
accountability units to the lowest level of
aggregation.

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 Manage to Succeed

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 Reasons for establishing sales
territories
• Companies form sales territories mainly to
maximize sales and profits.
• There are 3 pairs of guiding principles that
cause sales management to employ territories
in their operations:
– (a) customer-related
– (b) salesperson-related
– (c) managerial

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 Customer-Related
REASONS • BENEFITS
• Provide intensive • Produce higher sales
market coverage • Produce greater
• Provide excellent satisfaction
customer service

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 Sales Person-Related
REASONS • BENEFITS
• Generates enthusiasm • Lead to less turnover,
and motivation employee satisfaction
• Facilitate performance • Offer rewards related to
evaluation effort, pay-for-
performance

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 Managerial-Related
REASONS • BENEFITS
• Enhance control • Tight handle on selling
• Coordinate promotion expenses / allocate cost
by territory
• Plan for staff incentives

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 Reasons for Revising Territories
1. Major accounts open or close down facilities, move into or out of the area, or shift in
customers business – geographically or technological in nature
2. Aggressive domestic or international competition (markets are dynamic and conditions
change)
3. Changes in company’s buying policies or structure
4. Salespersons related revision due to physical, social, or psychological changes.
5. A salesperson may display a reduced energy level, family problems of various kinds can
effect territory performance significantly.
6. If a territory’s sales potential was underestimated or overestimated.
7. Managers can also find that they need to realign territories as new product lines are
introduced into the company’s product mix and the presentation and servicing burdens
become too large under old arrangement.

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 Reasons for NOT establishing sales
territories
• When a company is small (few resources)
• When friendship sales is important to maintain
for long-term relationship
• When high technology selling is involved. In
high technology application there are often a
very limited number of potential customers
nationwide that require highly specialized
advice.

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 Developing Territories
• Drawing up territories ranks among the most
important responsibilities of sales managers.
• It affects the sales force morale and performance.
• Results can be measured by sales volume, relative
market share or profit.

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 Factors to consider in establishing
‘Territories’
• Sales persons workload and nature of the job, for e.g. a prospecting
salesperson can handle a larger territory assignment then a person who
must provide full service for each account.
• The type of product / product lines
• The type of competition faced by the company in each territory.
• The desired intensity of the market coverage / challenging territories
• Channels of distribution available and transportation
• system
• Sales potential and servicing requirement. Limited potential territories can
be used as a training grounds for new members of a sales force.
• Salesperson can be assigned to more challenging territories in accordance
with their performance.

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 Model of Territory Management
• Territory management can be defined broadly in
terms of:
• Planning (Analysis, Objectives, Strategies, Tactics)
• Implementation (achievement of new business
targets, reporting)
• Control (compares intended and actual results with a
view to taking corrective action)

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 1. Planning
Analysis:
• Account load – the number of actual and potential customers assigned to a
salesperson
• Account potential – the share of an account’s business that the firm can reasonably
expect to attract.
• Servicing requirements – established and new accounts have servicing requirements
that are based on both the past volume with the company and their unique needs
and problems.
Objectives:
• Concern here is the sales volume and market share goals in the territory, which is
derived in top-down manner, starting from corporate objectives.
Strategies:
• Have to work on various strategies like pricing, promotional, delivery terms, payment
and credit terms.
Tactics:
• Routing and scheduling task, avoid repetitive tasks, intensity of territory coverage and
minimizing non-productive time.
• Designing a sales person travelling plan or the sequence of location to be visited
(known as ‘Routing’).
• Proper scheduling or sequencing of appointments.

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 2. Implementation
• Establishing customer base; selling and servicing these accounts is
the principal act of territory activity.
• New business development should be a continuous
• undertaking.
• Customer satisfaction and maintaining long term relationship are
among the foremost concern of the territory manager.
• Another important ingredient in implementation is ‘reporting’.
• Maintaining a steady flow of reports to the home office about sales
results, problems or corrective actions.

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 3. Control

• A feedback process
• A comparison take place between intended and actual
results, with a view of taking corrective action where
required.

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 Prioritize Your Activities to Produce
Maximum Results
• How you prioritize your sales territory management activities depends upon
whether you are managing a territory that has existing customers, or whether you
are building your customer base from scratch.
• If you manage a territory that has existing customers, your first priority should be to introduce
yourself to every single one of your customers. This should be a pleasant, low-key introduction
along the lines of, "I just wanted to introduce myself and see if there is anything I can do to help
you." Then, as you are chatting with your customers, you can ask, "Would you mind sharing with
me how you think my company's relationship with you has been going so far? What have we
been doing well? Where could we improve?"
• Collecting this kind of feedback is a great way to start relationships with customers.
• It also helps you draw any festering problems out into the open. If you can address the
problems quickly, it can really jump-start your relationships with the affected customers.
• This same approach can also be effective for customers that have been reducing their purchases
from your company over time, or customers that have stopped ordering completely. It is never
much fun to listen to people complain. But, if you can isolate and solve the problems that are
causing the dissatisfaction, you can produce a rapid and substantial boost in sales.

