MARKETING ADVANCED Abhishek Bhide

SESSION 4
12 Aug 2025

ABHISHEK BHIDE 2
STRUCTURING THE SALES TRAINING PROGRAM
Identifying Getting Basic Deciding
Training needs & background of Trainers
objectives Trainees

Determining the Fixing the Timing Determining

Training Location & Duration Training Modules
& Methods

Creating the Evaluating

Instruction program through
Materials feedback
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TRAINING & EFFECTIVENESS

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SALES FORCE CONTROL Evaluating & Controlling

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MANAGING THE SALES FORCE

Recruiting, selecting

Training

Supervising/ Evaluating

Motivating

Remunerating

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INTERCONNECTEDNESS PROCESSES
Sales
Information
System

Sales Sales Control

Forecasting & Evaluation

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SALES CONTROL
oIn order to ensure that the sales targets are achieved, sales processes need to be
controlled both on an on-going basis (or continuously) as well as overall at a fixed
periodicity.
oThe sales control function assists the sales manager to ascertain what level of sales
results have been attained, why there has been a variance, if any between actual and
budgeted results, and what remedial action be taken to achieve the targeted results.
oControlling the Sales force requires a good sales information system
oSales Force control is also closely linked to Evaluation & Compensation of sales
personnel

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PURPOSE OF SALES FORCE CONTROL
1. To initiate remedial steps.
2. To revise the sales policy and the strategies being followed.
3. To implement steps for improving the productivity of the salesforce.
4. To improve the quality of target setting, sales planning and budgeting
functions
5. To increase sales profitability.

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METHODS OF SALES CONTROL
Sales analysis:
It is a detailed examination of sales volume by territory, salesperson, customer, product
line etc. with a view to uncover any issues or gaps
Marketing cost analysis:
It analyses the level of selling costs incurred to attain the given sales volume.
Marketing cost analysis is a detailed examination of the costs incurred in the
organisation and administration of the sales and marketing function and its impact on
sales volume. It relates costs to sales volume and resultant profitability.
Sales management audit:
This third technique of sales control relates to the strategic dimensions of sales control.
The purpose of sales management audit is to evaluate the soundness of the sales
management of the firm.
It is a comprehensive audit of the policy, systems & procedures
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TOTAL SALES AUDIT
The sales audit is an objective total evaluation of marketing efforts including policies,
objectives and even personnel.
Sales audit is an important function of modern marketing executives.
It has been defined as “a systematic, critical, unbiased review and appraisal of the
basic objectives and policies of the marketing function and of the organisation,
methods, procedures and personnel employed to implement those policies and to
achieve those objectives.”

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EVALUATING PERFORMANCE OF SALESPEOPLE
Evaluating salesperson’s performance is a complex task not only because they are
required to perform a variety of activities, but also because different types of selling
situations require different kinds of selling skills which may not lend themselves to
equitable comparisons.
In addition, salesmen differ in terms of selling acumen and personal qualities.
Also territories may differ widely and they are required to spend a large part of their
time away from their immediate manager.
A good monitoring system becomes a basis for developing an evaluation system.

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FORM FOR EVALUATING PERFORMANCE- EXAMPLE

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MOTIVATION Keeping them ‘charged’

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MANAGING THE SALES FORCE

Recruiting, selecting

Training

Supervising/ Evaluating

Motivating

Remunerating

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MOTIVATING THE SALES FORCE
Motivation is an important factor which encourages personnel to give their
best performance and help the company reach its enterprise goals.
A strong positive motivation will increase output of employees while a
negative motivation will negatively impact their performance.

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IMPORTANCE OF MOTIVATING THE SALES FORCE
1) Good Team relations
2) Low Absenteeism and Attrition
3) Good Corporate Image
4) Higher Efficiency
5) Higher Margins

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How do you motivate salespeople?
 WHAT MOTIVATES SALES REPS? (U.S. SURVEY)
Most Rewarding Least Rewarding
Pay Liking
Promotion Respect
Personal growth Security
Sense of accomplishment Recognition

Will different cultures around the globe have differing answers?

