PERSONAL SELLING AND MANAGEMENT OF SALES

FORCE

SALES: Sales refers to the exchange of goods/ commodities against money or service. It is
the only revenue generating function in an organization. It has formed an important part in
business throughout history. Even prior to the introduction of money, people used to
exchange goods in order to fulfill the needs, which is known as the barter system.

Conditions of Sales

 There are two parties involved in the transaction, the seller and the buyer.

 The seller is the provider of goods or services and the buyer is the purchaser in
exchange of money.
The seller of goods has to transfer the title of ownership of the item to the buyer upon an
agreed price. A person who sells goods or services on behalf of the seller is known as the
salesman/woman.
Distribution is the process of making a product or service available for use or consumption
to the end consumer or business.
Distribution could be of the following two types −

Direct Distribution
It can be defined as expanding or moving from one place to another without changing
direction or stopping. For example, Bata has no distribution channel; it sells its products
directly to the end consumers.

Indirect Distribution
It can be defined as means that are not directly caused by or resulting from something. For
example, LG sells its product from the factory to the dealers, and it reaches the consumers
through dealers.
The following image shows the end-products stored at a warehouse, ready for shipment to
the dealers/consumers.
What is Sales management?

Sales Management
Originally, sales management refers to the direction of sales force i.e. the people associated with the activities of
selling. With time, the term acquired a broader meaning. In addition to management of personal selling, sales
management meant management of all marketing related activities such as advertisement, sales promotion,
marketing research, physical distribution, pricing and product merchandising. However, it was pointed out these
activities are primarily carried out by the marketing department of a company and there was a need to clearly
define the purview of sales management.
Finally, American Marketing Academy agreed that sales management means the planning, direction
and control of personal selling, including recruitment, selection, equipping, assigning, routing, supervising, paying
and motivating as these tasks apply to personal task force.
The activities concerned with personal selling are sales management, while the activities of
managing those carrying out the activity of personal selling may be called as sales force management. The sales
managers organise the sales activity both within the organization and outside the organization. In the company,
the sales managers build both formal and informa1 organisations to ensure effective communication in the sales
department as well as other departments of the company. Outside the company, the sales managers build key
contacts with the customers and publics to ensure a smooth personal selling.
Skills of a Sales Executive
Sales management is an art where the sales executive or the salesperson helps the
organization or individual to achieve its objective or buy a product with their skills.
The following are some skills that a sales executive needs to possess −

Conceptual Skills
Conceptual skill includes the formulation of ideas. Managers understand abstract
relationships, improve ideas, and solve issues creatively. The sales executive should be well
versed with the concept of the product he/she is selling.

People Skills
People skills involve the ability to interact effectively with people in a friendly way,
especially in business. The term ‘people skills’ involves both psychological skills and social
skills, but they are less inclusive than life skills.
Every person has a different mindset, so a sales executive should know how to present the
product depending on the customer’s mindset.

Technical Skills
Technical skills are the abilities captured through learning and practice. They are often job
or task specific. In simple words, a specific skill set or proficiency is required to perform a
specific job or task. As a part of conceptual skills, a sales executive should also have a good
grasp on the technical skills of the product.

Decision Skills
Decision skills are the most important because to tackle the questions from consumers,
sales executive should always have the knowledge of competitors’ products and take a
wise decision.

Monitoring Performance
Sales executives should monitor the performance of the employees and report to higher
management to improve the performance and fill the loop holes.
Thus, conceptual skills deal with ideas, technical skills deal with things, people skills
concern individuals, technical skills are concerned with product-specific skills, and decision
skills relate to decision-making.

Importance of Sales Management

Sales management is very crucial for any organization to achieve its targets. In order to
increase customer demand for a particular product, we need management of sales.
The following points need to be considered for sales management in an organization −
 The first and foremost importance of sales management is that it facilitates the sale
of a product at a price, which realizes profits and helps in generating revenue to the
company.
 It helps to achieve organizational goals and objectives by focusing on the aim and
planning a strategy regarding achievement of the goal within a timeframe.
 Sales team monitors the customer preference, government policy, competitor
situation, etc., to make the required changes accordingly and manage sales.
  By monitoring the customer preference, the salesperson develops a positive
relationship with the customer, which helps to retain the customer for a long period
of time.
 Both the buyers and sellers have the same type of relationship, which is based on
exchange of goods, services and money. This helps in attaining customer
satisfaction.
Sales Management may differ from one organization to the other, but overall, we can
conclude that sales management is very important for an organization for achieving its
short- and long-term goals.

Objective of Sales Management

Every organization has an objective before initializing functions. We need to understand
the goal of managing sales. Here we are discussing Sales Management in terms of its
objectives.

Sales Volume
It is the capacity or the number of items sold or services sold in the normal operations of a
company in a specified period. The foremost objective of sales management is to increase
sales volume to generate revenue.

Contribution to Profit
The sales of the organization should contribute to profit, as it is the only revenue
generating department. It can be calculated as the percentage or ratio of gain in total
turnover.

Continuing Growth
One of the main objectives of Sales Management is to retain consumers to continue
growth of the organization. There should be regular expansion of sales and demand for an
item in the market with new advanced formulation.
These are the major objectives a sales executive has to focus on in sales management.

Sales and Distribution Management - Steps

Companies use sales strategies and tactics in order to make a consumer buy their products
or services. Before we processed further, we should know the meaning of sales strategies
and tactics. Although they go hand in hand, they are distinct.

Set Objective
The very first step in sales management is setting goals and objectives. The senior
management of a firm needs to sit together and reach a mutual decision regarding what
the vision and resolution of the firm is.
This may sound quite easy but setting objective acts as a framework for designing a
company. If efficient decisions are made and objectives are set according to the company’s
potential and the market demand, the company progresses wonderfully. However, if the
objectives are poorly set, then the company might not prosper.
Develop Sales Strategy
After the objectives are set for the company to achieve, a strategy needs
to be designed. Sales strategy can be defined as how a company
markets or wants to sell its products or services. It can be a concept of
how the company meets the desired objectives and marketing goals; it
also clarifies what the sales executives do.
Strategy includes various components. following are a few of the
components −

 Knowledge of the company’s brand history and consumer market

 The way marketing is going to influence overall business

 Competitors’ performance

 Pros and cons of the plan

Develop Tactics
A strategy explains the purpose of the company whereas tactics explain the process to move
forward and implement the plan. Sales strategy is important as compared to the individual tactics.
But after the strategy is designed, we need to develop tactics to follow the strategy.
Sales tactics can be defined as the action taken by the company to impose its sales strategy to bring
it to life. There are different modes in which the company delivers the message to the consumers
such as websites, brochures, advertisements in social media, etc.
An investor or lender will invest in the company if they know about the objective and the strategy
of the company; else, it becomes difficult for the company and the lenders to make or justify a
decision of whether to invest in the company.
The company has to know that investment by lenders is very much required for the marketing
campaign. If the tactics are excellent but the strategies are not defined in a proper manner or
defined poorly, it does not help the company to grow.

Sales and Distribution Management - Process

Sales management in an organization is a business discipline, which focuses on the
practical application of sales techniques and the management of a firm’s sales operation.
It is done in an efficient and effective manner through planning, staffing, training, leading
and controlling organizational resources. Now we will explain each of these processes.

Planning
Planning can be defined as the process of decision-making in a systematic manner
regarding the goals and the objectives of an organization. In short, it is a process an
individual or group will undertake in the future and the resources required for attaining
them.

Sales planning includes strategy, setting profit-based sales targets, quotas, sales
forecasting, demand management and the screening, writing and execution of a sales plan.
A sales plan is a strategic document that outlines the business targets, resources and sales
activities. It basically follows the lead of the marketing plan, the strategic plan and the
business plan with more precise detailing on how the goals and objectives can be achieved
through the actual sale of products and services.

Staffing
Staffing is the process of capturing, deploying, and retaining a workforce of optimal
quantity and quality to create a positive impact on the firm’s effectiveness.

Staffing consists of the following three components −

 Acquisition − It involves human resource planning to select what the organization
requires in terms of the numbers of employees needed and their attributes such as
knowledge, skills and abilities, in order to effectively meet job requirements.
 Deployment − It includes decisions regarding how those recruited will be assigned
to specific roles according to the business demands. It also concerns the frequent
appointment to more advanced jobs through internal recruitment, promotion or
reorganization
 Retention − It is concerned with the management of the outflow of employees from
an organization. It combines both managing voluntary practices like resignation and
controlling involuntary measures whereby employees are handled out of the
organization through redundancy programs or other types of dismissal.
Staffing is basically used in the sphere of employment. It is applicable to more than one
aspect of the working surrounding. Staffing is also used in a specific sense to refer to the
management of employee schedules.

Training
The training program in sales management provides frontline sales managers with proven
skills, knowledge and tools they need to drive margin line performance.

This in-depth program involves self-assessments and covers the following four crucial sales
management abilities −

 Managing sales performance

 Sales coaching
 Recruiting
 Selecting sales "STARs"
 Sales leadership
After the sales personnel are recruited, the company ensures the training, i.e., off the job
and on job training related to the skills, knowledge and job culture, which helps to meet
the selling performance and goals.

Leading
Leading is done by the person who possesses the leadership quality, the ability to motivate
other people and get the work done. Leading is an effective sales management force that
invites the sales management executive to use practical tools and cuttingedge concepts to
create an effective sales management model.

This model is derived after a thorough research and consulting experience through cases,
group discussions, problem-solving exercises, computer-aided workshops, and
communicative case presentations.
The managers need to explore various perspectives on what does and does not work, and
why. A leader also monitors the work and explains the pro and cons as well as the ways to
complete a task effectively and efficiently.

Controlling
The task assigned to the sales personnel is monitored to find out whether the organization
is achieving its target or the goals as per the planning. Controlling is a process, which
defines the scope of and leads the actual performance against the planned goals of the
organization.
Controlling dwells in verifying whether everything happens in conformity with the plans
adopted, instructions issued and principles authorized. Controlling assures that there is
effective and efficient utilization of organizational resources so as to achieve the planned
goals and objectives.
Controlling judges the deviation of actual performance from the standard
performance, notices the causes of such deviations and helps in taking corrective actions.
The following figure depicts sales management with its functions and explains the role of
each function. All the roles are inter-related. An individual function cannot relate to work
without the help from other.
Resources
Resources are one of the important parts of sales management, as, without resources, the
planned process cannot be implemented. Resources include the following −

Human Resource
Human resources can be defined as that section of a business or organization that deals
with the hiring, administration, and training of staff. In sales management, we can say it is
the salesperson responsible for selling/marketing of products or services.

Financial Resource
Financial resource is the capital available to a business for investing in the form of cash,
liquid securities and credit lines. Before going into business, a businessman needs to secure
sufficient financial resources.
This is required in order to be able to function efficiently and sufficiently well to promote
success. It includes the finance that the company needs to perform the activities like
campaign, advertisement etc.

Materials
They are assets in the form of material possessions. Here, by assets, we mean anything of
material value or usefulness that is owned by an individual or a company. It includes the
source from where the raw material could be procured in low cost.

Technology
It is the application of science, especially to industrial or commercial goals and objectives. it
also includes the scientific technique and material used to achieve a commercial or
industrial objective as well as the machinery and the techniques that the organization uses
for the end product.
It will now be clear why resources are important in managing sales.

Performance
Performance is the completion of a given task measured against known preset standards of
accuracy, completeness, cost, and speed. In a contract, performance is assumed to be the
fulfillment of accountability in a manner that releases the performer from all liabilities
under the contract.
The last function is to review the performance. In this function, the leader reviews the past
performance and advises the Sales Personnel regarding the improvements required. It also
involves checking that all the functions are working in a proper way and there is no
deviation in achieving the goals.

Sales & Distribution Management - Methods

Sales method can be explained as one of several techniques used to recognize revenue
specifically when revenue and expense are recognized at the time of cash collection rather
than at the time of sale.
Thus, we can say that Sales Methods are the different ways to sell the product or service.
The Sales Personnel help to sell the end products to the consumer. Some sales methods
are given below.
Direct Sales
Direct sale is the sale of good/services involving person contact. It can be defined as the
most important method that is used, as most of the consumers prefer to purchase goods
through a direct contact with the seller, during which they understand the features and get
to know about the needs and benefits.
The above illustration depicts the seller in the middle as A. Buyers are seen reaching out to
the seller. It is an example of direct sales where the buyers (in green) are approaching the
seller in orange.
Example − Boeing airlines sells it air buses directly to the consumer with no intermediary
involved.

Pro forma Sales

The term pro forma is a Latin word, which means, "as a matter of form" or "for the sake of
form". It is commonly used to describe a practice or document that is provided as a
courtesy and that satisfies limited requirements, conforms to a norm or doctrine, tends to
be performed perfunctorily and/or is considered a formality.
Pro forma financial statements are fashioned to reflect a proposed change, like a merger or
acquisition or to emphasize certain figures when a company issues an earnings
announcement to the public.
It can be termed as the practice or document that is provided as a courtesy or satisfies the
minimum requirements which contain the details of the buyer and the receiver. It can also
be termed as an invoice of the product.

Agency-based Sales
In agency-based sales, the organization hires an agent on contract basis. That sales agent
acquires the right to negotiate the sale of the organization’s goods or services in exchange
of a fixed commission or fee. The commission is calculated on the basis of the percentage
of the sales generated. Example: Insurance Policy, opening of bank accounts etc.

Door to Door
In door to door sales, the sales executive walks from the door of one
house to another to sell the product or service. For this type of sale, the
sales agent should be versatile and capable of quickly creating a
relationship with the customers.

The following are some major duties of sales personnel for door to door sales −

 Striking a conversation with a stranger.

 Getting the form filled and completing the administrative tasks.
 Getting the payments processed from customers.
 Building rapport with customers.
 Providing training to new team members.
These are some of the major responsibilities that a door to door sales executive needs to
manage in order to maintain or increase productivity.
Hawking
Hawking is associated with a hawker (seller) who sells the goods that can be easily
transported. A hawker sells not-so-expensive goods on the streets by shouting in loud voice
and chitchatting with the passers-by to develop rapport and convince them to buy his
goods.
In the above figure, we can see hawkers selling products on the
roadside. In India, there are 10 million street vendors, Mumbai and Delhi
contributing the most to the number. Many consumers also prefer street
shopping because of the low price of the products.

B2B
B2B selling is known as Business to Business selling. It refers to a
situation where one business makes a transaction with another.
B2B occurs where −
 Factory produces goods and sells them to wholesalers.

Example – Food products manufacturers, shoes, bags, etc.

 Organization outsources its process to other companies to reduce the labor cost.

Example – BPO (Business Process Outsourcing)

 Company purchases raw materials from another company to make the final product.

Example – Tata Steel purchases goods from its ancillary companies

Electronic Sales
Electronic sales or e-Commerce is known as trading of goods or services through the
internet. The figure given below depicts how e-Commerce works. We can conclude that the
e-commerce business has been increasing day by day due to easy access and simplicity.
E-commerce businesses may employ some or all of the following −
 Online shopping web sites for retail sales direct to consumers.
 Providing or participating in online marketplaces, which process third-party
business-to-consumer or consumer-to-consumer sales.
 Business-to-business buying and selling.
 Gathering and utilizing demographic data through web contacts or social media.
 Marketing to prospective and established customers by e-mail or fax (for example,
with newsletters).
 Engaging in prevailing market for launching new products and services.
Thus, e-commerce can be defined as the business conducted through the application of
computers, telephones, fax machines, barcode readers, credit cards, automated teller
machines (ATM) or other electronic appliances (whether or not using the internet) without
the exchange of paper-based documents.

Request for Proposal

Request for proposal is a type of bidding procedure by a company who is interested in
procurement of goods or services from potential suppliers to submit business proposals.
Given below are the salient features of a Request for Proposal.
  It informs the suppliers that a company is looking to solicit and inspire them to make
their best effort.
 The company has to provide specifications regarding the proposal to purchase and if
the analysis regarding the requirement is prepared, accordingly it can be easily
integrated into a Request document.
 It also signals suppliers that the selection process is competitive.
 It ensures that suppliers respond factually to the identified requirements.
 The selection process is structural so that there is no partiality in the process.
Thus, a request for proposal is a proposal that a company ensures for procurement of
products. The above points enlist the functions of a general request for proposal used by a
company.

Sales & Distribution Mngmt - Techniques

Sales techniques are techniques for selling a product or service for marketing success. In
layman terms, it’s a combination of talking to the right people and finding out what they
actually want to buy; it depends on consumer choice and preference.
A salesperson using sales techniques doesn’t just sell the products. In fact, he looks at the
customer’s need or want and then offers the product after explaining its advantages and
disadvantages.
This helps the customer to differentiate among available products, making the decision
easy for the customer. This way of selling is more impressive than sampling delivering the
product.
It also helps to build a rapport between the customer and the salesperson who
understands how much the product is worth to the customer.

Conceptual Selling
Conceptual selling is a type of sales technique, which requires the salesperson to first
understand their customer’s issues, i.e., what they are trying to accomplish, fix or avoid.
Then the salesperson applies his expertise to find a solution for the customer.
By applying this approach, its helps to build trust with customers and the solution found
becomes difficult for the competitors to replicate. Conceptual selling is like introducing a
new technology, a revolutionary delivery method, a different way of serving customers and
finding a new way to resolve old problems.
Conceptual selling is classified into the following four categories −

 Perceptual
 Change
 Emotional
 Fundamental need
Perceptual
Perception is the way a person looks at something. It differs from person to person and it is
also possible for the perception of two people to be alike. This psychological proposal asks
the consumer to change the attitudes towards something or view it in a different way from
the existing point of view.
In other words, the seller requests the buyer to view things from a different perspective.

Change
Change is vital and a thing cannot be the same for a long period of time. The first step itself
relates to change. Most of the times, the first step is conceptual selling. The buyer should
be interested in listening to new ideas and seriously apply himself to something different.

Emotional
While the seller describes the product to the consumer, he wants an emotional relation
with the consumer. The seller should be passionate and eager; it plays a major role in
selling. This helps to increase credibility with the consumer and also helps to retain the
consumer for a long period of time.

Fundamental need
The fundamental need of a product satisfies a conceptual sale. The assumption is that the
product serves as a catalyst for the change that the seller petitions. In case the consumer
does not understand that this fundamental need, he will not buy the product.

Sales Negotiation
Sales negotiation refers to the mutual discussion between the buyer and the seller for a
transaction or agreement. The negotiation can be a formal event at a specific date and
time. It can also be an ongoing process at different points in sales process.
Why does a salesperson negotiate? The answer is because of a customer’s attitude towards
the product or service. A customer’s attitude can be categorized in four categories −

Objection
In this category, the customer shows an opposition to the product or service. The customer
is not satisfied with the product and opposes and raises a query against the product.

Indifference
The customer is not interested or shows less interest in the product; the reason could be
no perceived need for its benefits.

Skepticism
The customer has the perception of the product and its benefits but is in dilemma if the
product offered can really provide any benefit.
Acceptance
In this category, the customer agrees with the benefits as advised by the salesperson and
has no objections or negative feedback towards the product.
Thus, we can conclude that negotiation skills are required to change a customer’s
perception towards a product or service.

Sales Negotiation Strategies

A salesperson needs to practice some negotiation strategies to deal with customers. The
best way is to draw them into a problem-solving partnership. The initial step is to focus on
the issues where the salesperson and the customer have the most agreement.
The salesperson has to take a stiff position initially so that when he compromises, the
customer feels that he has negotiated a bargain. The motive should be to concentrate on
solving the issues that satisfies the needs of both the buyer and the seller. Solutions of the
issues should be certain for both the parties to work on.
It’s very important to keep a record of the issues resolved in the process of discussion and
to request recaps to confirm the progress being made. This helps to roll up the discussion
and easily arrive at the final conclusion.

Negotiation Outcomes
The following are the four types of negotiation outcomes −

Seller Win – Buyer Win

In this outcome, there is a Win-Win situation for both the buyer and the seller. Out of the
four, this is the only outcome that leads to long term success for both the parties.

Seller Win – Buyer Lose

In this case, the seller wins but the buyer loses. If the customer is not satisfied, the business
relationship is in trouble, as it may affect the reputation of the company.
If the customer feels that he is not satisfied or has been manipulated regarding the product
description, he may refuse to have something. If his nature is aggressive, he may take
action against the salesperson.

Seller Lose – Buyer Win

The buyers win in the negotiation and the salesperson will feel short changed and try to
avoid the situation or even future negotiation. In this outcome also, the buyer and seller
relationship is in trouble.

Seller Lose – Buyer Lose

Both the buyer and seller lose and are dissatisfied. After this outcome, it is very unlikely in
future to have any negotiation between the two parties.
Reverse Selling
Reverse selling refers to a situation where the buyers get a chance to respond to the sales
negotiation or feedback regarding the product or service. If we observe keenly, in most of
the cases, the seller talks too much and is always ready to question.
Reverse selling is just the opposite. The buyers have to provide the feedback, which helps
to develop a long term relationship between the buyer and the seller. By doing this, the
company can understand the pros and cons of its products and services, which helps to
improvise and make changes accordingly.
The traditional way of selling a product used by a salesperson is that he/she pressurizes the
prospective buyer.

Questioning Strategy
Once the company has listed all the points and the required information, they need to
prepare a questionnaire. The questions should begin with broad issues and should allow
the buyer to express his/her point of view.

Engaging the Buyer

Questions can be open ended or close ended. If the questions are close ended, the buyer
will not be able to apply his own perception or points. An open ended question gives the
buyer a chance to explain an issue or to provide a proper feedback, whether positive or
negative.

Reverse Question
When a buyer evaluates a product, whether to purchase or otherwise, it gives an
opportunity to the seller to pitch in and re-confirm the perception of the buyer. It helps
improve the relationship. The seller can better understand how to deal with the situation
and what can be offered to the buyer to satisfy his/her needs.
We can thus conclude that reverse selling has now become an important part in today’s
competitive market.

Take away
Take away selling techniques have become very famous in recent times. As the name
suggests, in this type, the buyer takes the product and moves on. In the traditional system,
the regular and take away counter used to be the same and people had to wait for long
even to take a small parcel.
In the following illustration, we can see a modern take away counter, where the buyer can
easily grab a parcel and move on. Such take away counters help the buyer to the get the
product in less time.

In a few places, we have a take away counter where the customer orders the product from
one side and the delivery is made on the other side of the road. This also saves a lot of time
for the buyer.
Sales Outsourcing
Sales outsourcing is a way by which one company outsources its process or part of the
process to the other company. The company outsources its work to increase the sales
volume without link to the sales team that carries on the sales campaigns.
The company that undertakes the process will be paid on a contract basis or the as per the
mutual understanding between both the parties. The other party is accountable and
answerable regarding all sales activities while representing the brand to the client. That
party is responsible for all the operations associated with direct sales activities.
The main purpose of sales outsourcing is to reduce the cost of production. For example, in
London, the labor cost is high as compared to India. So the company would like to
outsource the process to India and get the work done in less cost as compared to the home
country.

Advantages of Sales Outsourcing

Sales outsourcing is cheaper as compared to fully loaded cost of employing sales personnel.
The advantage of sales outsourcing is increasing the revenue for the company by providing
the same process in a different way, i.e., by a third party.
The company may also select outsourcing as a means to access the best sales skills. From
the company’s point of view, if the work gets done in half of the cost as compared to the
previous method, it will obviously outsource.
Another reason of outsourcing relates to a company that wants to set up its market in a
new place. It would rather provide the contract to a local agency because they will
understand the need and perception of that locality. This helps the company to easily set
up the business and capture the market faster.

Various roles of sales force

In a company, the sales force has to cover a broad range of position. The
actual nature of the role and the position may vary with the company; still some of the
roles played by sales force are as under :
1. Deliverer
In many cases, the role of sales persons is mainly to deliver the products
to the customers. This type of role is often played in companies selling milk,
bread etc where the product is of generic nature and it is the availability of
the product that decides the selling of the same. Even in soft drinks, the
available product sells and the sales personnel have the main task of delivering
the product. In the present age of Internet, most companies are offering the
facility of placing orders by the Internet. In such companies, delivery of
product is of prime importance and the sales personnel have to undertake
them.

2. Order taker
In some cases, the sales persons may be the order takers and the delivery
of the product may be made by the dealers or through courier. In such cases,
the salesmen visit the customers, show their products, and persuade the
customer to purchase them. They book the orders and convey it to their
distribution department or their dealers. This practice is common in companies
selling consumer goods. The salesmen visit the shops and book orders and
convey them to the dealer who delivers them to the customers. This bifurcation
of delivery and order collection activity is done so that the sales person can
devote more time in understanding the customers and the market activity.
Also, the sales person might be working in a wide territory and the delivery
is done the distributor’s representative.

3. Missionary
In certain cases, the salesmen are not directed to book the orders or deliver
them. Their main task is just to build goodwill and create a favourable attitude
in the minds of the customers. They might also be directed to educate the
potential customer. In such cases, they act as missionary i.e. making market
calls with a broader mission and not merely booking orders. Medical
representative visiting doctors and informing about their products plays such
a role. They do not book orders but educate the doctors about their products
and the benefits they offer. This practice allows sales person to visit and
service customers in a large territory.

4. Technician
In certain cases where the product is technical in nature, the sales personnel
may have to act as a technical consultant and not merely focus on booking
orders. This activity is witnessed in the companies making plants and equipment
that involve high technical knowledge on the part of the seller as well as the
purchaser.
5. Demand creator
Often, the sales personnel have to stimulate the demand by product
demonstration or customer education. E.g. the demand of vacuum cleaners
was actually created by the salesmen by visiting the customers. Similarly,
the role-played by insurance agents by educating the customers helps them
in selling the insurance policies.

Tasks performed by sales force

The nature of tasks performed by the sales personals vary from company to company
depending upon the objectives laid down for them. For example
the sales representatives of IBM are responsible for not only selling the
computer but also for its installation and upgradation. Similarly the sales
representatives of AT&T are responsible for developing, selling and protecting
accounts. In addition to the difference in company objective, other factors
such as state of economy, market orientation of a company etc. also determine
the nature of tasks performed by sales force. In general the sales personal
perform the following tasks :

1. Prospecting
The sales force has to be on the look out for new customers always. The
customers have the prospect of purchasing must be identified and persuaded
to purchase the products of the company. The new customers serve as a base
of growth of sales volumes and so they need to be-identified and converted
from a prospect to a customer.
2. Communicating
The sales force has to skillfully communicate the information about the
companies’ products and services. In fact communication is one of the single
most important function which is performed. The communication is both
within the organistion as well as out side the organization. Within the
organization, the sales representatives have to take instructions from marketing and
sales managers. They convey order collected form the customers to the
distribution department so that it can make the delivery. The sales representatives
also communicate with the accounts department of the company in order to
ensure that the timely collection of payments is made. In case a complaint is received
from the customers, the sales representatives have to communicate
the same to the technical personnel in production and quality control department.
Outside the department, the sales representatives have to meet the customers,
distributors, retailers and all those who affect the selling activity directly
or indirectly. They collect orders and payment. In addition to this, one of
the important tasks of sales representatives is to communicate market
intelligence i.e. the activities of the competitors so that the senior managers
can formulate strategies to face the competition. Thus, communication is
one of the single most task performed. The successful sales representatives
have to master the art of communication.
3. Selling
This is the core function of the sales representatives because all the activities must
ultimately culminate into sales. The sales representatives have to very
skillfully master this art of approaching the customers, presenting their
product, convincing them about the benefits of the products over the competing
products, answer the guarries and objections of the customers. The sales
representatives have to learn the art of negotiations and closing the deal. The
order thus collected must be conveyed to the company. The responsibility
of selling does not end here. The sales persons have to ensure product
delivery and customer education.