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 Prioritize Your Activities to Produce
Maximum Results
• If you find customers that are really happy with the service your company has provided, drill down (with
more questions) to determine just what has made them so happy. Their answers will provide you with a
template for successfully managing their (and other) accounts. Also, ask these happy customers for
referrals, regardless of whether you have contributed in any way to their happiness! Happy, satisfied
customers are usually delighted to share their positive experience with others.
• Once you have met all of your existing customers, the next step is to identify target prospects in your
territory
• Start by checking with your manager. If they have been managing your sales team for any period of time,
they should be able to suggest some good target prospects.
• Once you have compiled a list of target prospects, determine which ones you will pursue first. Which
target prospects have the greatest potential to purchase the largest amounts of products and services?
Which ones are likely to be "quick closes"? If you have both types of target prospects on your list, pursue
several of each type at the same time. In the words of a well-respected executive that I used to work with,
"Elephant hunting is great. But those rabbits sure taste good in between the elephants!"
• When you are ready to begin pursuing your target prospects, start by asking your existing customers
whether they know anyone that works in the target organizations. If they do, ask for referrals. Once you
have exhausted available referrals, proceed with the other activities in your prospecting plan - but tailor
these activities to attract the attention of your target prospects.

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 Prioritize Your Activities to Produce
Maximum Results
Conclusion
• Effective sales territory management begins with touching base with every
single one of your existing customers. Ask questions to gauge their
satisfaction with their relationship with your company. If they identify any
problems, work aggressively to solve these problems as your first priority.
• If a customer expresses happiness and satisfaction, ask questions to
determine what your company has been doing right. Use this information
to create a template for managing all of your accounts. Also be sure to ask
for referrals, both in general and to specific target accounts. Exhaust these
referrals before you begin the other (less productive) activities in your
prospecting plan.
• Prioritize your activities as described in this article, and you will maximize
sales growth in your territory!

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 Sales Quota
Definition

• Sales Quotas are the targets that that the sales people try to
achieve within a specific period of time, which contributes
towards achieving the organizational goals regarding sales
forecasts.
 Meaning
• Quotas are routinely assigned to the sales
unit.

• Sales quotas are the sum of total sales of a

future period and duties to achieve the
component of total sales by each salesperson
are handed down to them at the beginning of
the period.
 According to Philip Kotler….

• ‘A sales quota is the sales goal set for a

product line, company division or sales
representative. It is primarily a managerial
device for defining and stimulating sales
effort.’
• Quotas are based on sales.

• A sales forecast is an estimate of what a firm

can sell.

• Sales quotas may be set equal to, above or

below the sales forecast.

• Sales potential is the maximum share of the

market demand that a firm can obtain.
 Principles of setting Sales Quota
• There is no specific formulae or method for setting sales
quota, however a scientific method can be followed for
effective quota setting.

• There should be objectivity in approach while fixing quotas

and it should be based on facts and figures drawn from the
market.

• There should be an equal level playing field.

• The set sales quota should be achievable by an average

salesperson with minimum effort.
• A flexible quota often helps the salespeople to adjust their
efforts and returns to the market behaviour.

• There should be a level of definiteness in the quota set for the

salesperson based on – either geographic territory, or on
money value or on the basis of units of product(s).

• A participatory quota setting procedure serves as a tool of

motivation and realization of organizational sales goals.
 Quota Objectives

• Three kinds of objectives can be towards the

quota…

1) Regular and recurring

2) Problem solving
3) Creative
 1)Regular and recurring

• These objectives are related to the sales volume, target

market share, expenses, frequency and quantity of calls,
prospects and lead generation, growth in order size, market
coverage, and reporting procedures.

• Achieving these goals is a satisfactory performance

evaluation of the concern.
 2) Problem solving

• Are individual salespersons goal that involve deviations from

the standard and routine objectives, where things have gone
wrong and bringing a blockage in the smooth functioning of
the organization system.

• These objectives need specific unique commitments form the

salesperson.
 3) Creative

• Creative objectives are actions the sales person states and

commits which are new, challenging, creative, innovative,
intelligent and original in the territory or in another area of
responsibility.

• These goals mean managing breakthrough and quantum

leaps to new levels of performance.

The manager needs to talk to sell the objective and

commitment to his sales staff as they meet customers to sell
products and services.
 Procedure for Setting Sales Quota
• There are essentially three steps to be
followed for quota setting:

1) Scheduled planning
2) Conferencing with each sales person
3) Arriving at a summarized written quota
statement.
 1) Scheduled planning

• It involves planning for goal setting meetings with individual

salespeople and particularly with new recruits.

• These schedules are necessary to explain systems and

reasons, benefits and incentives for each salesperson and
goals for the organization.

• The salespeople should be allowed to ask questions and get

clarification for their doubts.
 • 2) Conferencing with each sales person

• Here the sales manager allows the salesperson to discuss.

• The discussion revolves around four key areas – territory,

account, call management and self management.

• The purpose is to create a win-win situation for both the

organization and the employee.
 3) Arriving at a summarized written quota
statement.

• The next task is to prepare written summary of the goals

agreed upon.

• The written goals become a document of understanding for

all purposes.