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SOME MEANS OF MOTIVATION
1. Sales Contests
2. Promotion
3. Special Bonuses
4. Profit Sharing Plan

More alternatives:
1. Conventions & meetings
2. Recognition & Honour
3. Personal Communication/ Interaction with Top management
4. Freedom & Autonomy

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1. SALES CONTESTS AND PRIZES
In addition to standard targets, companies use sales contests and offer prizes to boost
the competitive spirit of the salesmen.
The goal is to create a competitive but healthy environment while pushing the
performance of the personnel.
Special quotas are fixed or special targets are set and salesmen who are able to
reach those targets are rewarded.
These rewards may be in the form of cash or other benefits.

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2. PROMOTIONS
Sometimes salespersons are given incentive by way of promotion. Those salespersons
who have performed exceptionally well or who are able to sell beyond a limit are
given special promotions.
Relatively newer or junior salespersons may be promoted to encourage performance &
a culture of meritocracy

Note: Promotion could mean just an increase in ‘employee pay grade’ or ‘level’ and not
necessarily a change in role

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3. BONUS
Bonus is paid to salesmen who put extra efforts to increase the sales volume. This
amount is given in recognition of services and talent of salesman, as it is paid over and
above the regular remuneration.
They may be tied to performance of the team as a whole or performance of the
company itself.
This is often given on some occasion such as festivals or company founding day etc.

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4. PROFIT SHARING PLAN
Some firms disburse a portion of their divisible profits amongst their salespersons thus in
effect giving a share in the profits earned to their salespersons.
The amount to be disbursed may be calculated on the basis of overall profits of the
firm or the profits earned on sales in a given sales territory.
This often involves complex calculations and hence not used very widely.

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REMUNERATION Rewarding the performance

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MANAGING THE SALES FORCE

Recruiting, selecting

Training

Supervising/ Evaluating

Motivating

Remunerating

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What are the ‘functions’ of sales compensation?
SALES FORCE COMPENSATION
Compensation is the amount received by salespeople in exchange for the work or
services performed by them.
Compensation is in the form of salaries or commissions that enables the sales personnel
to meet their needs and those of their families.
Financial compensation is a vital source of satisfaction.
A proper compensation structure not only retains competent and efficient sales
personnel – but also attracts others from outside the organisation.
An appropriate compensation package gives employees a sense of satisfaction and
motivates them to strive more and more to achieve the set objectives.

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FUNCTIONS OF A COMPENSATION PLAN
1. The plan should help in attaining the objectives of the sales organisation.
2. It should incentivize the salespersons to put forth their best efforts in the
accomplishment of their tasks by establishing visible correlation between efforts,
results and their rewards.
3. It should help in the early deselection & removal of the personnel who are not
aligned with the long-term plans of the firm.
4. It should enable the firm to attract, retain and develop a motivated, efficient and
loyal sales force.
5. It should enable the firm to control and direct the activities of the salespersons
6. It should provide them extra benefits for doing duties other than selling.

Contd…

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 CONTD…
7. It should provide a living wage, preferably in the form of a secure income.
Individuals worried about money matters do not concentrate on doing their jobs.
8. The plan should fit in with the rest of the motivational program and does not conflict
with other motivational factors (such as team coordination, loyalty etc.).
9. The plan should not penalize sales personnel because of factors beyond their control
(It should be easy for sales personnel to understand-they are able to calculate their
own earnings.)
10. The plan should adjust as per changes in performance.
11. The plan should be economical to administer.

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COMPONENTS OF SALES FORCE COMPENSATION

Fixed amount

Variable amount

Expense allowances

Benefits

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EXPENSES ALLOWANCES & REIMBURSEMENTS
•Sales personnel travelling for meetings, site/factory visits & other company related
tasks expect reimbursements for the same
•The reimbursements should be clearly outlined in the company’s travel policies covering
mode of transport, type of accommodations, daily meal & other expenses
•There should be proper checks to ensure that these expenses are done productively
and efficiently.
•If such expenses are not controlled, salespersons can use them as an additional form of
compensation.