4. Servicing
The task of sales force does not end after taking the order. The customers
have to be visited again in order to resolve their difficulties or complaints.
In case the product is not performing well, the sales representatives have to get the
same repaired. It is also possible that the customer will have to
be educated about using the product. The sales people find it easier to sell
their products, to the existing customers. So, once a relationship is established
between the sales person and the customer, it has to be strengthened with
the help of services.
5. Information gathering
The sales personnel have to gather the information about the customers and
the market conditions and report the same to the company. The market
information helps the company in fighting competition. The information
about the customers helps the company in identifying customer needs and
designs the products, which the customers want. This helps the company is
getting an edge over the competitors.

6. Allocating
The sales representatives have the first hand information of the market
conditions. So, their opinion is significant in distributing or allocating the
products to the customers at the times when the product is in short supply.

SALES MANAGEMENT FUNCTION

Functions:
(i) Sales research and planning

(ii) Demand creation.

(iii) Sales costs and budget.

(iv) Price fixations.

(v) Development of products.

(vi) Establishing sales territories.

(vii) Co-ordination of sales.

These functions differ from company to company according to

their size and the nature of their products.

SALES MANAGER

A sales manager is someone who is responsible for leading and guiding a team
of sales people in an organization. They set sales goals & quotas, build a sales
plan, analyze data, assign sales training and sales territories, mentor the
members of his/her sales team and are involved in the hiring and firing
process.
Roles and Responsibilities of a Sales Manager

A sales manager plays a key role in the success and failure of an organization. He is the
one who plays a pivotal role in achieving the sales targets and eventually generates
revenue for the organization.
A sales manager must be very clear about his role in the organization. He should know what
he is supposed to do at the workplace.

Let us understand the roles and responsibilities of a sales manager:

 A sales manager is responsible for meeting the sales targets of the organization

through effective planning and budgeting.
 A sales manager can’t work alone. He needs the support of his sales team where
each one contributes in his best possible way and works towards the goals and
objectives of the organization. He is the one who sets the targets for the sales
executives and other sales representatives. A sales manager must ensure the targets
are realistic and achievable.
 The duties must not be imposed on anyone, instead should be delegated as per
interests and specializations of the individuals. A sales manager must understand
who can perform a particular task in the most effective way. It is his role to extract
the best out of each employee.
 A sales manager devises strategies and techniques necessary for achieving the sales
targets. He is the one who decides the future course of action for his team members.
 It is the sales manager’s duty to map potential customers and generate leads for
the organization. He should look forward to generating new opportunities for the
organization.
 A sales manager is also responsible for brand promotion. He must make the product
popular amongst the consumers. A banner at a wrong place is of no use. Canopies
must be placed at strategic locations; hoardings should be installed at important
places for the best results.
 Motivating team members is one of the most important duties of a sales manager.
He needs to make his team work as a single unit working towards a common
objective. He must ensure team members don’t fight amongst themselves and share
cordial relationship with each other. Develop lucrative incentive schemes and
introduce monetary benefits to encourage them to deliver their level best.
Appreciate whenever they do good work.
 It is the sales manager’s duty to ensure his team is delivering desired results.
Supervision is essential. Track their performances. Make sure each one is living up to
the expectations of the organization. Ask them to submit a report of what all they
have done through out the week or month. The performers must be encouraged
while the non performers must be dealt with utmost patience and care.
 He is the one who takes major decisions for his team. He should act as a pillar of
support for them and stand by their side at the hours of crisis.
 A sales manager should set an example for his team members. He should be a source
of inspiration for his team members.
 A sales manager is responsible for not only selling but also maintaining and
improving relationships with the client. Client relationship management is also his
KRA.
 As a sales manager, one should maintain necessary data and records for future
reference.
 As a sales manager you would organise, coach and lead a team of sales
representatives to work towards agreed sales targets. If you are good at selling and
want to manage a team, this could be the career for you.

 In this job you’ll be using your management skills and enthusiasm to motivate
others. You’ll also need to be organised and good at planning. You will need sales
experience and management skills to get into this job. Your skills and experience are
likely to be more important to most employers than your qualifications.

SKILLS OF SALES MANAGER

So, here are Top 10 Skills that are a Must-Have for every Sales Manager. Note them down and find opportunities to develop each
of these skills as preparation for your Sales Manager role in the near future!

1. Analytical Ability
Sales managers receive all kinds of information -- from verifiable facts to rumors. It
is important to be able to see the relevance of these bits of information, to draw
conclusions that fit the facts, and to analyze a problem to understand root causes.
Having analyzed the available information in a given situation, they must then
judicially weigh the evidence in order to decide on the best course of action. Most
decisions involve a balance of advantages and disadvantages, and so they should be
comfortable with tradeoffs.

2. Understanding the buyer

The Sales Manager needs to have “Social Perceptiveness” - Being aware of others'
reactions and understanding why they react as they do. The most important of
today’s sales skills is simply understanding the buyer. It’s the foundation of effective
selling. But it involves more than just understanding who the buyer is. As they say,
“This isn’t just about knowing what brand of coffee the buyer drinks”. Instead, it’s
about identifying the experience that the buyer wants to have as they consider
making a purchase in your market. Your buyer has a set of expectations about that
experience and your job as a salesperson is to exceed those expectations. You can’t
exceed them if you don’t understand the experience that the buyer wants to have.

3. Active Listening & Responsiveness

Giving full attention to what other people are saying, taking time to understand the
points being made, asking questions as appropriate, and not interrupting at
inappropriate times. Though it goes without saying and that the best salespeople
take action based on what they hear from their customer - “It’s not good enough to
just listen”. You need to internalize what the buyer just said and then do something
about it. This is called Customer-driven responsiveness.

4. Concise communications
Given how busy the average buyer is today, a critical sales skill is to make sure that
you communicate succinctly. The days of the silver-tongued, overly verbose
salesperson are coming to an end. Buyers value how information is presented more
than the information itself. Today, the preferred form of presentation is
conciseness. A good rule here is to never try to communicate more than three
important points in a single conversation with a buyer.

5. Service Orientation
Sales managers be Actively looking for ways to help out their clients in whatever
manner possible. Buyers don’t want to be closed; they want to be helped. That’s
why “Always Be Helping (ABH)” is the new “always be closing”. ABH is more of a
mindset than a skill. A lot of salespeople struggle with this, but you should try to
remember it every time you interact with a buyer.

6. Planning and Organizing

With the amount of data that comes to a Sales Manager on a daily basis, be it from
the Reports from the Team, or the latest memorandum from the management, A
strong sales manager needs to keep all information on his table planned, organized,
and ready to be dished out at a moment’s notice. This eventually helps the manager
to analyse the data properly, conduct implementations in the right way, and prepare
objectives and plans in detail. They're also then able to anticipate problems and
outline how they will be overcome.

7. Business Acumen
Business acumen is defined as the critical business thinking required to achieve your
sales objectives. The business environment demands that both sales reps and
managers have strong business skills. Sales managers need to be able to understand
complex business issues and help their sales reps view their business strategically.
Sales managers need to teach their sales people how to make wiser decisions, plan
better, and effectively allocate their resources based on customer needs and
potential for growth.

8. Coaching & Mentoring

Coaching is the number one sales management activity that drives sales
performance. The goal of coaching is to help each sales rep to improve their
performance and reach their true potential. It’s about developing your “A” sales
people to become “A+” and developing your “B” salespeople to become “A”s.
If performance issues go unchecked, sales and team moral can be negatively
affected. Many sales managers shy away from confronting sales people who are not
performing. It is up to the sales manager to have planned and unplanned
checkpoints to address performance issues and develop a plan of action to correct
the problem. The sales manager must continually raise the bar on performance. A
sales manager with great coaching skills will not only see improved sales
performance, but will have better sales rep engagement, reduced turnover and
improved job satisfaction.

9. Using Technology to Boost Productivity

Many sales organizations are using technology to become more efficient and
shorten the length of the average sales cycle. Salespeople are actually busier than
ever as evidenced by a recent CSO Insights report that shows that salespeople only
spend 37% of their time actually selling. The rest of their time apparently is taken
over by creating reports, sending emails, making proposals, attending internal
meetings,and whatnot. The salesperson that can use technology, and is able to
quickly grasp various CRM softwares, and the like, is sure to become more
productive, and have a significant advantage over their peers – Because they are
 then able to spend more time selling. Some other skills that go hand-in-hand with IT
skills are: Good Budgeting, Report Writing Skills, and PPT Skills.

10. Leadership
Sales managers need to be strong leaders. The key to becoming a strong sales
leaders is for you to be able to create and share a vision with your sales team.
Strong sales leaders, have the skill and the will to help their team adopt the vision
and keep them focused on working towards achieving it. Sales leaders require the
ability to communicate, innovate, inspire and set the tone for the sales team.

Functions of a Sales Manager

The basic aim of sales maanger is to promote sales and contribute to the profits of
the concern on one hand and satisfaction to consumer on the other hand. A sales
manager is to perform the following functions:-
1.Planning the future sales: Sales planning is one of the most dominant functions of sales
management which seeks to achieve co-ordinated structure of operations of various
programs in relation to sales. To plan is to look ahead. It is a process of thinking before doing
.He is to plan for long range .A sale budgeting is the instrument of sales planning that gives
items like product wise ,sales for the year and years to come.
2. Selection and Placement of salesmen: Any successful sales organization warrants the
selection of men capable of accelerating the wheels of it. “Right men for the right points”
is the watch word for a dynamic sales manager. Scientific selection is a rigorous process or
a hurdle race designed by a sales manager which is to be won by the salesman.Selection
procedure embraces minute and meticulous stages such as – calling for interview –testing
them –conduct of medical examination- and the final interview and appointment.
3. Direction and co-ordination of sales-force: Management is essentially an art of getting
the work done. The Sales manager is responsible not only for planning organizing the sales
activities, but also for guiding and supervising his sales subordinates. He is the leader who
is to direct his sub-ordinates by issuing necessary orders,guiding and reading and
supervisingtheir activities as the part of performance.Naturally superiority complex plays
its icy hands ,misunderstanding creep in ,therefore there is need for bringing about unity
of thought ,purpose and action in the ranks and files.Coordination is opposite of conflict. It
kills conflict by timing ,balancing and integrating the variables.
4.Organizing the sales organization: Having planned the various activities ,the sales
manager,is to decide as to how and who will perform these activities.Organization is the
process of the framework of relations in the unit that is geared to attain the objective of
undertaking. It involves a critical and in-depth study of actual requirements of
organization ,division of it into viable departments ,designing the lines of authority and
responsibility and the delegation of authorities to sub-ordinates to get going.
5.Advertising the top management: Mere planning of sales activities is not the
responsibilities of a sales manager.He is accountable for the actual happenings in his
department which are to be reported to the top management .He is to advise an opening
and closing of branches. He is also to advice the higher officials of opportunities and
threats of venture; new appointment and selection ,transfers ,promotions ;on pricing and
discount policies and show their bearings on profitability and profits of the unit.
6.Training the sales-force: Motivation and morale are the primary purposes of
training.Training improves employee productivity ,standardizes working procedure for the
sales-force ,reduces personnel turn-over,provides rescue force, reduces personnel
turnover,provides rescue force of trained and experienced men and women and instills the
confidence of performance par excellence .Sales manager is to plan for training new
employee and continuing it in case of experienced hands through refresher courses .A
good plan of training embraces managerial supervision and service personnel in the sales
organizations.
7.Compensating the sales- force: Sound employer and employee relations are the base for
the total success of sales organization. There will be sweet relations between men and
boss when the employer treats employees well,pays well so that the employee put their
heart and soul together to better the performance.The employee efforts are to be
rewarded amply. Employee motivation and morale depend on compensation policy in
consultation with personnel experts that is viable and workable.A good plan is one that
pays well in time treats impartially ,economical,productive and elastic.
8. Controlling the sales force: When the sales-force is provided with quality products
,equipments ,adequately compensated one can expect the best results.There is always gap
between promises and performance due to the factor which are both controllable and
uncontrollable .If everything goes well ,there is no need for control . Control means having
continuous watch on the working of any program and applying brakes or speed to actions
wherever necessary.
Types of Sales Manager
1. Administrative sales manager:
Administrative sales managers are found normally in highly integrated sales organisations
selling multiple lines of products in national and international markets. He is known by
alternative titles such as ‘vice president’, ‘in-charge of sales’, ‘director of marketing’,
‘general sales manager’ and ‘marketing manager’.
He is primarily concerned with coordination and integration of all the company activities
relevant to marketing. He is not an authority on design, engineering, manufacturing and
finance; contrary to these, he is an authority on sales and profits. It does not mean,
however, that he can be aloof from other departments and their functions.
In addition to the crucial task of coordinating marketing with other company activities, he is
to coordinate the activities of his own sales organisation within and with outside advertising
and sales counsel. He is responsible for sales planning that involves integration of sales
personnel, merchandising, advertising and promotion, financing, distribution network.
Planning also includes the determination of the functions of sales organisation, delegation
of responsibilities, personnel selection, and performance evaluation. He frames the policies
and strategies on the prices, distribution, relations with dealers, service, advertising and
sales-promotion.
2. Field sales manager:
The field sales manager or operating sales manager is a line sales executive reporting
directly to the administrative sales manager. Operative sales manager works under the
direction, guidance and supervision of the general sales manager.
He is mainly responsible for the effective implementation of sales plans and policies
developed by the administrative sales manager.
Thus, a field sales manager provides the administrative sales manager with the latest
information relating to the view points of dealers and consumers on company, company
products, policies, and practices with facts on market trends, competitors, distributors and
individual salesman.

He is known for personal direction and control of sales personnel and hence, spends major
portion of his time in the field supervision of the work of sales-force. Manpower
maintenance of the sales organisation is the basic task of this executive. He is to recruit,
select, train, supervise, stimulate, evaluate, equip, control and route the sales-force.
Field sales manager moves with salesmen on visits of importance. He assigns sales
territories and controls activities of salesmen through setting the standards of sales
achievements, analysing the sales reports, holding the sales meeting, supervising the
advertising and sales-promotion cooperation with dealers, directing sales contests,
supervising warehousing inventories, dealer relations and coordinating territorial and home
office activities.
Thus, a field sales manager provides the administrative sales manager with the latest
information relating to the view points of dealers and consumers on company, company
products, policies, and practices with facts on market trends, competitors, distributors and
individual salesman.
3. Administrative-cum-field sales manager:
In case of smaller organisations, we come across such sales manager who combines the
functions of administrative and executive sales officer. Generally speaking, administration
and field operations cannot go together. However, size and economy points force many
units to combine the distinct roles of administration and field operation.
As an administrator, he plans, organizes, directs and coordinates. As a field operator, he
guides and supervises and controls the activities within the sales organisation. Thus, thinking
and doing are done by the same person that goes against the very idea of specialisation for
an administrator is a ‘thinker’ and a line officer as ‘doer’.
4. Assistant sales manager:
Generally, the administrative sales manager is assisted by Assistant sales manager in the
administrative functions of planning, analysis, direction and coordination. He coordinates
the work of sales staff that is specialized in advertising, sales-promotion, research,
merchandising and dealer relations.
He may also handle sales office personnel, records and routine. He acts as the link between
the head-quarters and the field-sales-manager at distance. It is not a surprise if he
discharges the functions of field sales manager. Thus, he acts as both line and staff officer in
the sales organisation.
5. Product-line sales manager:
A company that markets variety of products has such product-line sales manager
responsible for one or group of products in the product- line. He is also known as product or
brand manager.
He is responsible not only for sales but also for production, research, product- development,
planning, advertising and profit for the product or the group of products in question. He is
to report to the Marketing manager who coordinates the work of several product sales
managers.
6. Marketing staff manager:
As the title suggests, the Marketing staff manager is not a line-officer. He is one of the staff
specialists who are delegated some of the responsibilities of administrative sales manager.
These are the specialists in the areas of marketing research, sales-promotion,
merchandising, advertising, sales planning, sales personnel, distributor/dealer relations,
sales costs, budget sales finances, traffic, sales office administration and service and the like.
These staff managers being non-line officers have no field tasks.
Field sales manager moves with salesmen on visits of importance. He assigns sales
territories and controls activities of salesmen through setting the standards of sales
achievements, analysing the sales reports, holding the sales meeting, supervising the
advertising and sales-promotion cooperation with dealers, directing sales contests,
supervising warehousing inventories, dealer relations and coordinating territorial and home
office activities.

Salesmanship
The term salesmanship has been defined in various ways. Some of the definitions of salesmanship are :

a. Salesmanship is the art of persuading persons to buy goods or services, which will give them lasting
satisfaction.

b. Salesmanship is the art of helping prospects and customers achieve their goals in life.

c. Selling is a buying process wherein the salesman ascertains the customers’ needs and indicates convincingly
how the needs can be satisfied through the purchase of goods and services.

d. Salesmanship is the art of solving the customers’ problems through the benefits offered by the products or
services being sold by the salesman.

Personal Selling
Meaning of Personal Selling:
Personal-selling or salesmanship are synonymous terms; with the only difference that the
former term is of recent origin, while the latter term has been traditionally in usage, in the
commercial world.

Since a salesman, in persuading a prospect to buy a certain product, follows a personal

approach; salesmanship, in the present-day-times in often popularly called as personal
selling.
Personal selling (or salesmanship) is the most traditional method, devised by manufactures,
for promotion of the sales of their products. Prior to the development of the advertising
technique, personal selling used to be the only method used by manufacturers for promotion
of sales. It is, in fact, the forerunner of advertising and other sales promotion devices.

Concept of Personal Selling:

Personal selling might be defined as follows:
Personal selling is a face-to-face contact between the salesman and the prospect; through
which the salesman persuades the prospect, to appreciate the need for the product canvassed
by him – with the expectation of a sales-transaction, being eventually materialized.

Following are given some popular definitions of salesmanship:

(1) “Salesmanship is the art of presenting an offering so that the prospect appreciates the
need for it and a mutually satisfactory sale follows.”

—Philips and Duncan

(2) “It is the part of a salesman’s’ business to create demand by demonstrating that the need
does exist, although before his visit there was no consciousness of that need.”

—W. Major Scott

Features of Personal Selling:

Some important features of personal selling are given below:
(i) Personal selling involves a face-to-face contact between the salesman and the prospect.

(ii) It is an art of persuading the prospect, to appreciate the need for the product canvassed
by the salesman, in a democratic, cordial and social manner. This, then, requires outstanding
qualities in a salesman; specially the proficiency in selling skills and techniques.

(iii) In personal selling, the emphasis is on the development of permanent and lasting
relations with prospects If a prospect is won; a sales transaction might materialize with him
subsequently in future. Obtaining an immediate sale may be the natural ambition of a
salesman; it should never be his target.
(iv) A salesman sells product, by first selling his own idea or viewpoint to the prospect.
Personal selling, therefore, is the art of convincing the prospect and influencing his mind, in
a favourbale way.

(v) Personal selling requires a flexible approach; on the part of the salesman i.e. the salesman
should modify his approach in persuading the prospect, in view of the psychology, needs and
resources of the prospect.

(vi) The ultimate goal of personal selling is mutual satisfaction of the interests of both – the
salesman and the prospect.

Need for Personal Selling:

Despite the dominance of advertising, in the present day commercial world, personal selling
still occupies its unique place; co-existing with advertising.

Some of the reasons for the need of personal selling are as follows:
(i) Requirements of Product Demonstration:
There are certain products which require a demonstration, for purposes of explaining their
use, manner of their handling and the precautions required in using them. This requirement
for product demonstration necessitates personal selling; as no advertising media cannot
undertake this work.

A good instance of products requiring demonstration is a washing machine, used in

households. A salesman is required for explaining the operation of a washing machine to
housewives.

(ii) Illiterate Prospects:

Where a manufacturer is interested in selling some of his products to prospects, who, by and
large, are literate; personal selling is necessary. Illiterate prospects could not be expected to
appreciate the need and utility for a product-just through advertising.

Salesmen are needed to approach such illiterate prospects, who would explain the usefulness
of the products to them, in a convincing style.
(iii) Traditional Necessity of Personal Selling:
There are cases of products, where advertising is not usually done; partly due to the technical
or specialized nature of products and partly due to traditions. In cases of such products,
therefore, personal selling is necessitated to meet the requirements of tradition prevalent in
particular trades.

Examples of such products as require personal selling are:

(1) Medicines, where salesmen (called medical representatives) still go from doctor to doctor
or from hospital to hospital, canvassing new medicines manufactured by their
pharmaceutical companies.
(2) Industrial goods (like new machines or spare parts), where salesmen visit various
industrial houses and convince the industrialists, of the utility of the new industrial goods
manufactured by their companies.

(iv) Emergence of an Entirely New Type of Product:

In case of innovations, i.e. entirely new types of products, manufactured by a producer,
salesmen are appointed by the producer to publicize such new products to prepare a base for
demand creation. Then, through subsequent advertising, by the manufacturer, demand base
is further expanded.

(v) Need to Develop Relations with Customers:

Personal selling helps a manufacturer to develop good relations with customers/prospects.
Through advertising alone, development of relations with customers is not possible. This
factor again necessitates personal selling and accounts for its survival, in the present-day
times.

(vi) Source of Marketing Research Data:

Salesmen, because of their interactions with customers, prospects, dealers etc., are able to
provide valuable data to the manufacturer about market trends, consumer preferences,
degree of market competition etc.; which are utilized for marketing research purposes.

Some of the manufacturers appoint salesmen precisely for this purpose, besides expecting
them to create more sales. This factor, therefore, becomes a modern factor necessitating
salesmanship; and accounting for its survival under the modern marketing conditions.

(vii) To Remove Misconceptions Caused by Competitive Advertising:

In the modern marketing world, competitive advertising has become so aggressive that one
competitor would not hesitate in defaming the products of others for the sake of building a
reputation for his own product.

A manufacturer, through salesmanship can plan to remove such misconceptions from the
minds of prospects (caused by competitive advertising), by making them available true facts
and merits of his products through his own salesmen.

PROCESS OF PERSONAL SELLING

1.Prospecting

2.Pre-approaching

3. Approaching and attention

4.Demonstration

5. Handling Objection

6. Closing the sales

7.Follow-up

1. Prospecting: A prospect means a probable buyer. Prospecting means searching for persons , to whom
sales can be affected.Prospect is a person ,who has wants to be satisfied and has ability and
willingness to buy . Therefore this is a first step in identifying and locating of prospects,either from
company’s past records or customers or advertisements. A list of Prospects is prepared and this helps
in planning the whole selling efforts so as to avoid waste calls.
2. Pre-Approaching: It involves developing an understanding about the prospective buyers or
qualified buyers as to their needs, problems, buying motives, preferences, personal
character etc. This pre-approach is effective for making a ground for approach.
3. Approaching & attention: This is a sales interview.This is a seed,with which sales tree grows
up.This stage is important and vital. The first impression of the salesman may bring a long-
benefit-repeated-sales.This step is based on AIDAS formula.The salesman adopts all other
selling points relating to the products.
4. Demonstration: The need-satisfying characteristics of the product are to be presented or
demonstrated.The prospect may be made to understand the benefits of the product.He
may also be informed of the special features,merits,benefits etc. of the products.The
salesman can also show the survey reports,relevant data,free gifts,referring to specific
problems in other products,telling examples etc. The prospects must be convinced and an
interest in processing the product must be aroused .
5. Handling Objectives: When one shows interest in buying the products ,generally,every
salesman faces objections from the prospective buyers. There is no wonder, when a buyer
purchases products at a price,buyers ask questions and explanations.The salesman must
face the buyer by giving satisfactory answers,sincerely and without any hurry.
6. Closing the sales: It aims at taking an order for the products from the prospective buyer.The salesman
also asks questions as to the product –choice of colour, periodicity of delivery, quantity, terms etc. At the
climax stage, the prospects place orders with the salesman.
7. Follow-up: Satisfaction of the buyer is important as a source of publicity.This stage is
important,to have information from buyers regarding the product-use-problems,if any.The
salesman keeps contact to know the problems,if any. After sale service should be followed
strictly i.e., punctuality,personal attention etc.

Advantages of Personal Selling

 It is a two-way communication. So the selling agent can get instant feedback from the
prospective buyer. If it is not according to plan he can even adjust his approach accordingly.
 Since it is an interactive form of selling, it helps build trust with the customer. When you
are selling high-value products like cars, it is important that the customer trusts not only the
product but the seller also. This is possible in personal selling.
 It also is a more persuasive form of marketing. Since the customer is face to face with the
salesperson it is not easy to dismiss them. The customer at least makes an effort to listen.
 Finally, direct selling helps reach the audience that we cannot reach in any other form.
There are sometimes customers that cannot be reached by any other method.

Disadvantages of Personal Selling

 It is a relatively expensive method of selling. High capital costs are required.

 Also, it is an extremely labour intensive method. A large sales force is required to carry
out personal selling successfully.
 The training of the salesperson is also a very time consuming and costly.
 And the method can only reach a limited number of people. Unlike TV or Radio ads it
does not cover s huge demographic.

ROLE/IMPORTANCE OF PERSONAL SELLING

Personal selling is an important tool in the marketing of goods and services. Its
importance to the businessmen, customers and society is discussed below.