• It provides clear cut goals and responsibilities for the year

ahead.
 Types of Sales Quota
Quota types include

1) Sales volume quota

2) Sales budget quota
3) Sales activity quota
4) Combination quota
 1) Sales volume quota
• It is the most commonly used method as it provides an
important standard of appraising the performance of
individual salespeople, intermediaries and the branch.

• Sales volume quotas communicate the organizations

expectations in terms of what amount of sales for/in what
period.

• This kind of quota can be set for geographical territories,

different product lines, different marketing intermediaries, or
more than one of these combinations.
• The annual quota is set for the year and then broken down
into specific time periods.

• In many cases, these specific time periods may vary

depending upon the seasonality of the business, consumer
attitude towards buying and the geographic location of the
customer.

• Organizations make sales forecasts on the basis of the sales

divisions, regions, branches, districts and individual sales
territories.
• The sales volume quota is of three kinds:

a) Monetary sales volume quota,

b) Unit sales volume quota,
c) Points sales volume quota
 a)Monetary sales volume quota

• The sales volume is set in monetary terms and

not in terms of units of the product.

• The monetary quota is set for each sales unit

separately.
 b) Unit sales volume quota
• Here quota is set in terms of volume.

• It is used in two situations;

• When the prices of the products are expected to fluctuate
considerably during the quota period, and when the
companies with a narrow product line sell at a price that
fluctuates little during the quota period.

• It helps the company to achieve the sales in terms of volume.

 c) Points sales volume quota

• Some organizations use sales volume quota expressed in

‘points’ into which money or unit sales or both can be
converted as desired by the sales manager.

• A multi-product firm may fix a point volume quota where sale

of one unit will bring a certain point.

• Eg: if a salesperson is given a quota of 1000 points……..

 2) Sales budget quota
• These kinds of quotas are set for various units of the
organization in order to control the expenses (expenses
quota), gross margins and net profits (profit quota).

• The objective not only to make desired sales volume but also
make profits.

• Expenses quota ensures that the salespeople limit their

expenses in alignment with the volume and control the cost
to acquire customers.
• Many companies set upper limits on items of expenses like
lodging, meals and entertainment and expect the salespeople
to manage within the budget.

• Profit quota can be set on Gross margins and Net profits.

• Organizations emphasize net profits more than sales volume.

• The rationale behind this type of quota is that the sales

personnel operate more efficiently to reduce the expenses
and increase the sales resulting in increased margins and
profits.
• The manufacturing department provides the sales manager
with information regarding the cost of goods sold, which
includes the cost of manufacturing the product.

• By subtracting the cost of goods sold and the direct selling

expenses from the sales volume, one can determine the net
profit quota.

• Here the sales person does not decide the price and has no
control over the manufacturing cost.
 3) Sales activity quota
• The sales person is not always involved in
sales realization; for example a retail
salesperson has a job of providing information
only.

• In addition to direct sales activity, the

salesperson is expected to do some non-
selling activity and the quota can be set as a
mix of these activities.

• Eg: Insurance selling, Medical Reps.

• Activity quota can be set on total sales calls, particular
classes or set of customers, calls on prospects, number of
new accounts, product demonstration, etc.

• Activities quota set objectives for job related studies.

 4) Combination quota

• The most common combination is the sales

volume and activity quota.
• It is used to control the sales force
performance on the basis of selling and non-
selling activities.
 Methods of setting Sales Quota
• Fixing sales quota in organizations is a
challenging task today due to the sheer size of
the sales organizations, complex sales force
structure and varied competition conditions in
different territories.

• For fixing quotas, the following methods can

be followed,
 1) Based on Sales Forecasts and
Potentials
• Organizations forecast the total sales or
volumes for the entire market, which is then
divided into territories and then brought
down to the individual salesperson level.

• Estimated future sales per territory are then

divided by the number of salespersons or by
the branches to determine the sales quota for
each.
 2) Based on Forecast
• It is not always possible to obtain the
forecasted figures for individual sales
territories as companies lack information,
data, money and people to determine the
sales potential for individual sales territories.

• Small companies set quota in relation to their

sales forecast or total market estimates.
 3) Based on Past sales or Experience
• Here the companies collect the sales data of previous years,
average them out for each geographical territory and then
add an arbitrary percentage for next years quota.

• This average method is followed due to the ease in using

trends and projecting them in future.
• This method gives a rare view perspective, as it does not take
into consideration the sales potential.
 4) Based on Executive Judgement
• This method is used when there is no or little
information available in the market.

• It may also be impractical to find out the

potential of new product in an existing
territory or an existing product in a new
territory.
5) Based on Salespeople Judgment
• Many companies ask their own salespeople to set the quota
for themselves.

• This is mostly applicable in situations where the company is

expanding the territory or starting up its own sales force.

• These inputs from the salespeople allow the company to fix

their production and manufacturing schedules.
• Asking the salespeople their quota, provides
an opportunity for the salespeople to test
their abilities and it makes them to work with
higher motivation.

• What can be the 2 issues here when the

salespeople are asked to set the quota for
themselves……discuss….
 6)Based on Compensation
• Salespeople are promoted on the basis of their achieving
quota.

