SALES DISTRIBUTION MANAGEMENT Module 3 Organizing Sales Efforts

SALES & DISTRIBUTION MANAGEMENT Module – 3 Organizing Sales Efforts, Management of Sales Territory & Sales Quota PRASHANT

Introduction: Difference between Sales Person and Sales Executive. In most organisations, outstanding sales persons are preferred to be promoted and fill the sales executive’s vacancy whenever it arises. But the duties and responsibilities vary. Sales executive’s job demands administrative skills much beyond those required by a sales person.

Functions of Sales Executive: OPERATING FUNCTION Ø Sales Force Management (Includes staffing, training, motivating, compensating, sales meetings, supervising territory management, quotas etc) Ø Ø Handling relationships with personnel in other company departments & with trade (Middlemen/ customers). Communicating & Co-ordinating with other Sales executives. Ø Reporting to higher authority. Ø Occasionally handling Key (special) accounts as needed. Ø Supervising PLANNING FUNCTION Ø Setting Personal Selling Goals. Ø Developing Sales Program designed to achieve these goals Ø Formulating sales policies and personal selling strategies. Ø Planning sales budget. Ø Putting together plans for proper implementation of all the above activities.

Qualities of an Effective Sales Executive Ability to define his position’s (i. e. , Sales Executive’s) exact functions and duties in relation to the goals of the company should expect to attain. Ability to select and train capable subordinates and willingness to delegate sufficient authority to enable them to carry out assigned tasks with minimum supervision. Ability to utilize time effectively. Ability to allocate sufficient time for thinking and planning. Ability to exercise skilled leadership. Relevant technical, conceptual and communication skills.

Selling Skills Effective communication skills – (Verbal & Problem solving skills Non Verbal) Selling Skills Listening Skills Negotiation and bargaining skills Conflict management and resolution skills

Sales territory A group of present and potential customers assigned to: üAn individual üA Sales person, a group of sales person, a branch, a dealer, üA distributor (Dealer) or a marketing organization at a given period of time. NOTE: A sales Territory may or may not be designated geographically Eg. : Technical products, sales territories are assigned on the basis of the class (category) of customers, rather than their location. Another example is Insurance selling – No geographical division.

Sales territory (contd. ) Advantages of designing a sales territory : v It ensures better and organised market coverage. v Effective utilization of the sales force. v Efficient distribution of workload among sales people. v It is convenient to evaluate the performance of sales people. v To control over the direct and indirect costs of sales. v Optimum utilization of sales time by sales people. v Increases individual attention to key customers.

Reasons for Establishing OR Revising Sales Territories: Providing proper market coverage. Controlling Sales expenses (Costs). Assisting in evaluating Sales personnel. Contributing to Sales force morale. Aiding in Co-ordination of Personal selling & Advertising. Efficient distribution of work load among sales people. Use of logic and common sense

Designing sales territories - Procedure Factors influencing the modifications of a territory: • Mergers • Market consolidation • Split in division • Sales force turnover • Customer relocations • Product life cycle change • Product line change Select the basic geographic control units Decide on the criteria for allocation Decide on the starting point Combine control units adjacent to starting point Modify territorial boundaries to Compare territories on allocation criteria and conduct workload analysis balance workload and potential Assign sales force to new territories

Territory management problems & Remedies: Problems 1. 2. 3. 4. 5. 6. 7. 8. 9. Inadequate coverage Inadequate size Revision Shifting accounts Inadequate support Territory jumping Overlapping territory Selling cost variations High turnover Remedies 1. Split territory 2. Enlarge territory 3. Prepare salespeople 4. Revise territory 5. Assist salespersons 6. Eliminate practice. 7. Minimize crossovers 8. Review cost figure 9. Rectify casual factor

COMMON TERRITORY SHAPES: Circle: Appropriate when accounts and prospects are distributed evenly throughout the area. Clover Leaf: When accounts are located randomly through a territory. Wedge: For territories containing both urban and non urban areas. Radiates out from densely populate urban center. Travel time among the adjoining wedges by balancing urban and non urban calls.

Sales Quota • A quota is quantitative performance objective expressed in absolute terms and assigned to a particular marketing unit. These units can be Sales person/ executive or territory. • A quota is a sales assignments or goal to be achieved in a specific period of time • It is routinely assigned to the sales units (e. g. departments, divisions, and individuals). “A sales quota is the sales goal set for a product line, company division, or sales representative. It is primarily a managerial device for defining and stimulating the sales effort. ”. … Kotler

SALES QUOTAS - OBJECTIVES To provide quantitative performance standards. To obtain tighter sales and expense control. To motivate desired performance. To use in connection with sales contests.

Principles of quota setting • Setting of sales quotas is a challenge to the sales manager and should be handled with precision and adequate skill. • Objectivity (Impartiality) to be observed while fixing quotas and should be based on facts and figures drawn from the market. • It must be simple to understand both to the manager and the sales people. (i. e. it should not be vague) • Quotas set above the achievable limit often demotivate and result in high turnover in the organization. Quotas should SMART.

Principles Contd…. • Flexible to the prevailing and emerging market conditions. • There should be a level of definiteness in the quota set for a salesperson • It should be fixed either in terms of geographic territory, on money value, or on the basis of units of product(s) • A participatory quota setting procedure followed jointly by the sales manager and sales people together serves as a tool of motivation and leads to the realization of the organizational sales goals

S M A R P E C IF I C E A S U R A B L E T T A I N A B L E E A L I S T I C T I M E SBO (Sales By Objectives)… MBO in the Sales domain?

Types of Sales Quota: § Sale Volume Quota – i) Rupees sales volume quota. ii) Unit sales volume quota. iii) Points (weight) sales volume quota. § Sales Budget Quota – i) Expense quota. ii) Gross margin (or Net profit quota). § Sales Activity Quota § Combination quota or Other point system quota

Methods (Procedure) of setting sales quota Quotas are based on… • Market potential & Sales potential. • Forecast. • Past sales and experience or Naïve method of forecasting. • Executive judgment • Sales people judgment (Sales force composite). • Compensation.

PROBLEMS IN SETTING SALES QUOTA 1. There is a high level of individual difference in every organization. 2. A perfect quota is a combination of selling and nonselling activities. 3. Often sales people do not give proper attention to the non-selling activities (e. g. searching for prospects, handling customer objections, and creating market for probable entry of new products).

PROBLEMS IN SETTING SALES QUOTA

END OF MODULE – 3 ANY QUESTIONS…? ? Refer Richard Still, edward cundiff & norman govoni or tapan panda & sunil sahadev for this module