Management of Sales Territory & Sales Quota

Module 3

Sales territory

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Sales territory

A sales territory is defined as a group of present and potential customers assigned to an individual salesperson, group of salesperson, a branch, a dealer, a distributor or a marketing organization at a given period of time

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Advantages

Better market coverage Effective use of sales force Convenient way to evaluate the performance of a

sales person. Enhance employee morale Understand and serve customers I a better way Develop loyalty. Develop specific marketing programs for the specific

territory. Develop trade promotion strategy Cost control etc.

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Disadvantages

This type of territory designing may not be possible for some companies. New companies. Small companies. Where customers are geographically

dispersed. Some organizations may need industry

specific groups. etc.

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Size of sales territories

Nature and demand of the product. Mode of physical distribution. Selling process. Transport and communication

facilities. Other factors

Government regulations Density of population

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Size of sales territories contd…

Population spread within the territory Market potential Growth rates Level of competition Co’s sales policy Ability of sales people Overall economic condition etc.

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Allocation of Sales Territories

Assigning a particular sales man to a specific territory. He knows the customers closely and Customer know him

Uniform distribution of work for all sales people

This motivates the sales man to perform.

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Allocation of Sales Territories contd…

Duplication of work is avoided.

Economies of scale can be achieved.

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Designing a sales territory

1.Select the basic geographic Control 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 The modification 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 basic geographic control units-

While designing territories, the first step is to select a geographical control unit as a territorial base. Commonly used units are states, countries, cities, pin codes etc.

A typical territory may compromise several individual units.

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Designing Sales territory contd…

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.

The get above information company can make use of lot of data which is easily available. For eg. Per capita income, employment situation, FMCG sales figures, house rents and lot of data available from various research institutes or reports.

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Designing Sales territory contd

3. Determine basic territories- at this stage territories are established

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 setTerritorial lines by

Combining control units Until total calls needed

= total calls possible

Modify territoriesAs needed

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Breakdown method

Management Must determine

company sales potential

sales potentialIn each control

unit

Sales volumeexpected from

eachsalesperson

Tentative territorialboundary lines bycombining control

units until totalsales potential =

expected sales volume

Territorial modifications

As needed

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Designing Sales territory contd … Routing 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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4. Assigning salespeople to territories

Till this point we have assumed that all the sales people are equal in aspects. But this is not true.

Sales representative’s 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.

Sales quota

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A sales quota is the sales goal set for the product line, company division, or sales representative. It is primarily a managerial device for defining and stimulating sales efforts

- Philip Kotler

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Introduction

Quota is a type of plan It is expected performance objective Quotas are assigned to departments,

divisions, and individuals. They are goals, which are to be

achieved in a specific period of time.

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Importance of Sales Quota

Motivate sales people. Quota helps management by

exception. It gives direction to the sales people’s

efforts and resources for specific ends.

It serves as a control.

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Principles of Quota Setting

SMART Quota should be Specific, Measurable,

Attainable, Realistic, Time specific

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Selling by Objectives (Charles Futrell)

Organization of sales job Territory Management Account Management Call Management Self Management

Defining Annual Objectives These objectives are of three types

Regular/Recurring Objectives Problem solving Objectives Creative objectives

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Types of Sales Quota

Sales Volume Quota Sales Budget Quota Sales Activity Quota Combination Quota

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Methods of Setting Quota

Based on sales potential Based on forecast Based on Past Sales Based on Executive Judgement Based on Sales Person’s Judgement Based on Compensation

Recruitment and selection of Sales Force

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Hiring process

Phases of hiring process

Human resource planning process Recruitment Selection Socialization

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Challenges in Sales Force Selection

The determination of characteristics that differentiate candidates who perform better, measuring these characteristics, evaluation of the motivation level of candidates for the job and for the organization, followed by a decision on who will make the ultimate selection decision.

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1. Human Resource Planning It is a systematic procedure that describes

the way a sales job is to be performed and the skills and abilities needed to perform the job.

Determination of performance measures. The identification of critical success factor. The performance dimensions of the position. The determination of performance measure

dimensions. The operationalization and the establishment of

performance. Standards and the design of the assessment

tools.

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1. Human Resource Planning contd…

Turnover

Job Analysis

Job qualification and Job Description

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2. Sales Force Recruitment

Sources

Internal

External

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3. Selection Inviting application

Personal interview

Reference checks

Physical examination

Psychological tests

Intelligence

Personality

Aptitude test

Determination of terms of service

Appointment

Initial orientation

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4. Socialization

Anticipatory Stage

Encounter Stage

Setting in

Training the Sales Force

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Importance of training

Objectives of sales training

Challenges in sales training

Role of a trainer

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The training process

1. Training need assessment.

2. Design and conduct of training programme.

3. Evaluation of a training programme.

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1. Training need assessment

Organizational level analysis

Task level analysis

Individual level analysis

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Discovery of the training need involves the following five tasks Listing the duties, responsibilities, or tasks of the job

under consideration on the basis of the job description guide.

Listing the standards of work performance related to the job.

Comparing the actual performance against standards.

Determining the part of the job that creates a problematic environment for the sales person and whether or not he is performing the job, as per the standards.

Determining the kind of training needed to overcome specific difficulties and problems.

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2. Design and conduct of training programme.

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4. Evaluation