Dm.sales Territories

download Dm.sales Territories

of 104

Transcript of Dm.sales Territories

  • 8/18/2019 Dm.sales Territories

    1/104

    Management of Sales

     Territories andQuotas

  • 8/18/2019 Dm.sales Territories

    2/104

    This chapter will enable you

    • To understand the concept of and reasons forestablishing Sales Territories.

    •  To learn the procedure for designing Sales Territories,

    and for assigning salespeople to territories including useof information technology.

    • To know the management of territorial coverage, whichincludes routing, scheduling, and time management.

    • To understand objectives and types of Sales Quotas.• To learn the methods of setting Sales Quotas, and someof the insights into setting and administration of SalesQuotas.

  • 8/18/2019 Dm.sales Territories

    3/104

    Sales Territory

      Sales Territory consists of existing and potentialcustomers assigned to a salesperson.  The Territory may or may not have geographicboundaries. owever, generally, a salesperson isassigned to a geographic area consisting of present

    and potential customers. !or instance, a salespersonis asked to look after customers located in Mumbaiterritory.

      The basic concept of a sale territory is that aterritory or a market is made up of present andpotential customers, rather than a geographical area.ence, in de"ning a sales territory the keyword is customers, instead of geographicalarea.

  • 8/18/2019 Dm.sales Territories

    4/104

    #easons for Setting up or #eviewingSales Territories

    Some of the reasons for companies toestablish sales territories are:

    $a%&ncrease Market $ or customer% coverage,$b% 'ontrol selling expenses,$c% better evaluation of salesforce

    performance,$d% &mprove customer relations,

    $e% &ncrease salesforce e(ectiveness,$f% improve co)ordination,$g% bene"t salespeople and the company.

  • 8/18/2019 Dm.sales Territories

    5/104

    $a% &ncrease Market or 'ustomer 'overage

     * well)designed sales territory allows salespeople to spendsu+cient time with present and potential customers, whichimproved the market coverage.

     etter coverage of market, results in gaining competitors-customers.

     Sales territories should be large enough to ensure reasonableworkloads to salesforce but small enough to that all existingcustomers and prospects are visited adeuately as needed bythe customers.

     The "eld sales managers can control the activities ofsalespeople, if the sales territories are set up properly.

     /ell)designed sales territories allow salespeople to cover

    existing  and potential customers economically and adeuately.

  • 8/18/2019 Dm.sales Territories

    6/104

    $b% 'ontrol Selling 0xpenses

     y setting)up well designed sales territoriessalespeople spend less time on the road, fewernights away from home, resulting in less cost oftravelling and less expenses on lodging and food.

     The result is reduction of selling expenses as

    percentage of sales revenue.

     /ith no geographic sales territories, thesalespeople would have to travel to their customersfrom the sales o+ce, as and when needed, spending

    more time and money in travelling.

     /ith proper sales territories, there is a bettercontrol on the selling expenses of salespeople.

  • 8/18/2019 Dm.sales Territories

    7/104

  • 8/18/2019 Dm.sales Territories

    8/104

    $d% &mprove 'ustomer #elations

      The 'ustomer relationships are developed over a longperiod of interactions between the salesperson and thebuyers.

     These interactions and regular visits are possible because

    each salesperson is assigned a group of customers. Some salespeople develop collaborative or partneringrelationships with a few high pro"t potential customers, formutual bene"ts of buying and selling "rms.

     The selling "rms becomes a sole or preferred supplier, as a

    result of a long term, mutually bene"cial relationship betweenthe buying and the selling "rm.

     The salesperson is the basic building block of such apartnering relationship.

  • 8/18/2019 Dm.sales Territories

    9/104

    $e% &ncrease Salesforce 0(ectiveness

     /hen the sales territory is properly designed, thesalespersons workload is reasonable and the con2icts areminimum as speci"c customers are assigned to them.

      * salesperson is clearly responsible to maintain good

    relationship with speci"c customers.

     *ll these positive factors contribute to improve thesalespersons- performance and e(ectiveness in terms ofconsistently achieving and exceeding the goals or uotas.

  • 8/18/2019 Dm.sales Territories

    10/104

    &mprove 'o)ordination

     The company-s sales performance improves substantially if the

    salesperson is involved in co)ordinating various elements ofmarketing communication $or promotion%. !or instance,distribution of sales promotion materials $like coupons, point)of)purchase $131% displays, and samples% to retailers ensuring

    adeuate stocks at stores before a major advertising campaign,and training retailers- salespersons.

    &ntegrated marketing communication $M'% concept can bee(ectively implemented by co)ordinating through the salespeopleto the customers in various sales territories. 3ther functions andactivities like market research, telemarketing, and the internet can

    also be carried out in sales territories, which will help salespeopleimprove their performance.

  • 8/18/2019 Dm.sales Territories

    11/104

    ene"t salespeople and the company

    1roper territory design and allocation of salespeople to

    territories will result in improved salesforce performance,which in turn bene"ts the company. /hen the company-ssales revenue increases, and the selling expenses are

    controlled, there is a marked improvement in the pro"ts. Thus, the company is bene"ted due to improvement in

    top)line $sales revenue% and bottom)line $net pro"ts%. /henthe performance of salesforce improves, the salespeople arerewarded, through good increments, incentives, and in some

    cases promotions.4ue to the bene"ts received by the salesforce as well as

    the company, the overall working environment improves.

  • 8/18/2019 Dm.sales Territories

    12/104

    #easons for not Setting)up Sales Territories

    &n spite of earlier mentioned reasons or advantages of setting)up sales territories, there are certain situations when salesterritories are not reuired.

    Some of the reasons for not setting up territories are:

    $a% * small company with one or few salesperson$s% selling in a

    local market may not need set up sales territories$b% 1ersonal contacts or relationships is the basis of making

    the sales, such a life insurance policies and networkmarketing,

    $c% The salespeople are demotivated due to restrictions ofsales territories, and

    $d% Management of the company may not be aware of theadvantages or bene"ts of developing sales territories ormay not know

      how to set up sales territories.

  • 8/18/2019 Dm.sales Territories

    13/104

    PROCEDURES FOR DESIGNING SALESTERRITORIES

      The design of sales territories is very important to salespeopleand management of an organi5ation as sales and pro"tperformances are linked to the well)designed territories.  The ideal objective in territory design is to have eual

    opportunity $or sales potential% and eual salesforce workload forall sales territories. Typically, this objective is di+cult to achievein practice, although sales managers make great e(orts toachieve the same.  *ny di(erences in sales potential and workload of salesforce indi(erent territories, which remain at the end, can be taken care

    of when sales uotas are set up for salespeople and salesterritories.