Importance to Businessmen:
 It is helpful to businessmen as follows:
1. Effective Promotional Tool:Personal selling is an effective promotional tool in
the hands of businessman for increasing sales. Salesman provides information about
the various features and advantages of his product as well as about market
developments.
2. Flexible Tool: Personal selling is the most flexible tool of promotion. Sales
presentation is adjusted according to the requirements of the customer.
3. Minimises Wastage of Efforts: Personal selling involves minimum wastage of
efforts as compared to other tools of promotion.
4. Customer Attention:The level of customer attention and interest can easily be
assessed under personal selling. Thereafter, the presentation can be modified
appropriately.
5. Lasting Relationship:Personal selling aims at developing good and long lasting
relationship between salesperson and the customer to increase sales in line with
WIN-WIN philosophy.
6. Personal Rapport: Competitive strength of a business organisation increases
with the development of personal rapport between its salespersons and prospective
customers.
7. Role in Introduction Stage: By describing the merits of a product and
persuading the customer to purchase it, salesperson helps in introducing a new
product in the market.
8. Link with Customers:By playing persuasive, servile and informative role,
salesperson help in linking business firm to its customers.
Importance to Customers:
It is important to customers as follow:
1. Helps in Identifying Needs: It helps in identifying the needs & wants of the
customers so that they can be satisfied by getting best products.
 2. Latest Market Information: Under personal selling, customers are provided
with information regarding availability or shortage of product, introduction of new
product etc.
3. Expert Advice:Expert advice and guidance can be provided to the customers
while purchasing various goods and services.
4. Induces Customers:Personal selling induces customers to buy new product in
order to satisfy their needs in a better way.
Importance to Society:
It is also important to society as follow:
1. Converts Latest Demand:Personal selling helps in converting latest demand
into effective demand. This results in more production, and hence leads to increase in
GDP.
2. Employment Opportunities: It provides opportunity to unemployed people to
work as salespersons for earning income.
3. Career Opportunities:Personal selling ensures attractive career, job
satisfaction, respect, variety, security etc.
4. Mobility of Sales People:Travel and tourism in the country get promoted by
the mobility of the people from one place to another.
5. Product Standardisation:Personal selling ensures uniformity in consumption
by selling standardized products.
Sales Organization
Introduction and Meaning:

Whenever two or more persons join together to do activities for achieving some common objectives ,a necessity
to distribute the work among them is felt and coordination among different activities is to be made.The
organization originates from this very necessity. Organization is the process of identifying and grouping the work
to be performed, defining and delegating responsibility and establishing relationship for the purpose of enabling
people to work together most efficiently in attaining objectives.

Sales Organization is a structured framework, specifying the formal authority and responsibility among persons
working in the organization. It consists of group of individuals working in the organization. It consists of group of
individuals working to achieve selling objectives to increase sales, maximizing profits ,expanding market share
etc.it establishes coordination among various selling activities necessary for the achievement of selling
objectives. Sales organization is not a separate unit.It is affected by other functional areas such as
production,finance,personnel etc. Sales organization organizes group of persons in the form of a suitable
structure ,depending upon the requirements of the enterprise. Various forms of sales organization structure can
be line organization,line and staff organization , functional sales organization, committee form of sales
organization.

Sales organisation consists of human beings or persons working together for the effective
marketing of products manufactured by the firm or the products purchased for resale. Sales
organisation co-ordinates the efforts of members of a group to bring about a desirable result.
It provides an efficient, economic and flexible administrative set up to ensure timely
movement of products from the warehouse to the ultimate consumer. Thus it provides
satisfactory job to buyers and sellers.
A sales organisation has a number of departments. It has a planned and well co-ordinated
structure. It performs the functions of planning, organizing and controlling marketing and
distribution of products. Sales organisation is a foundation for effective sales planning and
sales policies. Systematic execution of plans and policies and programmes of a sales
organisation control all the sales activities. As such it ensures maximum efficiency and
profitability without losing consumer service and satisfaction.

According to Boiling, “A good sales organisation is one wherein the functions or

departments have each been carefully planned and co-ordinated towards the objective of
putting the product in the hands of the consumers—the whole effort being efficiently
supervised and managed, so that each function is carried out in the desired manner.”

Definition:

According to H.R. Toosdal, “A sales organization consists of human beings working together for the marketing
of products manufactured by the firm or marketing of commodities which have been purchased for resale.”

According to Still and Cundiff, “ A sales organization is a group of individual striving jointly to reach certain goals
and bearing formal as well as informal relations to each other.”

Characteristics of Sales Organization

Sales organization has the following characteristics:

1. Sales Organization is a part of total enterprise.

2. It works for the attainment of common selling objectives like maximizing sales volume
,maximizing profits , increasing market shares etc.
3. It consists of group of people engagement in selling activities like distribution, sales
promotion,personnel-selling ,advertising etc.
4. It defined the duties ,responsibilities and right of people engaged in selling activites.
5. It establishes formal and informal relationships among persons engaged in selling activities.
6. The success of sales organization depends on the unified and coordinated efforts of sales
personnel.
7. The sales organization works under the direct control of General sales manager.

Types of Sales Organization

An organization is designed in a manner where we can identify the work
or activity performed by an individual or group. The roles and
responsibilities are defined, which helps in building relationships to
enable people to work effectively and efficiently. This helps in achieving
the goals of the organization. The following are the four types of sales
organizations −

Functional Type
Functional type of organization is divided and classified on the basis of
the functions performed. The following illustration shows a functional
type organization.
This depicts the functional type organization. We will now discuss the
advantages and disadvantages of this type.
Advantages of functional type
The following are the advantages of a functional type of organization −
 Specialization − In the figure, we can see the division has been made according to the functions. By this,
we can expect each function is specialized in its activity.
 Flexibility − The number of departments can be added or removed as per the requirements.
 Decision making − Decisions can be made quickly as the person would be an expert in his department and
will be aware of the impact of his decision.
 Co-ordination − The co-ordination between functions can be done easily

Disadvantages of functional type

Let us now understand the disadvantages associated with functional type
of organization −
 Due Attention − Each department is only specialized in their own activity; hence there is no attention
focused on the product.
 Delay − There is delay in making decisions because of co-ordination between all the departments.
 Co-ordination − From the figure, we can see that all departments report to the General Manager.
Therefore, .in peak times, it may become difficult for the General Manager to maintain co-ordination
between the departments.
 Conflicts − There is always conflict between departments due to being specialized only in one core area
and lack of cross training.

In general, functional type of organization is suitable where the

organization structure is small having limited products.

Product Type
This type of division is made according to the products. The organization
divides the departments based on the products.
The following illustration shows the layout of the product type.
Advantages of Product Type
 Due Attention − Due to the division according to the product, each product gets required attention.
 Specialization − The salesperson is specialized in specific products; hence he/she has an advantage in
handling the department.
 Responsibility − The responsibility can be easily assigned to a salesperson because all the salespersons
are specialized in their product/ department and are well acquainted with the product, which helps them to
handle customers smoothly.

Disadvantages of Product Type

 Co-ordination − There would be problem of co-ordination between two product departments.
 Selling Cost − The selling cost of product may increase due to the division according to the products.
 Operational Cost − Operational cost may also increase due to each product being treated differently.
 Freedom − There is no cap on the freedom enjoyed by employees because the salesperson is specialized
only on his/her product/department and will not be able to handle other product/department.

Suitability of Product Type

Product type is suitable in the following cases −
 Where the organization has many products and it can divide the departments according to the products.
 For organizations selling highly priced products.
 When the products of an organization are more technical oriented, the organization can divide the
departments according to the products as the salesperson will be efficient and effective to discuss the
product with the customer in an effective way.

Consumer Specialization Type

According to consumer specialization, the departments are divided on the
basis of the costumers to whom the products are offered. Most of the
time, market appearance plays an important role in knowing the
consumer needs and to divide the departments accordingly.
The following illustration shows the layout of the consumer specialization
type.
Advantages of Consumer Specialization Type
 Consumer − Here the division is according to consumers, so each consumer gets due attention.
 Consumer satisfaction − Consumer satisfaction is the first priority; as maximum services are provided to
the consumer.
 Planning and policies − The sales planning is done in a proper way and policies are designed keeping
each category in focus to achieve the goal.
 Brand − The organization is able to fulfil consumer needs and wants and create its own brand to gain
market share.

Disadvantages of the Consumer Specialization Type

 Expenses − The expenses for the company to build and plan according to consumer and develop the
market are huge.
 Sales activities − It becomes difficult for the sales manager to co-ordinate the sales activities of
salesperson.
 Investments − In this case of specialization, the investments are high and sometimes repeated, which in
turn, is loss to the company.

Suitability of the Consumer Specialization Type

Consumer type is suitable in the following cases −

 When there is a large number of consumers who are looking out for special services.

 The costumer is ready to pay for the services offered. Here, the target is mostly premier customers.

Area Type
In this type of organization, departments are divided accord ing to the
attributes of areas. They can also be divided geographically. The
following illustration shows the layout of the area type organization.
Advantages of Area Type
 Products − Customers can be served with the latest products and customized products.
 Transport cost − Transport cost can be reduced because the division has been made according to areas.
 Customer service − Company can provide better customer services as the division is made according to
area. Thus, the company can understand the customer psychology and perception better.
 Sales performance − The sales performance can be compared according to zones and steps can be taken
to improve.

Disadvantages of Area Type

 Costly − It is costly as compared to other types and increases expenses of the company.
 Markets − It becomes difficult for co-ordination for the General Manager for different markets.
 Conflicts − There may be conflicts regarding resource allocation between zones.

Suitability of Area Type

The area type of organization is suitable in the following cases −

 When the area or the territory for market is very large.

 Where the market is different based on zone.

 Where the product is differentiated depending on zone.

 Where the sales volumes are high and generate more revenues.

Factors Affecting the size/structure of Sales Organization

A number of factors determines how sales organizations are structured; these include the customers, marketing
channels, company size, products, practices of competitors and the personality and abilities of sales personnel.

Here are 6 factors influencing structure of sales organization

1) Customers

Customers naturally influence the structure of sales organization. The customers are the core reason why
production is ongoing and why the sales department is being set up. Therefore an organization ought to
understand their customer base and experiences before they settle on any particular design for their sales
department. Doing this will significantly influence how well the set team will help the organization meet
customers’ needs and expectations.
2) Marketing channels

Marketing channels at the time of setting a sales team also determine how the department will be structured. The
marketing channels refer to the methods used to avail products and services to consumers. This just like with the
customers is very important. The organization, therefore, ought to pay attention to their channels of distribution
as well as how the team will work with these channels to deliver the products and services at the right places and
the right time for the consumer to buy.

3) Organizational size

Smaller companies do not usually require a vast sales organization because most of the tasks are centralized.
Larger companies, on the other hand, need a more powerful sales framework for their sales team. A company
with a larger customer base expects more sales personnel to handle the needs of all their customers. Highly
specialized business operations in the same regard also require a more formal structure like the line and staff
sales organization.

4) Product

Product and product line is another determining factor that will influence the new design a sales organization will
take.  For example, a business that deals with a more diversified product or a wide range of products requires a
more intense sale force compared to one that deals in only one particular product.

Ideally, the nature of products dealt in significantly influence the structure of the sales organization. The design,
as well as selection of the sales team, will vary based on the level of awareness of the products, complexity of
the products, and the customization needs. Depending on these elements, an organization ought to determine
what the team will constitute, the level of expertise required and what structure will ensure that product
awareness, market penetration and customization needs are handled efficiently.

5) Practices of competitors

Another factor influencing sales organization structure is comprised of the practices of competitors. Most
organizations form their structures based on the market competition. And therefore in this regard,
an individual organization has to map its competitors’ practices like marketing techniques, channels, etc. to
create its structure that will help beat competition.

6) Abilities of the sales personnel

These capabilities include skills, experience, and knowledge of the sale personnel. For example, a company with
a complex nature of products that require thorough customer education as well as extensive customization need
a sale force design of well educated, highly dedicated and specialized members.  This will be so from the top
management to the lowermost position.

Conclusion

An efficient organizational planner ought to understand that structures are often derived from the needs of the
company. Therefore as you prepare to create a sales organization, understand the needs of the business, the
various designs including their benefits and limitations and then choose the most appropriate one for the
company in question.

Need for a Sales Organisation:

“A sales organisation is like a power station sending out energy, which is devoted to the
advertising and selling of particular lines; and there is a tremendous waste of energy between
the power station and the points where it reaches the consumers. Therefore, there arises the
necessity of organizing the sales department.”

So long as the firm is a small one, there is no need for sales organisation, as the proprietor
himself can sell all the output or in certain cases, he is assisted by one or two salesmen,
under his direct control. But when the firm or the business itself expands, because of
extension of markets, production in large-scale, competitive market etc., the need for a sales
organisation is felt.
The need arises because of the following factors:
1. Production in anticipation of demand, which must be sold.

2. To create demand for the products through efficient salesmen.

3. Execution of orders without delay.

4. Satisfactory action against complaints from customers.

5. Collection of credit sales.

6. Keeping enough stock by looking at the future demand.

7. Maximum contribution to profit.

8. To enforce proper supervision of sales-force.

9. To divide and fix authority among the subordinates.

10. To locate responsibility.

Importance of Sales Organisation:

A sales organisation is the mechanism through which a sales manager’s philosophy is
translated into action. The sales organisation provides the vehicle for making decisions on
planning, organisation, selection and training of salesmen, their motivation, directing and
controlling them. It also provides vehicle through which these decisions are implemented.

“A business organisation is like a home. It has characteristic atmosphere. In some homes the
head of the household and all its members are vitally concerned about religion, politics or
some other interest—the occupations of the individual members being only of minor interest.
In other homes where the personality of the head of the household dominates the activities
and spirit of the members the opposite occurs. Like any group a business organisation has its
own culture, traditions, and to some extent its own language and climate.” —Hepner

“A sale organisation is like a power-station sending out energy which is devoted to the
advertising and selling of particular lines and there is a tremendous waste of energy between
the power station and the points where it reaches the consumers. Therefore, there arises the
necessity of organizing the sales department.” —Boiling

“Sales are the life blood of business,” Sales organisation is part and parcel of a business firm.
All the departments are carefully plaited in a good sales organisation.

The importance of the sales organisation, in brief, is:

1. Blood circulation of a human body keeps a man alive and in sound health. Similarly the
sales strengthen the organisation. The more is the sales, the more is the profit.

2. Increasing sales means progress of the firm. If the sales fall down, it is fatal, because sales
are the life blood of the business, as the blood is to a human body.

3. Consumers are the kings. Manufacturers produce goods for consumers. They must be
satisfied in the market which is full of competitors with products for similar use. So suitable
products are necessary, and for this an organisation is necessary.

4. To move the products from the factory to the consumers, the sales organisation is
necessary— demand creation.

5. To handle the orders promptly i.e., from the stages of enquiry to order at full satisfaction
to consumers.

6. Collection of dues is also important. Several drops make an ocean; at the same time
milking cows should not be neglected.

7. To keep good public relations by redressing the complaints if any, and to create a good
image of the firm.

Functions of a Sales Organisation:

Modem sales organisation is not only profit-oriented but also customer-oriented.

The following are the important functions of a sales organisation:

1. Analysis of markets thoroughly, including product and market research.

2. Adoption of a selfishly sound but defensible sales policy.

3. Accurate market or sales forecasting and planning the sales campaign, based on relevant
data.

4. Deciding about prices and terms of sales and pricing policies.

5. Packaging for the consumer wants a container which will satisfy his desire for attractive

appearance, keeping qualities, utility, and correct price and many other factors.

6. Branding the product.

7. Deciding the channels of distribution.

8. Selection, training and control of salesmen and fixing their remuneration.

9. Allocation of Territory and quota-setting.

10. Sales programmers and sales promotion activities.

11. Arranging for advertising and publicity.

12. Order preparation and office recording.

13. Preparation of customer’s record cards.

14. Scrutiny and recording of reports.

15. Study of statistical records and returns.

16. Maintenance of salesmen’s records.

Structure of the Sales Organisation:

The following factors are to be taken into consideration while designing the
structure of a sales organisation:
1. Nature of the market

2. Sales policies of the enterprise

3. Nature of the product

4. Number of products

5. Availability of financial resources

6. Level of distribution system

7. Size of the company

8. Price of the product

9. Ability of the professionals

10. Position of competitors’ Products.

Sales Management:
Sales management is concerned with mainly with the management of selling function. The
sales function in a business is a basic function. The sales management represents one of the
most important functional areas of business management, and all the principles of general
management such as planning, organizing, directing, motivating, and controlling are applied
to sales management too for securing better business performance, viz., reasonable profits
through sales. Modem business is consumer centred.

The American Marketing Association has defined sales management as “the planning,
direction, and control of the personal selling activities of a business unit, including
recruiting, selecting, training, equipping, assigning, rating, supervising, paying and
motivating as these tasks apply to the personal sales force.”

Functions of Sales Management:

The general functions of sales management or marketing management are as
follows:
1. Sales planning and policies

2. Pricing policies and price fixing

3. Advertising and promotions

4. Control of sales force

5. Marketing research

6. Planning and control of sales

7. Management of distribution channels

8. Branding, packing and labelling

9. After sale service

10. Integration and co-ordination of all functions.

The Field of Sales Management:

The field of sales management includes the following tasks:
1. Setting sales force objectives

2. Human resource planning

3. Recruitment and selection of salesmen

4. Training of sales personnel

5. Motivation

6. Compensation
7. Controlling the sales force

8. Organizing and supporting the work of salesman

9. Designing sales force objectives

10. Supervising and evaluating the sales force.

SMBO APPROACH
It is another approach to formulate and accomplish sales-objectives is the
sales management by objectives (SMBO) technique. It is formulated
combined by sales manager and sales-force (representatives). It aims to
focus on (i) results, within a specified set of objectives and (ii)
participative style of management.

Process of SMBO
The operationalization of SMBO is a process, comprising of the
following steps:
(i) Setting goals jointly with the salesman: In this process the goals
for sales-man and sales managers are settled simultaneously in the
organisation so that they can built a close coordination between them and
lastly they achieve the main objective of the organisation.
(ii) Planning strategy to reach the objectives: His the participative
style of sales. Management proves to be a boon to the top-management, in
the sense of the close familiarity
of the salesman, with their markets. The outcome of the joint exercise would
be the development of a strategy that directs the salesman to his objectives,
following a plan, in the
correct sequence, with the correct timing, and must be efficient, in the use
of resources of time and money.

Importance of SMBO

The importance of SMBO for a business firm is as follows:

(a) Directing the salesman towards the broader sales and marketing
objectives of the Company;
(b) Providing abetter approach, from the view-point of the salesman; and
(c) Motivating the salesman

ORGANISATION OF SELLING UNIT

The main objective of any business firm is to sell effectively its goods and
services to the consumer at reasonable prices. So long as the business
undertaking operates on a small-scale; the proprietor can handle himself, or
with the help of a few salesmen, under his directcontrol
and supervision. But, as the business grows and expands, the size of the
target market, to be covered to sell large quantities of goods and services
becomes too large to be controlled by the owner of the business firm,
personally. Therefore, these activities arises the need of a
sales-organisation.
Generally, an organisation is a structured-process in which individuals
interact with each other for achieving stated-objectives. It is a social and
dynamic system. It emphasises human-values. It is the job of management,
to integrate and co-ordinate all its constituents.

Need and Importance

The sales organisation is required for the following purposes:
(i) To enable the top-management, to devote to more time in policy making
for the growth and expansion of business.
(ii) To divide and fix authority among the sub-ordinates so that they may
shirk work.
(iii) To avoid repetition of duties and functions so that there may not be any
confusion among them.
(iv) To locate responsibility of each and every employee so that they can
complete the whole work in stipulated time; if not then the particular person
must be responsible.
(v) To establish the sales-routine in the business unit.
(vi) To stimulate sales-effort.
(vii) To enforce proper supervision of sales-force.

(viii) To integrate the individual in the organisation.

Business organisations consist of an input, a processing-
unit, an output and a feedback-loop; with its own environment Organisation
as an open-ended social and dynamic system. Feedback-loop, provides
control mechanism. Input is drawn from the environment. It gives output to
satisfy the needs of environment, which the process itself transfers,
input to output through its operators. In this approach, the main emphasis
is on human-values. Workers are not simply cogs in the machinery they are
social beings first. They are the key players of the roduction-system; and the
management has to recognise this fact, that
each person is unique. This makes an organisation, in the present-day
context, quite complex.

Functions of Sale Organisation

A sales organisation performs the following functions:
(i) Analysis of markets thoroughly, including products and market research.
(ii) Adoption of sound and defensible sales-policy.
(iii) Accurate market or sales forecasting and planning the sales campaign,
based on relevant data or information supplied by the marketing research
staff.
(iv) Deciding about prices of the goods and services; terms of sales and
pricing policies to be implemented in the potential and existing markets.
(v) Labelling, Packaging and packing, for the consumer, who wants a
container, which will satisfy his desire for attractive appearance; keeping
qualities, utility, quantity, and correct
price and many other factors in view.
(vi) Branding or naming the product(s) and/or services to differentiate them
from the competitors and to recognise easily by the customer.
(vii) Deciding the channels of distribution for easy accessibility and timely
delivery of the products and services.
(viii) Selection, training and control of salesmen, and fixing their
remuneration to run the business operations efficiently and effectively.
(ix) Allocation of territory, and quota setting for effective Selling and to fix
the responsibility to the concern person.
(x) Sales-programmes and sales-promotion-activities prepared so that every
sales activity may be completed in a planned manner
(xi) Arranging for advertising and publicity to inform the customer about the
new products and services and their multiple uses.
(xii) Order-preparation and office-recording to know the profitability of the
business and to evaluate the performance of the employees.
(xiii) Preparation of customer s record-card to the customer loyalty about the
products.
(xiv) Scrutiny and recording of reports to compare the other competitors and
to compare with the past period.
(xv) Study of statistical-records and reports for comparative analyses in
terms of sales, etc.
(xvi) Maintenance of salesman’s records to know their efficiency
and to develop them.

Structure of Sales Organisation

The structure of sales organisation differs from company to company. There

may be a very small and simple one with only a few salesmen. At the other
extreme, there may be quite complex, with many sub-organisations, based
upon divisions, according to territory, product
and marketing-functions. The structure of the sales-organisation, usually
depends upon the following factors:
(i) Nature and size of the firm.
(ii) Methods of distribution, adopted by the firm.
(iii) Selling-policies of the firm.
(iv) Financial conditions of the firm.
(v) Personality of the sales manager.
The other dimension of the sales-organisation-structure, is related
(i) What shall be the status of the sales manager?
(ii) What functions shall his department perform?
(iii) What shall be the strength of the department? etc.
These are many issues, which, besides being based on the factors, listed in
the procedure shall depend upon the state of the acceptance of the modem
marketing concept, within the organisation, and the extent to which, it is
found to permeate within it. We have some firms in India, where the sales
manager is the head of total marketing and salesoperations
of the company; others where the head of the sales-operations of the
company, is a functional director of the company’s board of directors, and
responsible for total sales-operations of the company.
Further, to carry out the functions of the sales-organisation successfully,
the sales department is divided into sub-departments. Each sub-department
is put under an officer, who is responsible to the salesmanager, who is the
head or chief executive officer (CEO) of the company.
For example, in the case of a big business firm, these sub-departments
could be (i) market-research, (ii) advertising, (iii) sales-promotion, (iv)
recruitment and training, (v) credit and collection, (vi) sales-office for
receiving the orders and arranging to dispatch goods to their
destinations.
Steps to establish a sales structure
The following procedure may be adopted to, establish a practical and viable
sales-organisational structure:
(i) Begin with a historical profile of the company’s allegiance, overall
organisation and top-management philosophy of the firm.
(ii) Analyse the requirements of the company and the sales department,
particularly in terms of its: size, position in the market, nature of activities,
product mix, nature of customers, state of competition, and sales-people
and their ambitions.
(iii) Appraise the potential of the company, in terms of its impact on the
financial, technical, scientific and human resources, existing currently.
(iv) Analyse the prevailing working-atmosphere and state of
communications, especially from the view-point of relationship and human-
feelings involved in such relationships.
(v) List the various administrative-details, connected with the company.
(vi) Prepare a note, relating to the various administrative-details including
aspects like hierarchy, span of control, etc. on the sales-department, and
overall organisation of the
department.
(vii) Describe the procedures and Processes to be followed for executing
various tasks.
(viii) Based on the above, prepare a draft-structure of the sales
department,giving job-descriptions of the whole of the department, and a
who’s who of the department.
(ix) Examine the structure, from the point of view of viability and
practicality.
In the light of the complexities and vastness of the above process, for
creating a sales structure, once again, we state that various industries,
though being equally efficient, and of the same category, organise their
sales-departments, in different ways.

RECRUITMENT AND SELECTION OF SALES FORCE

INTRODUCTION
Recruitment is a positive process in which a company attract a pool of
talented people, whereas selection is a negative process through which they
screen people and finally select desired number of personnel who are offered
appointment. Attracting and selecting new sales personnel is an important
aspect of the sales manager's job. Recruitment is the procedure to obtain a
good number of people with the potential capability of becoming good sales
personnel. After attracting a large number of people, it becomes feasible to
select the individuals, which fit the needs of the organization. Appropriate
recruiting and selection
policies and procedures, and their skilful execution result in greater overall
efficiency of sales department. Good selection fits the right person to the
right job, thereby increasing job satisfaction and reducing the cost of
personnel turnover. In addition training costs are reduced, either because
those hired are more capable of absorbing training or because
they require less formal training.

RECRUITMENT PROCESS
To ensure the new recruits have the aptitude necessary to be successful in a
particular type of sales job, certain procedures should be followed in the
recruitment process. The steps in this process are:
(a) Conducting a job analysis
Before a company can search for a particular type of salesperson, it must
know something about the sales job to be filled. To aid in the process, a job
analysis should be conducted to identify the duties, requirements,
responsibilities, and conditions involved in the job. A
proper job analysis involves following steps:
1. Analyze the environment in which the salesperson is to work.
For example:
(a) what is the nature of the competition faced by the salesperson in this
job?
(b) what is the nature of the customers to be contacted, and what kinds of
problems do they have? (c) what degree of knowledge, skill, and potential is
needed for this particular position?
2. Determine the duties and responsibilities that are expected from the
sales-person. In so doing, information should be obtained from (a)
salespeople; (b) customers; (c) the sales
manager; and (d) other marketing executives, including the advertising
manager, marketing services manager, distribution manager, marketing
research director, and
credit manager.
3. Spend time making calls with several salespeople, observing and
recording the various tasks of the job as they are actually performed. This
should be done for a variety of
different types of customers and over a representative period of time.

