TOOLS FOR SALES SUPERVISION AND CONTROL

Dr. Sanjeev Prashar

The Management Cycle

Four steps remain in the management process also referred to as the management cycle

Establishing performance standards Recording performance Evaluating performance against standards Taking action

These four steps constitute what is known as control.Control has both static and dynamic facets.

1. Standards of Performance

Standards of sales performance facilitate the measurement of progress made toward departmental objectives

Performance standards are designed to measure the performance of activities that the company considers most important.

Setting sales performance standards requires

considerable market knowledge. total sales potential and the portion that each sales

territory is capable of producing. evaluation of customers and prospects from the

standpoint of potential profitability for each class and size of account.

evaluation of competitors strengths, weaknesses, practices and policies

Management must know the selling expenses in different territories.

These items all bear on the setting performance standards, specially quantitative standards.

Quantitative Performance Standards

Provide description of what management expects. These help sales personnel make their activities more

purposeful. Sales personnel with well defined objectives waste less

time or effort in pursuing activities that do not contribute to reach those objectives.

In the past the performance of sales individuals were measured solely in terms of sales volume

No control over certain factors “uncontrollable” Resultant - other quantitative performance standards

besides sales volume.

Types of Quantitative Performance Standards

Quotas Quotas specify desired levels of accomplishment

for sales volume, gross margins, net profit, expenses

Try to answer the question- How much for what period?

In setting sales quota, management estimates future demand for the company’s product in each territory and then finalizes the quota.

Selling Expense Ratio

Sales managers use this standard to control the relation of selling expenses to sales volume.

Selling expenses ratios should be set individually for each person on the sales force.

An attractive feature of selling expense ratio is the sales person can affect it both by controlling expenses and by making sales.

Territorial Net Profit or Gross Margin Ratio

Managements regard each sales territory as a separate organizational unit that should make a profit contribution.

Sales personnel influence the net profit ratio by selling more volume and by reducing selling expenses.

They may emphasize more profitable products and devote more time and effort to the accounts and prospects that are more profitable.

Shortcomings sales personnel may “ high spot” their territories, neglect the

solicitation of new accounts and overemphasize sales of high profit of high margin products while underemphasizing new products that may be more profitable in the long run.

Territorial Market Share

This standard controls market share on a territory by territory basis.

Management sets target market share percentages for each territory.

Management compares company sales to industry sales in each territory and measures the effectiveness of sales personnel in obtaining market share.

Sales Coverage Effectiveness index

This standard controls the thoroughness with which a sales person works the assigned territory.

The index consists of the ratio of the number of customers to the total prospects in the territory.

Individual standards for Sales Coverage effectiveness are set up for each class and size of customer.

Call Frequency Ratio

Calculated by dividing the number of sales calls on a particular class of customers by the number of customers in that class.

Management directs selling effort to those accounts most likely to produce profitable orders.

Management should assure that the interval between calls is proper-neither so short that unprofitably small orders are secured nor so long that sales are lost to competitors

Calls per Day

A standard is set for the number of calls per day. Otherwise some sales personnel make too few

calls per day and some make too many calls per day and need training in how to service accounts.

Standards for calls are set individually for different territories taking into account territorial differences such as customer density etc.

Order Call Ratio

This ratio measures the effectiveness of sales personnel in securing orders.

It is calculated by dividing the number of orders secured by the number of calls made.

Average cost per call To emphasize the importance of making profitable calls,

a target for average cost per call is set. Standards are set for each category of account. Target average cost per call standards are used to

reduce the call frequency on accounts responsible for small orders.

Average Order Size

Average Order Size standards along with average cost per call standards are used by management to control the salespersons allocation of effort aming different accounts and increase order size obtained.

Multiple Quantitative performance standards Multiple Quantitative performance standards are

used by most firms per operating period.