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FRINGE BENEFITS
•Fringe benefits include mandatory items such as insurance, medical care and provident
fund etc.,
•Additionally, company may provide perquisites such as festival allowances, vacations,
child welfare benefits, stock options, moving or outstation allowances
•Some companies also provide senior executives (particularly sales executives) with
memberships to clubs to allow them to meet & entertain prospects
•These can sometimes be used strategically by the company to enable the salespersons
to perform better

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COMPENSATING THE SALES FORCE
Monetary compensation is the single most important factor which affects the
effectiveness of sales personnel.
The compensation structures of sales personnel can be categorized as:
1. Straight Salary Structure
2. Straight Incentive Structure
3. Combination of Salary and Incentives (or other variable elements)

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1. STRAIGHT SALARY STRUCTURE
A company may hire a salesperson on a straight fixed monthly salary.
This ensures that the salesperson takes home a fixed income every month and is secure
about his financial position
It also ensures that the firm knows its financial commitment and that the salesperson will
perform even the non-selling jobs like information gathering and customer service
properly.
The only reward for achieving higher sales targets in this case will be non-monetary or
long-term such as formal recognition or promotion

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2. STRAIGHT INCENTIVE STRUCTURE
A straight incentive structure is like a straight plan in which the salesperson’s earnings
are in direct proportion to his or her sales. It is probably the simplest form of reward
for sales personnel.
In this method, sales personnel only get a fixed percentage of the sales of profit
volume. Naturally, their earnings are in direct proportion to the results i.e. sales or
revenues
This type of scheme is particularly popular while selling insurance, operating as agents
to overseas suppliers, selling real estate etc.
In some cases, the personnel are paid their expenses separately on actuals.

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3. COMBINATION OF SALARY & INCENTIVES
The limitations of the above two methods of compensation are sought to be overcome
through combination plans.
In these plans, a base salary is determined which the salesperson gets irrespective of
his performance or the turnover of the company.
This ensures that the salesperson is able to meet his basic expenditures in bad months
The variable component is usually calculated against specific ‘KPIs’ (Key Performance
Indicators)
 These include revenues, product quotas, client interactions etc.
 It may be paid monthly, quarterly or even yearly

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AN ACTUAL COMPENSATION PLAN WITH CALCULATIONS
 Fixed Gross Salary ₹ 35,000 including perks such as:
 Cell phone bills
 Fuel allowance
 Travel & other out of pocket expenses on actuals
 No incentive up to ₹ 20,00,000 quarterly sales
 Incentive of 2% of sales to end consumers
 Incentive of 1% to sales to channel partners
 Maximum incentive per quarter ₹ 50,000
 Incentives paid only on orders wherein payments are realized

Note: This is an actual incentive plan with some details modified slightly

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What would be the advantages & disadvantages of
each structure?
STRAIGHT SALARY METHOD
Advantages Disadvantages
• Company knows its exact salary • Motivating personnel becomes difficult
outflow every month • The entire burden of remuneration has
• Personnel get security about their to be borne irrespective of revenues-
position & financial security particularly difficult for small companies
• Personnel will tend to other • High performing sales personnel may
administrative activities properly not feel appreciated
• Personnel tend to be more loyal & • Personnel may have to be laid off
attrition is generally less during downturns since their salaries
• Sales personnel are willing to outflow is constant
cultivate long term clients & orders
with longer sales cycles

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STRAIGHT INCENTIVE STRUCTURE
Advantages Disadvantages
• Remuneration can be paid against • Attrition is generally quite high
revenues received by companies • Cooperation among team members may
• Sales personnel are highly driven to be hard to achieve
close sales orders • Non-selling activities will have to be
• Company can have a bigger sales attended to by other personnel
force • Team members may not feel a sense of
• Allows smaller companies with loyalty
exceptional products to penetrate the • Sales personnel will tend to favour short
market & grow fast term clients & orders

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COMBINATION STRUCTURE
Advantages Disadvantages
• It tries to give both a sense of • The effective design of such a plan
security while rewarding for efforts requires careful inputs from multiple
and results stakeholders
• It enables teamwork & loyalty and • The calculations & implementation
reduces attrition require more efforts from the sales &
• It enables sales personnel to treat all HR departments
customers better - both long term & • Incorrectly structured plans can have
short term disastrous results

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SALES ORGANIZATION & ITS Department/ Division/ Function
STRUCTURES
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WHAT IS ORGANIZATIONAL STRUCTURE?
An organizational structure defines how activities such as task allocation, coordination,
and supervision are directed toward the achievement of organizational aims
It is the typical hierarchical arrangement of lines of authority, communications, rights
and duties of an organization.
The size of large organization and the complexities of products necessitates the
identification of selling as a separate organization within the whole system.
The terms organization and management are not synonymous.
 Organization is the coordination of functions which are highly essential to the accomplishment of
objectives,
 Management is the control of the functions.