(b) Preparing a job description

The result of a formal job analysis is a job description. Since a job
description is used in recruiting, selecting, training, compensating and
evaluating the sales force, the description should be in writing so that it can
be referred to frequently. The written job description lets prospective job
applicants, as well as current sales personnel, know exactly what the
duties and responsibilities of the sales position are and on what basis the
new employee will be evaluated.
The job description is probably the most important single tool used in
managing the sales force. It is used not only in hiring but also in managing
and sometimes as a basis for firing salespeople. It provides the sales trainer
with a description of the salespeople's duties and enables him or her to
develop training programmes that will help salespeople perform their duties
better. Job descriptions are also used in developing compensation plans.
Often, the type of job determines the type of compensation plan that will be
used. Job descriptions aid managers in supervision and motivation, and
they are used as an official document that is part of the contract between
management and a salesperson's union. Finally, a job description puts
management in a position to determine whether each salesperson has a
reasonable workload.
(c) Developing a set of job qualifications
The duties and responsibilities set forth in the job description should be
converted into a set of qualifications that a recruit should have in order to
perform the sales job satisfactorily. Determining these qualifications is
probably the most difficult aspect of the entire
recruitment process. One reason is that the manager is dealing with human
beings; therefore, a multitude of subjective and very complex characteristics
are involved. Specific qualifications such as education and experience
should be included in the job qualification, thus making good candidates
easier to identify. But most firms also try to identify
personality traits that presumably make better salespersons, such as self-
confidence, aggressiveness, etc.
(d) Attracting a pool of applicants
The next major step in the recruitment process is attracting a pool of
applicants for the sales position to be filled. All large companies with a sales
force have a continuous need to identify, locate, and attract potentially
effective salespeople. The candidates recruited become the reserve pool of
sales staff from which new salespeople will be chosen. Then quality of this
group will predict the future successes or problems of the sales
organization.

SOURCES OF RECRUITMENT
There are many places a sales manager can go to find recruits. Sales
managers should analyze each potential source to determine which ones will
produce the best recruits for the sales position to be filled. Once good
sources are identified, sales managers should maintain a continuing
relationship with them, even during periods when no hiring is being done.
Good sources are hard to find, and goodwill must be established between
the firm and the source to ensure good recruits in the future.
Some firms will use only one source; others will use several. The most
frequently used sources are persons within the company, competitors, non-
competing companies, educational institutions, advertisements, and
employment agencies.
(a) Persons within the company
Companies often recruit salespeople from other departments, such as
production or engineering, and from the non-selling section of the sales
department. The people are already familiar with company policies as well as
the technical aspects of the product itself. The chance of finding good
salespeople within the company should be excellent because
sales managers know the people and are aware of their sales potential. In
fact, most firms turn to non-sale personnel within the company as their first
source of new sales recruits.
Hiring people from within the company can lift morale because a transfer
to sales is often viewed as a promotion. But transferring outstanding
workers from the plant or office into the sales department does not
guarantee success. In some cases hostility can arise among plant and office
supervisors, who feel their personnel are being taken by the sales
department.

Recommendations from the present sales force and sales executive usually
yield better prospects than those of other employees because the people in
sales understand the needed qualifications.
(b) Competitors
Salespeople recruited from a competitor are trained, have experience of
selling similar products to similar markets, and should be ready to sell
almost immediately. But usually a premium must be paid in order to attract
them from their present jobs.
Some sales managers are reluctant to hire competitors' salespeople because
the practice is sometimes viewed as unethical. But is it? Is it really any
different than attempting to take a competitor's customers or market share?
No. But it is unethical if the salesperson uses valuable confidential
information in competing against the former employer.
Recruiting competitors' salespeople may bring other problems.
Although these people are highly trained and know the market and the
product very well. It is often hard for them to unlearn old practices. They
may not be compatible with the new organization and management. Also,
recruits from a competitors usually are expected to switch their customers
to the new business; if they are unable to do so, their new employer may be
disappointed.
The potential for these problems to arise may be evaluated with one
question: why is this person leaving the present employer? A satisfactory
answer to this question frequently clears up many doubts and usually leads
to a valuable employee. The difficulty arises, however, in
determining the real answer. Often, it is almost impossible to assess
accurately why someone is looking for another job. Good sales managers
must be able to evaluate effectively the information they get.
(c) Non-competing companies
Non-competing firms can provide a good source of trained and experienced
salespeople, especially if they are selling similar products or selling to the
same market. Even though some recruits may be unfamiliar with the
recruiting firm's product line, they do have selling experience and require
less training.
Companies that are either vendors or customers of the recruiting firm can
also be an excellent source of candidates. Recruits from these sources
already have some knowledge of the company from having sold to or
purchased from it; their familiarity reduces the time it will take to make
them productive employees. Another advantage of recruits from the sources
is that they are already familiar with the industry.
(d) Educational institutions
High schools, adult evening classes, business colleges, vocational schools,
junior colleges, and universities are all excellent sources of sales recruits.
Large firms usually are successful in recruiting from universities, but small
firms tend to be more successful in recruiting
from small educational institutions or from other sources.
While most college graduates lack specific sales experience, they have the
education and perspective that most employers seek in potential sales
managers. College graduates tend to adapt more easily than experienced
personnel. They have not yet developed any loyalties to a
firm or an industry.
A major problem in recruiting from college campuses used to be the
unfavourable image of sales. Selling typically was associated with job
insecurity, low status, and lack of creativity, but this situation has been
changing in recent years. Colleges graduates are beginning to realize that
selling provides challenge and a sense of accomplishment, that it is
complex and exciting, that it allows them to be creative, that it rewards
them well and in direct proportion to their level of achievement, and that it
provides opportunity for rapid advancement. In short, many students today
know that a sales career is a good use of a college education.
Small firms are less likely to recruit on college campuses because many
graduates prefer large, well-known corporations with training programs and
company benefits. College students tend to avoid small companies because
these companies usually employ few college
graduates, and students are afraid that people without college degrees will
not understand or appreciate their needs and expectations.
(e) AdvertisementsClassified advertisements in newspapers and trade
journals are another source of recruits. National newspapers and various
trade journals are used in recruiting for high-caliber sales and sales
management positions. However, most firms that use advertising,
especially in local newspapers, are recruiting for low-level sales positions.
Many businesses use advertising only as a last resort. While advertisements
reach a large audience, the caliber of the average applicant is often second-
rate. This places a burden on those doing the initial screening. The quality
of applicants recruited by advertisements can be increased by carefully
selecting the type of media and describing the job qualifications specifically
in the ad. To be effective, a recruiting ad must attract attention and have
credibility. The following elements should be included to ensure an ad's
effectiveness: company name; product; territory; hiring qualifications;
compensation plan, expense plan, and fringe benefits; and the way to
contact the employer.
(f) Employment agencies
Employment agencies are among the best and the worst sources. Most of the
time it depends on the relationship between the agency and the sales
manager. The agency should be carefully selected, and a good working
relationship must be developed. Sales managers should make sure that the
agency clearly understands both the job description and the job
qualifications for the position to be filled.
In recent years agencies have steadily improved and expanded their
services. They can provide a highly useful service to sales managers by
screening candidates so that recruiters may spend more time with those
prospects who are most highly qualified for the job.

SELECTION PROCESS
The recruiting process furnishes the sales manager with a pool of applicants
from which to choose. The selection process involves choosing the
candidates who best meet the qualifications and have the greatest aptitude
for the job. There are numerous tools, techniques, and procedures that can
be used in the selection process. Companies
typically use initial screening interviews, application forms, in-depth
interviews, reference checks, physical examinations, and tests as selection
tools.
None of these should be used alone. Each is designed to collect different
information. While successful selection of sales applicants does not
necessitate the use of all the tools and techniques, the more that are used,
the higher the probability of selecting successful sales personnel.
Selection tools and techniques are only aids to sound executive judgement.
They can eliminate the obviously unqualified candidates and generally spot
the more competent individuals. However, in regard to the majority or
recruits who normally fall between these extremes, the current tools can
only suggest which ones will be successful in sales. As a result executive
judgement is heavily relied on in selecting salespeople.

(a) Initial screening interviews

The steps in the selection process vary from company to company,
depending on the size of the company, the number of salespeople needed,
and the importance of the position to be filled. The purpose of the initial
screening interview is to eliminate, as soon as possible, the undesirable
recruits. Initial screening may start with an application form, an
interview, or some type of test. But no matter which tool is initially used , it
should be brief. The shorter it is, the ore it will cut down on costs. But it
must not be so brief that it screens out good candidates.
(b) Application forms
Application forms are one of the two most widely used selection tools (the
other is the personal interview). An application form is an easy means of
collecting information necessary for determining an applicant's
qualifications. Information requested on forms usually includes name,
address, position applied for, physical condition, educational
background, work experience, participation in social organizations, outside
interests and activities, and personal references. Other important questions
on an application form relate directly to the sales position for which the
application is made. For example:
• Why do you want this job?
• Why do you want to change jobs?
• What minimum income do you require?
• Are you willing to travel?
• Are you willing to be transferred?
• Are you willing to use your car for business?
• What do you want to be doing five years from now? Ten years
from now? Application forms will differ from company to company. On all
forms, however, it is illegal to include questions that are not related to
the job.
Some companies use a weighted application form that has been developed
from the regular application form by analyzing the various items that help
distinguish between good and poor salespeople. If companies can show that
items such as educational level, and years of selling experience tend to be
more related to success than are other items, then more weight (importance)
can be placed on them in making hiring decisions. Thus, applicants who
rate higher than an established minimum number of points on these items
are considered, and those who fail to reach the cut off point are usually
rejected.
An important function of application forms is to help sales managers
prepare for personal interviews with candidates for sales positions. By
looking over the application form before the interview, the sales manager
can get an initial impression of the applicant and can
prepare a list of questions to ask during the interview.
(c) In-depth interviews
The interview is the most used of the various tools for selecting employees. A
salesperson is seldom hired without a personal interview. In fact, as many
as three or four interviews are usually conducted with the most desirable
candidates. No other selection tool can take the place of getting to know the
applicants personally.
The personal interview is used to help determine if a person is right for the
job. It can bring out personal characteristics that no other selection tool is
capable of revealing. The interview also serves as a two way channel of
communication, which means both the company and the
applicant can ask questions and learn about each other. The questions
asked during an interview should be aimed at finding out certain things: Is
the candidate qualified for the job? Does the candidate really want the job?
Will this sales job help the candidate fulfill
personal goals? Will the candidate find this sales position challenging
enough? These questions, like those on the application form, are directed at
examining the applicant's past behaviour, experiences, and motivation.
Every sales manager will use a different approach in attempting to elicit
useful information. The approach used will depend on the sales manager's
personality, training, and work experience.
Interviews differ, depending on the number of questions that are prepared in
advance and the extent to which the interviewer guides the conversation. At
one end is the totally structured, or guided, interview; at the other end is the
informal, unstructured type. In the structured
interview, the recruiter asks each candidate the same set of questions.
These are standardized questions that have been designed to help determine
the applicant's fitness for the sales position, structured interviews can be
used for initial screening but are not useful in probing for in-depth
information. A structured approach is particularly useful for
inexperienced interviewers. Since it helps and guide the interviewer and
ensures that all factors relevant to the candidate's qualifications are
covered.
At the other end of the continuum is the unstructured interview, which is
informal and non-directed. The goal of the unstructured interviewing
approach is to get the candidate to talk freely on a variety of topics.
Frequently, the recruiter begins the interview by saying to the
candidate. Tell me about yourself", or by asking questions such as "Why did
you decide to interview with out company?"
Several problems are associated with unstructured interviews. One is that
they do not provide answers to standard questions that can be compared
with other candidates' responses or with the company's past experiences.
Also, considerable time may be spent on relatively unimportant topics.
However, personnel experts say this technique is the best for probing an
individual's personality and for gaining insight into the candidate's attitudes
and opinions. To administer and interpret unstructured interviews,
interviewers must be well trained.
Therefore, many firms use a combination of structured and unstructured
approaches, usually referred to as a semi-structured interview. In semi-
structured interviews the interviewer has a pre planned list of major
questions but allows time for interaction and discussion.
This approach is flexible and can be tailored to meet the needs of different
candidates as well as different interviewers.
(d) Reference checks
A company cannot be sure it has all the information on an applicant until
references have been thoroughly checked. Reference checks allows a
company to secure information not available from other sources. References
usually are checked while the application form is
processed and before the final interview takes place. In general, the quality
of reference checks as a selection tool is questionable. Checking on the
names supplied by a candidate is often seen as a waste of time because it is
unlikely that serious problems will be uncovered. Therefore, many firms try
to talk with people who know the applicant but were not listed on the
application form. For reference checking to be a useful selection tool, the
sales manager must be resourceful and pursue leads that are not directly
given. If only one significant fact is uncovered, it usually makes the effort
worthwhile.
References from teachers and former employers are generally more helpful
than other types of references. Teachers can usually give an indication of
intelligence, work habits, and personality traits. Former employers can be
used to find out why the person left the job and how well he or she got along
with others. Reference checks can uncover information about an applicant
that may alter a sales manager's perceptions of the person's sales ability.
(e) Physical examinations
Many sales jobs require a degree of physical activity and stamina.
Poor physical condition can only hinder a salesperson's job performance;
therefore, a company should insist on a thorough medical examination for
all its sales recruits. The results from the examination should be interpreted
by a doctor who is familiar with the demands of the sales job,
and the sales manager should be notified of the results. Because of their
expense, physical examinations usually are not given until a recruit has
passed most of the steps in the selection process.
(f) Tests:Tests are the most controversial tools used in the selection
process.
The need for application forms, reference checks, and personal interviews is
seldom disputed, but there are differences of opinion about whether tests
are necessary in the hiring of salespeople. Questions regarding the legality of
testing have increased the complexity and the controversy surrounding the
use of tests as a screening tool. But research has shown that test profile
data can be useful to management in the process of selecting and classifying
sales applicants who are likely to be high performers.
There are some basic tests used in the selection process of sales personnel.
Intelligence tests: These tests measure raw intelligence and trainability.
Recent research has indicated that a salesperson's cognitive ability or
intelligence is the best indicator of future job performance.
Thus, although once looked down upon, the intelligence test is slowly
regaining status as the most effective tool for selecting salespeople.
Knowledge tests: These tests are designed to measure what the applicant
knows about a certain product, service, market, and the like.
Sales aptitude test: These tests measure a person's innate or acquired
social skills and selling know-how as well as tact and diplomacy.
Vocational interest tests: These tests measure the applicant's vocational
interest, the assumption being that a person is going to be more effective
and stable if he or she has a strong interest in selling. Personality tests-
these tests attempt to measure the behavioural
traits believed necessary for success in selling, such as assertiveness,
initiative, and extroversion.

SALES TRAINING
INTRODUCTION
For effective operation of selling activities, sale force in terms of manpower
and womanpower is necessary for a business concern. For attaining
predetermined objectives; it is imperative that entire manpower should be in
place. Manpower i.e. in this case salesforce is one of the most precious
resources of a business unit. It takes a lot of years to build-up and to
develop itself for efficient and effective working. As we know that the effective
sales organisation is the antipathy of any competitor. However, it must be
emphasised that the Sales-Force can be effective only when the other
ingredients of the Marketing-Mix: product,
price, place and promotion are equally sound and intact. To expect
salespeople to become more productive; it is hardly fair. Each ingredient of
this Mix has to be emphasised equally so that its productivity may be
improved. Thus, the Sales-Force is the infantry that has to visit
customers, and/or channels of distribution to impart information and
knowledge; actually obtain orders from specific customers, and ensure that
existing customers are happy and satisfied with the company and its service
provided to them apart from, of course, looking for new prospects.
4.2 SALES FORCE TRAINING
Training is very much important for salesforce to ensure that the contents
related to the product are described to the potential customer and exiting
customers efficiently and effectively. Generally, training means to train the
employees i.e. to improve their productivity to face the challenges created by
competition. The art of selling lies in presenting the
benefits and multi-uses of the product so that the buyer gets the feeling of
satisfaction to his needs.
Not only, it is expected from a successful salesman that he must be well
informed/intelligent in terms of knowledge but also he must be skilled in the
presentation of information/knowledge of himself. A salesforce training
programme, thus, aims at providing the required knowledge about the
products and the effective ways presentation to the
customers in the market. The nature and scale of both these skills should
be specified, in advance, so that the programme so conceived is directed
towards predetermined and definite goals.
The Training-Programme may be for the-newly recruited salesmen as well as
those already in employment with the company to refresh their knowledge.
So, the first task for the Sales Manager/Training Manager is to set objectives
for such type of training programmes. For this purpose, the first step is to
identify the gap between the standard of skills required
and Salesman’s current standard in the organisation/company.

The level, they are supposed to achieve can be known easily by reference to
job specifications. Current-levels of skills, in the case of existing Salesmen,
can be determined through observations of their actual working i.e., their
knowledge about Product, Competition, selling skills etc. Though, a good
Training-Programme should clearly state what
the Trainees are expected to do, after their Training and the period within
which they should be able to do it. For guidance, the Training Manager, may
include Knowledge-Areas, viz. the Company, its Products, Practices and
Procedures; as well as the Product/Services and their Competition.
The Skill-Areas include:
(i) Sales-techniques,
(ii) Work-Organisation, and
(iii) Reporting-System.
Depending on the nature of a Company, there may be certain
other exclusive, supplementary areas, where Training may also be needed.
After setting the objectives, the Manager has to think about the following
points:
(i) What should be taught?
(ii) Where should it be taught?
(iii) Should who teach it?
(iv) How should it be taught? and
(v) What time should it be taught at?
In the reply of the first question, i.e., what (i.e., contents of the course), have
been explained already. Regarding the second question of place, normally
there are three alternatives: the company’s, factory and Office, the fields and
courses run by outside organisations, e.g., NICEM, etc. Usually, the best
location for training in basics: policies procedures and processes, knowledge
is the place where this type of work is being actually carried out, e.g.
Company’s Head Office. Moreover, the basics of theoretical-training maybe
discussed the staff training room is the best location. To impart the basic
knowledge, the trainees should be assigned to a senior sales executive. It
will be here that the trainee will be able to appreciate the application of the
required kills. And, training may be integrated with demonstrations and
real-life experience in in-plant training.
In the response to the question ‘By Whom’, it simply means that the training
should be imparted by different senior sales-executives, who are specialists
in their own areas. Of course, the overall respol1sibility is that of the sales
manager/training manager. By delegating the authority, the sales manager
does not wash-off his hands; he just shares his
burden, but retains overall control. Some big companies have their own
training department and human resource development departments. It pre-
supposes enough number of trainees, to justify specialised staff.
Sometimes, companies also have consultants. But this approach has the
disadvantage of total lack of their knowledge of company’s objectives and
needs. External courses are also mostly general in nature. However, a
judicial mix of all the three alternatives, so as to serve best the company’s
needs is advised. The reply of fourth question depends upon, who is
teaching? Every individual has his own and unique way of
teaching/explaining. However, some basic guidelines may be laid down to
serve as instructions of the training-personnel. Similarly, the last question is
at ‘What Time?’ It is difficult to precisely lay down the specific duration of
training. Usually, it may be between 6-8 weeks in medium to large
companies. In between
sessions, there should be adequate breaks. If required, the programme can
go well into the evenings. However, every instructor should avoid too much
of lectures and rather should concentrate on participative-activity, so that
interest in the course is maintained. Another teaching-approach, suitable to
all companies of any size is meet the man behind you. Here,
each head of the department talks with the trainees. In doing so, he makes
direct contact and he befriends them. He tries to self his department to the
trainees. During this type of a lecture, the following points are may be
covered:
(i) His job-what he does?
(ii) Goals-what his department does presently?
(iii) Innovations- what is scheduled for
future?
(iv) Needs-what is needed for his more effective working?
(v) Help how salesmen can help in effective working? To sum-up, the
initial training-programme ends with the achievement of basic-
objectives laid down for it. By this time the trainee is expected to
have acquired basic grounding in
(i) product-knowledge, (ii) the company and (iii) the desired
level of skills in sales-techniques, and maybe considered to be fit to be
exposed to actual field conditions, i.e., then starts the on-the-job training. It
is here, that he applies the principles enunciated during his training. It is
absolutely necessary that the supervisor looks after each new entrant; and
ensures their proper seasoning. Sometimes, a new entrant is assigned to an
experienced senior salesman, for a couple of weeks, so that he gets practical
training; before-assuming charge of his independent territory. It is
sometimes said, if the trainee has not learnt, the trainer has not taught. In
fact, it is true; because, as we know that after a series of tests, analysis etc.;
a person of below average qualities cannot get selected for the job. So,
unless the training-methods are devised and planned well in advance, it
would result in a huge waste of valuable resources of the company. A good
training schedule may be prepared on the basis of ACMEE principle, where’
A’ = Aim of the
Training; ‘C’ = Content of the Training; ‘M’ = Method of the Training; ‘E’ =
Execution of the training-programme, and ‘E’ = Evaluation. A Training-
Programme should be executed scientifically, and a post-evaluation
should be made after each kind of Training.

SALES FORCE DEVELOPMENT

It is assumed that the newly trained salesmen charge of his territory after
initial-training freely. But, the sales manager must ensure the ways for their
continuous development. The standards of performance that the salespeople
have learnt during their training must be properly channelized. It has been
noticed that even the seniors, with good performance-records, need
assistance, to give continued good performance. And it must be remembered
that the development is a continuous process and is the key to make the
sales-force really more and more productive/efficient. Development-process
could be carried out
in two ways:
(1) Field, i.e., on-the-job training, where sales-executive develops each
individual new-entrant salesman, under his charge, during his day-to-day
working, and
(2) Through sales-meetings, refresher courses and development
programmes, at the office.
Field- training aims at rendering continuous help to the salesman, to get
over his initial difficulties; and perform better on an on-goingbasis.
For this, the sales-executive in-charge has to follow the points:
(i) Compares his charge’s field-performance regularly, (compared with the
set standards) and reasons for variances are established.
(ii) Weak areas are also identified, and the salesman is educated, on how to
overcome them. The new-entrant salesman is encouraged to incorporate
offered suggestions in
his work.
(iii) The weak areas observed by the sales-executive in-charge, should be
tabulated on corporate basis. This will reveal general weaknesses of initial
training, and would help set objectives of the refresher course for the future.
It will also help in improving the quality of training for future batches.

METHODS OF IMPROVING SALES-FORCE PRODUCTIVITY

In the ensuing lines, it is tried to explore a few important areas, in which
Marketing- . Oriented Companies can help their sales- force, to act and
perform in a more productive manner.
(1) Identifying the Perfect Customer
Every time the company must do the task of personal selling’s sales-force.
The salesman haste call on prospects and tries to convert them into
customers. One of the drawbacks of asking salespeople to carryout a
number of calls-per-period is the danger that one tends to
concentrate on the number, rather than on the quality of calls. However, it
is more sensible, to target one’s effort on a smaller number of better calls. At
this point, they can plan their day in a more effective way, by allowing more
of their time and effort upon A=Excellent or B=Good Customers; some time
on the C=Fair and none on the D=Poor. That would mean that the ‘Call-rate’
can be better targeted on promising prospects, and little time is wasted on
contacts, which are less likely to yield results i.e. sales. The preparation
0fahit-list designating levels of attractiveness to potential-customers, can
thus, be a powerful tool to
spur productivity, in the selling-effort. In the case of industrial goods, one
can use the standard industrial classifications (sics), as the basis for
categorisation of customers. This is particularly valuable, if market research
has established which group/class, in the classification, offers promising-
pickings. However, the company may adopt its own basis to suit its unique
aims/objectives and needs. However, some type of selectivity is essential to
run the sales- force, as a tight and effective force. No two bases need be the
same. But bear in mind not to target those customers, whom you’re
competitors are in a far better position of
penetrating. As a guide/salesperson, for this basis of categories, the
following points must be considered:
(i) Size of the firm and/or its consumption-level (sales-volume).
(ii) Segments that serve potential-customers.
(iii) The nature of firm’s products, techniques and productionprocesses.
(iv) The personality of buying-decision-makers and/or their
motivational stimuli (e.g., willing to purchase from .large
firms or from small firms only).
(v) The geographical location of the customers.
2. Understanding the Customer’s Decision-Making Unit
(DMU)
Generally, sales-person deals with a number of customers. In this process of
selling; the main participants are deciders, buyers, influencers, users, and
gatekeepers etc. Each one of these has a role to play, sometimes supportive
and sometimes become barrier. A good salesperson
must understand the way this unit, as a whole, functions, and the
respective roles of each member, thereof. The situation gets further
complicated in the case of large firms, where there are many members in
this decision-making unit (DMU). Each one of them is to be communicated,
in one form or the other. However, it is impractical, inefficient and often
positively imprudent, for the sales-persons to contact them all. It is
suggested that he may contact, the less important or less accessible
members of this unit, through company’s literature, directmailing,
exhibitions etc. However, it must be ensured that:
(i) Every member of the DMU receives the right amount of information
neither too much, nor too little.
(ii) He has to concentrate on the most important and decisive members of
this DMU of the buyer (customer).
(iii) The sales manager may prepare a record about ever] one of more
promising customers, which should include: annual reports and published
accounts; a scrap-book of published material about the firm; company’s
literature and product-specifications; organisational details; a ‘‘who-is-who’’
of the personnel in the company; and ideally, a comparison of the firm’s
performance, with that of its competitors. If this database is complete and
up-to-date, the sales-person would be addressing a customer about whom
his or her knowledge-level is so high, that a true relationship can easily be
forged.
(iv) The sales manager may also prepare a comprehensive list of DMU’s
members, together with the other sub-departments of marketing, designing
and integrated communication programme’ etc. Whatever selling-technique
the sales-person adopts, the aim should be, to target each member of the
DMU, in the most productive and cost-beneficial way, especially those upon
whom they can have maximum impact. In case the sales-department has a
fairly small number of large potential (key) accounts, we can also prepare an
integrated communication programme with DMU-members of these
Companies. It is rather surprising to note that a large number of firms do
not bother to collect the most elementary information about the client-
company, even where the total catchments market consists of only not more
than a couple of dozen companies.
(3) Learning from the Star Performers
Sales-Force is a heterogenic lot of numerous personalities. That makes it
rather impossible to achieve total homogeneity of behaviour; attitude; and
performances. There are the high-flyers at one extreme, and sloggers at the
other; the former are enthusiastic, creative and effective;
he latter may work hard, but results do not come easily to them. However,
by analysing the level of performance of individual sales-people, one can
easily designate, the top ten percent as the stars; the next twenty percent as
good; the next thirty as adequate; and the remaining forty percent are
treated as ‘problem children’. Once the sales-force has been
categorised into clearly defined Groups, based on their performance quality,
‘one can ask a simple question:
“What does the ‘Star ‘do, which is so very different from that of others?” If
one could identify, in some detail, how the ‘Star’ behaves, in front of a
“Customer”, the way he (or she) communicates the message, plans and
manages time, uses Sales-Aids etc., one would know how to develop new
training-methods, for the rest of the force. Thus, an insight would be gained,
into the Selling and Buying-Environment, and this should help in
discovering areas, in which Productivity could be improved.
(4) Sales-Meetings (Conferences)
This is another, important avenue for the development of the salesforce.
The “objectives” of such sales-meetings are:
(i) training and development of individuals;
(ii) to inform and get the feedback information;
(iii) to stimulate and motivate, and
(iv) to provide a common
platform for exchange of experience. A sales meeting to be successful,
should have the following in-built ingredients:
(a) Location: It should be held at a place, where any additional
information, can be easily made available. Company’s Headquarters; Head
Office of the Sales Manager; or that of the Regional Manager, are ideally
suitable. Adequate arrangement should be made for the seating of the
participants, and proper and “business-like atmosphere” should be created.
(b) Audience: The level of intelligence of participants should be
considered. This will help in selecting and assigning the subjects for
discussion, to suitable hands.
(c) Agenda: A proper Agenda should be framed, keeping in view the needs,
for which the Meeting is being held. The agenda should be made known to
the participants in advance.
(d) Periodicity: The sales meeting should have a definite periodicity.
National-level sales-meetings/conferences, are usually an annual affair. This
ensures that the participants are well prepared.
(e) Activities: There should be proper allocation of work, so that each
participant knows what to expect from whom. The Convener should do well
to ensure a “participative atmosphere” in the Meeting. A little ‘Creativity’, on
his part, will go a long way, in ensuring success of the
meeting.
(5) Kerb-Side Conferences
These conferences aim at a random appraisal of the performance of a sales-
man, and is usually done on a monthly basis, taking a day’s work into
consideration. It should be ensured that (i) the salesman is not calling on
his friendly customers on that day, and (ii) the presence of the appraiser,
does not influence the sales-person’s work-pattern. The appraiser has to
watch the salesman, during the day and keep a mental note of his strong
and weak areas. After the call(s) is/are over the day, the appraiser and the
salesman deferred to a quiet place, where the work is systematically
appraised; and properly recorded and graded, on an
appraisal-form. It is essential that the agreement of the salesman be
obtained to such an appraisal-form. This will put him in a proper frame of
mind, and he will be receptive to suggestions.
The sequence of this appraisal, could be like this: (i) the appraiser
appreciates the skills that have been employed; (ii) the salesman is now
asked to analyse the call(s), identify the problems not properly tackled, and
reasons thereof; (iii) if the salesman fails to identify his weak areas, even
after questioning, the appraiser tells him about these, in very clear terms;
(iv) once the deficiencies have been isolated, salesman’s concurrence, on his
weaknesses is obtained; (v) the appraiser, then gives instructions, on how to
overcome these weaknesses. The salesman, may in some cases be asked to
rehearse these, to reduce the element of any
doubt; (vi) any follow-up action is then specifically pointed out; (vii) before
parting, the appraiser says a few words of encouragement and concludes on
a note of optimism.
Such kerb-side meetings are very useful for the purpose of increasing the
productivity of employees, but heavily depend on the ability and skills of the
appraiser, to pinpoint deficiencies and offer remedial measures. However,
generalities should be avoided, as the
process is very expensive.
(6) Refresher Courses
Generally, the refresher courses are held at the company’s headquarters,
usually once a year. The course-content is usually based on the feedback-
information from
(i) company’s activities;
(ii) sales executives;
(iii) market-intelligence;
(iv) sales-meetings/conferences etc.,
(v) product-development,
(vi) technical areas affecting the company etc.(since the last
conference/meeting). Such courses make the sales-force adequately
prepared, periodically, to face the challenges of competition, with
confidence.
(7) Sales Bulletins
Lastly but not least, training and development is also continued through
sales bulletins. It is a good medium to keep the salesman educated about
day-to-day matters of changes/interests. The information reaches him
through the bulletins, while the salespeople are at work, and also when it is
urgently required. No time is lost in waiting for the next sales-
meeting/conference. However, the language used in he bulletins should be
crisp and to the point, so as to arouse the salesman’s interest and is easily
understood by the recipient.
 UNIT-2