Form used for Assigning Quantitative Performance Standards to Sales Personnel

ASSIGNED STANDARDS OF PERFORMANCE

SALES PERSON………… OPERATING PERIOD………

1Sales during period……………………. (Quota:$........)Standard: Meet or exceed quota

2New accounts obtained during period……………………Standard: 5 per period

3Sales to new accounts during period………………………Standard: 10% of total sales

4Total calls during period:………… Average calls per day:…Standard: 6 calls per day

5Total sales meetings held:………….. Attended:…………..Standard: Attend all

6. Customers entertained during period:…… Average per week:…..Standard: 1 0r more per week

QUALITATIVE PERFORMANCE CRITERIA The sales personnel is rated against a detailed checklist of

subjective factors as shown below.SALES PERFORMANCE ANALYSIS

NAME: ______________________________ DATE: ____________________

Problem Fair Average Good SuperiorJOB FACTORS

PRODUCT KNOWLEDGEAWARENESS OF CUST. NEEDSRELATIONSHIP WITH CUSTOMERNUMBER OF SALES CALLSQUOTA PERFORMANCESERVICE FOLLOW UP

PERSONAL FACTORS

PUNCTUALITYGENERAL ATTITUDEDRESS & APPEARANCEDELIGENCECOOPERATIONACCURACYADAPTABILITYRELIABILITY

Strongest Point ________________________________________________________

Weakest Point _________________________________________________________

Comments ____________________________________________________________

RECORDING ACTUAL PERFORMANCE.

His/Her emphasis shifts to gathering performance information. Purpose of field sales report… The general purpose of all field sales report is to provide information for

measuring performance. To provide data for evaluating performance eg. Details of accounts and prospects called upon Number of calls made Orders obtained Days worked Miles traveled Selling expenses etc.

To help sales person plan work e.g. Planning itineraries How to approach different customers.

Contd.

To record customer suggestions and complaints and their reactions to new products.

To gather information on competitors activities new products market tests changes in promotion changes in pricing Changes in policy.

To report changes in local business and economic conditions.

TYPES OF SALES FORCE REPORT

Progress or Call Report: It is prepared individually for each call or

cumulatively covering all calls daily or weekly. Usually the call report form records of not only calls and sales but more detailed data, such as class of customer or prospect, competitive brands handled, the strengths and activities of competitors, best time to call and future promises.

CALL REPORT

Date_________20_____

Customer: _______________________________________________________________________Street: __________________________________________________________________________City: ________________________________________ State: _____________________________PersonsContacted: ____________________________________ Title: _____________________________

____________________________________ Title: _____________________________

TYPE OF CUSTOMER SELLING STEPS TAKEN Road Contractor Catalogs Building Contractor Movie Water and Sewer Contractor View Machine Governmental Demonstration Industrial Service Utility Entertained Mining and Quarry Other _____________________________ Other __________________________ _____________________________ __________________________

INTERESTED IN NEW USED RENTAL

Euclid Thew Gardener-Cenver Pioneer Bros. Rogers Dynahoe Coastal Other ___________

FOLLOW UP PLAN: _____________________________________________________________

Date of next call: ______________________

REMARKS: _____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________Sales person: ___________________________________________________ Add to Mailing List.

WHITE-HOUSTON PINK-BRANCH YELLOW SALESPERSON

Expense Report

The purpose of this report is to control the nature and amount of salespersons expenses. It also helps the salesperson exercise self control over expenses, it also reminds him that he is under a moral obligation to keep expenses in line with reported sales.

WEEKLY EXPENSE REPORTCASH EXPENDITURES

Name________________________ Week Ending ____________________

Date From/To (or place at) Meals (including self)

Lodging Entertainment Miscellaneous Daily Totals

Description Amount

M

T

W

T

F

S

S

Expense Item Tools for Week

I Herby certify that the above expenses represent monies spent for legitimate business only.

Amount to be reimburse

Approval_____________________________ Singed_____________________________

EXPLANATION OF ENTERTAINMENT EXPENSES

DateName persons entertained Firm Where Nature and purpose Amount

Total

Sales Work Plan

This report helps the sales person in planning and scheduling activities and to inform management of the salespersons whereabouts.

It provides the basis for evaluating the salespersons ability “to plan the work and to work the plan”.

Sales Work PlanXYZ Company Ltd.

Prospect Location Purpose of Contact

Monday

Tuesday

Wednesday

Thursday

Friday

Saturday

Salesperson _______________________ Date _______________________week of __________________

New Business or Potential New Business Report

This report informs management of accounts recently obtained and prospects who may become sources of new business.