• Salesperson get extra compensation by reaching sales volume

quotas for total unit or rupee sales, sales of existing products
and new products… also to a new or an existing customer.

• Quotas related to compensation are determined by any of the

previously explained quota setting methods.
Planning, Sales Forecasting, and
Budgeting
 Strategic Planning

• Planning is deciding now what, how, and when we

are going to do
• Strategic planning is deciding about the
organisation’s long-term objectives and strategies
• In a large organisation, planning is done at three or
four organisational levels, as shown in the figure (in
the next slide)
 Planning In A Large Organisation
Organisational Organisation Structure Type of
Levels Planning

Corporate Corporate Office Corporate

Strategic
Planning

SBU SBU SBU

Division / Divisional /
„A‟ „B‟ „C‟
Business Unit / SBU Strategic
SBU Planning
Product /
Product Product Product
Product Operational
„x‟ „y‟ „z‟
Planning

• For effective planning, operations, and control, a large multi-

product / multi-business firm divides its major products /
services into divisions / strategic business units ( SBUs)
• Each SBU has a separate business, a set of competitors and
customers, and a manager responsible for strategic planning,
performance, and control
 Role of Marketing in Organisational Planning
Type of Role of Marketing – Key Tasks Formal
Planning Name

• Corporate • Provide customer and competition • Corporate

strategic information marketing
planning • Support customer orientation

• Divisional / • Provide customer and competition • Strategic

SBU analysis marketing
Strategic • Develop competitive advantage, target
planning markets, value proposition, positioning

• Product / • Evolve and implement marketing plan • Marketing

functional or including marketing-mix strategy, and sales management
Operational strategy
planning
 Marketing and Sales Strategies
• Figure below shows how sales strategy is developed from marketing
strategy Sales
promotion
strategy
Product /
service
strategy
Target
Advertising
market
strategy
strategy
(Long- Promotion /
term) IMC* strategy

Marketing
Personal selling /
Strategy
sales strategy
Price
Marketing strategy
mix
strategy
(Short- Public relations &
term) Publicity strategy

Distribution
strategy
Direct marketing
strategy

* IMC: Integrated Marketing Communication

 Components of Sales Strategy
• Classifying market segments and individual customers
within a target segment
• Each firm should first decide on target market segments
and if possible, to classify customers into high, medium,
low sales & profit potentials
• Sales strategy is developed accordingly
• Relationship strategy
• Whether a selling firm should use transactional, value-
added, or collaborative relationship depends on both
the seller and the customer
• Each selling firm to decide which segments and
individual customers respond profitably to collaborative
relationship
 Components of Sales Strategy (Continued)
• Selling Methods
• These are: (1) Stimulus response, (2) formula, (3) need-
satisfaction, (4) team selling, (5) consultative
• Selection of appropriate selling method depends on
relationship strategy
• Channel Strategy
• There are many sales / marketing channels. For example:
company salesforce, distributors, franchisees, agents, the
internet, brokers, discount stores
• Selection of a suitable channel depends on both the
buyer and the seller, products / services, and markets
 Basic Terms Used in Sales Forecasting
• Market demand for a product or service is the
estimated total sales volume in a market (or
industry) for a specific time period in a defined
marketing environment, under a defined marketing
program or expenditure. Market demand is a
function associated with varying levels of industry
marketing expenditure.
• Market (or industry) forecast (or market size) is the
expected market (or industry) demand at one level of
industry marketing expenditure
 Basic Terms (Continued)
• Market potential is the maximum market (or industry)
demand, resulting from a very high level of industry
marketing expenditure, where further increases in
expenditure would have little effect on increase in
demand
• Company demand is the company’s estimated share of
market demand for a product or service at alternative
levels of the company marketing efforts (or expenditures)
in a specific time period
Fig. Market Demand Functions
Market demand

Market Potential

Market Forecast
Market Minimum

Industry marketing expenditure

 Basic Terms (Continued)
• Company sales potential is the maximum estimated company
sales of a product or service, based on maximum share (or
percentage) of market potential expected by the company
• Company sales forecast is the estimated company sales of a
product or service, based on a chosen (or proposed)
marketing expenditure plan, for a specific time period, in a
assumed marketing environment
• Sales budget is the estimate of expected sales volume in units
or revenues from the company’s products and services, and
the selling expenses. It is set slightly lower than the company
sales forecast, to avoid excessive risks
 Forecasting Approaches

• Two basic approaches:

• Top-down or Break-down approach
• Bottom-up or Build-up approach

• Some companies use both approaches to

increase their confidence in the forecast
 Steps followed in Top-down / Break-down
Approach
• Forecast relevant external environmental factors
• Estimate industry sales or market potential
• Calculate company sales potential = market potential
x company share
• Decide company sales forecast (lower than company
sales potential because sales potential is maximum
estimated sales, without any constraints)
 Steps followed in Bottom-up / Build-up
Approach
• Salespersons estimate sales expected from their
customers
• Area / Branch managers combine sales forecasts
received from salespersons
• Regional / Zonal managers combine sales forecasts
received from area / branch managers
• Sales / marketing head combines sales forecasts
received from regional / zonal managers into
company sales forecast, which is presented to CEO
for discussion and approval
 Sales Forecasting Methods