PLANNING,DIRECTING AND EVALUATING SALES FORCE

SALES BUDGETS AND QUOTAS

SALES BUDGET
A sales budget is simply a tool, a financial plan, that depict how resources
should best be allocated to achieve forecast sales. In other words, sales
budget is a blueprint for making profitable sales. It details who is going to
sell ‘how much’ of ‘what’ during the operating period, and to which customers
or class of trade and the likely selling expenses. It is a projection of what
a given sales programme means in terms of sales volume, selling expenses,
and net profits. The purpose of sales budgeting is to plan for and control
the expenditure of resources (money, material, people and facilities) necessary
to achieve the desired sales objectives.
The sales forecast is the source for the sales volume portion of the sales
budget. The sales volume objective derived from the sales forecast is broken
down into the quantities of products that are to be sold, the sales personnel
or sales districts that are to sell them, the customers or classes of trade that
are to buy them, and the quantities that are to be sold during different time
segments in the operating period. After these breakdowns are made, the
selling expenses that will be incurred in implementing the sales programme
are estimated. Sales forecast and sales budget are therefore, intimately
related as much as if the sales budget is inadequate, the sales forecast will
not be achieved, or if the sales forecast is increased the sales budget must
be increased accordingly. Sales budget by relating sales obtained and resources
deployed also acts as a means for evaluating-sales planning and sales effort.
It aims at attaining maximum profits by directing the emphasis on most
profitable segments, customers and products.
(A) PURPOSE OF THE SALES BUDGET
A sales budget generally serves three important purposes.
(i) Instrument of Planning : The budgeting process requires complex
sequences of planning decisions. In order to achieve goals and objectives
of the sales department, the managers must outline essential tasks to
1Je performed and compute the estimated costs required for their
performance. The planners show how the targeted volume can be
reached, while keeping selling expenses at a level that permits attainment
of the targeted profit. Sales budgeting, hence, helps in profit planning
and provides a guideline for action towards achieving the organisational
objectives. The alternative sales plan are drafted so that selection of
the most appropriate may serve the company’s sales volume and net
profit objectives.
(ii) A tool of coordination : Sales department is a sub-system of marketing
division and selling is one of the most important functions of marketing.
To be effective, it needs support from other elements of the marketing
mix. The, process of developing realistic sales budget draws upon
backward and forward linkages of selling with marketing and in turn
brings about necessary integration within the various selling and
marketing functions, and coordination between sales, finance, production
and purchase function. The sales budget enables sales executives to coordinate
expenses with sales and with the budgets of the other
departments.
(iii) Mechanism of Control : Control is the prime orientation in sales
budgeting. The budget, which is a composite of sales, expense, and
profit goals for various sales units, serves as a yardstick against which
progress is measured. Comparison of accomplishments with relevant
breakdowns of the budget measures the quality of performance of
individual sales personnel, sales regions, products, marketing channels,
and customers. These evaluations identify specific weaknesses in
operating plans, enabling safes management to make revisions to,
improve performance. The sales budget itself, since it is a master
standard against which diverse aspects of performance are measured,
then serves as an instrument for controlling sales volume, selling
expenses, and net profits.

METHODS OF SALES BUDGETING

Methods of sales budgeting differ from company to company. There are a
variety of methods ranging from the sales manager’s gut feelings to application
of computer based management science models for determining the sales
budgets. Some important methods are given below :
(i) Percentage of Sales : This method is also know as rules of thumb.
In this method manager multiplies the forecast sales by various
percentages for each category of expense. The resultant then becomes
the amount budgeted for each of the respective categories. It is
generally based on the manager’s experience or feelings about what
portion of the sales volume can be spent on each business function to achieve the
desired profit. But, there are no guarantees that setting
the budgets using these percentages will lead to optimal performance.
Mass selling organisations are major users of this method.
(ii) What is affordable : This method is generally used by firms dealing
in capital industrial goods. Also, companies giving low emphasis on
sales and marketing function or having small size of operation make
use of this judgemental method.
(iii) Competitive parity method : This method advocates determining
sales budget comparable to the competitors. The use of this method
presumes knowledge of the competitor’s activities and resource
allocation. Large sized companies’ whose products face tough
competition and need effective marketing to maintain profits use this
method.
(iv) Objective and task method : In this method the manager starts with
identifying the objectives of sales department followed by determination
of tasks that must be accomplished in order to achieve the set objectives.
Later, the cost of each activity or task is calculated to arrive at the
total budget. The finalisation of the budget may require adjustment
both in the objectives as well as in the way the task may be performed.
(v) Zero-base budgeting : It is relatively new approach to budgeting. It
involves a process in which the sales budget for each year is initiated
from zero base thus, justifying all expenditure and discarding continuation
of conventions and rules of thumb. This method suffers from practical
limitations which relate to a very elaborate and time consuming process
required by it.

(C) SALES BUDGETARY PROCEDURE

Sales budgetary procedure differ from company to company with most

differences tracing to difference in basic planning styles, i.e., top-down and
bottom up. In top down planning, top management sets the objectives and
drafts the plans for all organisational units. By contrast, in bottom-up planning
different organisational units (generally departments) prepare their own
tentative objectives and plans and forward them to top management for
consideration. Preparation of sales budget is one of the most important
elements of the sales planning process. Mostly sales organisations have their
own specified procedures, formats and time tables for developing the sales
budget. However, the general steps taken in systematic preparation of sales
budget can be identified in the sequence given below :
(i) Analysis of sales volume and expenses : The preparation of the sales
budget normally starts at the lowest level in the sales organisation and
works upward. Thus, each district sales manager estimates district
sales volume and expenses for the coming period. Some of the common
items each sales budget includes are salaries, travel, lodging, food,
entertainment, commissions on sales, office expenses, promotional
material selling aids, contest awards, product sample etc.
These district budgets are submitted to the divisional or regional
office, where they are added together and are included with the divisional
budget. In turn, divisional budgets are submitted to the sales manager
for the particular product or market group. At the end this chain of
subordinate budgets, the top sales executive compiles a companywide
sales budget.

(ii) Handing competition for available funds within the marketing

division : Sales executives at the top level must communicate their
sales goals and objectives to the marketing department and argue
effectively for an equitable share of funds. The chief sales executive of
the company should encourage participation of all supervisors and
managers in the budget process so that, as a part of its development, they
will accept responsibility for it and later enthusiastically implement it.
(iii) Selling the sales budget to the top management : The top sales and
marketing executives must visualise that every budget proposal they
are presenting to the top management must remain in competition
with proposal submitted by the heads of other divisions. Each and
every division usually demand for an increased allocation of funds.
Unless sale managers rationally justify each item in their budgets on
the basis of profit contribution, the item may not get due consideration
of the top management.
(D) BUDGET IMPLEMENTATION AND FEEDBACK
Actual budgetary control features go into operation, as soon as the approved
budgets have been distributed to all units of the company. Each item in the
budget serve as standards against which management measures performance.
In case actual performance is at a variance from budgeted performance, two
courses of actions are available to the organisation.
(i) To ascertain whether the variance is a result of poor performance by
the sales group - necessary steps should be taken to ensure that sales
persons organise their selling efforts more carefully, so that budgeted
expenses can be brought back into line.

(ii) To revise the sales budget by incorporating the changed allocation of

the item. For example, if the travel expenses have increased because
of the necessity of calling on new customers not previously covered,
action should be taken to revise the budget to reflect the changed
conditions.
Salespersons are generally trained to be budget-conscious. It is the responsibility
of the sales manager to ensure that sales revenue and cost ratios remain
within reasonable budget limit. Experiences bring out the following main
items on which variance between budgeted and actual costs often arise, are
salaries and fringe benefits, direct selling expenses, maintenance of company
vehicles, promotional costs, discounts, rebates etc. It is wise to tighten
control over expenses especially under circumstances when sales forecasts
are not being met or sales budgets are being exceeded.
(E) FLEXIBILITY IN BUDGETING
If sales budget estimates are consistently, or even frequently, found to be
errorneous, it may be that more time should be spent in budgetary planning.
Perhaps sales forecasting methods are misapplied or are inappropriate for
the budgeting situation. Experience shows that in most fields sales can be
forecast for a sufficiently long period, and within limits of accuracy that are
sufficiently close to serve the purpose of stabilising production. If it is
possible to forecast sales within the limits needed to stabilise production,
it is possible to forecast sales within the limits of accuracy required for
purposes of budgeting selling expenses.

Some companies, either intentionally or because of difficulties in securing

accurate sales forecasts, use budgetary procedures without definite forecasts.
One way is to prepare alternate budgets, based on different assumptions
about the level of sales volume. Thus, efficiency can be evaluated, even
though wide variations exists between expected volume and actual volume,
‘Low-volume’ and ‘High-volume’ forecasts are prepared on break-even style
charts and interpolated to adjust for the difference between the two alternative
budgeted sales figures and the actual operating level.
However, flexible budgeting is the subject of considerable criticism, because
whenever it is used, plans must be made on the basis of wide range of
probabilities. Some experts refer to flexible budgeting as a crutch for weak
executives who have not absorbed the art of forecasting. Most writers on
sales management argue that some flexibility is desirable. Companies cannot
authorise a year ahead expense appropriations so flexible that there is no
need later to review or revise them. Full advantage of new market opportunities
must be taken as they appear. If competitors initiate actions not foreseen
at budget-making time, funds must be allocated to counter-act them. A
realistic attitude toward the dynamic character of a market is part of effective
sales budgeting.
When the budget is in error because of faulty sales forecasting and badly
set sales and profit objectives, the accepted procedure is to alter estimates
by applying standard ratios of costs to the adjusted volume figure. This
system, known as variable budgeting, is used by most business.

(F) CONCLUSION
The sales budget is a statement of projected sales revenues and selling
expenses. The projected sales revenues are, in effect, the sales volume
objectives derived from the various sales forecasts. The projected selling
expenses are determined by the different organisational units within the sales
department and are based on assigned sales and profit objectives. The sales
budget is best prepared in an atmosphere where the bottom-up planning style
predominates, with each echelon preparing a tentative budget of revenue and
expense. In reality, the sales budget is a composite of quotas-for sales,
profits, and expenses - and is a valuable tool for control.

SALES QUOTA
A sales quota is a quantitative goal assigned to a sales unit for a specific
period of time. A sales unit may be a sales person, territory, branch office,
region or distributor. Sales quotas are used to plan, control and evaluate
selling activities of a firm. As standards for appraising selling effectiveness,
quotas specify desired performance levels for sales volume, expenses, gross
margin, net profit, selling and non-selling activities, for some combination
of these items. Sales quotas provide a source of motivation, a basis for
incentive, compensation, standards for performance evaluation of sales person
and uncover the strengths and weaknesses in the selling structure of the firm.
Quotas are devices for directing and controlling sales operations. Their
effectiveness depends upon the kind, amount, and accuracy of marketing
information used in setting them, and upon management’s skills in administering
the quota system. In effective systems, management bases quota on information
derived from sales forecasts, studies of market and sales potentials, and cost
estimates. Accurate data are important to the effectiveness of a quota system,
but, they are not sufficient; judgement and administrative skills are required
of those with quota setting responsibilities. Soundly administered quotas
based on thorough market knowledge are effective devices for directing and
controlling sales operations.

Objectives
Sales quota is imposed in an organization to fulfil various objectives required to increase
the sales of product and maximize profit.
Sales objectives help an organization in the following ways −
  They provide a standard to measure the performance.
 They help to control sales expenses for customer acquisition.
 They help define a target; this further facilitates motivation and enhanced
performance.
 These help to identify and monitor the performance of salespersons.
These are some of the primary objectives of sales quota for an organization. Further, sales
quota can be divided in different types according to the requirement.

TYPES OF QUOTAS
Differences in forecasting and budgeting procedures, management philosophy,
selling problems, and executive judgment, as well as variations in quota setting
procedures, cause each firm to have somewhat unique’ quota. Ignoring
small differences, however quotas fall into four categories :
(i) Sales volume quota : The most commonly used quotas are those
based on sales volume. This type of quotas are set for an individual
sales person, geographical areas, product lines or distributive outlet
or for only one or more of these in combination. Sales volume quotas
are also set to balance the sales of slow moving products and fast
moving products or between various categories of customers per
sales unit. The sales volume quota may be set in terms of units of
product sales, or rupee sales .or both on overall as well as product
wise basis. Some companies combine these two and set quota on the
point basis. Points are awarded on the attainment of a certain specific
level of sales in units and rupee terms for each product/customer. For
example : A company might consider Rs.1000 equal to 1 point, Rs.2000
equal to 2 points and so on. At the same time company may award 3 points for unit
sales of product A and 5 points-for unit sales product
B. Companies use this type of approach generally because of problems
faced in implementing either rupee sales volume or unit sales volume
quota. Unit sales volume quotas are found useful in market situations
where the prices of the products fluctuate considerably or when the
unit price of the product is rather high. Rupee sales volume quotas
are found suitable in the case of sales force, selling multiple products
to one or different types of customers.
(ii) Financial or budget quotas : Financial or budget quotas, are determined
to attain desired net profit as well as to control the sales expenses
incurred. In other words, it is set for various units in the sales organisation
to control expenses, gross margin, or net profit. The intention in
setting financial quota is .to make it clear to sales personnel that this
jobs consist something more than obtaining sales volume. It makes
personnel more conscious that the company is in business to make
a profit. Expense quotas emphasize keeping expenses in alignment
with sales volume, thus indirectly controlling gross margin and net
profit contribution. Gross margin or net profit quotas emphasize
margin and profit contributions, thus indirectly controlling sales
expenses.
Expense quotas : In order to make the sales force conscious of the
need to keep selling costs within reasonable limits, some companies
set quota for expenses linked to different levels of sales attained by
their sales force. And to ensure its conformity they even link compensation incentives
to keeping expenses within prescribed limits.
Since sales are the result of the selling tasks performed which vary
across sales territories, it is not easy to determine expense quotas
as percentage of sales in a uniform manner. Also very strict conformity
to expense. quota norms result in demotivation of sales force. As such
expense quota is generally used as a supplement to other types of
quotas.
Net profit quotas : Net profit quotas are particularly useful in multi
product companies where different products contribute varying level
of profits. Its emphasis is on the sales force to make right use of their
time. It is important for the management to ensure that its sales force
do not spend more time on less profitable products, because the
salespersons are costing the company the opportunity of earning
higher profits from their high margin products. In other words, it
should ensure that its salespersons spend their maximum time on
more profitable customers. The objective can be achieved by setting
a quota on net profit for its sales force, and thus, encouraging them
to sell more of high margin products and less the low margin products.
(iii) Activity quotas : Good performance in competitive markets requires
the sales force to perform the sales .as well as market development
related activities. The latter activities have long term implications on
the goodwill of the firm.
To ensure that such important activities get performed, some companies
set quotas for the sales force in terms of various selling activities to be performed by
them within a given period. Finally the company
must set a target level of performance for, the sales persons. Some
of the common type of activity quotas prevalent in Indian firms are
as under :
Number of prospects called on
Number of new accounts opened
Number of calls made for realising company’s account
Number of dealers called on
Number of service calls made
Number of demonstrations made
The chief merit of activity quota lies in its ability to direct the sales
force to perform the urgent selling activities and-important nonselling
but market development related activities in a balanced and
regular manner.
(iv) Combination Quotas : Depending upon the nature of product and
market, selling tasks required to be performed as well as selling
challenges facing the company, some companies find it useful to
set quotas in combination of the two or three types discussed above.
Rupee sales volume and net profit quotas or unit sales volume and
activity quota in a combined manner are found in common use in
a large number of consumer and industrial products companies in
 India.

PROCEDURE FOR SETTING SALES VOLUME QUOTA

(i) Quotas based on sales potential : One common practice in quota

setting is to relate quotas directly to the territorial sales potentials.
These potentials are the share of the estimated total industry sales that
the company expects to realise in a given territory. A sales volume
quota sums up the effort that a particular selling unit should expend.
Sales potential represents the maximum sales opportunities open to
the same selling unit. Many companies derive sales volume quota
from sales potentials, and this approach is appropriate when - territorial
sales potentials are determined in conjunction with territorial design
or bottom-up planning and forecasting procedures are used in obtaining
the sales estimate in the sales forecast.
Thus, if the territorial sales potentials or forecasts have already been
determined and the quotas are to be related to these measures, the
job of quota setting is largely completed. For instance, let us assume
that the sales potential in territory A is Rs.300000 or 4 per cent of
the total company potential. Then management may assign this amount
as a quota for the salesperson who covers that territory. The total of
all territorial quotas then would be equal the company sales potential.
In some cases, management chooses to use the estimate of potential
as starting point in determining the quota. These potentials are then
adjusted for one or more of the factors discussed below :
Human factors : A quota may have to be adjusted downwards because
an older salesperson is covering the district. The salesperson may have done a fine job
for, the company for years but is now approaching
retirement age and slowing down because of physical limitations. It
would not be good human relations - or ethical - to discharge or force
the person into early retirement. Sometimes such persons are given
smaller territories with corresponding lower quotas. Likewise sometimes
new sales people are given lower quotas for the first few years until
they learn a greater level of competence.
Psychological factors : Management understands that it is human
nature to relax after a goal has been reached. Therefore, sometimes
sales managers set their quotas a little higher than the expected
potential. On the other hand management must not set the goals
unrealistically high. A quota too far, above the sales potential can
discourage the sales force. The ideal psychological quota is one that
is bit above the potential but can still be met and even exceeded by
working efficiently.
Compensation factors : Sometimes companies relate their quotas
basically to the sales potential, but adjust them to allow for the
compensation plan. In such a case, the company is really using both.
the quota and compensation systems to stimulate the sales force. For
example, one company may set its quota at 90 percent of potential.
It pays for one bonus if the quota is met and an additional bonus if
the sales reach 100 per cent of the potential.
(ii) Quotas based on past sales alone : In some organisations, sales
volume quotas are based strictly on the preceding year’s sales or on
an average of sales over a period of several years. Management sets each
salesperson’s quota at an arbitrary percentage increases over
sales in some past period. The only merits in this method of quota
setting are computational simplicity and low-cost administration. If
a firm follows this procedure, it should at least use an average figure
for the past several years as a base, not just the previous year’s sales.
Random or irregular events would greatly affect a sales index based
on only one year.
However, a quota setting method based on past performances alone
is subject to severe limitations. This method ignores possible changes
in a territory’s sales potential. Generally business conditions this year
may be depressed in a district, thus cutting the sales potential or
promising new customers may have moved into the district, thus
boosting the potential volume. Basing quotas on previous year’s sales
may not uncover poor performance in a given territory. A person may
have had sales of Rs.100000 last year, and the quota is increased by
5 per cent for this year. The salesperson may even reach the goal of
Rs.105000. However, the potential in the district may be Rs.200000.
This salesperson may perform poorly for years without letting the
management realize that a problem exists. Quotas set on past sales
also ignore the percentage of sales potential already achieved. Moreover,
‘chase your tail’ quotas- in which the more the salespeople sell, the
more they are supposed to sell-destroy morale and ultimately cause
top achievers to leave the company.
(iii) Quotas based on executive judgement above : Sometimes sales
volume quotas are based solely on the executive judgment, which is more precisely
called guesswork. Executive judgment is usually an
indispensable ingredient in a sound procedure for quota setting, but
to use it alone is certainly not recommended. Even though the manager
may be very experienced, too many risks are involved in relying solely
on this factor without referring to quantitative market measures. This
method is justified when there is little information to use in setting
quotas. There may be no sales forecast, no practical way to determine
territorial sales potential. The product may be new and its probable
rate of market acceptance is unknown, the territory may not yet have
been opened; or a newly recruited salesperson may have been assigned
to a new territory. In such situations, management may set sales
volume quotas solely on a judgement basis.
(iv) Quotas based on total market estimates : In some companies
management has neither statistics nor sales force estimates of territorial
sales potentials. These companies use top-down planning and forecasting
to obtain the sales estimate for the whole company; hence, if management
sets volume quotas, it uses similar procedures. Management may
either (i) breakdown the total company sales estimate, using various
indexes of relative sales opportunities in each territory and then make
adjustments or (ii) convert the company sales estimate into a
companywide sales quota and then breakdown the company volume
quota, by using an index of relative sales opportunities in each territory.
In the second procedure, another set of adjustment is made for differences
in territories and sales personnel before finally arriving at territorial
quotas. Note that these choices are similar the only difference being whether
adjustments are made only at the territorial level, or also at
the company level. The second alternative is a better choice.
(v) Quotas related only to compensation plan : Companies sometimes
base sales volume quotas solely upon the projected amounts of
compensation that management believes, sales personnel should receive.
No consideration is given to territorial sales potentials, total market
estimates, and past sales experiences, and quotas are tailored exclusively
to fit the sales compensation plan. If for example, salesperson A is
to receive Rs.5000 monthly salary and a 5 per cent commission on
all monthly sales over Rs.50,000. A’s monthly sales volume quota is
set at Rs.50,000. As long as A’s monthly sales exceed Rs.50,000,
management holds A’s compensation-to-sales ratio to 5 per cent.
Note that A is really paid on a straight-commission plan, even though
it is labeled “Salary and commission”.
Such sales volume quotas are poor standards for appraising sales
performance, they relate only indirectly, if at all, to territorial sales
potentials. It is appropriate to tie in sales force quota performance
with the sales compensation plan, that is, as financial incentive to
performers, but no sales volume quota should be based on the
compensation plan alone.
(vi) Salesperson set their own quota : Some companies turn the setting
of sales volume quotas over to the sales staff, who are placed in the
position of determining their own performance standards. The reason
for this is that sales personnel, being closest to the territories, know them best and
therefore, should set the most realistic sales volume
quotas. The real reason, however, is that management is transferring
the quota setting responsibilities and turns the whole problem over
to the sales staff, thinking, they will complain less if they set their
own standards. There is, indeed, a certain ring of truth in the argument
that having sales personnel set their own objectives may cause them
to work harder to attain them and complain less. But sales personnel
are seldom dispassionate in setting their own quotas. Some are reluctant
to obligate themselves to achieve what they regard as ‘too much’; and
others for this is just as common-overestimate their capabilities and
set unrealistically high quotas. Quotas set unrealistically high or low
by management or by the sales force cause dissatisfaction and results
in low sales force morale. Management should have better information,
therefore, it should make final quota decisions. Bow, for- instance,
can sales personnel adjust for changes management makes in price,
product, promotion, and other policies?

CHARACTERISTICS OF A GOOD QUOTA SYSTEM

(i) Realistic attainability : If a quota is to spur the sales force to
maximum effort, the goal must be realistically attainable. If it is too
far out of reach, the salespeople will lose their incentives.
(ii) Objective Accuracy : Regardless of what type of quota management
uses, it should be related to potentials”. Executive judgement is also
required, but it should not be the sole factor in the decision.

(iii) Ease of understanding and administering : A quota must be easy

for both management and the sales force to understand. Also, the
system should be economical to administer.
(iv) Flexibility : All quota systems need adequate flexibility. Particularly,
if the quota period is as long as a year, management may have to make
adjustments because of changes in market conditions.
(v) Fairness : A good quota system is perceived as fair to the people
involved. The workload imposed by quotas should be the same for all
sales people. However, this does not mean that quotas must be equal.
Differences in potentials, competition, and ability of the sales force
do exist.