  • 8/18/2019 Dm.sales Territories

    14/104

    1rocedure for 4esigning Sales Territories

  • 8/18/2019 Dm.sales Territories

    15/104

    Select a 'ontrol 6nit

     The "rst step in territory design is to select a geographical territorial base,called control unit that will used in the territory analysis. 'ommonly usedcontrol units are states, metros $metropolis%, cities, districts, towns, pin)codeareas, industrial estates, and major customers.

    In general, the sales manager should select smallest control unit.The reasons are:

     (a) control units- market potential and the company sales potential should bepossible to calculate, and

    (b) adjustments $additions or deletions% of control units should be possiblewhen tentative territory boundaries are modi"ed to make "nal territories.

    !or example, if a company wants to reduce one control unit $say, osurindustrial estate% from 'henmai territory and add it to angalore territory, forminimi5ing the cost and time of contacting customers, it can be done if the

    control unit is small $such as industrial estate or area%. * brief description of theabove mentioned

     control units, as applicable to &ndian situation, is as follows.

  • 8/18/2019 Dm.sales Territories

    16/104

    States

    •  * few companies may consider building their salesterritories around states, by selecting the same as thegeographical control unit, if they have a few salespeoplefor covering the entire national market, with a selective

    distribution strategy.

    •  owever, most companies would not consider states$likes *ndhra 1radesh, 7amataka Mahashra% as a controlunit, because it is a large area and adjustments ofterritories will be very di+cult, for any speci"c reasons likeminimi5ation of time and cost of travelling of salespeople.

  • 8/18/2019 Dm.sales Territories

    17/104

    Metros

      These are also called as metropolis  or metropolitanareas, with large populations in urban and suburban areas.

     They have a large number of households, with high levels of

    buying incomes and retail sales.

      These are concentrated markets for many consumer andindustrial products. The information on market forecast ofmetros is also available. Some of these metros in &ndia are

    Mumbai, 4elhi, 'henmai, and 7olkata. owever, metros aretoo large for consideration of geographical control units.

  • 8/18/2019 Dm.sales Territories

    18/104

    'ities8Towns84istricts

      The administrative set up varies from one country toanother.

     &n 6S*, cities and postal 5ip)code areas are used as control

    units. owever, in &ndia, the administrative set up consists ofdistricts, tehsil8talluk, towns and villages.

      &t is possible to get statistical market data for variousproducts at town and district levels.

      ut below the district level $tehsil8talluk and village% it isdi+cult to get statistical market data. ence, in &ndia, districtor towns can be used as a control unit.

  • 8/18/2019 Dm.sales Territories

    19/104

    Fin Lo!ation an Potential o"C#stomers

     The next step is to "nd the location and sales potential $orbusiness potential% of present and prospective customers ineach control unit.

      &nformation of present customers should be available fromthe company-s sales analysis, owever, the information onprospective customers can be obtained not only from thecompany-s salespeople, but also from telephone directories,and market research studies.

     !or industrial products and services, where often there are afew buyers, identi"cation of business is desirable and possible.

  • 8/18/2019 Dm.sales Territories

    20/104

    owever, for consumer products and services, it isunnecessary and expensive to carry out identi"cation of "nal

    consumers.  *fter the present and potential customers are identi"ed,the company should estimate the total sales potential for allcustomers in each geographical control unit. !or this, "rstmarket potential or market forecast should be estimated, basedon the use of one or two of the forecasting methods discussedearlier. The sales potential $ or business potential % for thecompany is decided by estimating the company share of themarket potential in the control unit. The estimation of thecompany-s share depends upon the present market share,strengths and weaknesses of the company in comparison to

    competitors , and the company-s relationships wit existingcustomers.  *fter the sales potential of control units are calculated, it isnecessary to classify the customers based on their sales and orpro"t potential. 3ne of the commonly used methods is *'

    analysis. &n this method, all the customers.

  • 8/18/2019 Dm.sales Territories

    21/104

    • *fter the sales potential of control units are calculated, it isnecessary to classify the customers based on their salesand or pro"ts potential. 3ne of the commonly used methodsis *' analysis.

    •  &n this method, all the customers are entered in the

    reverse order of their sales8pro"t potential is the highest. Then the name of the customer with second highestpotential entered.

    • This process is repeated till the names and potential "guresof all the customers. * customers are those whose

    sales8pro"t potential add up to 9: per cent of the total. ;extcustomers whose business potential add up to

  • 8/18/2019 Dm.sales Territories

    22/104

    4ecide asic Territories

     The third step in designing sales territories are set up by

    the building up from the control units. The objective to beachieved is to euali5e the workload of salespeople.

    >. 4ecide call !reuencies &t means how many times acustomer should be visited by the company-ssalesperson per year. The factors that in2uence callfreuency are the customer-s sales8pro"ts potential,cost of visiting the customers, buying behaviour of the

    customer, and the nature of the product or serviceo(ered. The optimum call freuencies. !or di(erenttypes of customers, can be decided by using computer

  • 8/18/2019 Dm.sales Territories

    23/104

    CUSTO$ER T%PE

    CALLFRE&UENC% PER$ONT'

    NO OFCUSTO$

    ERS

    NO OFCALLSPER

     %EAR

    NO OFCUSTO$

    ERS

    NO OFCALLSPER

     %EAR

    * ? @ >?? ? >A<

    < 9 >BC C >A<' >

  • 8/18/2019 Dm.sales Territories

    24/104

    !igure ?.< uild up Method of Territorial 4esign

    4ecide'all

    !reuencies

     

    'alculatetotal

    number

    of calls ineachcontrol

    unit

    0stimate/orkload

    capacity of

    asalesperso

    n

    Make

    tentativeterritories

    4evelop

    "nalterritories

    Step > Step < Step @ Step ? Step D

  • 8/18/2019 Dm.sales Territories

    25/104

    Cal!#late t*e total n#mber o" !allsin ea!* !ontrol #nit

    &n example shown in Table ?.>, the total number ofsales calls needed in districts x and y $which are thecontrol units% are DD< and 9< months.