Qualitative Methods Quantitative Methods

• Executive opinion • Moving averages

• Delphi method • Exponential smoothing
• Salesforce composite • Decomposition
• Survey of buyers’ • Naïve / Ratio method
intentions
• Test marketing • Regression analysis
• Econometric analysis
Executive opinion method
• Most widely used
• Procedure includes discussions and / or average of all
executives’ individual opinion
• Advantages: quick forecast, less expensive
• Disadvantages: subjective, no breakdown into subunits
• Accuracy: fair; time required: short to medium (1 – 4 weeks)
Delphi method
• Process includes a coordinator getting forecasts separately
from experts, summarizing the forecasts, giving the summary
report to experts, who are asked to make another prediction;
the process is repeated till some consensus is reached
• Experts are company managers, consultants, intermediaries,
and trade associations
 Delphi Method (Continued)
• Advantages: objective, good accuracy
• Disadvantages: getting experts, no breakdown into subunits,
time required: medium (3/4 weeks) to long (2/3 months)
Salesforce composite method
• An example of bottom-up or grass-roots approach
• Procedure consists of each salesperson estimating sales.
Company sales forecast is made up of all salespersons’ sales
estimates
• Advantages: Salespeople are involved, breakdown into
subunits possible
• Disadvantages: Optimistic or pessimistic forecasts, medium to
long time required
• Accuracy: fair to good (if trained)
Survey of Buyers’ Intentions Method
• Process includes asking customers about their intentions to
buy the company’s products and services
• Questionnaire may contain other relevant questions
• Advantages: gives more market information, can forecast new
and existing products, good accuracy
• Disadvantages: some buyers’ unwilling to respond, time
required is long (3-6 months), medium to high cost
Test Marketing Method
• Methods used for consumer market testing: full blown,
controlled, and simulated test marketing
• Methods used for business market testing: alpha and beta
testing
Test Marketing Method (Continued)
• Advantages: used for new or modified products, good accuracy,
minimizes risk of national launch
• Disadvantages: Competitors may disturb if some methods are
used, medium to high cost, medium to long time required
Moving Average Method
• Procedure is to calculate the average company sales for previous
years
• Moving averages name is due to dropping sales in the oldest
period and replacing it by sales in the newest period
• Advantages: simple and easy to calculate, low cost, less time,
good accuracy for short term and stable conditions
• Disadvantages: can not predict downturn / upturn, not used for
unstable market conditions and long-term forecasts
 Exponential Smoothing Method
• The forecaster allows sales in certain periods to influence the
sales forecast more than sales in other periods
• Equation used:
Sales forecast for next period=(L)(actual sales of this year)+(1-
L)(this year’s sales forecast), where (L) is a smoothing
constant, ranging greater than zero and less than 1
• Advantages: simple method, forecaster’s knowledge used, low
cost, less time, good accuracy for short term forecast
• Disadvantages: smoothing constant is arbitrary, not used for
long-term and new product forecast
Decomposition Method
• Process includes breaking down the company’s previous periods’ sales data into
components like trend, cycle, seasonal, and erratic events. These components
are recombined to produce sales forecast
• Advantages: Conceptually sound, fair to good accuracy, low cost, less time
• Disadvantages: complex statistical method, historical data needed, used for
short-term forecasting only
Naive / Ratio Method
• Assumes: what happened in the immediate past will happen in immediate
future
• Simple formula used:
Actual sales of this year
Sales forecast for next year  Actual sales of this year 
Actual sales of last year
• Advantages: simple to calculate, low cost, less time, accuracy good for short-
term forecasting
• Disadvantages: less accurate if past sales fluctuate
 Regression Analysis Method
• It is a statistical forecasting method
• Process consists of identifying causal relationship between
company sales (dependent variable, y) and independent variable
(x), which influences sales
• If one independent variable is used, it is called linear (or simple)
regression, using formula; y=a+bx, where ‘a’ is the intercept and
‘b’ is the slope of the trend line
• In practice, company sales are influenced by several independent
variables, like price, population, promotional expenditure. The
method used is multiple regression analysis
• Advantages: Objective, good accuracy, predicts upturn /
downturn, short to medium time, low to medium cost
• Disadvantages: technically complex, large historical data needed,
software packages essential.
• Example: One can forecast based on linear relationships. If one variable is linearly related to
the other for a long enough period of time, it may be beneficial to predict such a relationship in
thefuture.
 Econometric Analysis Method
• Procedure includes developing many regression
equations representing (i) relationships between
sales and independent variables which influence
sales, and (ii) interrelationships between variables.
Forecast is prepared by solving these equations
• Computers and software packages are used
• Advantages: Good accuracy of forecasts of economic
conditions and industry sales
• Disadvantages: need expertise & large historical data,
medium to long time, medium to high cost
 How to Improve Forecasting Accuracy?
• Sales forecasting is an important & difficult task
• Following guidelines may help in improving its
accuracy
• Use multiple (2/3) forecasting methods
• Select suitable forecasting methods, based on application,
cost, and available time
• Use few independent variables / factors, based on
discussions with salespeople & customers
• Establish a range of sales forecasts – minimum,
intermediate, and maximum
• Use computer software forecasting packages
What is a Sales Budget?
• It includes estimates of sales volume and selling expenses
• Sales volume budget is derived from the company sales forecast –
generally slightly lower than the company sales forecast, to avoid
excessive risks
• Selling expenses budget consists of personal selling expenses
budget and sales administration expenses budget
• Sales budget gives a detailed break-down of estimates of sales
revenue and selling expenditure
Purposes of the Sales Budget
• Planning
• Coordination
• Control
 Sales Budget Process
• Many firms follow a process for preparation of
annual sales and company budgets. It generally
includes:
• Review past, current, and future situations
• Communicate information to all managers on budget
preparation – guidelines, formats, timetable
• Use build-up approach, starting with first-line sales
managers
• Get approval of sales budget from top management
• Prepare budgets of other departments
 Key Learnings