CONCLUSION
Quotas are quantitative objectives assigned to sales personnel and other units
of the selling organisation. They are intended both to stimulate performance
and to evaluate it, through communicating management’s expectations and
serving as performance measures. In successful quota systems, special pains
are taken to tie in quota setting procedures with sales potentials and planning
data from the sales forecast and sales budget. Sound judgement is required
for adjusting tentative quotas both for contemplated policy changes and for
factors unique to each territorial environment. Continuous managerial review
and appraisal and balanced flexibility in making changes in quotas and
improvements in quota setting procedures characterise successful quota
system. When based .on relevant and accurate market information, and when
intelligently administered, quotas are effective devices for directing and
controlling sales operations.

SALES TERRITORIES
The task of assigning the sales territories to the sales representatives has
a significant effect on the functional efficiency of the sales department. The
sales representatives do not work within the boundaries of the organisation.
For them, working at the market place is the prime responsibility. In case
the territories are not assigned by clear planning, there is likely to no control
over the activities of the sales representatives. Also, in case the territories
are too large or too small, the performance is bound to be affected. In case
the nature of the territories is not homogenous, the comparison of the
performance of the sales representatives becomes difficult. With this background
of the difficulties that can arise in case of unplanned territory allocation,
it is of prime importance that the managers plan the territories of the
companies very carefully.
Sales territory : the concept
The territory can be defined in terms of the size of the area in which the
sales representatives operate as well in terms of the number of customers.
Operationally, it is better to define the sales territory as a
grouping of customers, and prospects assigned to an individual sales person. This
definition lays more stress on the customers and prospects in an area instead
of the size of the territory. A company might prefer to keep more sales
representatives in a densely populated metropolitan city and keep a few sales
representatives in an area with a lesser density of the customers and prospects.
E.g. Daewoo Motors selling Matiz and Cielo cars would prefer to keep more sales
representatives in Delhi and might keep only a few sales representatives
in the entire state of Haryana or Himachal Pradesh, although in terms of the
size the states are much bigger. It is the number of the customers as well
as the prospects who are likely to decide the sales volume that can be
achieved by a company and not the geographical area. The prospects represent
the sales potential that can be useful for the company in future. As the
companies start their marketing operations, they usually start with appointing
the sales representatives in the potential areas and increase the number of
sales representatives in the underrepresented area. This might call in for
increasing the number of sales representatives in the territories. In cases
when a single account is very large and is responsible for a significant part
of the sales of a company, them a single representative might not be assigned
this important client but it might be handled by a group of executives from the head
office. Such a client (often called as account) is known as house
account.

PURPOSE OF ESTABLISHING SALES TERROTORIES

The task of setting up sales territories is a continuous process and in constantly

updated or revised keeping in view, the changes that occur in the marketplace.
The sales territories are primarily set up to facilitate planning and control
of sales operations. In specific terms, the reasons of establishing the sales
territories can be stated as under :
Proper coverage of market
In the present competitive world, the market coverage is the key to gaining
competitive advantage. The opportunities of the marketplace cannot be wasted and
allowed to go into the hands of the competitors. So, the competition,
to provide adequate coverage of the market. In the present age of competition,
it is the sellers market and, not the buyers market. It is not expected out of
a customer to wait to purchase the product. So, the companies have to make
themselves available to the customer so that the customer can purchase the
product. The ease in making the company accessible to the company is called
as the spatial convenience, which in itself is acknowledged as a part of
customer service.
However, it is important to note that mere design of territories to cover the
markets should not be the only aim. The territory design should facilitate
the operational working and study the feasibility of establishing the territory,
keeping in view the costs of sales in that areas and the likely returns to make
the sales a profitable venture in that area. A good design will facilitate a sales
representative in spending more time in servicing the customers and reduce
the time in non-productive activities such as travelling. The territory design
must match with the sales programmes to achieve better coordination of the
operation of the sales department as a whole.
Controlling the sales expenses
While sales department is a major source of returns to the company, it is
also a major cost centre because of the investment and the costs incurred
in achieving the sales. The territory design has a key role to play in controlling
the sales expenses. In case the territories are too small in terms of numbers
of customers and prospects, the sales representatives achieve the sales at
a greater cost. The limit to the number of customers would not allow the
sales to grow beyond a point and the overhead expenses would increase the cost of
sales. Similarly if the territories are large in terms of number of
customers, it might not-be possible for the sales representative to be able
to contact all of them. This would result into loss of some opportunities for
the company. If the sales territories were too large in terms of physical size,
the cost of sales would mount because of the greater traveling expenses and
less of productive time spent with the customers.
The sales representatives have to report to their area sales managers and
regional managers. So, an error in the territory design would affect their
organization structure also that thereby adding to the sales expenses. Thus,
the territory design has to be optimum to achieve the maximum sales at the,
lowest possible costs to increase the profitability.
Facilitating evaluation
The sales representatives are evaluated for their performance so that they
can be adequately compensated. In order to achieve a fair evaluation, the
sales representatives must have an equal platform for evaluation. The well
designed sales territories facilitate their evaluation. The territories must-be
so designed that they can be considered as homogenous for comparing the
performance of the sales representatives. It is noteworthy that the nature of
duties of the sales representative does not allow their performance evaluation
in the manner in which the functionaries of other department of the company
are evaluated. The sales representatives do not have fixed duty hours, nor
do, they have well furnished offices or work premises. So, for their evaluation,
all these factors have to be kept in view. Territory all9cationfacilitates
evaluation and hence leads to more satisfied employees. The sales of a
company are affected significantly in case the sales representatives are not satisfied
from the compensation. It is the personal relationship that the sales
representatives develop in the market that helps them in getting the sales.
Consequently, if a sales representative leaves an organization, the new person
has to develop the relations to get the same level of sales. So, the managers
have to devise ways and means that keep the managers going to achieve their
targeted sales.
Contributing to morale of sales force
As explained in the previous point, correctly designed territories facilitate
evaluation of the sales representatives When the sales representatives feel
that they are getting their due reward for their efforts, they feel motivated
to achieve higher levels of sales performance. Their commitment to the
company increases and their morale i.e. their drive increases.
Coordination
The territories help in achieving the coordination between personal selling
and advertisement. If left alone, both of them cannot be an effective means
to achieve higher sales. It is their combined effort, which can achieve the
sales objectives. By the allocation of territories, the specific requirement
of each area can be studied and the advertisement and the sales promotion
scheme can be designed accordingly. These customized approaches helps in
servicing the customer in-a better way and thus gain more sales. E.g. A
company can divide the Indian states as territories and study the requirements
of the customers of each state. Each state will have its different language
and may require different sales promotion campaigns. Correctly formed
territories will reduce the wasteful expenditures into unproductive sales
promotion schemes and adopt a more effective and targeted approach.

satisfied from the compensation. It is the personal relationship that the sales
representatives develop in the market that helps them in getting the sales.
Consequently, if a sales representative leaves an organization, the new person
has to develop the relations to get the same level of sales. So, the managers
have to devise ways and means that keep the managers going to achieve their
targeted sales.
Contributing to morale of sales force
As explained in the previous point, correctly designed territories facilitate
evaluation of the sales representatives When the sales representatives feel
that they are getting their due reward for their efforts, they feel motivated
to achieve higher levels of sales performance. Their commitment to the
company increases and their morale i.e. their drive increases.
Coordination
The territories help in achieving the coordination between personal selling
and advertisement. If left alone, both of them cannot be an effective means
to achieve higher sales. It is their combined effort, which can achieve the
sales objectives. By the allocation of territories, the specific requirement
of each area can be studied and the advertisement and the sales promotion
scheme can be designed accordingly. These customized approaches helps in
servicing the customer in-a better way and thus gain more sales. E.g. A
company can divide the Indian states as territories and study the requirements
of the customers of each state. Each state will have its different language
and may require different sales promotion campaigns. Correctly formed
territories will reduce the wasteful expenditures into unproductive sales
promotion schemes and adopt a more effective and targeted approach.
STEPS FOR TERRITORY DESIGN
The steps for designing the sales territory very with the nature of business
operation. For example the principals followed while designing the sales
territories would be very different in case of FMGC companies like Hindustan
Levers, P&G etc. in comparison to consumers durable companies like Maruti,
BPL etc. Still some generalisation can be drawn regarding the steps for
setting of the sales territory :
(i) Selecting a basic geographical control unit.
(ii) Estimating the sales potential in control units.
(iii) Designing tentative territories from control units
(iv) Adjusting for coverage difficulty and redesigning the territory.
Selecting a basic geographical control unit.
The stating point in the planning of the sales territories is the basic geographical
unit. The commonly used geographical control unit in India is the district
or the state. In case of metropolitan cities, the territories are allocated as
per residential/business localities. Some of the other bases of selecting a
control unit are Zip code numbers (practiced in U.S.A.), cities, trading areas
etc. While selecting a control unit, it is preferable to keep them small and
allocate them on the basis of geographical proximity in order to facilitate
the sales operation subsequently. Such an allocation of territories also facilitates
readjustment of territories at a later stage. The various basis of geographical
control units are further-described herein :

Countries
The firms operating in multinational markets divide their markets on the
basis of the countries. The countries can be assumed to be homogenous
markets, although large countries need to be further subdivided into smaller
territories. However, the companies in the initial stages of multinational
marketing find it most convenient to divide their market on the basis of
countries or even groups of countries such as Middle East, Far East, Europe,
South Asia etc.
States
For the firms operating in India, state is considered to be a very convenient
geographical control unit. The companies might even use groups of states
and call it and region. The region shall be further divided into the states and
then the states further divided if necessary to districts under the area sales
managers with sales representatives operating in the smaller towns. E.g.
Cipla Ltd. A major pharmaceutical company has 22 regions in the country,
each comprising of one or more states. Similarly, most companies divide
all India sales operations into five regions. namely North, South, East, West
and Central India. Each region consists of a group of states.
Districts
With the increased competition, the companies have to formulate territories
much smaller than the states because they have to increase their reach. For
this purpose, the district serves as a logical basis for division into territory.
However, most companies divide the districts according to their convenience and may
not adhere to the administrative districts as formed by the government.
E.g. Shahbad, although comes under district Kurukshetra, most companies
count it as a part of the territory of Ambala district because the stockists
of Ambala visit Shahbad while those of Kurukshetra do not. So, the sales in
Shahbad are not counted into the performance of Kurukshetra district and
are counted as the sales performance of Ambala district. Analogous to
districts, American companies use Zip code as a basis for making the territories.
Zip code contains area that can be counted as one homogenous market.
Metropolitan cities
Metropolitan cities comprise of a large population in a relatively smaller
area. The population in Delhi is, almost equal to that of the state of Haryana
although in terms of area it is very small. So, in case of metropolitan cities,
the localities are divided depending on the basis of the number of customers
and prospects living in an area. Usually, the people living in a locality can
be taken as a fairly homogenous in terms of their income levels, education
and consequently consumer behaviour. So, they can be taken as one territory.
E.g. people of Greater Kailash and Nehru Place localities in Delhi can be
taken as one territory while those living, in Janakpuri and Vikaspuri can be
taken as another territory. Similarly, people living across river Yamuna can
be taken as another territory. The economic level, education, occupation etc.
in these localities is likely to be homogenous. White the first is a posh
locality, the second one may be taken as middle income class 1ocality and
the third as a lower income locality. The companies can allocate the resources
to these territories and achieve their sales targets. Territory allocation on the basis of
product
In certain cases, companies are resorting to allocating territories on the
basis of products. E.g. Cipla Ltd. Has representatives promoting specialised
products such as anti asthmatic and cardiac range of products in addition to
the representatives selling the regular antibiotics and anti inflammatory
.products. The representatives promoting specialised products are assigned
special territories, exclusive of the regular territories. There might be
representative selling cardiac products only in Punjab and Chandigarh while
the other may visit the doctors only in Haryana and Delhi. With the everincreasing
product lines of companies, this basis bf territory allocation is
also becoming quite popular.
Estimating the sales potential in each control unit
Once the basis of a control unit is established, the sales potential of each
control unit is estimated. The sales potential is estimated not only in the
present terms but also the future terms by estimating the number of prospects
in a sales territory. For this, the customer profile must be defined and an
estimate of the number of customers is made. Caution must be exercised
to estimate of the number of target customers and not vaguely defined
individuals. E.g. a company (say Revelon) marketing cosmetics has to estimate
not the number of women in a territory but the women who have the capacity
to purchase their premium range of cosmetics. So, they would be. interested
to estimate the population of the number of women in the upper middle class
society whom they would target in their marketing strategies. Thus, the
territories must not be looked upon merely in terms of the geographical area
and population, but in terms of the potential customers who can actually be useful to
the marketers. Such an estimate may be possible, in those situations,
an indirect estimate about the size of markets must be made by measuring
the variables that have a direct correlation with the market size. E.g. the
campany selling paints may not be able to estimate the number of people
who will get their houses painted in the next year, but the estimate of
population may be an indicator of the likely sales. In a populated area, the
sales are likely to be more as compared to a sparsely populated area.
Having conducted the exercise stated above, the companies estimate the
marketing potential. The next step is to estimate the sales potential by
analyzing the historical market shares within each control unit. The changes
required (if any) in the strategies and marketing practices are studied before
arriving at any conclusion. Having estimated the sales potential of the control
units, the territorial planner identifies those territories that have substantial
sales potential to justify sales-coverage. In case the company plans to have
mass coverage as its strategy, then all the territories are covered irrespective
of the sales potential. However if the company plans far a selective coverage
of markets, then the territories have to be selected an the basis of the sales
potential. This is the practice preferred during the initial launch stages of
the products as in case the companies are marketing industrial products.
Designing tentative territories from control units
The control units are combined to be converted into the tentative territories.
The territories are always subject to change, so they have been termed as
tentative. As a first exercise, contiguous control units are designated as
territories, each containing approximately same sales potential. The number of sales
persons required are estimated by dividing the sates potential and
the average sales that can be realised by an individual sales person. Historic
data and competitor information serve as useful basis in making such decisions.
For example, .assume that the management estimates that an average sales
person can realise a sale of Rs. 25,000 and the sales potential of Haryana
is Rs. 2,50,000. The management will have to divide Haryana into ten territories
and appoint ten sales representatives in order to achieve the sales targets.
In practice, while every effort is made to keep the, territories homogenous
in size, such figures present lot of practical difficulties. So, the sales potential
of a territory is often expressed as the percentage of sales potentials of the
total market.
Designing the shape of territories
The shape of the territories affects the selling expenses as well as the
efficiency of the sales person. If the territory shape permits a sales person
to spend minimum time on the road and more time in meeting the customers
it results in more productive time and hence better achievement of target.
This also contributes to increasing the morale of the sales persons. Three
types of shapes are most commonly used; the wedge, the circle and the
clover leaf territories. There shapes are as shown in the figure.
The wedge shape territory is appropriate when it contains both rural as well
as the urban areas. The urban areas are situated in the middle of the wedge
and the sides of the wedge protrude in the direction in which the rural
markets are spread. Wedges can be in m-any sizes. The travel time along the
adjoining wedges can be equalised by balancing urban and non-urban calls.
The circle shaped territory is appropriate when the customers (accounts) are
evenly distributed throughout the area. The sales person assigned to circular
shaped territory is based at some point near the centre, making for greater
uniformity in frequency of calls on customers and prospects. This also
makes the sales persons nearer to more of the customers than is possible
in a wedge shaped territory.
The cloverleaf is desirable when accounts are located randomly throughout
the territory. Careful planning of call schedule results in each clover leaf
being completed in a week or a fortnight in order to facilitate the completion
of one touring cycle of the sales representative. The sales representative can
report to his head quarter after the completion of one tour cycle. Usually
home base of the sales persons assigned to the territory is near the centre.
Cloverleaf territories are more common among consumer market and among
companies cultivating the markets extensively rather than intensively.
Adjusting and redesigning the territory
The final step is to adjust the tentative-territories by adjusting them for
coverage difficulty. The tentative territories should be so designed that each
territory contains approximately the same sales potential. However, it must
be accepted that even the territories with nearly equal sales potentials require
different selling efforts. They also differ in the selling expenses also. The
unrealistic assumptions are removed so that no differences in the characteristics
of geographical control units exist. Significant differences in physical and
other characteristics make the sales coverage more difficult for some control
units than for others. For example, certain large cities like Delhi have greater sales
potentials for
most products than some states such as Haryana or Punjab. However, the
time required to contact customers and prospects in cities is much less, and
the same is true in case of selling expenses. The optimum territorial arrangement
is reached when incremental sales per dollar of selling expenditures are
equated among all territories. In working toward this ideal, both sales potential
and coverage difficulty are taken into account. As the planner adjusts for
differences in coverage difficulty, control units are taken away from some
tentative territories and added to others. The final territorial arrangement is
one in which different territories contain different sales potentials.
Differences in coverage difficulty represent differences in workloads. The
planner ascertains how large the maximum workload the largest work load
for any salesperson should be. All workloads need not be the same size, since
sales personnel vary in ability as well as in drive, and some can safely be
assigned larger workloads. However, since there is an upper limit to the
desirable workload, and this also limits a territory’s maximum geographical
extent. When final adjustments for coverage difficulty are mad : sales territories
have varying amounts of sales potential and different-sized work loads, but
none exceeds the maximum desirable work load. The work load method is
one of the approaches to determine the sales force size. Here, the same
concept, with minor modifications is used for redistricting.
Redistricting to adjust for coverage difficulty (that is, differences in work
loads) is a seven-step procedure :
1. Determination of number, location and size of customers and
prospects in each tentative territory. Customers are identified and located through
sales records; prospects through trade directories,
subscription lists to trade publications, classified directories, and
credit reporting agencies. Size is measured in terms of sales potential.
2. Estimation of the average time required for each sales call. This
varies from account to account and from prospect to prospect, so
customers and prospects are classified into groups, estimating an
average time per call for each group. Time and duty analyses of sales
personnel are used to check these estimates.
3. Determination of the time required for traveling from one customer
to the next. This varies among regions, depending on the density of
customers and prospects and the condition of roads and transportation
facilities. Particular attention is paid to physical characteristics. Large
rivers, lakes, mountains, and other barriers to travel make natural and
necessary territorial boundaries. The number of places where a large
mountain range can be crossed by automobile are limited and often
considerable time is consumed in the crossing. The same is true of
large rivers, lakes, bays, and so forth. Transportation facilities are as
important as physical characteristics. If public transportation facilities
such as commercial airlines are used, territories are planned with an
eye on locations of air terminals. The planner interrelates and balances
differences in sales potential, physical geographical characteristics,
and transportation facilities and routes. After sketching in on a map
the tentative territorial division according to roughly equal sales potentials, the planner
makes adjustments after superimposing maps
showing topographic and transportation features.
4. Deciding call frequencies. Within certain control units, some or all
customer and prospect classes require call frequencies that differ
from those in other control units. Differences in the strength of
competition require variations in call frequency rates. Similarly, call
frequency rates are influenced by the market acceptance of the product
line within control units. Cost studies on minimum profitable order
sizes also provide input to the decision on call frequencies.
5. Calculating the number of calls possible within a given time period.
To determine the number of calls per day in a certain control unit,
the average amount of time required for each call is added to the
average time between- calls and divided into the number of working
hours in the day. Adjustments are made when call lengths vary for
different classes of customers and prospects.
6. Adjusting the number of calls possible during a given period by
the desired call frequencies for the different classes of customers
and prospects. Such an exercise results in estimation for the total
workload represented by the control units in each tentative territory.
Further adjustments are made to assure that the workload in any
territory is not larger than the allowable maximum and that selling
expenses are within budget limits. The planner shifts control units
among different tentative territories, adding units to some by taking
them away from adjacent territories. Each’ shift brings the territorial arrangement
closer to the optimum-that is, closer to one in which
incremental sales per dollar of selling expenditures are equated among
all territories.
7. Checking out the adjusted territories with sales personnel who work
or who have worked in each are, and make further adjustments as
required. Personnel familiar with customer service requirements,
competitive conditions, and topography, roads and travel conditions
may point out weaknesses not obvious to the planner. These cause
further shifting of control units from one territory to another, each
shift bringing the final territorial arrangement a little closer to the
optimum.
Assigning sales persons to the territories
Upon obtaining the best possible arrangement of the territories, the sales
persons are assigned to the territories. The above planning had assumed that
all the sales persons are similar in their performance, however the actual
allocation of persons poses lots of problems. People vary in ability, initiative,
effectiveness and physical condition. Moreover, sales persons performance
can vary in the territory. E.g. a South Indian is likely to be less effective in
Himachal Pradesh and vice versa. So, management has to consider lots of
factors while assigning the persons to the territories. Some companies find
that assigning hometown to the people to work gives better results while
some. companies think otherwise. There can be no prescriptive basis to serve
as a basis for assigning persons to the territories. The task of assigning persons must
fit into individual’s ability and should result into highest
contribution of the individual towards corporate profit. It might be noted that
even the periodic transfer of persons of one territory to another might be
done where it is felt that such an exercise will increase the effectiveness
of the person.
Routing and scheduling persons
The routing and scheduling plans aim to maintain the lines of communication
so as to optimise sales coverage and minimise wastage of time. The only
productive time that the sales persons spend is when they are in contact with
the customers. The time spent in travelling and reporting activities yields
less returns to the company. 5d, the routes and schedules of the sales persons
should be so designed that the non-productive time is maximised and the
productive time is maximised. The management can consider the options of
modes of transport in case this results in increasing the productive time. E.g.
the sales person may be provided with a car which will result in increase in
the productive time and an increase in the sales expenses also. Depending
the financial viability, such a decision should be taken. Similarly, companies
might allow sales persons to travel by air so as to reduce the travelling time.
The planned selection of routes will also result in reduction of non-productive
time. The schedules must be according to the convenience of the customer,
but care must be taken that the cost involved does not increase unnecessarily.
The practical problems must be accommodated while designing tour plans
and schedules and adequate flexibility must be allowed in the plans to allow
the uncontrollable situations.
Reasons for Establishing Territories
The main motive of establishing sales territories is to simplify the planning and controlling
of the selling function.
Following are some reasons for establishing sales territories −

To obtain thorough coverage of the market

According to the division of sales territory, the activities are assigned to salesperson. This
helps in market coverage, rather than the salesperson selling the product according to his
ambition. It helps the sales manager to monitor and take updates accordingly from
different sales managers.

To establish the salesperson’s job and responsibilities

It’s very important to establish jobs and responsibilities for salespersons. Sales territories
help in doing so because the task is assigned to the salesperson and he is responsible and
answerable for the same.
Once the task is assigned, frequent checks are done to monitor the calls; it helps to
determine the work of each salesperson. If the sales manager finds the workload for a
particular person is more, the work is divided and reassigned equally. This creates
motivation and interest to work.

To evaluate sales performance

In an organization, the sales territory is compared from the previous years to current to
find out the difference, i.e., the increase or decrease in sales volumes. It helps to work on
the difference accordingly. This is done with the help of sales territory as the activities are
assigned in a proper manner and gathering of data and evaluation becomes easy.
The comparison to evaluate sales performance is done on the following basis −

 Individual to District
 District to Regional
 Regional to Entire Sales Force
By this comparison, we can evaluate and determine where the sales force is contributing
for high volume of sales.

To improve customer relations

As we know, salespersons have to spend most of their time on road to sell the products but
if the sales territory is designed in a proper way, the salesperson can spend more time with
the customers (present and potential). This helps in building rapport and understanding the
needs better.
Sales of a company can increase when a customer receives regular calls and the salesman
has to visit the customers on the basis of calls. The salesman and the customer get time to
understand each other and resolve their issues regarding demand and supply. This also
helps in increasing the brand value of the company.

To reduce sales expenses

Once the geographical areas are decided, the company gets a proper picture as to the
areas that can be assigned to the salespersons. He/she needs to cover that area so that
there is no duplication of work by sending two salespersons in the same area.
The selling cost of the company gets reduced and leads to increase in profits. There is also
an advantage to the salesperson for few travels and overnight trips.

To improve control of the sales force

The performance of a salesperson can be measured on the basis of calls made to
customers, the routes taken and the schedules. In this case, the salesperson cannot deny if
the results are not positive.
The salesperson has to work on the same routes, schedule and everything is
predetermined. This results in better control of the sales force.

To coordinate selling with other marketing functions

If the sales territory is designed properly, it helps the management to perform other
marketing functions as well. It is easy to perform an analysis on the basis territory as
compared to the entire market.
The research done by the management on marketing on territory basis can be used to set
sales quotas, expenses and budgets. The results can be satisfactory if the salesperson helps
in advertising, distribution and promotion when the work is assigned on territory basis
instead of the market as a whole.