  • 8/18/2019 Dm.sales Territories

    26/104

    + Estimate ,or-loa !apa!it. o" a

    salesperson

     –.  a salesperson-s normal workload capacity is estimatedby multiplying average number of calls a salesperson

    can make in a working day by number of working daysin a year. !or instance, the average number of calls asalesperson makes in a day works out of "ve, based onthe average travel time @: minutes per call, theaverage length of one hour for each call, and eighthours per day working. &f the number of working daysin a year is

  • 8/18/2019 Dm.sales Territories

    27/104

    /$a-e tentati0e territories –. &n this step, company should group $or gather%

    adjoining control units $which share their borders% untilyearly number of calls needed in those control unitseuals the total number of calls a salesperson canmake $workload of a salesperson%. &n our exampleshown in Table ?.>, districts x and y together need$DD

  • 8/18/2019 Dm.sales Territories

    28/104

    De0elop Final Territories

    •  &n cases where workloads of salespersonsare not euali5ed, adjustments of tentativeterritories are made by adding or removingcertain control units.

    •  The objective is to achieve euali5edworkload for each salesperson.

    •  efore a sales manager "nali5es the salesterritory design, he should discuss withsalespeople, who are familiar with customers

    and the territories. This may bring out certainchanges, which need to be carried beforemaking "nal sales territories.

  • 8/18/2019 Dm.sales Territories

    29/104

    reakdownMethod

    *s mentioned earlier, this is another method of

    territory design that is used by companies who have

    decided to have intensive distribution strategy,mostly for selling consumer product. The objectiveis to euali5e the sales potential of territories. Theprocedure $or the steps followed% for implementingthis method is given in "gure ?.@.

  • 8/18/2019 Dm.sales Territories

    30/104

    !igure ?.@ reakdown Method of Territorial4esign

    0stimate'ompany

    sales

    potentialfor totalmarket

    !orecastsales

    potential

    for eachcontrol

    unit

    0stimatesales

    volume

    expectedfrom eachsalesperso

    n

    Maketentative

    salesterritories

    4evelop

    "nalterritories

    Step > Step @Step < Step ? Step D

  • 8/18/2019 Dm.sales Territories

    31/104

  • 8/18/2019 Dm.sales Territories

    32/104

    @. 0stimate the sales volume expected from each salesperson)here the salesmanager must estimate how much salespersonmust sell, in order to ensure pro"table operation.

     !or this, the sales manager studies the past sales as well as thecost and pro"tability analysis as shown in the followingexample. The direct selling cost for next year is estimated as#s. B,::,:::, the cost of goods solds is estimated at B:I ofsales, and expected pro"t at >DI of sales, then the minimum

    sales expected from each salesperson is calculated as followsJ

    1ro"tK Sales)'ost of Sales)4irect Selling 'ost

    :.>DxKx):.Bx)B,::,:::, where xKSales

    by solving the above euation, xK#s.

  • 8/18/2019 Dm.sales Territories

    33/104

    ?. Make tentative sales territories) in this step, the salesmanager makes tentative territories by combining adjoining

    control units $which will share a broader% until the salespotential of each territory is eual or greater than the expectedsales volume from each salesperson. 'ontinuing with theexample discussed above, the sales potential of each territoryshould be eual to or greater than #s. D:,::,::: $or #s. D

    million%. 'are should be taken to ensure that the boundaries ofthe each territory coincide with the border of the control units.

     

    D. 4evelop "nal territories) the tentative territories need to beadjusted due to special considerations such as geographical

    locations of customers, or uneual sales potential of someterritories, the adjustments are done by moving speci"ccustomers or control units from one territory to anotherterritory. The objective is to achieve eual sales potential ofterritories.

  • 8/18/2019 Dm.sales Territories

    34/104

    *SS&;&; S*N0S10#S3; T3 T0##&T3#&0S

    • 3nce the sales territories are designed, the sales manager is ready to assignor allocate individual salesperson to each territory. &n designing the salesterritories, we assumed implicitly that the salespeople have eual sellingabilities and that each salesperson would perform eually well in territory.

    •  &n any given salesforce, salesperson di(er in selling abilities ande(ectiveness. * salesperson may succeed in one territory, even though salespotential and workload are the same in the two territories. This happensbecause interactions of the salesperson with present and potential customersare a(ected by factors like social and cultural characteristics of customers.

     

    &n assigning salespeople to territories the sales manager should consider twocriteriaJ

     (a) relative ability of salespeople

    (b) salesperson e(ectiveness in a territory.

  • 8/18/2019 Dm.sales Territories

    35/104

    #0N*T&O0 *&N&TF 3! * S*N0S1031N0

    * sales manager should evaluate the relative abilities of asalespeople based on key factors, such as product and market

    knowledge, past performance in achieving sales uotas $salesgoals%, ability in verbal and written communication and selling

    skills. y either giving eual of di(erent weightages, the sales

    manager evaluates each salesperson on relative ability anddecides an ability index with maximum score of > as shown in thetable ?.D.

  • 8/18/2019 Dm.sales Territories

    36/104

  • 8/18/2019 Dm.sales Territories

    37/104

    S*N0S10#S3; 0!!0'T&O0;0SS &; * T0##&T3#F

     The sales manager should judge the e(ectiveness of a salesperson bycomparing the salespersonHs social, cultural and physical characteristics withthose of the territory

    &t would also help of the salesperson is familiar with the local language andcustoms of the territory. The objective of the sales manager in matching

    salespeople to territories is to maximi5e the sales and pro"t potential ofterritories.

     This objective is achieve by making the salesperson comfortable with thecustomers in the territory and the customers comfortable with the salesperson. Thus the decisions on assigning salespeople relationship between salespeopleand customers and between salespeople and the sales manager.

     The existing excellent relationships between the salesperson and customersshould not be disturbed by the sales manager while carrying out

    the task of assigning or deploying salespeople to territories. 

  • 8/18/2019 Dm.sales Territories

    38/104

    6S0 3! &.T. T0##&T3#F M*;*0M0;T

     !or designing and aligning sales territories, computers andmapping software are increasingly used by salesmanager.

     The advantages of using information technology in territory

    management over manual working of break down or build upmethods are that the task will be done faster as well as morecomprehensively.

    eographic &nformation Systems $&S% is a technology that

    provides a framework to manage, analy5e, and disseminatedgeographical knowledge. &S technology can be integrated ina companyHs enterprise information system framework.

  • 8/18/2019 Dm.sales Territories

    39/104

     There are a number of softwares available $such as *rc0ditor, *rc &S 4ata Models, *rc &S Survey *nalyst%, whichare capable of running simulations and optimi5ing territorialdesign.

      6sing the software for simulations helps in improving theterritorial design because the computer can examine more

    combinations than the manual work done by a salesmanager

      The problems in using some of the high)end software arethe high cost and no considerations given to the geographicobstacles likerivers, mountains, and forests faced by

    salespeople during their sales calls. owever, as more andmore companies develop software for use in designing andrevising sales territories, the cost will come, andsalesmanagers would "nd easier and much more accurate.