• Strategic planning is deciding about the organization’s long-

term objectives and strategies
• Strategic marketing has a role at divisional or strategic
business unit (SBU) level of strategic planning by providing
market information and developing competitive advantage,
target markets, value proposition
• Sales strategy is developed from marketing strategy through
marketing-mix and promotional strategies
• Components of sales strategy includes classification of market
segments / customers, relationship strategy, selling methods,
& channel strategy
 Key Learnings (Continued)
• Two basic approaches of forecasting are: top-down (or
breakdown), and bottom-up (or build-up)
• Sales forecasting methods are broadly classified as: qualitative
and quantitative
• Qualitative methods include executive opinion, delphi
method, salesforce composite, survey of buyers’ intentions,
test marketing
• Quantitative methods consist of moving averages, exponential
smoothing, decomposition, naïve/ratio, regression analysis,
econometric analysis
• Sales budget gives a detailed estimates of sales volume and
selling expenses. Its purposes are planning, coordination, and
control
Planning the Sales Call Is a Must!
 What’s a Plan?
• A plan is a method of achieving an end.
• The foundation of your plan must be based
upon the truth.
Only Through Truth Can Trust Be Supported to
Bridge the Gap between People
The Pre approach Involves Planning the
Sales Presentation
Strategic Customer Sales Planning–The Pre
approach
• Strategic problem solving involves
– Strategic needs
– Creative solutions
– Mutually beneficial agreements
Strategic Customer Sales Planning–The Pre
approach, cont…
• Reasons for planning the sales call
– Builds confidence
– Develops atmosphere of goodwill
– Reflects professionalism
– Generally increases sales
 Steps in the Pre approach: Planning
the Sale

Determine Develop/Review Develop Develop sales

sales call customer profile customer presentation
objective(s) benefits
 Strategic Customer Sales Planning–the Pre
approach, cont…
• Always Have a Sales Call Objective
– The precall objective – have one or more!
– Focus and flexibility
• Customer focus your efforts on the objective when you
are with the customer
• Be prepared to switch to another objective if needed
– Make the goal specific
– Move customer conversation toward the objective
 Strategic Customer Sales Planning -
The Preapproach, cont…
Determine sales Develop/Review Develop Develop sales
call objective(s) customer profile customer benefits presentation

• Always have a sales call objective

 Set a SMART call objective
 S pecific
 M easurable
 A chievable

 R ealistic

 T imed
 Strategic Customer Sales Planning–
Customer Profile Provides Insight
Determine sales Develop/Review Develop Develop sales
call objective(s) customer profile customer benefits presentation

• Review information to create customized

presentation
• See what customer has done in the past to
determine future needs
• If do not have customer profiles – get one for
each customer
Information Used in a Profile and for
Planning
 Customer Benefit Plan: What It’s All
About!
Determine sales Develop/Review Develop Develop sales
call objective(s) customer profile customer benefits presentation

• Steps in creating the customer benefit plan:

Step 1: Select FABs for product discussion
Step 2: Select FABs for marketing plan discussion
Step 3: Select FABs for business proposition
discussion
Step 4: Develop suggested purchase order based
on first three steps
Examples of Topics Contained in the Marketing Plan
Segment of Your Sales Presentation
Examples of Topics Contained in the Business Proposition
Segment of Your Sales Presentation
Customer Benefit Plan: Develop Sales
Presentation
Determine sales Develop/Review Develop Develop sales
call objective(s) customer profile customer benefits presentation

• Write out all FABs for steps 1 - 3

• Write out suggested purchase order
• Now you are ALMOST ready to create your sales
presentation
Major Phases in Your Presentation: A Sequence of Events to
Complete in Developing a Sales Presentation
Rapport-building
Uncover needs
Attention, interest, transition
Features
Advantages
Benefits
How to resell (for reseller)
How to use (for consumers
and industrial user)
What’s in it for your
customers?

Recommend what to buy in

order to fill the needs
uncovered in the presentation.
Ask for the business!
Do not give up!
Act as a professional
Leave the door open
 What is Left in Creating Your Sales
Presentation?
1. Approach.
 As shown you need to create
2. Fully discuss your
product.
your:
 Approach
3. Present your  Close
marketing plan.

