Controlling the salesforce

Sales Force Expenses

Typical reimbursement

–Legitimate sales expenses

-Travel

-Meals

-Lodging

-Entertainment of customers

-Telephone

Expenses Plan = compensation plan

Sales Force Expenses

Effective expense plan :-

-Fair to the salesperson-Neither gain nor lose

-Fair to the company-Eliminate padding of expenses by the S.P

-Simple and economical to administer-Reports / forms to be precise

Sales Force Expenses

Effective expense plan :-

-Allow difference in travel expenses-A class cities and B class cities

-Reimbursement without much delay-Tour advance and later settlement

4 Types of Expense Plans

The salesperson pays all expenses :--compensated by straight commission-Paid a little higher-No cost of administration-Non selling activities have no direct control

-Reports, intelligence-SP is non answerable for expenses

-The company pays all expenses (unlimited payment plan)-Honour system-No limit (total / individual items)

- against actuals-+Free from psychological anxiety about expenses--Vehicle for padding expenses

-The company partially pays expenses (limited pay plan)-Rs. 1000 for room and food each day – stay away overnight-Rs. 150 for lunch / dinnerRs. 700 for lodging & Rs. 75 for breakfast

4 Types of Expense Plans

-The company partially pays expenses (limited pay plan)-Lump sum ( Weekly/daily)

-Rs. 1000 for room and food each day – stay away overnight-Limited amount itemised

-Rs. 150 for lunch / dinnerRs. 700 for lodging & Rs. 75 for breakfast -+ expenses can be forecasted--Inflexible--Unusual expenses

-Explanatory note--Padding can happen

Types of Expense Plans

-combination plan ( expense-quota plan)-Limited / unlimited plans

-Food& lodging/ travel cost

-Expense-quota plan-2% of net sales

-Rs. 10,000 set for a month since expected monthly sales is Rs. 5,00,000

-Mgmt has control on selling expenses-SP have flexibility

Marketing Audit

-A comprehensive, periodic & systematic examination of a company’s marketing environment, objective, strategies and tactics with a view to find out opportunities and problems and recommend and action plan to improve the company’s marketing performance.

Marketing Audit

-Average US corporation-Loses half of its customers in 5 yrs-Half of its employees in 4 yrs-Half of its investors in less than 1 yr

WEAKNESS

•Time consuming

•Difficult

•Expensive

Marketing Audit

-Covers total marketing system-Sales mgmt function

-Sales Force Audit

-Physical distribution dept

Sales force audit (SMA)

-A periodic evaluation if goals are achieved

-Objective-Outside consulting firm-Another functional area

THE PROCESS

What happened

why it happened

What to do about it

Sales force audit (SMA)

THE PROCESS

What happened

why it happened

What to do about it

Compare actual performance with goals or targets

Eg :-

Actual performance on sales @ the end of first quarter of the year is Rs. 90 million against sales goal Rs. 100 million –ve variance Rs. 10 million

Sales force audit (SMA)

THE PROCESS

What happened

why it happened

What to do about it

What factors brought –ve variance

• Marketing mix ?

•Sales people ?

•Sales managers ?

Sales force audit (SMA)

THE PROCESS

What happened

why it happened

What to do about it

Corrective action to solve the problems

•Overcome harmful

•Leverage favorable conditions

Situation analysis

Customer services not as per customer expectation

Evaluation of Effectiveness of Sales organisation

THE PROCESS

Effectiveness of a sales organisation

Sales analysis

Cost analysis

Profitability analysis

Productivity analysis

Sales AnalysisWHEN A SALES TAKES PLACE – ORDER RECEIVED ? SHIPPED(& INVOICED)

OR PAID FOR

SALES ANALYSIS

All levels in the sales organisation

National level sales organisation

Regional Level

Branch / District level

Territory level

Individual customer level

Different types of sales

Total sales of the company

By type of products

By type of distribution channels

By type of customer classifications

By size of the orders

Different types of Analsysis

Comparisons with sales quota

Comparisons with previous periods

Comparisons with industry / competitiors

Comparisons within sales organisation

Comparisons with sales forecasts

Sales Analysis

Examining Sales volume :

-By territory

-By SR

-By Customer

-By product line

WHEN A SALES TAKES PLACE – ORDER RECEIVED ? SHIPPED(& INVOICED) OR PAID FOR

Sales AnalysisSales analysis by territory :

Territory Quotas Actual Performance as % of QuotaEast 1650 1700 103%

West 1500 1500 100%

North 1780 1740 98%

South 1700 1840 108%

Sales analysis by SR : North

SR Quotas Actual Performance as % of QuotaSharma 190 186 98%

Sadhu 230 234 102%

Singh 220 218 99%

- 212 220 104%

- 216 214 99%

- 220 224 102%

Rajan 260 212 82%

Reddy 232 232 100%

1780 1740 98%

Sales Analysis

Sales analysis by product line :

Shri Rajan, SR’s Sale by product line

Product line Quotas Actual Performance as % of QuotaAnitbiotics 44 46 104%

Anti-inflamm 56 56 100%

Antacid 60 12 20%

Antidiabe 52 50 96%

Ointments 52 50 96%

260 212 82%

Sales Analysis

Sales analysis by customer :

Shri Rajan, Customerwise performance for antacids

Customer Quotas Actual Performance as % of QuotaDoctors 4 4 100%

Big Hospitals 2 2 100%

Nursing homes

2 2 100%

Retail chemists

48 0 0%

Govt. Dept 2 2 100%

Canteens 2 2 100%

60 12 20%

Sales Analysis

A frame work for sales analysis :

Customer Northern Eastern Western Southern

Sales (Rs. Mln) 23 22 28.5 27

Sales Quota (Rs. Mln) 25 20 30 25

Effectiveness index 92 110 95 108

Sales last yr (Rs. Mln) 22.5 19 28 24

Sales Growth (%) 2 16 2 12

Industry Sales (Rs. Mln) 250 200 300 250

Market share (%) 9 11 9.5 11