  • 8/18/2019 Dm.sales Territories

    40/104

    M*;*&; T0##&T3#&*N '3O0#*0

     *fter designing sales territories, and assigning salespeopleto di(erent sales territories, the next task of the salesmanager is the management if territorial coverage, or in other

    words, how each salesperson should cover the assigned salesterritory.

     This consists of three activities:

    $a% planning of e+cient routes for salespeople

    $b% scheduling the salespeopleHs time, and

    $c% using time management tools.

  • 8/18/2019 Dm.sales Territories

    41/104

    #36T&;, S'046N&; *;4 T&M0M*;*0M0;T

      1lanning of e+cient routes for salespeople is amanagerial activity. often as sales managers, initiallytrain salespeople in route planning, and subseuently

    ask them to prepare their own route plans.

      #outing is a travel plan or pattern used by asalesperson for making customer calls in a territory.

  • 8/18/2019 Dm.sales Territories

    42/104

    The main advantages of routing are:

    $a% reduction in travel time and cost by excluding backtracking

    and criss)crossing by salespeople in their territory,

    $b% improvement in territory coverage, as salespeople reducetheir travel time and increases selling time.

     There are, however, certain objections to routing. Somesales managers are of the opinion that routine reducessalespeopleHs 2exibility and initiative, particularly when

    customersH needs change and mark conditions vary. Thisobjection can be overcomed by using computers forupdating the routeplans.

  • 8/18/2019 Dm.sales Territories

    43/104

    1#3'046#0 !3# S0TT&; 61 *#36T&; 1N*;

     The "rst step in setting up a routing plan is to identify thepresent and potential customers on territory map.

      ;ext, each customer should be classi"ed into high,

    medium, or low sales potential, and call freuency for eachclass of customer to be decided. !or instance, high potentialcustomers are to be visited four times a month, mediumpotential customers twice a month, and low customers oncemonth

     The route plan should be built around locations of highpotential customers. Some of the commonly used routingpattern are shown in !ig. ?.?

  • 8/18/2019 Dm.sales Territories

    44/104

  • 8/18/2019 Dm.sales Territories

    45/104

      In strai1*t line ro#te pattern, thesalesperson starts from o+ce or home base and makes salescalls in one direction. This can be combined with hopscotchpattern, in which a salesperson starts at the farthest point fromhome or o+ce base and names sales calls on customers on theway back to home8o+ce.

      This process is repeated in di(erent directions. &n circularroute pattern, the salesperson starts from his base and move ina circle, making sales calls, ending back at the o+ce8home. &n acloverleaf pattern, the "rst route covers a part of the territory,

    the next trip of the salesperson covers the adjoining circle andthis is continued until the entire territory is covered.

     'omputeri5ed mathematical models have been developed tohelp the sales managers decide the route that will minimi5e thetravel cost or maximi5e the selling time.

  • 8/18/2019 Dm.sales Territories

    46/104

    *11N&'*T&3; *;4 &M13#T*;'0 3!#36T&;

     The degree of importance to the application of routing dependson two factorsJ

    $a% the nature of the product, and

    $b% the type of the job of salespeople. !or fast moving consumergoods $!M'%, like softdrinks, bread, and grocery products, sold

    to retailer, they need freuent servicing, route plan is absolutelynecessary.

      Similarly, driver)cum)salesperson type of jobs should haveproper route plans, since if the calls are not made regularly, thecompany can lose important retailers. owever, the sales jobswith creative selling may need a 2exible route plan. &n general,application of routing is

    important for all companies, bur some companies should be

     2exible in its implementation

  • 8/18/2019 Dm.sales Territories

    47/104

    S'046N&;

    Scheduling is planning a salespersonHsspeci"c time of visits to customers.

    Scheduling the salespersonHs time should beconsidered as the time allocation problem.Studies have shown that the bestsalespersons are those who manage their

    time e(ectively.

  • 8/18/2019 Dm.sales Territories

    48/104

    *NN3'*T&3; 3! T&M0

    •  The sales manager must "rst decide andcommunicate the major activities or duties of thesalesperson, and the amount of time that should

    be allocated to each activity.

    •  *lthough the activities or tasks vary fromcompany to company, generally these are

    classi"ed into the following areas, along with thetime spent, as shown in Table ?.@

  • 8/18/2019 Dm.sales Territories

    49/104

  • 8/18/2019 Dm.sales Territories

    50/104

     &t is interesting to note that >A per cent time is spentby a salesperson on the telephone.

     Many companies are using telephone selling in orderto reduce the cost of selling. The toil that is used widelyto help the salesperson to understand how they spendtheir time is called Ptime and activity analysis.

     The salesperson records the time spent on variousactivities over a period of two weeks. The sales managerand the salesperson then discuss and decide how toincrease the time spent on major activities.

  • 8/18/2019 Dm.sales Territories

    51/104

    'ustomer 'alls

      'ompany often state norms of visits to existing customersand prospects to their salespeople.

      This is done because, if left to there own wish, manysalespeople will spend most of the time with the presentcustomers, who are known to them. owever, the companywants business from new customers also.

      !or instance, 'ompton reaves Nimited asked in salesengineers to spend C: per cent of their time with the presentcustomers and

  • 8/18/2019 Dm.sales Territories

    52/104

    i l f

  • 8/18/2019 Dm.sales Territories

    53/104

     Time Management Tools for

    Salespeople

     There are many supports to help salespeople manage their

    time more e+ciently and productively.

    These are: (a) use of computers, mobile communication euipment, andother high)tech euipment and

     (b) inside salespeople.

  • 8/18/2019 Dm.sales Territories

    54/104

    igh)tech euipment

     4esktop and laptop 1's, '4s, automatic dialers, e)mail, faxmachines, tele)conferencing, videophones, cellular phones, airphones and lackberry are the time management tools thatare available to salespeople and sales managers.

      &n particular, in some companies salespeople have laptopcomputers that they carry as they travel around their

    territories. The main objective of having high)tech euipmentis to help salespeople make more e+cient use of their time.

     Salepeople use computers to enter and transmit their visitreports and customer orders, get information on inventory and

    delivery status, access a customer-s "le to get up)to)dateinformation before making the sales call, exchange messageswith customers and sales managers,

    and make sales presentation to customers.

    & id S l l

  • 8/18/2019 Dm.sales Territories

    55/104

    &nside Salepeople To reduce time demands in their outside salesforce, many companies

    are increasingly using inside salespeople who remain within theorgani5ation.