4. Explain your
business proposition.

5. Suggested purchase
order.

6. Close

7. Exit
In Planning a Sales Presentation, You Should
Consider:
 The prospect’s mental steps ?
??? ?

 What would the prospect be thinking as

you give your presentation?
The Prospect’s Five Mental Steps in Buying

Attention Interest Desire Conviction Purchase

 How Do You Obtain Someone’s Attention When
You Begin Your Presentation?

 Show you are there to help!

 The proper approach is important!
 Your goal is to determine a need or problem

Attention Interest Desire Conviction Purchase

 How Do You Keep Someone’s Interest in
What You are Presenting?
 Show you are there to help!
 Quickly present major FABs that:
 Fulfill a need
 Solve a problem
 Show and tell

Attention Interest Desire Conviction Purchase

 How Do You Build Desire for Your Product?

 Show you are there to help!

 Using your trial closes, determine
if prospect is interested in benefits
 Watch for nonverbal signals!
 Green
 Yellow
 Red

Attention Interest Desire Conviction Purchase

 How Do You Establish The Conviction Your
Product Will Solve Needs or Problems?

 Show you are there to help!

 Let the customer see how your product’s
FABs will solve her needs or problems
 Your trial closes will reveal whether the
customer ready to buy

Attention Interest Desire Conviction Purchase

 How Do You Know if Customer Ready to
Purchase So You Can Close?
 Show you are there to help!
 Trial close response(s) give nonverbal
signals that indicate positive beliefs that the
product will fulfill needs or solve problems

Attention Interest Desire Conviction Purchase

 Overview of the Selling Process
• Getting the prospect’s attention and interest by having
the prospect recognize a need or problem, and stating a
wish to fulfill the need or solve the problem
• Uncovering and answering the prospect’s questions and
revealing and meeting or overcoming objections results
in more intense desire
• Desire is transformed into the conviction that your
product can fulfill the prospect’s needs or solve problems
Sales Organization Structure and
Sales Force Deployment
 Sales Organization Concepts

Specialization
The degree to which individuals perform some of the
required tasks to the exclusion of others. Individuals
can become experts on certain tasks, leading to better
performance for the entire organization.

Centralization
The degree two which important decisions and tasks
performed at higher levels in the management hierarchy.
Centralized structures place authority and responsibility
at higher management levels.
 Sales Force Specialization Continuum

Generalists Specialists
Some specialization
All selling activities Certain selling
of selling activities,
and all products to activities for certain
products, and/or
all customers products for certain
customers
customers
Span of Control vs. Management
Levels
Flat Sales Organization
National

Management Levels
Sales
Manager

District District District District District

Sales Sales Sales Sales Sales
Manager Manager Manager Manager Manager

Span of Control
Span of Control vs. Management
Levels
Tall Sales Organization

National Sales
Manager

Management Levels
Regional Sales Regional Sales
Manager Manager

District District District District District District

Sales Sales Sales Sales Sales Sales
Manager Manager Manager Manager Manager Manage
r
Span of Control
 Line vs. Staff Positions

National Sales Manager

Sales Training Manager

Regional Sales Managers

Sales Training Manager

District Sales Managers
Staff Position

Salespeople Line Position

 Selling-Situation Factors and
Organizational Structure
Organizational Environmental Task Performance
Structure Characteristics Performance Objective

High Envir.
Specialization uncertainty Nonroutine Adaptiveness

Low Envir.
Centralization Uncertainty Repetitive Effectiveness
 Customer and Product
Determinants
of Sales Force Specialization
Customer Needs Different
Market- Product/Market-
Driven Driven
Simple Specialization Specialization Complex
Product Range of
Offering Geography- Product- Products
Driven Driven
Specialization Specialization

Customer Needs Similar

Geographic Sales Organization

National Sales Manager

Sales Training Manager

Eastern Region Sales Manager Western Region Sales Manager

Zone Sales Managers (4) Zone Sales Managers (4)

District Sales Managers (20) District Sales Managers (20)

Salespeople (100) Salespeople (100)

 Product Sales Organization

National Sales Manager

Office Equipment Sales Manager Office Supplies Sales Manager

District Sales Managers (10) District Sales Managers (10)

Salespeople (100) Salespeople (100)

 Market Sales Organization
National Sales Manager

Commercial Accounts Government Accounts

Sales Manager Sales Manager

Sales Training
Manager

Zone Sales Managers (4) District Sales Managers (5)

District Sales Managers (25) Salespeople (50)

Salespeople (150)
 Functional Sales Organization

National Sales Manager

Field Sales Manager Telemarketing Sales Manager

Regional Sales Managers (4) District Sales Managers (2)

District Sales Managers (16) Salespeople (40)

Salespeople (160)
 Identifying Major Accounts

Large Large Major

Size of Account

Account Account

Regular Complex
Small Account Account
Simple Complex
Complexity of Account
Major Accounts Options

Develop Major Account Salesforce

Assign Major Accounts to

Sales Managers

Assign Major Accounts to Salespeople

along with Other Accounts
 Comparison of
Sales Organization Structures

Organizational
Structure Advantages Disadvantages

• Low Cost
• Limited specialization
• No geographic duplication
• Lack of management
Geographic • No customer duplication
control over product or
• Fewer management levels
customer emphasis