MOTIVATION OF SALES FORCE

MEANING OF MOTIVATION
High productivity in sales personnel come about neither naturally nor
accidentally. Some sales personnel are self-starters, requiring little external,
incentive to perform effectively, but they are the exceptions. The majority
of sales personnel require motivational help from management in order to
reach and maintain satisfactory job performance levels.
Motivation is goal-directed behaviour, underlying which are certain needs or
desires. The term “needs” suggests ‘lack of something’ or a state of felt
deprivation of some basic satisfaction, while the term “desires” suggests
positive ardor and strength of feeling. The complex of needs and desires
stemming from within individuals leads them to act in ways that will satisfy
these needs and desires.
Specifically, as applied to sales personnel, motivation is the amount of effort
the salesperson desires to expend on each of the activities or tasks associated
with the sales job, such as calling on potential new accounts, planning sales
presentations, and filling sales reports. Expending effort on each activity
making up the sales job leads to some level of achievement on one or more
dimensions of job performance-total sales volume, profitability of sales,
sales to new accounts, quota attainment and the like.
Motivational “Help” From Management
Most sales personnel require additional motivational “help” from management
in order to reach and maintain acceptable levels of job performance. They
require additional motivation both as individuals and as group members. As
individuals they are targets for personalized motivational efforts by their
superiors. As members of the sales, force, they are targets for sales management
efforts aimed toward welding them into an effective selling team. Four
aspects of the salesperson’s job affect the quality of its performance. The
following discussion focuses on these aspects. Each aspect is an important
reason why most sales personnel require additional motivation to perform
their jobs satisfactorily.
(a) Inherent Nature of the Sales Job : Although sales jobs vary from
company to company, sales jobs are alike in certain respects. To a
greater or lesser extent, each sales job involves a succession of ups
and downs, a series of experiences resulting in alternating feelings
of exhilaration and depression. In the course of a day’s work, salespersons
interact with many pleasant and courteous people; but they also meet
some who are unpleasant and rude, with whom it is difficult to deal.
They are frequently frustrated, particularly when aggressive competing
sales personnel are vying for the same business, and they meet numerous turndowns.
Furthermore, sales personnel spend not only working time
but considerable after-hours time away from home, causing them to
miss many of the most attractive parts of family life. These conditions
can cause an individual salesperson to become discouraged, to achieve
low performance levels, or even to seek a nonselling position. The
inherent nature of the sales job, then, often is the reason that additional
motivation is required to assure acceptable job performance.
(b) Salesperson’s Boundary Position and Role Conflicts : The
salesperson occupies a “boundary position” in the company and must
try to satisfy the expectations of people both within the company (in
the sales department and elsewhere) and in customer organizations.
There is linkage with four distinct groups : (1) the sales management
group, (2) the balance of the company organization who must be
depended upon for order fulfillment, (3) the customers, and (4) other
company sales personnel. Each group imposes certain behavioral
expectations on the salesperson and, in playing these different roles,
the salesperson faces role conflicts, such as :
1. Conflict of identification : This arises out of multi group membership.
As the salesperson works with the customer, it is reasonable to expect
identification with the customer rather than the company. However,
on returning to the company, the salesperson must drop identification
with the customer and identify with company.
2. Advocacy conflict : This arises when the salesperson has identified
with the customer, and seeks to aid the customer by advocating the customer’s
position to other groups in the company organization.
Although this may be important-and may be encouraged by the sales
n1anagement group it places the advocator in a difficult position.
(c) Tendency Toward Apathy : Many sales personnel have a natural tendency
to become apathetic, to get into a rut. Those who, year after year, cover
the same territory and virtually the same customers, tend to lose interest
and enthusiasm. Gradually their sales calls degenerate into routine
order taking. Because they feel they know the customers so well. They
come to believe that good salesmanship is not longer necessary. Many
salespeople require additional motivation to maintain continuing
enthusiasm for their work or to generate renewed interest in it.
(d) Maintaining a Feeling of Group Identity : The salesperson, working
alone for the most part, finds it difficult to develop and maintain a
feeling of group identity with other company salespeople. Team spirit,
if present at all, tends to be weak. Thus, the contagious enthusiasm
conducive to improving the entire group’s performance-does not develop.
If management, through providing added motivation, succeeds in developing
and maintaining team spirit, individual sales personnel will strive hard to
meet group performance standards : Few people who do not consider themselves
members of the sales team appear as poor performers in the eyes of their
colleagues in the sales force.
Providing the kind of working atmosphere in which all members of the sales
force feel they are participating in a cooperative endeavour is not easy nevertheless,
effective sales management works continuously to achieve and
maintain it.
DESIGNING A SALES-COMPENSATION PLAN

Whether contemplating major or minor changes or drafting a completely

new sales-compensation plan, the executive should approach the project
systematically. Good compensation plans are built on solid foundations. A
systematic approach assures that no essential step is overlooked.
(A) Define the Sales Job
The first step is to examine the nature of the sales job. Up-to-date written
job descriptions are the logical place to start. If job descriptions are outdated,
or if they are not accurate and incomplete, revision is in order.
Other aspects of company operations should be considered in relation to
their impact on the sales job. Sales department objectives should be analyzed
for their effect on the salesperson’s job. Sales volume objectives, for instance,
whether in rupees, units of product, or numbers of dealers and distributors,
are translated ultimately into what is expected of the sales personnel, as a
group and individually. The impact of sales-related marketing policies should
be determined. Distribution policies, credit policies, price policies, and
other policies affect the salesperson’s job. Current and proposed advertising
and sales promotional programmes should be evaluated as per their significance
for sales personnel. The review of company objectives, policies, at promotional
programmes should assist in clarifying the nature of the salesperson’s goals,
duties, and activities.

(B) Consider the Company’s General Compensation Structure

Most large companies, and many smaller ones, use systems of job evaluation
to determine the relative value of individual jobs. Job-evaluation procedure
is not scientific; it is an orderly approach based on judgment. It focuses on
the jobs, without considering the ability or personality of individuals who
do the work. Its purpose is to arrive at fair compensation relationships among
company jobs.
(C) Consider Compensation Patterns in Community and Industry
Because compensation levels for sales personnel are closely related to
extern, supply-and-demand factors, consideration should be given to prevailing
compensation patterns in the community and industry. Management need
answers to several key questions : (1) What compensation systems are be
in, used? (2) What is the average compensation for similar positions? (3)
How are other companies doing with their plans? (4) What are the pros and
con of departing from industry or community patterns? The answers to these
and related questions and their relative significance, differ with the company
and the industry.
If there is a companywide formal job evaluation programme, it should take
into account the current rates for sales positions in the community and
industry. A programme for setting compensation of sales personnel is sound
only if it considers the relation of external compensation practices to those
of the company. Sales executives should maintain constant vigilance against
the possibility that the pay of sales personnel should not get out of line with
that paid for similar jobs in the community or industry.

(D) Determine Compensation Level

Management must determine the amount of compensation a salesperson
should receive on the average. Although the compensation level might be set
through individual bargaining, or on an arbitrary-judgment basis, neither
expedient is recommended. Management should ascertain whether the caliber
of the, present sales force measures up to what the company would like to
have. If it is too low, or if the company should have lowergrade people than
those currently employed, management should determine the market value
of sales personnel of the desired grade. Management should also weigh the
worth of individual persons to the company through estimating the sales and
profit that would be lost if particular salesperson resigned. Still another
consideration in setting the sales compensation level is the amount the
company can afford to pay. The result of examining these and other factors,
pertinent to the situation of the individual firm, is a series of estimates for
the total cost of salespeople’s compensation.
(E) Provide For the Various Compensation Elements
A sales-compensation plan has as many as four basic elements : (1) a (fixed
element) either a salary or a drawing account, which is intended to provide
some stability of income; (2) a variable element (for example, a commission,
bonus, or profit-sharing arrangement), designed to serve as an incentive; (3)
an element providing for (reimbursement of expenses or payment of expense
allowances; and (4) an element covering the fringe or “plus factors”, such
as paid vacations, sickness and accident benefits, life insurance, pension and
the like. Not every company wants to, or should, include all four elements.

REQUIREMENTS OF A GOOD SALES COMPENSATION

PLAN
A good sales compensation plan meets seven requirements.
First, it
provides a living wage, preferably in the form of a secure income.
Individuals worried about money matters do not concentrate on doing
their jobs well.
Second, the plan fits with the rest of the motivational program-it does not
conflict with other motivational factors, such as the intangible feeling of
belonging to the sales team.

Third, the plan is fair-it does not penalize sales personnel because of factors
beyond their control within the limits of seniority and other special
circumstances, sales
personnel receive equal pay for equal performance.

Fourth, it is easy for sales personnel to understand- they are able to

calculate their own
earnings.

Fifth, the plan adjusts pay to changes in performance.

Sixth,the plan is economical to administer.

Seventh, the plan helps in attaining the objectives of the sales organization.

DEVISING A SALES COMPENSATION PLAN

Whether contemplating major or minor changes or drafting a
completely new sales compensation plan, the sales executive approaches
the project systematically. Good compensation plans are built on solid
foundations. A systematic approach assures that no essential step is
overlooked.
The first step is to re-examine the nature of the sales job. Up-to-date
written job descriptions are the logical place to start. Other aspects of
company operations are considered in relation to their impact upon
the sales job. Sales department objectives are analyzed for their effect on
the salesperson’s job. The impact of sales-related marketing policies is
determined. Distribution policies, credit policies, price policies, and other
policies affect the salesperson’s job. Current and proposed advertising
and sales promotional programs assist in clarifying the nature of the
salesperson’s goals, duties, and activities.
Most large companies, and many smaller ones, use job evaluation
system to determine the relative value of individual jobs. Job evaluation
procedure is not scientific; it is an orderly approach based on judgement.
It focuses on the jobs, without considering the ability or personality of
individuals who do the work. Its purpose is to arrive at fair compensation
relationships among jobs.

Traditionally, sales executives have opposed using formal job

evaluations to determine the compensation levels of sales personnel.
They contend that compensation levels for sales personnel are more
closely related to external supply-and-demand factors than to conditions
inside the company.
Because compensation levels for sales personnel are related to
external supply-and-demand factors, it is important to consider
prevailing compensation patterns in the community and industry.
Management needs answers to four questions- (1) What compensation
systems are being used? (2) What is the average compensation for similar
positions? (3) How are other companies doing with their plans? and (4)
What are the pros and cons of departing from industry or community
patterns?

A programme for setting compensation of sales personnel is sound

only if it considers the relation of external compensation practices to
those of the company. Effective sales executives maintain constant
vigilance against the possibility that the pay of sales personnel will get
out of line with that paid for similar jobs in the community or industry.
Management must determine the amount of compensation
salesperson should receive. Although the compensation level might be set
through individual bargaining, or on an arbitrary judgement basis,
neither expedient is recommended. Management should ascertain
whether the caliber of the present sales force measures up to what the
company would like to have. Management weights the worth of individual
persons through estimating the sales and profit that would be lost if
particular salespeople resigned. Another consideration is the
compensation amount the company can afford to pay.

A sales compensation plan has as many as four basic elements: (1)

a fixed element, either a salary or a drawing account, to provide some
stability of income; (2) a variable element (for example, a commission,
bonus, or profit-sharing arrangement), to serve as an incentive; (3) an
element covering the fringe or “plus factor”, such as paid vacations,
sickness and accident benefits, life insurance, pensions, and the like;
and (4) an element providing for reimbursement of expenses or payment
of expense allowances. Not every company includes all four elements.
Management selects the combination of elements that best fits the selling
situation.

Management should consult the present sales personnel.

Management should encourage sales personnel to articulate their likes and
dislikes about the current plan and to suggest changes in it.
Criticisms and suggestions are appraised relative to the plan or plans
under consideration.
For clarification and to eliminate inconsistencies the tentative plan
is put in writing. Then it is pre-tested. The amount of testing required
depends upon how much the new plan differs from the one in use. The
greater the difference, the more thorough is the testing. Pretests of
compensation plans are almost always mathematical and usually
computerized.
The plan is then revised to eliminate trouble spots or deficiencies. If
alternations are extensive, the revised plan goes through further pretests
and perhaps another pilot test.
At the time the new plan is implemented, it is explained to sales
personnel. Management should convince them of its basic fairness and
logic. The sales personnel are made to understand what management
hopes to accomplish through the new plan and how this is to be done.
Details of changes from the old plan, and their significance require
explanation. Provisions for follow-up are made. From periodic checkups,
need for further adjustment is detected. Periodic checks provide evidence
of the plan’s accomplishments, and they uncover weaknesses needing
correction.
5.4 TYPES OF COMPENSATION
Direct: The direct compensation package for a salesman is more or
less the same in all companies. However, as you must have also seen in
your experience, a company employing technical person as salesman for
selling, say, industrial or electronic products may offer a high basic
salary. Sometimes, when the product is in the introductory stage the
function of the salesman is to create new markets and make customers
understand how to use the product as in the case of a new consumer
durable product like vacuum cleaners of a new electronics products used
by certain industries; the basic salary of the salesman may be on the
higher side. The direct compensation package of a salesperson thus
consists of the basic pay plus allowances covering all travel and
entertainment expenses etc. In case, the salesman has to stay overnight
his boarding and lodging allowances are also provided for. The basic
salary and other allowances are revised from time to time. They also
increase with promotion of the salesman.
Indirect: It consists of financial as well as non-financial incentives.
Financial incentives
(i) Salary plus commission on sales above a certain amount-
Herein, the salesman receives direct salary and a
commission in addition to it. Every salesman is assigned a
fixed quota. The commission is awarded on achievement of
the targeted quota. A fixed percentage of sales achieved over
and above the target is also set. This type of compensation
scheme ensures a direct salary as well as an in-built
motivation system through incentives.
(ii) Salary plus share in profits- This is not a very prevalent
method. It is generally suggested for a company selling high
value items with high profit margins. The incentive here is based on profits
earned. The selling expenses to sell a
product may also be large and this is incorporated in the
profit sharing scheme as it acts as a control mechanism. Also
salespeople working to obtain contracts are generally given a
share in profits rather than awarded on direct sales.
Non-financial incentives
(a) Training programme- Most companies offer training
programmes for their salesmen. On an average a salesman
has to undergo a training course every one or two years.
These programmes enable interaction between salesmen of
different territories as well as provide them with latest
developments in the field. These training programmes are
viewed as an indirect benefit by the salesmen.
(b) Awards, recognitions and prizes- In addition to training
programmes the award ceremonies for outstanding
achievements in sales are held in exotic locations like hill
stations or five-star hotels. The awards are presented
through foreign dignitaries or important people in the field,
thus providing the salesman with the much needed
recognition.
5.5 FACTORS INFLUENCING COMPENSATION
Although the basic structure of a compensation plan may be
similar across the companies, some factors do predominantly shape the
structure of the company’s compensation plan.

The relation with product life cycle

The amount of selling effort is directly related with the stage at
which a product is in its life cycle. The compensation structure is a
function of selling effort. When the product is in the introductory stage
the company needs a dynamic salesforce which can establish the product
in the desired market. The salesforce must be enterprising, willing to
travel, take criticism easily, have a good knowledge of the product, have
good communication skills and last but not the least, have tremendous
stamina to work. To keep such a salesforce motivated, adequate
compensation is the basic need.
In the growth stage, the motivation of the salesforce has to be
sustained to exploit all the opportunities available in the market. They
have to approach the market with renewed vigour. At this point indirect
compensation schemes which are incentive linked play an important role.
When the product has firmly established itself, the salesforce also needs
a break from the monotony. Other indirect benefits like training
programmes in good environmental locations; foreign trips for training
and understanding markets; promotions to much responsible positions
are the requirements at this stage.
When the product is in the decline stage some fresh incentive
schemes may be introduced in the compensation scheme to generate
fresh interest in the product. The number of people involved with the
product has also to increase marginally.
Compensation related with demographic characteristic

The compensation package preferred by the salespeople depends

upon their demographic characteristics also. Their age and size of family
or number of dependents play an important part in the preference for a
basic salary and/or incentives. However, this cannot be generalized and
depends largely on the individual.
Role of selling in marketing strategy of the company, and
competitor’s practices are other important factors influencing
compensation.
5.6 DIMENSIONS OF SALES MOTIVATION
Motivational effort is generally thought to include three
dimensions- intensity, persistence, and choice. Intensity refers to the
amount of effort the salesperson expends on a given task; persistence
refers to how long the salesperson will continue to put forth effort; and
choice refers to the salesperson’s choice of specific actions to accomplish
job-related tasks. For example, a salesperson may decide to focus on a
particular customer (choice). He may increase the number of calls he
makes on this customer (intensity) until he gets the first order
(persistence). The choice of a specific action may affect the intensity and
persistence. Likewise, intensity and persistence may affect the choice of
specific actions.
The sales job consists of a large variety of complex and diverse
tasks. Because of this, it is important that the sales person’s efforts be
channeled in a direction consistent with the company’s strategic plan.
Therefore, the direction of the salesperson’s effort is as important as the
intensity and persistence of that effort.

IMPORTANCE OF MOTIVATION
The nature of the sales job, the individuality of salespeople, the
diversity of company goals, and the continuing changes in the
marketplace make motivating sales persons a particularly difficult and
important task.
Unique nature of the sales job- Salespeople experience a
wonderful sense of exhilaration when they make a sale. But they must
also frequently deal with the frustration and rejection of not making the
sale. Even very good sales person does not make every sale. Also, while
many customers are gracious, courteous, and thoughtful in their
dealings with salespeople, some are rude, demanding, and even
threatening.
Salespeople spend a large amount of time by themselves calling on
customers and travelling between accounts. This means that most of the
time they are away from any kind of support from their peers or leaders,
and they often feel isolated and detached from their companies.
Consequently, they usually require more motivation than is needed for
other jobs to reach the performance level management desires.
Individuality of salespeople- Sales people have their own personal
goals, problems, strengths, and weaknesses. Each sales person may
respond differently to a given motivating force. Ideally, the company
should develop a separate motivational package for each sales person;
but a totally tailor-made approach poses major practical problems. In
reality, management must develop a motivational mix that appeals to a
whole group but also has the flexibility to appeal to the varying individual
needs.
A related point is that the sales people themselves may not know
why they react as they do to a given motivator, or they may be unwilling
to admit what these reasons are. For example, a salesperson may engage
in a certain selling task because it satisfies his ego, rather than admit
this, however, he will say that he is motivated by a desire to serve his
customers.
Diversity in company goals- A company usually has many diverse
sales goals, and these goals may even conflict with each other. One goal
may be to correct an imbalanced inventory and another may be to have
the sales force to missionary selling to strengthen long-term customer
relations. These two goals conflict somewhat and require different
motivating forces. With diverse goals such as these, developing an
effective combination of motivators is difficult.
Changes in market environment- Changes in the market
environment can make it difficult for management to develop the right
mix of sales force motivational methods. What motivates sales people
today may not work next month because of changes in market
conditions. Conversely, sales executives can face motivational problems
when market conditions remain stable for an extended period of time. In
this situation, the same motivators may lose their effectiveness.
5.8 MOTIVATION THEORIES
Researchers in the behavioural sciences have shown that all
human activity is directed toward satisfying certain needs and reaching
certain goals. How sales-people behave on the job is directly related to
their individual needs and goals. Thus, some individuals will behave
differently and will be more successful because of different motivational
patterns. Many people feel that individual motivation is dependent upon
whether or not salespersons find something in the job that is personally
motivating for them. Therefore, the job of the sales manager must be
redefined, with greater emphasis placed upon understanding and
accepting the idea of how motivation works. The sales manager is
responsible not only for motivating the sales force per se but also for
counseling each salesperson individually to find the source of that
person’s self-motivation.
Maslow’s Need Theory
Maslow’s well-known theory contends that people are motivated by
a “hierarchy” of psychological growth needs. Relative gratification of the
needs at one level activates the next-higher order of needs. The
hierarchy-of-needs theory implies that salespeople come to their jobs
already motivated and that they only need the opportunity to respond to
the challenges of higher-order needs. The following Exhibit presents the
order of priority of the needs individuals seek to fulfill and the needs
sales managers must consider.
EXHIBIT: HIERARCHY OF HUMAN NEEDS AND THEIR IMPLICATIONS
FOR SALES MANAGERS
Maslow’s Hierarchy Salesperson’s Needs Sales Manager’s Task
Self-actualization needs
Self-development
Creativity
Self-fulfillment
Provide greater freedom,
self-development workshop
95
Esteem needs
Recognition Status Provide greater job
responsibilities, promotion
opportunities, public
recognition for
achievements
Social needs
Social interaction
Friendship
Acceptance among peers
and superiors
Maintain close
relationships with sales
force
Sales meetings
Newsletters, memoranda,
etc.
Safety needs
Freedom from worry about
security of jobs, incomes,
medical expenses, etc.
Provide a balanced package
of fringe benefits
Physiological needs Food, shelter, overall
health, etc.
Be aware of general health
and living conditions of
sales force
Sales managers applying need theory should keep in mind its two
major premises:
• The greater the deprivation of a given need, the greater its
importance and strength.
• Gratification of needs at one level in the hierarchy activates
needs at the next-higher level.
Sales managers must keep track of the level of needs most
important to each salesperson, from the beginning trainee to the senior
sales representative. Before salespeople become stagnated at one level,
they must be given opportunities to activate and satisfy higher-level
needs if they are to be successfully motivated toward superior
performances. Since various salespeople are at different need levels at
any one time, sales managers have to retain their sensitivity to the
evolving needs of individual sales person through close personal contact
with each member of the sales force.

Motivator-Hygiene Theory: Herzberg’s classic research studies

found two types of factors associated with the satisfaction or
dissatisfaction of employees. Sources of satisfaction are called motivators
because they are necessary to stimulate individuals to superior efforts.
They relate to the nature or content of the job itself and include
responsibility, achievement, recognition, and opportunities for growth
and advancement. Sources of dissatisfaction are called hygiene factors
because they are necessary to keep employee performance from dropping
or becoming unhealthy. They comprise the environment, include salary,
company policies and administration, supervision, and working
conditions.
According to Herzberg’s theories, to improve productivity, sales
managers must maintain hygiene factors (pleasant work environment)
while providing motivators (job enrichment) for the sales force. Here are
some examples of job enrichment:
Give salespeople a complete natural unit of work responsibility and
accountability (e.g. specific customer category assignments in a
designated area).
Grant greater authority and job freedom to the salespeople in
accomplishing assignments (e.g., let salespeople schedule their time in
their own unique way as long as organizational goals are met).
Introduce salespeople to new and more difficult tasks and to
challenges not previously handled (e.g., opening new accounts, selling a
new product category, or being assigned a large national account).

Assign salespeople specific or specialized tasks enabling them to

become experts (e.g., training new salespeople on “how to close a sale”).
Send periodic reports and communications directly to the
salesperson instead of forwarding everything via the sales supervisor. (Of
course, the supervisor must be informed about what information the
salespeople are receiving).
Achievement Theory: Research by McClelland and his associates
confirmed that some people have higher achievement needs than others;
they labeled such persons “achievement oriented”. Children who are
given greater responsibilities and trusted from youth to do things on their
own are more likely to have achievement-oriented profiles.
Achievementoriented
people readily accept individual responsibility, seek challenging
tasks, and are willing to take risks doing asks that may serve as stepping
stones to future rewards. These individuals receive more satisfaction
from accomplishing goals and more frustration from failure or unfinished
tasks than the average person. Any achievement-related step on the
“success path” may include rewards (positive incentives) or threats
(negative incentives). A path is contingent if the individual feels that
immediate success is required in order to have the opportunity to
continue toward further successes and that immediate failure causes
loss of the opportunity to continue on the path. If immediate success or
failure has no effect on the opportunity to continue on the path toward
future success or failure, the path is noncontingent.
Sales managers need to identify the achievement-motivated
salespeople and then give them personal responsibility for solving
definable problems or achieving certain goals. Frequent, specific feedback is
also essential so that these sales-people can know whether they are
successful or not. Managers may have to temper negative feedback
because achievement-motivated people may resign if they feel that they
are going to be unsuccessful. Finally, competition among such
salespeople can become cut-throat and damaging to the organization
unless carefully monitored and controlled.
Contrasted with these achievement-oriented individuals, affiliative
people are not as competitive nor are they as anxious about uncompleted
tasks; they require only general feedback regarding goal achievement.
Affiliative types like to work in groups and want to be accepted by others.
They are less self-centered, usually help bind the group together, and are
less able to tolerate traveling jobs involving long periods of solitude.
Although salespeople generally exhibit traits of both task
achievement and group affiliation, it is up to the sales manager to learn
the dominant needs of individual salespeople in order to devise specific
strategies for motivating them.
Inequity theory: According to the inequity theory of motivation,
people compare their relative work contributions and rewards with those
of other individuals in similar situations. As “positive-thinking” minister
and author Robert Schuller says: “Many people hear through their peers,
not their ears”. Inequity is experienced when a person feels either
underrewarded or overrewarded for his or her contribution relative to
that of others. The stronger the feeling of inequity, the stronger the drive
to reduce tension. Although individuals may respond in unique ways to
inequity, most people who feel underpaid or underrewarded, relative to
others making similar contributions, tend to decrease their work efforts:

people who feel overpaid tend to increase their efforts. People may also
reduce their inequity tensions by distorting their perceptions of their
rewards and contributions versus those of others. Finally, individuals
may leave a perceived inequitable situation by quitting the job or
changing the comparison group.
According to inequity theory, it is important that sales managers
learn how individual sales representatives feel about the equity of their
contributions and rewards compared with those of others. If inequity is
perceived by some of the salespeople, the sales manager needs to correct
the situation if inequity really does exist or help the salespeople reduce
tensions by altering their perceptions of the comparison group’s relative
contributions and rewards.
Role clarity: Donnelly and Ivancevich contend that one of the
most important needs of salespeople is role clarity, or a concept of exactly
what their job entails. Because salespeople often lack sufficient job
knowledge, must deal across departmental boundaries, and are
challenged by complex problems requiring innovative solutions, precisely
defined goals and clear role expectations can be motivational. Empirical
research with salespeople correlates increased role clarity with greater
job interest, more opportunity for job innovation, less work tension, more
job satisfaction, and a lower propensity to leave. Salespeople usually
want and need more information about what is expected of them and how
they will be evaluated.
Clearly written job descriptions and management-by-objectives
(MBO) conferences that set precise goals (mutually agreed upon by the
salesperson and sales manager) can have important motivational effects and
stimulate job satisfaction. Clarifying the role expectations for
salespeople by individualizing achievement plants and providing a
continuous flow of helpful information will consume significant amounts
of sales management time. But this seems to be one of the least
complicated, least expensive, and surest ways of obtaining higher sales
force productivity.

MOTIVATIONAL TOOLS
The simple motivational tools of early years such as only financial
benefits prove to be a poor method of motivation beyond physiological
and safety needs satisfaction on account of the unique aspects of a
salesperson’s job. The non-financial incentives, become an important
component of motivation. Some of the factors that make a special mark
on salesforce motivation are discussed below.
1. Meeting between manager and salesforce- These are highly
regarded by sales managers in the motivation of their sales
teams. This provides opportunity to managers to meet their
salesforce in the field, at head office and at the sales
meetings/conventions. This provides a number of
opportunities for improving motivation. These meetings allow
the sales manager to understand the personality, needs and
problems of each salesperson.
2. Clarity of job- Clarity of job and what is expected from the
salesperson is a great motivator. The objectives when duly
quantified and well defined, properly connected and linked with the reward
and recognition serve as source of
motivation to the salesperson.
3. Sales targets or quotas- If a sales target or quota is to be
effective in motivating a salesperson, it must be regarded as
fair and attainable and yet offer a challenge to him. Because
the salesperson should regard the quota as fair, it is usually
sensible to allow him to participate in the setting of the
quota.
4. Sales contest- The sales contest is an important tool to
motivate salesperson. The purpose of the sales contest varies
widely. It may encourage a higher level of sales in general, to
increase the sales of a slow-moving product or to reward the
generation of new customers. It provides an incentive to
show better performance and secure more satisfactory
results.
5. Sales conventions and conferences- These are the devices
of group motivation. They provide opportunities for
salesperson to participate, gain social satisfaction and
express their views on matters directly affecting their work.
They promote team work, dissolve social barriers, inspire and
raise salesperson’s morale. Most of the companies in India
are now-a-days adopting this method to motivate their
salesforce.
6. Positive affect- The positive affect method is also an
important techniques for motivating the salesforce to their
best. The proper application of praise, positive feedback, and human
warmth and understanding can impel others to
perform up to their capabilities. This must be done in a
genuine way and not be perceived as overtly-self serving.
7. Leadership style of the manager- Leadership style of the
manager plays an important role in motivating the
salesperson. Inspirational leadership, which refers to
influence through referent power. Identification or
charismatic charm is an important tool in the motivational
strategy of the management.
8. Freedom to work- In order to perform the onerous duties
and responsibilities, the salesperson must be given a
reasonable amount of freedom and discretion in performing
their job. Discretion and freedom may be accomplished by
allowing salesperson to develop their own call patterns, more
control over the types of promotional packages that are
offered to their customers etc. Freedom or autonomy satisfies
the psychological needs and is like power pay (which is a
reward), making the job of salesperson more important in the
organization.
9. Reward and recognition- Although sales quotas, sales
contests, conventions and conferences have positive carry
over effects, these are short lived techniques of motivating
salesmen. On the other hand reward and recognition on
salesperson accomplishments are more enduring and
relatively economic methods of motivation. Some of the ways
to extend recognition and honour to salesperson include conferment upon
the title of “salesman of the month/year”.
Congratulation telegrams from members of top management,
sales trophies, offering membership of social clubs, mention
in company newsletter, certificate etc.
10. Persuasion- One of the more common and recommended
forms of inducing high levels of motivation is through
persuasion. In this situation, managers use rational
arguments to convince salesperson that it is in their own
best interests to act in preferred way. Persuasion has the
advantage of getting people to conclude that their actions
were performed out of their own free will. This leads to higher
levels of self direction than reward or coercive modes of
influence where one perceives he or she acts more as a
function or external compulsion than internal volition.