     There are three types of inside salespeopleJ

    $a% sales assistants to provide clerical support for outside salesperson,such as delivery follow)up with production con"rm customerappointments, answer customer-s uestions. *nd so on

    $b% technical support people to give technical information and answers tocustomer-s uestions and

    $c% telemarketers to "nd new leads on prospects, ualify them, and referthem to outside salespersons for high and medium sales potentialsprospects or sell for low potentials customers.

    (•) 3utside salespoeple, who travel outside the organi5ation are then free tospend more time selling to major existing customers, getting more orders

     from major prospects, and building long)term

     relationships with major customer.

    Time

  • 8/18/2019 Dm.sales Territories

    56/104

     TimeManagement

     Tools

    for Sales

    Managers

  • 8/18/2019 Dm.sales Territories

    57/104

  • 8/18/2019 Dm.sales Territories

    58/104

    Direct Benets of ERP System

    $a% business integration

    $b% 2exibility and

    $c% better analysis and planning capabilities.

  • 8/18/2019 Dm.sales Territories

    59/104

    Eample:

    'overking 'ompany, a manufacturer and distributor of customi5edautomotive accessories, wanted to achieve a growth rate of @:I.owever. &t had a problem that most of it-s over D::,::: orders forcustomised car covers, 2oor mats, and other accessories werereceived by phone every year. The company wanted to reduce the timeit spent on order entry, without compromising on customer service.

     The solution to the problem was found in 0#1 package of ann &O,along with other Microsoft software, operating system and databases.'ustomers could enter orders from any computer euipped with webbrowser and check inventory via the internet. The system providedcustomers a comprehensive menu of order options. 6sers could selecta product, fabric, colour, etc., to place a customised order in a fractionof time reuired for a phone order. *part from a remote order entrysolution, the 0#1 system reduced the turnaround time formanufacturing customised products by

  • 8/18/2019 Dm.sales Territories

    60/104

    Eample:

    *nother example is about the problem of manualbilling process, and resulting delays and error,faced by *lcone 'ompany, which also wanted toprovide greater information access to its sta(. The

    company decided on 0#1 system from 1eopleSoftSelect, with operating system and database fromMicrosoft, to solve the problem. *fterimplementation, the billing process was automated,

    resulting in increased billing, improved e+ciencyand tremendous savings in time and e(ort. The 0#1system paid for itself within two years.

  • 8/18/2019 Dm.sales Territories

    61/104

    &ncreasing number of companies areusing '#M software to integrate sales,marketing and customer service functions

    and to give all customer integrating personsand departments access to share customerdata in real time. Many banks were the "rstones to use '#M systems.

    &n addition to using high tech euipment and

  • 8/18/2019 Dm.sales Territories

    62/104

    &n addition to using high)tech euipment andsupport systems, sales manager should alsopractice a few simple rules of e(ective time

    management as followsJ• Make plans for each day and each week.

    • Make or take phone calls twice before lunch and at the end of the day.Nearn to be brief.

    • #ead and reply e)mail8 fax messages at one or two times in a day.

    • &nterruptions from the boss and customers have to be responded.

    6nnecessary interruptions from others to be minimi5ed by politely sayingnoU.

    • 1riorities and activities8work in terms of importance and urgency, basedon *' analysis of activities.

    • 'oncentrate e(orts on major $or =*- type of% activities8tasks during primehours when we work most e(ectively.

    • Nearn to delegate routine and less important tasks of activities to others.

    /e all, including the Salesforce and salesmanagers, have one thing in common a

  • 8/18/2019 Dm.sales Territories

    63/104

    S!"ES #$%T!S $R S!"EST!R&ETS

    *fter "nali5ing the sales forecast andthe sales budget, the next logical step

    for a company is to set up the salesgoals or sales uotas, for marketing $orsales% units, such as regions, sales

    territories, salespersons, distributors,and dealers. /e shall now discuss thevarious parts of sales uotas, which

    are often tied to Salesforce

  • 8/18/2019 Dm.sales Territories

    64/104

    'hat are Sales #uotas(

    Sales uotas are sales goals $or uantitativeobjectives% set by a company for its marketingunits for a certain period of time. * marketing unitincludes a region, a territory, a branch, a sales

    person, a distributor, or a dealer. Sales uotas canbe set on sales volume, expense, pro"t margin,activity, customer satisfaction, and combination.*nnual sales uotas for each marketing unit are

    broken down to uarterly and monthly uotas.

  • 8/18/2019 Dm.sales Territories

    65/104

    Sales uotas are developed from theannual marketing plan of the company. *fter

    preparing the sales forecast, the companydecides its sales budget, which includes thecompany-s sales volume and sellingexpenses. The company sales budget is thenbroken down to sales uotas for regions andsales territories. 0ach territory managerdivides the territory-s uota among the

    salespersons, distributors, and dealers, whoare attached to the territory. ow theterritory manager or the sales manager setsthe sales uotas for the marketing units

    reporting to them will be discussed

  • 8/18/2019 Dm.sales Territories

    66/104

    $b)ecti*es of #uotas

    &mportance or objectives of sales uotas includeJ

    $a% Making available performancestandards,

    $b% 'ontrolling performance,

    $c% Motivating people, and

    $d% &dentifying strengths and weaknesses.

    +a,in- !*ailable Performance

  • 8/18/2019 Dm.sales Territories

    67/104

    +a,in- !*ailable PerformanceStandards

    * sales uota makes available to the sales manager a toolto measure the performance of the salesperson. * uota alsoprovides a goal $or a target% to the salesperson. ence, auota is a performance standard, against which the actualperformance is compared to understand whether the

    salesperson is performing well or not. !or example, a branchmanager of a consumer durable marketing company setsales uotas for his salesperson in terms of sales volume andselling expenses per annum. The yearly uotas is furtherbroken down to uarterly and monthly uotas for each

    salesperson. The branch manager uses these uotas asperformance standards for each salesperson, and measuresthe actual performance to compare with the uotas onmonthly and uarterly basis.

    C lli P f

  • 8/18/2019 Dm.sales Territories

    68/104

    Controllin- Performance

    •  The sales manager has power to in2uence and direct thebehaviour of salespeople reporting to him8her. y settinguotas on sales volume, the sales manager directs thee(orts or activities of salespeople towards the achievementof performance on sales. &f the actual performance of thesalesperson is a favourable in comparison to the uota, thesales manager should appreciate and reward thesalesperson suitably.

    • owever, if the salesperson-s performance is unfavourable,consistently over a period of time, the sales managershould "nd out the reasons for poor performance, byunderstanding the reasons or causes of poor performance,

    • y setting uotas for a salesperson-s activities, sales

    volume, and selling expenses, the sales manager iscontrolling the performance of salespeople. !orinstance, when a uota of eight calls per day onretailers or "ve calls per day on business customers isset, the salespeople know that they have to makethose many numbers of calls.