It provides data for evaluating the effectiveness of sales personnel.

WEEKLY ACTIVITY REPORT

Sales Person _________________ Week Ending ______________Branch ________________

Customer New or used

Make & Model

Eng. Sale Rental Mos

Pur. Opt.

Status

PROSPECTS

Lost Sales Report

This report provides information for evaluating a salespersons abilities to keep customers and to sell against competition. It points the way to needed sales training and changes in customer service policies and product improvements.

ORDERS PLACED

Customer New or used

Make & Model

Sale Rental Mos Remarks

LOST ORDERS

Customers Machine quoted Puu.make & model

Sale or rent Reason

Report of Complaint and/or Adjustments

This report provides information for analyzing complaints arising from a salespersons work, complaints by class of customer and cost of complaint adjustment.

It is helpful for decisions on sales training programs and product changes.

CUSTOMER SERVICE REQUEST

DATE ______CUSTOMER ______________________________________________________ADDRESS ________________________________________________________PHONE __________________

MERCHANDISE PROBLEMREMARKS

ORDER NOT FILLED DEFECTIVE ITEM REPAIR ITEM WRONG ITEM SOLD AMOUNT CHARGED IN ERROR CREDIT/REFUND NOT ISSUED OTHER _______________________________________________

DELIVERY PROBLEMS

INCORRECT ADDRESS CUSTOMER OUT LOST IN TRANSIT MERCHANDISE MISSING OTHER _____________________________________

DISPOSITION

REPORTS FROM FIELD SALES MANAGEMENT

MONTHLY SALES REPORTDIVISION…………………………………. MONTH……………………….

1Sales quotaMonthly quota net or exceeded? Yes ……… No……….% of quote achieved……………%

2Sales personnel who have met or exceeded monthly quota:Name Percent………………………………………… ……………….

3Sales personnel who have not met or exceeded monthly quota:Name Percent………………………………………… ……………….

4Action taken to correct deficiencies:……………………………………………………………………………………

5Dates of sales meetings held during this month:…………………………………………………………………………

6Subjects discussed at meetings:……………………………………………………………………………………

7General business activity in territory:……………………………………………………………………………………

8Suggestions for improving products, sales, services:……………………………………………………………………………………

9Other comments:……………………………………………………………………………………

Sales manager……………

EVALUATING – COMPARING ACTUAL

PERFORMANCES WITH STANDARDS

Evaluating sales personnel requires judgments and deep understanding of market factors and conditions.

An individual showing improvement but with still substandard performance - needs encouragement.

When an individual continually fails to reach a standard, management should investigate whether the standard has been set too high.

TAKING ACTION-THE DYNAMIC PHASE OF CONTROL

If performance and standards are in alignment the decision may be : no action needed

Otherwise the three alternatives are

a). adjust performance to the standards, thus increasing the degree of attainment of objectives.

b). revise the policy or plan or the strategies used for their implementation

c). lower or raise the objectives or the standards used in measuring their degree of attainment to make them more realistic.

The actions are conditioned by the executives judgments, experience, knowledge of the situation and administrative skill.

Conditions Under Which Supervision is Needed

Some conditions are:

Sales personnel turnover rate excessive in a branch, district or other organizational unit.

High turnover of accounts.

Increased complaints from customers.

Low ratio of orders to sales calls.

Total number of calls too low or very high.

Increasing ratio of selling expenses to sales in an organizational unit.

Low morale, as implied by negative attitude towards company, lack of enthusiasm, signs of restlessness and job hunting.

WHO SHOULD SUPERVISE?

Depending upon the company and its organization, sales personnel my be supervised by home office personnel, branch or district managers, or field sales supervisors.

QUALIFICATION OF SALES SUPERVISORS They are selected from among the sales force They must be good teachers. They must recognize selling needs, know how to train Be patient with those who have less skills Re tactful in pointing out better ways of doing things Understand the needs and problems of both and reconcile them in

the field Skilled in handling people Equipped to deal with many complex situations

Conclusion

Effective tools for sales force supervision and control assure that sales departments objectives are reached with minimum effort.

Evaluating and supervising are concerned with monitoring the balance standards and actual performance. Both are instrumental in achieving sales force control.