CONTROLLING SALES EFFORTS/SALES FORCE

INTRODUCTION
Sales executives are responsible for a myriad of activities as they are involved
in every decision regarding sales. In discharging, these complex responsibilities,
it is very difficult for a sales executive to pay adequate attention to selling
objectives and the need to achieve them at a profit to the company. Caught
up in the middle of everyday activities, the sales executives at all levels of
organization find it easy to neglect long term matters. In such a situation,
installation and operation of control technique is essential and pays off
handsomely.

If appropriately designed and skillfully implemented, control mechanisms

greatly increase the chances of achieving selling and profit objectives. The
sales budget is the key control mechanism and quotas (sales volume, profit
and activities) provide an effective means for motivating sales people to
achieve sales and profit objectives.
Sales control is an integral part of the sales management process, providing
the follow up to planning. It involves procedure not only for review but also
for the correction of a company’s sales activities.
The term sales control denotes a comprehensive effort encompassing sales
and cost analysis and periodic projects such as sales audit. Sales analysis
is the examination of sales activities, improves sales forecasting accuracy and directs
future sales efforts. It is identifying weaknesses so that the
operations may be correctly directed towards achieving the sales objectives
and ultimately organization objectives. This point culminates at sales audit.
The another important component of sales control is cost analysis, examining
in-depth the various cost factors which influence the profitability of the
company.
OBJECTIVES OF SALES CONTROL
Sales Control mechanism, if well designed and skillfully implemented greatly
increases the chances that the entire sides organization will focus its efforts
on achieving selling and profit objectives. The main purpose of sales control
is to keep a firm’s activities on the correct line. It makes sales planning a
meaningful endeavour. Main objectives of sales control are :
1. Measurement of Sales Performance : One important objective of
sales control is the measurement of sales performance. Effective control
requires feedback that enables an evaluation of sales results achieved in the
marketplace from the standards already fixed. In fact, anything which is
measured is better performed. Accurate measurement of actual results also
form the basis for any reward system. This encourages the sales force to
supply timely feedback.
2. Spotting out Negative Performance : The second objective of sales
control is to spot out negative features of the performance and detrimental
developments early. The feedback system must be so operated that smooth
and timely reports may be collected on a frequent basis. The tighter the
control system is, the lesser impact, .a threatening event like competitive.

price drop, will have before it is discovered and counteracted. Continuous

feedback shall detect deterioration in salesperson’s performance, which may
enable the sales supervisor/manager to take corrective action timely.
3. Identifying Opportunities : A well-functioning sales control system
identify the emerging opportunities before they are evident to competitors.
The company then gets an opportunity to enter the market with the new
product before an industry-wise on rush sets in. The identification of such
an opportunity requires an entrepreneurial skill and a knack to read the
market. Sales managers are uniquely qualified to undertake this dynamic
aspect of sales control.
Sales control always looks into the question why did it happen? And ideally,
addresses the issue of what is happening. This analysis leads to the questioning
what the company can do to optimize results undercurrent circumstances.

THE SALES CONTROL PROCESS

Three major activities are involved in Sales Control Process :
1. Establishment of Performance Standards : The first step in the
control process is the establishment of quantitative and qualitative standards
against which actual performance can be compared.
(A) Quantitative Performance Standards
Most companies use quantitative performance standards. The particular
combination of standards chosen varies with the company and its marketing
situation. Quantitative standards in effect, define both the nature and desired
levels of performance. Indeed quantitative standards are used for stimulating good
performance as well as for measuring it. They provide descriptions of
what management expects. Each person on the sales force should have
definitions of the performance aspects being measured and the measurement
units. These definitions help sales personnel make their activities more
purposeful. Sales personnel with well-defined objectives waste little time
in pursuing activities that do no contribute to reaching those objectives.
A single quantitative standard, such as’ one for sales volume attainment,
provides an inadequate basis for appraising an individual’s total performance.
In the past, the performances of individual sales personnel were measured
in terms of sales volume. Today’s sales managers realize that it is possible
to make unprofitable sales, and to make sales at the expense of future sales.
In some fields for example, industrial goods of high unit price sales result only after
extended periods of preliminary work and it is not only unfair but
misleading to appraise performance over short intervals solely on the basis
of sales volume.
Sales personnel have control over many factors affecting sales volume. They
should not be held accountable for “uncontrollable” such as differences in
the strength of competition, the amount of promotional support given to the
sales force, the potential territorial sales volume, the relative importance
of sales to national or house accounts and the amount of “wind fall” business
secured. A simple reason exists for, setting other quantitative performance standards
besides that for sales volume.
Each company selects that combination of quantitative performance standards
that befits its marketing situation and selling objectives. If necessary, it may develop
its own unique standards designed to serve the objectives. The
standards discussed here are representatives of the many types in use.
(a) Quotas : A quota is a quantitative objective expressed in absolute terms
and assigned to a specific marketing unit. They may be in rupees, or units
of products. As the most widely used quantitative standards, quotas specify
desired levels of accomplishment for sales volume, gross margin, net profit,
expenses, performance of non selling activities and a combination of these
and similar items. When the sales personnel are assigned sales quotas, management is
answering the important question. How much for what period?
The assumption is the management knows which objectives, both general and
specific are realistic and attainable. The validity of this assumption depends
upon the market knowledge the management has and utilises in setting quotas.
(b) Selling Expense Ratio : Sales managers use this standard to control
the relation of selling expenses to sales volume. Many factors, some controllable
by sales personnel and some not, cause selling expenses to vary with the
territory, so target selling expenses ratio should be set individually of each
person on the sales force. Selling expense ratios are determined after analysis
of expense conditions and sales volume potentials in each territory. An
attractive feature of the selling expense ratio is that the sales person can
affect it both by controlling expenses and by making sales.
The selling-expense ratio has several shortcomings. It does not take into
account variations in the profitability of different products. So a sales person
who has a favourable selling expenses ratio may be responsible for
disproportionately low profits. This performance standard may cause? The sales
person to over economize on selling expenses to the point where sales
volume suffers. Finally in times of declining general business, sellingexpense
ratio’s inhibit sales personnel from exerting efforts to blaster sales
volume.
Selling-expense ratio standards are used more by industrial product companies
than by consumer product companies. The explanation traces to differences
in the selling job. Industrial prod uct firms place the greater emphasis on
personal selling and entertainment of customers; consequently, their sales
personnel incur high costs of travel and subsistence.
(c) Territorial Net Profit or Gross Margin Ratio : Target ratios of net
profit or gross margin to sales for each territory focus sales personnel’s
attention on the needs for selling a balanced line and for considering relative
profitability. Sales personnel influence the net profit ratios by selling more volume
and by reducing selling expenses. They may emphasize more profitable
products and devote more title and effort to the accounts and prospects that
are potentially the most profitable. The net profit ratio controls sales volume
and expenses as well as net profit. The gross margin ratio controls sales
volume and the relative profitability of the sales mixture, but it does not
control the expenses of obtaining and filling orders. Net profit and gross margin ratios
have shortcomings. When either is a
performance standard, sales personnel may ‘high spot’ their territories,
neglect the solicitation of new accounts and over-emphasise sales of high
profit or high margin ‘products while under-emphasizing new products that
may be more profitable in the long run. Both ratios are influenced by factors

beyond the sales person’s control. For instance, pricing policy affects both
net profit and gross margin and delivery costs, not only vary in different
territories but are beyond the sales person’s controls. Neither ratio should
be used without recognition of its shortcomings.
(d) Territorial Market Share : This performance standard takes into
account market share, on territory to territory basis. Management sets target
market share percentages for, each territory. Management later compares
company sales to industry sales in each territory and measures the effectiveness
of sales personnel in obtaining market share. Closer control over the individual
sales person’s sales efforts is obtained by setting target market share percentages
for each product and each class of customer or even for individual customers.

(e) Sales Coverage Effectiveness Index : This standard controls the

thoroughness with which a sales person works in the assigned territory. The
index consists of the ratio of the number of customers to the total prospects
in a territory. To appraise the sales person’s efforts among different classification
of prospects, individual standards for sales coverage effectiveness are set
up for each class of customers.
(f) Call Frequency Ratio : A call frequency ratio is calculated by dividing
the number of sales calls on a particular class of customers by the number
of customers in that class. By establishing different call frequency ratio for
different classes of customers, management directs selling efforts 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. Sales
personnels who plan their own route and call schedules find target call
frequencies helpful in as much as these standards provide information essential
to this type of planning.
(g) Calls Per Day : In consumer product fields, where sales personnel
contact large numbers of customers, it is desirable to set a standard for the
number of calls per day, otherwise; some sales personnel make too few calls
per day and need help in planning their routes, in setting up appointments
before making calls or simply in starting their calls early enough in the
morning and staying on the job late enough in the day. Other sales personnel
make too many calls per day and need training in how to service accounts.
Standards for calls per day are set individually for different territories taking
into account territorial differences as to customer density, road and traffic
conditions and competitors practices.

(h) 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. Order call ratio standards are
set for each class of account. When a sales person’s order call ratio for a
particular class of account varies from the standard, the sales person needs
help in working with the class of account.

(i) Average Cost Per Call : To emphasize the importance of making

profitable calls a target for average cost per call is set. When considerable
variation exist in cost of calling on different size or classes of account,
standards are set for each category of account. Target average cost per call
standards also are used to reduce the call frequency on accounts responsible
for small orders.

(j) Average Order Size : The usual practice is to set different standards
for different sizes and classes of customers. Using average order size standards
alongwith average cost per call standards, management controls the sales
person’s allocation of effort among different accounts and increases order
size obtained. Accomplishing this objective may require sales personnel to
reduce the frequency of calls on some accounts.

(k) Nonselling Activities : Some companies establish quantitative performance

standards for such non-selling activities as obtaining dealer displays and
cooperative advertising contracts, training distributor’s personnel, and goodwill
calls on distributor’s customers. Whenever non selling activities are expressed
in absolute terms, they are, in reality, quotas.

(B) Qualitative Performance Criteria

Certain aspects of job performance, such as personal effectiveness in handling
customer relations problems, do not lend themselves to precise measurement.
So the use of some qualitative criteria is unavoidable. Qualitative criteria
are used for appraising performance characteristics that affect sales result
especially over the long run, but whose degree of excellence can be evaluated
only subsequently. Qualitative criteria defy exact definition. Many sales
executives do not define the desired qualitative characteristics with any
exactitude instead, they arrive at informal conclusions regarding the extent
to which each sales person possess them. Other executives consider the
qualitative factors formally, and use methods to rate sales personnel against
a detailed checklist of subjective factors.

Companies with merit rating systems differ on the desirability of using

numerical rating. Most numerical scoring systems are used in companies
that rate sales personnel primarily for detecting needed adjustment ill
compensation. Companies that use merit rating primarily to improve and
develop individual sales persons, usually do not use numerical scoring systems.
Executive judgement plays the major role in the qualitative performance
appraisal. Each firm develops its own set of qualitative criteria, based upon
the job descriptions; the manner in which these criteria are applied depends
upon the needs of management.

2. Comparison of Results with Standards : In this step, actual sales

and costs results are compared with the standards or budgeted figures.
Significant sustained differences indicate that something is wrong either
with the planning or with the operation. Consistent sales above quota or
expenses below budgeted figures indicate that something is wrong with the
planning and budgeting processes. On the other hand, if sales is below the
quota set and the spending level is above the budgeted allocations, it is, then,
certain that the process is out of control.

The causes for divergences have to be identified so that the corrective action
may be taken. A detailed analysis is, therefore, necessary to reveal the true
position. There may be two types of reasons for deviations : Controllable
and Noncontrollable. If the reason is controllable, it may be cured otherwise
the management will have to revise the standards of actions.
3. Corrective Actions : Once sales manager is able to identify correct
reason of over and under achievements, he has to take corrective actions.

There are two options : modify the standards or alter the results. If, events
are such that rendered the plan or sales budget inadequate or in other words,
factors responsible for deviations are noncontrollable, the sales management
must revise the sales plan or sales budget taking into account the changed
market conditions. If, on the other hand, the factors responsible for changes
are controllable, alteration of results should be done by having stricter
control over sales activities.
Thus, Sales control efforts entail the evaluation of the actual performance
vis-a-vis the standards so that the necessary corrective actions can be taken
immediately to improve the performance level.

METHODS OF SALES CONTROL

(A) SALES ANALYSIS
Through sales analysis, the management seeks insights on the sales territories
where it is strong and where it is weak, the product with the most and the
least sales volume, and the type of customers who provide the most satisfactory
and the least satisfactory sales volume. Sales analysis, will then uncover
significant details why it is so. It provides necessary information, management
needs in order to allocate future sales efforts more effectively. The role of
the management in sales analysis is to make a detailed analysis of the
available data and use them properly to initiate action.

Data for Sales Analysis : Sales analysis is nothing but to collect, classify,
compare and study the company sales data. Collection of data is not a part
of analytical effort but it vitally affects the quality of sales analysis.
Sales analysis is generally based on data already available. It is called Secondary
Data. Secondary data may be gathered either from internal sources such as
invoice or shipping records, or from external sources such as marketing
research agencies, government agencies, trade associations and trade journals.
Secondary data are often readily available but should be used with caution.
The management has to rearrange them according to its needs. Necessary
adjustments are required if they are outdated or they are classified in a
different manner. Their source and limitations should also be studied before
they are used for analysis.

Some companies maintain their internal sales records in some detailed

manner showing individual sales, sale by products, by classes of customers,
by sizes of orders, and other pertinent break downs or sales data. Data are
sometimes specifically collected for the purpose of sales analysis. This may
be called Primary Data and may be collected under the control of management
according to its needs.
The main purpose of sales analysis is to convert raw sales data into actionable
information for sales managers. This process involves editing, tabulating and
cross tabulating and also breaking them down into various ways to make them
comparable. A number of comparisons are possible such as (i) current data
can be compared with the past results measuring trends over the years, (ii)
current results of different territories, products or class of customers can be compared
with each other, or (iii) internal performance data can be
compared with external performance data i.e., performance data of the company
can be compared with the similar data of any other company or with that of industry.
Different ratios, percentages or variances can be used for comparison
purposes.
The final step in the analysis process is interpretation or drawing conclusions
from the compiled data.
Sales analysis supplies management with background information for sales
planning. During execution of the plan, sales analysis continually compares
the actual with standards. An evaluation programme reviews both the nature
and extent of sales force efforts and influence of external variables. Once
the degree of influence of controllable and uncontrollable factors on results
are determined, management can decide whether to take corrective actions
or to revise the sales plan or both.

Principles of Application of Sales Analysis

There are two basic principles of Sales Analysis – (i) Iceberg principle, and
(ii) 80-20 principle.
i) Iceberg Principle : This principle suggests that comparison of aggregate
sales data with those of the past is not a good practice. It may be possible
that total sales revenue or sales volume reaches to an acceptable level and
may be higher than the previous year’s level, but the breakdown shows that
a number of good customers have responded a little and a number of new
accounts are added, just to set off the difference. Response from old customers
is a matter of concern and the management should take special care for
maintaining relations by making additional efforts. Thus, analysis may reveal
similar future troubles which are not clear from the aggregate data. Thus, the principle
suggests that the data must be broken down in order to permit
insight into the performance of individual sales segments.
Sales data can be organized according to products, classes of customers or
geographical areas or all the three bases. Sales analysis for each such base
will show strong and weak points i.e., strong and weak products, or strong
and weak customers or strong and weak territories. Multiple measures are also
desirable to properly judge the performance at any of these levels.
However, absolute sales-data per unit i.e., sales revenue per product, account
or territory are meaningful and important and should be compared to results
achieved in past periods, comparison of relative performance measures are
equally important. Actual sales are commonly related to sales quotas, resulting
in quota attainment ratios. Many firms compare the actual sales with sales
potential to obtain the degree of potential realization.

(ii) Eighty-twenty Principle : This is a common experience that a

limited number of units account for a large portion of sales and vice versa.
This experience is referred to as 80-20 principle, which states that 20 per
cent of its products, customers and territories generates 80 per cent of its
sales volume. The percentage may vary but the basic pattern holds true in
most circumstances. This suggests that there is a great deal of inefficiency
and wasted efforts in personal sales that could be directed to achieve higher
sales volume.

Firms with a high level of dependence on a few accounts can become

vulnerable or even captive. A healthy account mix includes both types of
accounts i.e., small sizes and medium sized accounts. This provides stability
and may represent future growth opportunities.

Low sales volume in a territory may be due to certain unavoidable reasons

such as inadequate efforts by territory manager, stiff competition, lack of
potential etc.
To gain meaningful insights) regarding company’s selling strengths and
weaknesses, sales must be analysed on the bases discussed below :
(a) Sales Analysis by Territory : In this method, sales managers scan the
total sales on territory basis. It assumes that each quota assigned to sales
person was based on fair and sound measurement of potential. In addition,
any unusual conditions in the individual territories such’ as intense competition, strike
by labour union or transportation etc. which made an adverse effect on sales of the
company’s product was considered in order to guide further sales analysis. The
following example will further throw light on the aforesaid discussion.

Sales Analysis based on Territory

Territory Quota Actual Value in ‘000 Rupees
Performance
East 800 825 103%
West 900 900 100%
North 840 820 98%
South 830 900 108%
This example shows that almost all the territories achieved or exceeded their
quota except north region which achieved 98 per cent of quota. It will thus
help the sales manager to investigate the reasons for shortfall in north
territory and of best performance in south territory.

(b) Sales Analysis by Sales person : Concentrating on the north territory,

the Sales Manager should see the sales performance of all the sales persons
working in the territory. From the figure below it is clear that out of eight
sales persons working in the territory, four have made or exceeded their
quota, three others barely missed, only one i.e. (Gupta) fell significantly
below his sales quota with a performance of only 81 per cent.

(c) Sales Analysis by Product Line : Before asking for any explanation
from Gupta for his poor sales performance, the Sales Manager should see
his sales performance based on product line :

Sales person : Gupta’s Sales by Product Line

Product Line Quota Actual Performance as % of quota
Computers 12 13 108
Portable Typewriters 24 24 100
Manual Typewriters 20 6 30
Electronic Typewriters 15 15 100
Spares and Consumable 21 20 95
Total 92 78 85

It is clear from the above table that Gupta did an excellent job of reaching (d) Sales
Analysis by Customer : Customer-wise break-up of manual
typewriters sales attained by Gupta showed that one important account i.e.
Government department was responsible for Gupta’s poor performance on
that product line. Government Department was Gupta’s biggest customer and
has been targeted for 80 percent of his entire sales quota for manual typewriters.
With an entry of another office automation company, the customer had
switched over to the same. Gupta did not feel the gravity of situation, as the
sales to Government department was taken for granted by him. If he had
product quotas with the exception of manual typewriter, where he achieved
only 30 per cent of quota. With total sales of manual typewriter running
slight ahead of the last year in all other territories and no unusual situation
in Gupta’s territory, the sales manager should look into Gupta’s customer
wise details for detecting the causes of the shortfall.

foreseen the alarming situation in time, he could have asked for assistance
by the sales manager. Analysis of Gupta’s sales by customer also validates
the existence of 80-20 principle referred above.
Accounts Quota Actual Performance as %of quota
Banks 2 2 100
Financial Institutions 1 1 100
Educational Institutions 1 1 100
 Govt. Department 24 0 0
Industrial Undertaking 1 1 100
Private Parties 1 1 100
Total 30 6 20

The above illustration clearly brings out the importance of conducting detailed
sales analysis. It also leads the sales manager to diagnose the factors responsible
for variance between targeted and actual performance. Sales analysis thus
makes a good beginning in the sales control function of the Sales Manager.
Limitations of Sales Analysis
The following are certain limitations of the Sales Analysis :
1. A serious drawback of Sales Analysis is the fact that sales are in no
way indicative of segment’s or of the entire sales functions profitability.
Profitability is the result of the inter-play between revenue and costs. Sales
analysis analyses only the sales aspect and cost analysis does not come under
its scope.

2. Another danger of sales analysis is that as more and more sales data
become available, decision makers can become wired in detail. As this
analysis-paralysis sets in, the sales manager loses sight of the fact that
analysis is a tool and not an end in itself. It should not be used as a substitute
for but as an aid in decision making.
Thus, the tool of sales analysis should be used very cautiously and in the
interest of the firm.

Sales Promotion
Meaning and Definition

Sales promotion is defined as activities which include advertising and publicity aimed at stimulating

consumer purchasing and effective selling by dealers. Sales promotion includes free samples, a

premium on sale and dealer incentive, contests, fairs and exhibitions, public relations activities, etc.

Sales promotions are those activities, other than advertising and personal selling that stimulate

market demand for a product. The basic purpose is to stimulate on the spot buying by potential

customers through short-term incentives. These incentives are essentially temporary and non-

recurring nature.

According to American Marketing Association, “Those marketing activities, other than personal

selling, advertising and publicity that stimulate consumer purchasing and dealer effectiveness, such

as displays, show and exhibitions, demonstration and various non-recurrent selling efforts not in an

ordinary routine.”
 According to W.J. Stanton, “Sales promotion defined as demand stimulating devices to supplement

advertising and facilitate personal selling.”

  IMPORTANCE OF SALES PROMOTION

 Sales promotion is an important component of a promotion campaigning programme. It can be specific tool of the marketing
strategy of an enterprise. Because of increasing level of competition and costs of advertisement, producers largely use this
technique as a promotional tool. 

 Sale promotion techniques are not only useful to the producers and distributors, but also are useful to consumers. The
importance of sales promotion may be grouped as follows:

a). Importance to Consumers.

b). Importance to Manufactures/Producers.
c). Importance to Dealers/Middleman.
d). Importance to Society & the nation.

A)  IMPORTANCE TO CONSUMER

1. Sufficient product knowledge:-

                     Various consumer promotion methods such as demonstrations, training to use the product, etc. give sufficient
product’s knowledge to consumer with regard to uses, operations, maintenance or upkeep of the product.    

2. Availability of product at reduced prices:-

                Sales promotional tools like prices-off deals, premium offers, discounts, etc. reduce the price of the product when
purchased on notified occasions.

3. Increase in consumers buying confidence:- 

                           Free samples offered under the sales promotion programme give the potential consumers an opportunity to
use the goods and satisfy with the quality of product. This experience may give them confidence to take a better decision
towards the purchases of products.

4. Increases in the quality of goods purchased :-

                         Stimulated by the various promotional incentives like free goods, premium and coupons, etc. the buyer are
attracted towards larger purchases than their usual needs to avail the opportunity.

5. Higher slandered of living :-

                       The consumer also get plenty of opportunities in using the new , cheaper & durable items, to their satisfaction,
which may help them to maintain a higher standard of living. 
                                                 
6. Minimize exploitation :-

                      The consumer promotion programme gives sufficient knowledge about product and substitutes available for a
product, its quality and price. As a result, a seller cannot be able to create a monopoly in his product an exploit the consumers.
This may be the reason that for product like soaps. Detergent, toothpastes, etc. the exploitation is not at all possible.  

B)  IMPORTANCE TO PRODUCER / MANUFACTURE

1. Increases in sales :-
                                       sales promotion programme attracts the consumers & stimulates them for larger purchases leading to
increased sales.

2. Regular sales of seasonal product :- 

                                        The offer of off-season discounts, price cut etc. on seasonal products like fridge, coolers, fans, etc.
are able to maintain regular are continuous sales of such items.  

3. Improve effectiveness of advertisement and personal selling :-

                                                       The sales promotion makes the advertisement more effective to push the sales. It is
effective technique to minimize the dissatisfaction of customers that have been create by retail selling.

4. Cooperation from middlemen :- 

                                                    The various promotional incentives offered to the dealers help to achieve co-operations from
them to sell the product on priority basis and to maintain maximum stock with them.   

5. Demand for product & services :-

                                                  The sales promotion techniques have proved successfully in introducing new product &
services. By the supply of free samples, the new product makes its place in the market.

6. Able to capture new market :- 

                                               The sales promotion programme facilitates the producer to capture new markets for his products
easily. The markets of plantation products have been successfully in capturing the markets by the distribution of free samples.  

7. Increase in goodwill :- 

                                       The repeated uses of sales promotion tools facilitate the consumers to get a special identification of
the product as well as of the producer. The satisfaction that have been arrived to the consumers by continuous uses of the
products will gradually increase the goodwill of the firm.  

8. Direct control :- 

                             Since the advertising media is controlled by advertising agencies, the advertising costs are on higher side.
This has adverse effect on the sales and profits. But in the sales promotion programme, the producer has full control over the
promotional tools & therefore, can achieve maximum results at minimum costs.

9. Effective steps to face the competition:-    

                                                         Larger sales, reduce production costs, increase in profits, special identity and goodwill of
the producer, etc. achieved through sales promotion measures can help to face the competition more effectively.

10. Improvement & new uses of the production :-  

                                                   The sales promotion programme invites suggestions from the consumers from time to time to
know about their change in need & performance. According, necessary improvements or modifications are made in the product
to satisfy the consumer need. 
                          
C) IMPORTANCE TO DEALERS/ MIDDLE MEN

           1.       Facilitates larger sales :-

 The dealers get advantages of sales promotional techniques for increasing their sales. Sales promotion is a coordinating
activity between sales, advertising, research & public relations efforts & they reduce the resistance at the point of sales.    

     2. More facilities & assistance :-

                                          
 The producer, under the sales promotional programme, provides various facilities & assistance to the middlemen, such as
assistance to marketing research, providing with display materials and managerial assistance, etc. for maintaining regular stock
for sales.

3. Direct relation with customers :-

                                              
  A direct relationship between the dealers & the consumers are established through the sales promotion techniques which will
continue for a long time.     

D) IMPORTANCE TO THE SOCIETY & THE NATION

The importance of sales promotion programme for the society & the nation can be summarized as below :-
         Increase in standard of living the people.
         Increase in employment opportunities.
         Development and expansion of transport, communication, baning, insurance and warehousing facilities.
         Increase in Gross National Product and percapita income.
         Creation of healthy competition in national and international trade, etc.