  • 8/18/2019 Dm.sales Territories

    69/104

    +oti*atin- PeopleMost salespeople are motivated by money. Sales force compensation is

    often tied to the extent or degree of achievement of sales uotas. The"nancial compensation includes salaries, commission and 8or bonuses$also called as incentives%. The incentives, in most companies are linkedto the uotas. &f salespeople believe that the uotas are achievable, theywill put extra e(orts to achieve the uotas and earn the rewards ofincentive payments or recognition. Motivation of the salesperson is linked

    to the setting of uotas. Sales managers should not set sales uotas thatare too high and non)attainable. *t the same time, they should not seteasily attainable uotas. &n both these situations, motivation ofsalespeople decline.

    Sales contest are the additional motivating factors for special sellinge(orts of Sales force. The performance during the period of the sales

    contest is linked to uotas set for individual salespersons. Typically,special uotas are set for sales contests in order to create enthusiasmamong salespeople, resulting in superior performance. The incentives orrewards of achieving special uotas during sales contests are alsoattractive, in terms of winning trips abroad ) *ustralia, Singapore, Thailand, and Sri Nanka.

  • 8/18/2019 Dm.sales Territories

    70/104

    .dentifyin- Stren-ths and 'ea,nesses

    /hen actual sales performance is compared withrespective uotas of di(erent territories and salespersons,the sale manager can identify successful and unsuccessfulperformers. !urther, analysis of causes of poor performancemay reveal that the training programme needs

    improvement, better product uality reuired to meetcustomer needs, and positioning strategy needs to bereviewed. This analysis helps identify weaknesses as well asstrengths of the company in comparison to its competitors.Salespeople are closes to the customers and customer-s

    perceptions are important to know the company-s strengthsand weaknesses. Sales managers should, therefore, reviewthe actual performance of salespeople with their uotas onregular basis.

  • 8/18/2019 Dm.sales Territories

    71/104

    Types of #uotas

    'ompanies set many types of uotasthe most common types of uotas areJ

    $a% Sales Oolume,

    $b% !inancial,

    $c% *ctivity, and

    $d% 'ombination

  • 8/18/2019 Dm.sales Territories

    72/104

    Sales /olume #uotas

    Most companies have sales volume uotas forindividual salespersons, distributors, retailers,geographical areas, or products, for a speci"cperiod of time. !or e(ective control, it is proper to

    set sales volume uotas for the smallest marketingunit. !or instance, instead of setting uotas forregions $such as north, east, west and south%, it isbetter to set uotas for branches or districts withina region. Similar approach is used for setting salesvolume uotas for products for speci"c timeperiods.

  • 8/18/2019 Dm.sales Territories

    73/104

    etter direction and control by setting

    uotas for individual product items andbrands, instead of setting it for entireproduct lines. Similarly sales volume uotasare broken down to uarterly and monthly

    uotas. enerally, companies establish salesuotas for all those items for which theymake a sales budget.

    'ompanies set sales volume uotas inrupees or dollars sales volume, unit salesvolume, and8or point sales volume.

  • 8/18/2019 Dm.sales Territories

    74/104

    Rupees0 Dollars Sales /olume

    /hen sales people are reuired to sell many products,it is easier to manage if uotas are set in rupees ordollars. !or instance, in 'ompton reaves when theorgani5ation structure was changed from product divisionto customers segment orientation, the salespersonhandling industrial customers were reuired to sell all @>products of the company and their sales targets or uotawere expressed in rupees lacs $or million% per year,which were further broken down to uarterly and

    monthly uotas.*nother reason for using rupees sales volume uotas is

    that it allows an analysis of selling expenses to salesexpressed in percentage or ratio

  • 8/18/2019 Dm.sales Territories

    75/104

    %nit Sales /olume'ompanies set sales volume uotas in unit

    $numbers, tones, and liters% of products in threesituations. 3ne situation is when salesperson isselling a few products. !or instance, a companywhich marketer-s precision steel tubes to business

    customers has set sales uotas to branch managersand salespersons in rupees as well metric tones$MT-s%. The second situation is when prices of theproducts 2uctuate rapidly, resulting in salespeopleachieving the rupee sales uotas easily due toincrease in prices. The third situation is when theprice of each product or service is very high and it iseasy to understand unit sales uotas. !or instance,a company manufacturing power transformers sets

    sales volume uotas in number for its regions and

  • 8/18/2019 Dm.sales Territories

    76/104

    Point Sales *olume

    Some companies use sales volume uotas,conveyed in =points-. &t is used in a situationrelatively contribute more to the pro"ts. !orinstance, a company had two products, product *-s

    contributions to pro"t was two times that of product. &n order to improve the pro"tability, the companyset sales volume uota &n points, by assigning twopoints for each MT sales of product *, and one pointfor ach MT sales of product . Salespeople couldachieve their sales uotas in points easily by sellingproduct * more than product . This also helped the

    company to achieve its pro"tability goal.

  • 8/18/2019 Dm.sales Territories

    77/104

    &ross2+ar-in or

  • 8/18/2019 Dm.sales Territories

    78/104

    &ross +ar-in or Prot Contribution #uotas

    ross margin uota is decided by subtracting cost of goodssold from sales volume. 'ost goods sold is euivalent o cost ofmanufacturing the products. The problem of gross marginuota is that sales managers and salesperson have in controlon the cost of manufacturing and hence, they are not

    responsible for gross margins. Some companies, therefore,decide pro"t contributions uotas by subtracting cost of goodssold and salespeople-s direct selling expenses from salesvolume as shown in Table ?.?.

    4irect selling expense of salespeople include their salaries

    as well as travelling, lodging, boarding and customerentertainment expenses. The problem of pro"t uotas is atsome salesperson may reduce necessary expenses liketravelling, which may a negative e(ective on sale. This can beseen in the case of salespeople Sunil as shown in Table ?.?.

    'ompanies use pro"t uotas to convey to "eld sales managers

  • 8/18/2019 Dm.sales Territories

    79/104

    Epense #uotas

    'ompanies are trying to control rapidlyincreasing costs of selling, such as travelling,lodging and food. The objective of setting expenseuotas is to control the costs of marketing $or sale%units. Such as sales territories and salespeople.

    3ften expense uotas are used along with salesvolume uotas, so that selling expenses are kept nline with sales volume. Therefore, expense uotasare stated as percentages of sales, so that

    salespeople give importance both to sales volumeand selling expense. &n some companies, otherselling expenses have a uota of > percent of sales

    Table 343 5et Prot Comparison of Salespersons of "udhiana

  • 8/18/2019 Dm.sales Territories

    80/104

    Table 343 5et Prot Comparison of Salespersons of "udhianaBranch

    As*o- S#nil $a*inra TotalL#*iana

    2ran!*Sales #s.

