06 - Management of Sales Territories & Quotas
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Transcript of 06 - Management of Sales Territories & Quotas
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SALES AND DISTRIBUTIONMANAGEMENT
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06Managementof
Sales TerritoriesandQuotas
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Sales Territory A sales territory comprises a group of customers or
a geographical area assigned to a salesperson. The territory may or may not have geographical
boundaries.
A salesperson is assigned to a geographical area
containing present and potential customers.
The total market of most companies is usually toolarge to manage efficiently.
In technical selling style, geographical
considerations are ignored and sales personnel are
assigned entire classes of customers, regardless oftheir locations.
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Sales Territory
Why do some firms change
territory assignments
as often as their socks?
What are the repercussions
of such
fickle-mindedness?
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Reasons for establishing Sales Territories
Better market coverage
Effective use of sales force Convenient way to evaluate the performance of a
salesperson
Enhance employee morale
Understand and serve customers in a better way
Develop loyalty
Develop specific marketing programmes for the
specific territory
Develop trade promotion strategy
Cost control
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Reasons for not setting-up Sales Territories
The sales territory designing may not be
possible in the following:
New companies
Small companies Where customers are geographically
dispersed
Some organisations may need industry
specific groups
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Assigning Sales Territories Know the market
Score the potential opportunity
Draw the borders
Involve the sales team
Minimize future changes but plan for them
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Designing Sales Territory
1.Select the basic geographicControl units
2.Decide on the criteria for
allocation
3.Determine basic territories
4.Assign sales force to new
territories
5.Revising sales territories
Factors influencing Themodification Of
a territory
Merger
Market consolidation
Split in division
Sales force T/O
Customer relocation
Product life cycle
change
Product line change
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Designing Sales Territory
1. Select the basic geographic control units
While designing territories, the first step is to
select a geographical control unit as a territorial
base.
A typical territory may compromise several
individual units
2. Decide on the criteria for allocation
Management should determine the location and
potential of both present and prospective
customers within each selected control unit. To get information, the company can make use
of lot of data which is easily available.
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Designing Sales Territory3. Determine basic territories
Methods of determining the territory are
Build up method
Breakdown method
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Buildup method
Management
must
determine
Desirable call
pattern
(call frequency)
Total calls
needed In each
control group
Workload capacity
Tentatively set
territorial lines by
combining control units
until total calls needed= total calls possible
Modify territories
as needed
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Breakdown method
Management
must determine
Company sales
potential
Sales potential
In each control
unit
Sales volume
expected from
each
salesperson
Tentative territorial
boundary lines by
combining control
units until total
sales potential =
expected sales volume
Territorial
modificationsAs needed
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Designing Sales TerritoryRouting the sales force
Routing is the managerial activity that
establishes a formal pattern for sales reps to
follow as they as they go through their territories
Territory shapes
Circle
Wedge
Cloverleaf
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Designing Sales Territory
4. Assigning salespeople to territories
Sales representatives age, selling skill,
experience, initiative, creativity etc. has to be
taken into account while allotting the territory
Many companies design territories of unequal
sizes to take care of this aspect
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Assigning Salespeople to TerritoriesSales Manager should consider two criteria
Relative ability of salespeople, based on key
evaluation factors Product knowledge
Market knowledge
Past sales performance
Communication Selling skills
Salespersons Effectiveness in a Territory
Decided by comparing social, cultural and
physical characteristics of the salesperson withthose of the territory
Objective is to match salesperson to the territory.
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Management of Territorial Coverage
Planning efficient routes forsalespeople
Scheduling salespeoples time
Using time-management tools
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RoutingRouting is a travel plan used by a salesperson for
making customer calls in a territory.
Benefits of routing
Reduction in travel time and cost
Improvement in territory coverage
Importance of routing depends on the application
Nature of the product
Type of jobs of salespeople
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Procedure for setting up a Routing Plan
Identify current and prospective customers
Classify each customer into high, medium or lowsales potential
Decide call frequency for each class of customers
Build route plan around locations of high potential
customers
B
Circular
B
Clover Leaf
Base
(B)
C
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C
1
C
4
C
3
C
2
Straight line / Hopscotch
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SchedulingScheduling is planning a salespersons visit time to
customers.
Sales Manager communicates to salesperson
major activities and time allocation for each
activity
Salesperson records actual time spent on various
activities for 2 weeks
Sales Manager and salesperson discuss and
decide how to increase time spent on major
activities
Companies specify call norms for current customers,
based on sales and profit potentials and also for
prospective customers.
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Time Management Tools
Laptop computers and cellular phones
Inside salespeople provide clericalsupport, technical support and support
for prospecting and qualifying
Outside salespeople can then spend more timegetting orders & building relationships with
major customers.
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Sales Quota
A sales quota is the sales goal setfor the product line, companydivision or sales representative.
It is primarily a managerial devicefor defining and stimulating salesefforts.
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Assignment Territory Management
Rajesh is the star salesperson in a company.
His quota for the year is Rs 10 crore. Each sale he makes
averages at about Rs 1 crore. Rajesh knows that he spends nearly 0.1 day for each
opportunity in the prospecting stage of the selling process and
that only 10% of those opportunities are worth pursuing and
qualifying.
He spends about 2 days qualifying every opportunity,
understanding requirements and developing the opportunity.
He ends up qualifying only about 60% of the opportunities and
eliminates the others from his funnel.
He spends about 5 days in developing his solution and
presenting these to the customer.
He is put on the shortlist for about 70% of these opportunities. Finally he spends about 3 days closing each opportunity. This
includes revising proposals, negotiating and answering anycustomer concerns.
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Assignment Territory Management
He has a reasonably high win ratio since 85% of theopportunities he works on closing are actually won.
There are typically fewer than 220 working days in a year. Rajesh had wanted to take vacation for 7 days, had planned on
attending training in new products (requires 5 days). He neededto spend time supporting current customers and handlingadministrative tasks (requires 10 days).
Based on the way he manages his activities in selling, he finds
that he will not have enough time to manage his territory.
Questions How many days does Rajesh need to achieve his sales quota?
If he takes vacation for 7 days, goes for training for 5 days and
also spends 10 days in administrative tasks, what should he doto achieve his sales quota so that he still saves some time? You may assume the qualifying time is reduced to 1.5 days for
each opportunity, 4 days for developing the solution and 2 daysin closing the opportunity.
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Assignment Territory Management
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