SALES MANAGEMENT

Sales Effort

Some of the important terms are as under; 1. Market potential

2. Sales potential
3. Sales forecast

Analysing Market Potential

1. Market identification who buys / who uses / who are prospective buyers and or sellers
2. Market Motivation how best to present product in sales talk / relative effectiveness of different selling appeals / the appropriateness of different promotional methods 3. Analysis of Market Potential select the market factors associated with product demand / eliminate the segments not containing prospective buyers of the products

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Sales Effort

SALES FORECASTING Sales forecasting is the process of planning the sales of various products or services during the year in advance

Sales forecasting is normally done by the sales departments directly involved in selling, since this in turn also sets the targets for the sales person
Sales forecasting is also the base for calculations of the financial figures and budgets of the organisation It is therefore very important that every possible care is taken in forecasting

Following are the sales forecasting methods; 1. Jury of executive opinion 2. Poll of sales force Opinion

3. Projection of past sales

4. Survey of customers buying plans 5. Mathematical analysis (Regression analysis) 6. Conversion of industry forecast into company sales forecast

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BUDGETING AND QUOTAS

Sales Effort

A sales budget is a blueprint of the sales plan product-wise, estimates of the revenue and profits of the organisation for a particular period (normally a financial year) The budget starts from the quantities forecast during the period, the revenue generated based on the expected price level, the value addition generated during the period and the expenses In simple terms this would be as under;

No of products sold x unit price = Revenue generated

Cost of products + expenses + profits = Revenue generated The expenses would consist of; 1. Salary and other personnel expenses

2. Administrative expenses, traveling expenses

3. Promotional expenses, including advertising, special discounts, sampling costs 4. Trade discounts and commissions and Training expenses

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Sales Effort

PURPOSE OF SALES BUDGET Mechanism of Control - It is an instrument of control and serves as a yard stick for;

1. Measurement of sales
2. Revenue 3. Expenses 4. Profit 5. Variance from plan etc. Instrument of planning 1. The total plan of the organisation for the period 2. Direction in which the organisation will move 3. It shows the management vision 4. It shows path for future growth

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Sales Effort

BUDGETARY PROCEDURE Basically starts with sales department where the basic structure is prepared with the revenue expected (of course based on the sales forecast) Based on these figures, all departments prepare their expenses and other activities for the year

Planning is either Top down or Bottom up In case of Top down, the top management sets the objectives and targets which have to be followed and accordingly the budget is prepared This follows the Theory X which says people need to be told what needs to be got done, since they dislike work and shirk responsibility While bottom up follows Theory Y where people like work and take responsibility willingly and achieve objectives of the organisations.

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Sales Effort

Actual Budgetary Procedure The process starts from lowest level, i.e. from the profit centers

Each territory or area manager starts working the sales figures first
This gets the revenue figures for the planned period The next step is to work out the details of expenses on the basis of what the actual expenses for the previous year were and the likely next year

This is prepared for the area / territory and sent to head office / regional office
The budgets for the different regions are then consolidated to make a full budget The budget is then discussed among the head of regions and the head office people and changes made The budget is then forwarded to the top management for approval

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Errors in Budgets

Sales Effort

Conditions actually vary as compared to the time when prepared (change in demand Sudden change in some raw material costs, and not necessarily be passed on to the customers Change in technology Change in government policies

The organisations therefore must have a system to review the operations regularly and in case of justified change in conditions, changes are accepted and made. Sometimes even correction is made and revised accordingly. Some companies even prepare flexible budgets because of not being able to get accurate data of forecast. They therefore prepare alternate budgets based on different estimates and assumptions When the budget has errors due to faulty forecasting, the accepted procedure is to alter estimates by applying standard ratios of costs to the adjusted volumes of business. This practice is normally accepted by most companies.

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QUOTAS

Sales Effort

Quotas are the quantitative objectives assigned to an area, individual (a profit centre, an individual sales man, an agent/distributor )

These then form the basis for appraising effectiveness, evaluation of the performance levels, of all budgeted items such as;
The volume of sales Expenses etc.

Quotas are therefore devices for directing and controlling operations

Management bases quotas on; The derived information from sales forecasts Market studies

Sales potential and

Cost estimates

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Sales Effort

Objectives of using Quotas 1. To provide Quantitative Performance Standards

2. To obtain tighter sales & expense control

3. To motivate desired performance

4. To use in connection with sales contests

SALES MANAGEMENT

Sales Effort

Profitability Analysis A must for any organisation. Analysis basically starts with capturing the entire data of sales customer-wise, product-wise, area-wise, sales person wise, cost and expenses incurred on the sales, selling prices and discounts offered, credit controls, targets achieved etc. This answers following; 1. Reveals area with good and poor performances 2. Reveals the salespersons performances 3. The accounts will disclose the sales to larger and small customers both and the efforts required for future 4. The sales product wise will let you take a decision as to what ration of products to be maintained for selling and what extra efforts are required to sell more profitable items 5. It helps in realising the strengths and weaknesses of the organisation to take timely actions and make the organisation more profitable

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Sales Effort

TERRITORIZATION The placement of suitable staff/salesmen to look after a group of customers / locations are an important task This allocation of responsibility is called as territorization The ultimate aim is to break the total market into smaller areas classified as Territory which helps in planning and controlling the ultimate achievements Territorization is aimed at; 1. Controlling selling expenses Good design of territory with deployment of proper sales force helps in optimising the sales volume and expenses Salesman out on tour with minimum time spent per call or

Maximising calls with highest output at lowest cost

2. Evaluation of sales personnel

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3. Contributing to sales force Morale Good design helps in reducing extra loads or over burdening of salesman Helps in making each person as productive as possible to make higher earning Makes the field staff self confidant and

Minimises conflicts since some customers transact business in more than one territory

4. Aiding in coordination of personnel selling and advertising Proper coordination with advertisements planned to be released in the media can boost sales efforts since he can always plan his visits based on the release

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Procedures for setting up or revising territories Setting up of territories involves four steps 1. Selecting a basic Geographical control unit

Sales Effort

The first and foremost is the selection of the basic geographical unit consisting of various states, districts, towns and cities etc. This has to be based on the sales potential and the number of customers in the territory fixed or planned to be fixed The statistical data of the area also helps in setting the territory The free movement and routing is necessary between the various areas of the territories

2. Determining sales potential present in each control unit 3. Combining control units into tentative territories

Forming a shape of the territory so that travel is easy and connectivity is better

4. Adjusting for differences in coverage difficulty 5. Deciding assignments of sales personnel to territories

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Sales Effort

ROUTING AND SCHEDULING SALES PERSONNEL Proper coordination with advertisements planned to be released in the media can boost sales efforts since field sales force can always plan visits based on the release Regular scheduling of visits can help in developing relationship with the channels or the customers so that visits can be fruitful A proper rout of the visit is a must, to save on the cost and time and if possible, less of surprise visits be made (surprise visits are also necessary and sometimes may be necessary without the direct in-charge of the area) This basically helps in maintaining proper control over the movement and expenses of the field sales persons