Thus, sales organization is the mechanism through which a sales manager’s plan is
translated into action.

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SALES ORGANIZATION
"A sales organization is one where functions of sales departments have been carefully
planned and coordinated towards the objective of selling the product to the customers;
the whole efforts being efficiently supervised and managed so that each function is
carried out in the desired manner".
-C. L. Bolling

"Sales organization is the planning, directing and coordinating of the activities of sales
force for increasing organizational efficiency".

-American Marketing Association

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FUNCTIONS OF THE SALES ORGANIZATION
1. Increases Efficiency of sales personnel
2. Develops specialists within the team
3. Ensures all tasks required for successful sale are performed
4. Helps coordination within the department & with other departments
5. Helps departments such as HR, Marketing & R&D with critical inputs
6. Bolsters growth & profitability

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What can be the different types of structures of a
sales department?
STRUCTURES FOR THE SALES FORCE
a) Territory based sales force

b) Market or Product based sales force

c) Complex sales force structures

The Sales force structure is dependent on the overall sales strategy

Typically If the company sells one product line to one specific industry with customers in
many locations, the company will use a territorial sales force structure.
If the company sells many products to many types of customers, it might need a product
or market sales force structure.
And in very large multi-product, multi-category companies, a more complex sales force
structure will be needed
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A) TERRITORY BASED SALES FORCE
In the simplest sales organization, each sales representative is assigned an exclusive
territory in which to represent the company’s full line of products.
It results in a clear definition of the salesperson’s responsibilities.
 As the only salesperson working the territory, he or she bears the credit or blame from area sales and
his/her territorial responsibility increases.

This type of structure offers greater flexibility to a large company with many divisions,
allowing each unit to operate as its own company
This also reduces the cost & time required for travelling for sales calls & increases the
productivity of the salespersons.

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 CONTD…
Zonal Manager- Maharashtra
 Area manager-Navi Mumbai
o Area executive- Vashi

Limitations
Communication across divisions becomes a challenge
The front-line sales executives often feel cut-off from the overall company
Technical support & services become a challenge

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B) MARKET OR PRODUCT BASED SALES FORCE
Companies often specialize their sales forces along industry, product or customer lines.
Separate sales forces can be setup for different product industries or even for different
customers. The advantage of market specialization is that each sales force can become
knowledgeable about specific customer needs.
The major disadvantages of structured sales forces arise when the various type of
customers are scattered throughout the country as this requires extensive travel by each
sales force.

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C) COMPLEX SALES FORCE STRUCTURES/ MATRIX STRUCTURE
When a company sells a wide variety of relatively complex products (or services) to
many types of customers over a broad geographical area, if often uses a more
complex structure known as a matrix structure
A sales representative might then report to one or more-line managers and staff
managers.
These structures generally have ‘dual’ reporting for their employees

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MATRIX STRUCTURE- PROS & CONS
Advantages of this structure is that sales personnel & other employees can share their
knowledge across the different functional divisions, allowing for better communication
and understanding of each function’s role.
Also by working across functions, employees can broaden their skills and knowledge,
leading to professional growth within the company.
On the other hand, reporting to multiple managers may add confusion and conflict over
what should be reported. And if priorities are not clearly defined, employees, too, may
get confused about their roles.
It essentially requires the front-line executives to be highly trained & competent to
manage these multiple reporting lines

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QUOTAS, TARGETS & TERRITORIES Laying the ground work

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SALES QUOTAS
Sales quota, may be defined as the estimated volume of sales that a company expects
to secure within a definite period of time.
It is a quantitative goal assigned to a sales unit relating to a particular time period.
 A sales unit may be a salesperson, territory, branch office, region or distributor.
Sales quotas are used to plan, control and evaluate selling activities of a company.