    ?.>:.:C.:::

    #s

    @.CD.>D.:::

    #s

    ?.B:.:9.:::

    #s.

    >

  • 8/18/2019 Dm.sales Territories

    81/104

    Many companies set activity uotas so as todirect salesperson to carry out important job relatedactivities. These activities are useful for achievingperformance targets of salespeople. The process ofdeciding activity uotas includes $a% de"ning theimportant activities, $b% "nding out the time

    reuired for carrying out these activities, $c%deciding the priorities to be given among thevarious activities, and $d% deciding the uotas orfreuency for important activities. Table ?.D shows

    how a company selling lighting products tohousehold and business customers determineactivity uotas for it salesperson.

     !cti*ity #uotas

  • 8/18/2019 Dm.sales Territories

    82/104

  • 8/18/2019 Dm.sales Territories

    83/104

  • 8/18/2019 Dm.sales Territories

    84/104

  • 8/18/2019 Dm.sales Territories

    85/104

     Table ?.B 0valuation of salespeople

    with combination uotas

    T.pe o" otas ota A!t#alPer!entota

    4ei1*t

    5 ota 64ei1*t

    !or SalespersonJSrinivas

    Sales Oolume $#s% ?,D:,:::.:: ?,

  • 8/18/2019 Dm.sales Territories

    86/104

    •  &n Table ?.B, expense uota is one percent of sales volume uota.*lthough 1radeep exceeded his sales volume uota, because hecould not develop new customers to the extent of uota, his totalpoint score was less than >::. &n case of Srinivas, the total pointscore exceeded >::, although he achieved AD percent of salesvolume uota. This makes combination uotas di+cult forsalespeople to understand. To overcome this problem, actualperformance should be continuously monitored, with respect touotas, with the help of personal computers, and sales manager

    should also supervise on regular basis to ensure that some smartsalespersons do not try to beat the system in any ways.

    • *nother application of combination uotas is to evaluatesalespeople-s performance in selling various products of thecompany. The company decides weights for various products

    based on pro"tability of each product. 0ach salesperson has asales volume uota for each product. Similar process, as shown in Table ?.B, is followed to calculate the performance of eachsalesperson by calculating the total point score.

    + th d f S tti S l # t

  • 8/18/2019 Dm.sales Territories

    87/104

    +ethods for Settin- Sales #uotas

    Sales uotas are set by companiesby using several methods. The uotasare set based on territory potential,

    past sales experience, total marketestimates, executive judgment,salespeople-s estimates, andcompensation plan.

    + th d f S tti S l # t

  • 8/18/2019 Dm.sales Territories

    88/104

    +ethods for Settin- Sales #uotas

    • Territory potential This method is commonly used by large organi5ations for setting sales

    uotas. The procedure used includes "rst estimating the market potential$or industry sales forecast% for a product line for a geographical area,using top)down approach and sales forecasting methods discussed earlierin 'hapter @.

     The second step is to estimate the multiple factor index, as describedearlier, for each sales territory. ;ext, the expected industry sales in eachterritory $also called as the territory market potential% is obtained bymultiplying the industry sales forecast by multiple factor index. !inally,the company-s estimated market share in the territory is considered outof the territory market potential in order to come up with sales volumeuota for the territory.

    !or example, estimated market potential $or industry sales forecast% forskin care products in &ndia is #s. >@.D: billion. The multiple factor index,using population and buying power, of Mumbai is estimated at >.D. Thenexpected industry sales for skincare products in Mumbai is #s. D%. !urther considering the company-s market shareof

  • 8/18/2019 Dm.sales Territories

    89/104

    +ethods for Settin- Sales #uotas

    • 1ast sales experienceSome companies consider past sales only for setting sales volume

    uotas. They take the past year-s sales for each geographical salesterritory, add an arbitrary percentage and decide the "gures as salesvolume uotas. *nother alternative method is to take an average ofprevious three or "ve years- sales of each territory, add a percentage by

    which the market is expected to grow, and thus set sales uota for eachterritory. This method is better than the earlier method, because itconsiders the importance of the sales trend.

    'ompanies that use this method only for setting sales uotas assumethat future sales are related to past sales. This assumption may not alwaysbe correct. esides, if past sales were achieved by poor market coverage,

    the past mistakes will be carried on in future without any correction. encecompanies should not consider past sales as the only factor for deciding theterritory sales uotas. &t should as one of the many factors for determiningsales uotas.

    + th d f S tti S l # t

  • 8/18/2019 Dm.sales Territories

    90/104

    +ethods for Settin- Sales #uotas

    • Total market estimatesSome companies set uotas for sales territories based on the followingyear-s total market estimates $also called market potential or industry salesforecast% as described in 'hapter @. They then decide the company-sestimated market share for the following year from the total marketestimate to arrive at the company sales forecast. The next step is to "nd

    out reach territory-s percentage share of the total company sales in theprevious year. !or instance, if a territory-s past years sales was sevenpercent of the total company sales, then the territory-s sales uotas wouldbe seven percent of the total company sales forecast for the next year.

    owever, if the company is new and there is no information on past sales,the management "rst determines the market potential $or total marketestimate% for its products. The company then estimates what portion $orshare% of the market it could achieve in the "rst year. Thus, the companysales forecast is calculated by multiplying market potential by estimatedmarket share. Thereafter the company sales forecast $or sales budget% isbroken)down to individual territories by multiplying it with multiple factorindex for each territory. This procedure is used by new companies forsetting sales volume uotas for its newly establishment territories.

    E ti 7 d t

  • 8/18/2019 Dm.sales Territories

    91/104

    Eecuti*e 7ud-ment • Sometimes companies use executive judgment method when the

    company is new, the product and territories are new, or very little marketinformation is available. &n these situations, senior executives or managersuse their judgment, based on their past experience, to predict not only thecompany sales, but also sale uotas for territories. !or instance, managingdirector of material handling company asked its newly appointed vice)president $marketing% to double the previous year-s sales to decide the

    company sales budget as well as well as sales uotas of several territoriesfor the years >AA?)AD and >AAD)AB.

    •  This decision was taken based on the discussions the managing director

    had with the chairman in the absence of market information. *lthoughterritorial sales performance varied as compared to sales uotas, the

    company managed to achieve its sales budgets. owever, when themanagement again set double sales targets in the year >AAB)A9, it failedto achieve its sales goals because of recession in the economy. ased onthis and several other examples, it is said that executive judgment methodshould be used along with other methods, but it should not be only

    method for deciding sales uotas.