• Salespeople become experts

• High cost
in product attr. & applications
Product • Geographic duplication
• Management control over
• Customer duplication
selling effort
 Comparison of
Sales Organization Structures

Organizational
Structure Advantages Disadvantages
• Salespeople develop
better understanding of
unique customer needs • High cost
Market
• Management control over • Geographic duplication
selling allocated to different
markets

• Geographic duplication
• Efficiency in performing
Functional • Customer duplication
selling activities
• Need for coordination
 Hybrid Sales Organization
Structure
National Sales Manager

Commercial Accounts Government Accounts

Sales Manager Sales Manager

Major Accounts Regular Accounts Office Equipment Office Supplies

Sales Manager Sales Manager Sales Manager Sales Manager

Field Sales Telemarketing

Manager Sales Manager

Western Eastern
Sales Manager Sales Manager
 Salesforce Deployment

Sales Force deployment decisions can be viewed as

providing answers to three interrelated questions.
1. How much selling effort is needed to cover accounts and
prospects adequately so that sales and profit objectives
will be achieved?

2. How many salespeople are required to provide the desired

amount of selling effort?

3. How should territories be designed to ensure proper

coverage of accounts and to provide each salesperson
with a reasonable opportunity for success?
 Interrelatedness of
Sales Force Deployment Decisions

How much selling effort is needed to cover

Allocation of
accounts and prospects adequately so that sales
Selling Effort and profit objectives will be achieved?

Sales Force How many salespeople are required to provide the

Size desired amount of selling effort?

How should territories be designed and salespeople

Territory assigned to territories to ensure proper coverage of
Design accounts and to provide each salesperson with a
reasonable opportunity for success?
 Analytical Approaches to
Allocation of Selling Effort
Easy to Develop and Use

Single Factor
Models

Low High
Analytical Portfolio Analytical
Rigor Models Rigor

Decision
Models

Difficult to Develop and Use

 Single Factor Models

• Easy to develop and use/low analytical rigor

• Accounts classified into categories based on one factor, such

as market potential

• All accounts in the same category are assigned the same

number of sales calls

• Effort allocation decisions are based on the analysis of only

one factor and differences among accounts in the same
category are not considered in assigning sales call coverage
 Single Factor Model Example

Market Potential Average Sales Calls to Average Sales Calls to

Categories an Account Last Year an Account Next Year
A 25 32
B 23 24
C 20 16
D 16 8
 Portfolio Models

• Account Opportunity - an account’s need for

and ability to purchase the firm’s products

• Competitive Position - the strength of the

relationship between the firm and an account
Portfolio Model Segments and
Strategies
Competitive Position
Account Opportunity Strong Weak
High
Segment 1 Segment 2
Low

Segment 3 Segment 4
 Decision Models

• Simple Basic Concept - to allocate sales calls to

accounts that promise the highest sales return
from the sales calls

• Optimal number of calls in terms of sales or profit

maximization
Sales Force Size: Key Considerations

• Sales Productivity - the ratio of sales generated to selling

effort used
– In early stages, the addition of salespeople increases sales considerably
more than the selling costs. As salespeople continue to be added, sales
increases tend to decline until a point is reached when the costs to add
a salesperson are more than the revenues that salesperson can
generate.
• Salesforce Turnover
– Is very costly
– Should be anticipated
 Sales Force Size: Analytical Tools

The Breakdown Approach is used to determine the

number of salespeople needed to generate a
forecasted level of sales. This approach is easy to
develop. However, it is weak conceptually. The
concept underlying the calculations is that sales
determine the number of salespeople needed—putting
“the cart before the horse.”

Salesforce size = Forecasted sales / Average sales per person

 Sales Force Size: Analytical Tools

The Workload Approach determines how much selling

effort is needed to adequately cover the firm‟s market.
Then the number of salespeople required to provide
this amount of selling effort is calculated. This
approach relatively simple to develop and is sound
conceptually.

Total selling effort needed

Number of salespeople =
Average selling effort per
salesperson
 Sales Force Size: Analytical Tools

The Incremental Approach is the most rigorous for

calculating salesforce size. Its compares the marginal
profits and marginal costs associated with each
incremental salesperson. The major advantage is that it
quantifies the important relationships between salesforce
size, sales, and costs. However, this method is difficult to
develop, and it cannot be used for new sales forces where
historical data and accurate judgments are not possible.

# of Salespeople Marginal Contribution Marginal Cost

100 $85,000 $75,000
101 $80,000 $75,000
102 $75,000 $75,000
103 $70,000 $75,000
 Designing Territories

• Territories consist of whatever specific accounts are

assigned to a specific salesperson. The territory can
be viewed as the work unit for a salesperson.

• Territory Considerations
– Trading areas
– Present effort
– Recommended effort
 Territory Design Procedure

Analyze
Select Assess Finalize
Planning and Form Initial
Planning and Territory Territory
Control Unit Territories
Control Unit Workload Design
Opportunity