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SALES TARGETS
A sales target is a goal set for a salesperson or sales department measured in revenue
or units sold in a specific time period.
Different companies may use the terms ‘Quotas’ & ‘Targets’ differently
The target is usually directly linked to KPIs, evaluations & the variable compensation of
the sales personnel.
Sales Targets are usually derived from the sales quotas however in some cases
managers might set ‘stretch’ targets to challenge the salespersons to achieve more.
Specific and realistic sales targets help your sales team perform confidently,
consistently and with a clear understanding of expectations.
Choosing the right type of targets - and involving your team in choosing these targets -
can help achieve sales goals and grow profits.
Sales targets can be set by revenues, products sold, market segments & geographical
regions.

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FUNCTIONS OF SALES QUOTAS & TARGETS
1. Providing Goals and Incentives:
Quotas provide salespersons, teams, distributive outlets and others engaged in the
selling activities, goals and incentives to achieve certain performance levels.
2. Controlling Salespersons Activities:
Quotas provide an opportunity to direct and control the selling activities of
salespersons.
Salespersons are responsible for certain activities like customer calls, prospecting new
accounts, giving a minimum number of demonstrations & presentations etc.

Continued… 57
 CONTD…
3. Evaluating Performance:
Quotas enable the company to evaluate performance of its sales personnel, territory
or distributive network.
4. Controlling the Selling Expenses:
Quotas are also designed to keep selling expenses within limits. Some companies
reimburse sales expenses only up to a certain percentage of sales quota.
Other companies don’t reimburse if the sales are below a certain threshold.
5. Making an Effective Compensation Plan:
Quotas play an important role in the company’s sales compensation plan.
They enable the company to reduce the fixed cash outflow of the company

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TYPES OF SALES QUOTAS
I. Sales Volume Quota

II. Financial Quota

III. Activity Quota

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TYPES OF SALES QUOTAS
I. Sales Volume Quota:
The most used quotas are those based on sales volume.
Sales volume quotas are also set to balance the sales of slow-moving products/services and fast-
moving products/services or between various categories of customers per sales unit.
The sales volume quotas may be set in terms of units of product sales, or rupee sales or both on overall
as well as product-wise basis.
Some companies combine these two and set quota on “Point” basis.

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SETTING OF SALES VOLUME QUOTAS
Sales volume Quotas Calculation
a) Past Sales: One of the earliest methods of setting sales volume quotas is to base
them solely on past sales experience. The method in this case would be to determine
the percentage by which the company’s market share is expected to increase and
then add this into last year’s quota.
b) Total Market Estimates: The other method is to derive sales quotas from the total
market size estimates made by the company for the year. Two approaches are used
to arrive at such market estimates.
 One approach is to estimate the market size in an aggregate manner as per the data available
as well as the judgement of the executives at the head office.
 The other is to build estimates based on projections made by the field staff at each territory
office of the company.

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TYPES OF SALES QUOTAS
II. Financial Quotas:
Financial quotas are determined to attain desired net profit as well as to control the sales
expenses incurred.
(a) Net Profit Quota: Net profit quota is particularly useful in multi-product/multiservice
companies where different products/services contribute to a varying level of profit. The
objective can be achieved by setting a quota on net profit for its salesforce, and thus
encouraging them to sell more of high margin products and less of low margin products.
(b) Expense Quota: In order to make the salesforce conscious of the need to keep selling costs
within reasonable limits, some companies set quota for expenses linked to different levels
of sales attained by their salesforce. As such expense quota is generally used as a
supplement to other types of quotas.

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TYPES OF SALES QUOTAS
III. Activity Quotas:
Good performance in competitive markets requires the salesforce to perform the sales
as well as market development related activities. To ensure that such important activities
get performed, some companies set quota for the salesforce in terms of the various
selling activities to be performed by them within a given period. Some of the common
types of activity quotas are:
 Number of prospects called on
 Number of new accounts opened
 Number of calls made for collections of payments
 Number of dealers called on
 Number of service calls made

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