  • 8/18/2019 Dm.sales Territories

    92/104

    Compensation Plan

  • 8/18/2019 Dm.sales Territories

    93/104

    Compensation Plan

    • Some companies set uotas to "t with theirs sales compensationplan. !or instance, the sales uota for this year is based on thepast year-s sales. &f the last year-s sale was #s. >< million, thesales uota for this year is set at #s. >< million, and thesalesperson is paid an incentive of percentage of sales achievedover the uota of #s. >< million. *nother method used by some

    companies is based on salary plus commission plan.• !or example, the company wants to pay a monthly salary of #s.

    D::: plus a commission of three percent on all monthly sales over#s. >::,:::. The sales uota of #s. >::,::: is set such a way it isvery di+cult for the salesperson to exceed a total compensationof #s. C::: $#s. D::: salary plus #s. @::: incentive% per month.

    • *lthough compensation plan is often tied to the degree of uotaachievement, sales volume uota should not be based on thecompensation plan alone, because that would put the cart beforethe horseU.

    .nsi-hts into Settin- and

  • 8/18/2019 Dm.sales Territories

    94/104

    - - !dministration of Sales #uotas

    • Set realistic 9uotas4Some companies, like Eerox, believe in setting high uotas that most

    salesperson "nd di+cult to achieve, but are attainable by a few salesperson withextra e(orts. Some other companies, like @M, set modest uotas that majority

    of sales force can achieve so that salespeople would accept uotas as fair andattainable. owever, a general view is that the salesperson-s uotas should be at

    least eual to the last year-s sales plus a percentage of the di(erence betweenthe territory-s market potential and last-s sales. /hen sales uotas are relatedto territory market potential. They are considered as realistic. &f salespeople

    feel that the uotas are unrealistic. They will not be motivated.• %nderstand problems in settin- 9uotas4

    6nderestimation and overestimation of territory potential. ased on

    which the sales uotas are set, create problems. !or instance, if thecompany underestimates its sales potential, salespeople will easily achievetheir uotas and the company will pay incentive amounts more thanreuired.

    3n the contrary, if the company overestimates its sales potentials,the salespersons will "nd it very di+cult to achieve their uotas which maylead to demotivation and dissatisfaction. This problem can solved by making

    the uotas realistic as suggested in a general view in the earlier paragraph.

    E l l d t d t

  • 8/18/2019 Dm.sales Territories

    95/104

    • Ensure salespeople understand 9uotas4 The company management must ensure that the

    salespeople understand uotas and uota setting procedure. This is important because if the salesperson understands theprocess of setting uotas, they feel the uotas are fair,accurate, and achievable. &f salespeople do not understandhow the uotas are set, they feel bitter and suspicious. Thereare methods available to help salespeople understand

    uotas. These areJ

    1articipation in Quota)setting

    1urposes of Quotas

    'ompanies not using uotas

    Participation in 9uota settin-

  • 8/18/2019 Dm.sales Territories

    96/104

    Participation in 9uota2settin-

    y allowing salespersons to take part in the process of uota)

    setting, not only the understanding of salespeople about uotasincrease, but also their uestions are answered properly andsalespersons- inputs can be used in uota setting.

    • Continuous feedbac,

    Sales manager should give continuous feedback to

    salespeople on their performance in relation to uotas and whatshould be done by salespeople to improve their performance.

    • 1leibility in administerin- 9uotas

    *ny major changes in market demand or the company-sstrategies or policies must be looked into and the uotas should

    be change suitably. !or example, if the company increases itsprices by >:I, due an increase in the cost of raw materials andother inputs, the sales uotas have suitably adjusted. owever,small changes in market condition, which do not have muchimpact on the company sales, can be ignored.

    Purposes of #uotas

  • 8/18/2019 Dm.sales Territories

    97/104

    Purposes of #uotas

    Salespeople should be informed thatmonthly or uarterly uotas are usedfor incentives or rewarding and annual

    uotas are used for performanceevaluation.

    Purposes of #uotas

  • 8/18/2019 Dm.sales Territories

    98/104

    Purposes of #uotas

    %nderstand relationship between #uotaSelection and +ar,etin- En*ironment 

    Successful companies select the type of uota that is

    important to them based on the marketing environment andcompany objectives. *s mentioned earlier in the combinationuotas, companies have a few number of uotas, generally notmore than @. &f salespeople have too many uotas, their e(ortsand energy gets scattered and they get confused. The followingillustration would help to understand how successful companies

    select a few uotas that have relationships with marketingenvironment and sales situationJ

    Purposes of #uotas

  • 8/18/2019 Dm.sales Territories

    99/104

    Purposes of #uotas

    • /hen the company has too many new salespeople, it isproper to have one or two activity uotas to ensure thatsalespeople do the right things.

    • /hen the company-s products are in growth stage of productlife cycle, or in a high growth economy, the uotas should be

    on the percentage growth in sales or growth in market share.• /hen the company-s product or service is in maturity stage,

    the sales growth will be limited, and pro"tably uotas wouldbe important for salespeople and territories.

    • /hen the company-s objective is to increase sales from the

    existing customers, the uotas for salespeople should includesales growth and customer satisfaction or customer service.

    Companies not usin- 9uotas

  • 8/18/2019 Dm.sales Territories

    100/104

    Companies not usin- 9uotasSome companies do not use sales uotas for di(erent reason,

    'ompanies such ;ortel and Siegel thick that sales uotas drivesalespeople to achieve sales volume, ignoring customer service andcustomer satisfaction, which have long)term impact of repeat business. These companies want to use more numbers of parameters forevaluating and rewarding salespeople. Some other companies havedi+culties in setting accurate uotas by combining various factors like

    territorial potential, salespersons- abilities, and territory coveragedi+culty. Some sales managers do not used the word sales uotas, butprefer to use the words sales goals or sales objectives. These salesmanagers use uotas, but other di(erent names.

    • &n a situation, when a product or service is in short supply, sales uotas

    are not suitable. This is called seller-s market. Thus, sales uotas areproper in buyers- market.

    • *ny organi5ation that decides not to use uotas should have forcefulreasons, because if they do not have sales uotas or goals, they cannotachieve the company goals and objective.

  • 8/18/2019 Dm.sales Territories

    101/104

    Summary

  • 8/18/2019 Dm.sales Territories

    102/104

  • 8/18/2019 Dm.sales Territories

    103/104

  • 8/18/2019 Dm.sales Territories

    104/104