MODULE 3
Management of Sales Territory & Sales Quota
| Prof. Jaya Shetty --- Content provided by FirstRanker.com --- Assistant Professor Dept. of Business Administration MITE, Moodabidri |
OUTLINE
- Sales territory, meaning, size, designing.
- Sales quota, procedure for sales quota. Types of sales quota, Methods of setting quota.
- Recruitment and selection of sales force, Training of sales force.
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SALES TERRITORY
Definition:
Sales territory defined as a group of present and potential customers assigned to an individual salesperson, a group of salesperson, a branch, dealer, a distributor, or a marketing organization at a given period of time.
- Territories are defined on the basis of geographical boundaries in many organizations.
- It helps in matching the selling efforts with the sales opportunities in the market.
- It's a responsibility.
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DEFINITION
B R Cranfield
"a sales territory is a geographical area containing the present and potential customers who can be effectively and economically served by a single salesperson, branch, dealer, or distributor"
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ADVANTAGES
- It ensures better market coverage.
- Effective utilization of the sales force.
- Effective distribution of the workload.
- Convenient way to evaluate the performance of sales force.
- Control over direct & indirect cost.
- Optimum utilization of time by sales force.
- Enhances employee's morale and helps managers better control and monitor sales and evaluate programmes.
- Better penetration.
- Better service to the customer.
- Better understanding of the customers need and latent demand.
- Helps to evaluate the performance of sales force.
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SIZE OF SALES TERRITORIES
SIZE OF SALES TERRITORIES
Factors influence the size
- Nature & demand of the product
- Mode of distribution (logistics)
- Selling process
- Transport & communication facility
- Density of population
- Government restrictions
- Market potential
- Growth rate
- Competition
- Ability of sales person
- Sales policy
- Economic condition
- Population
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DESIGNING A SALES TERRITORY
| Factors influencing the modifications
--- Content provided by FirstRanker.com --- --- Content provided by FirstRanker.com --- | Select the basic geographic control units ? Decide on the criteria for allocation ? --- Content provided by FirstRanker.com --- Decide on the starting point ? Combine control units adjacent to starting point Compare territories on allocation criteria & conduct workload analysis Assign sales force to new territories --- Content provided by FirstRanker.com --- | Modify territory boundaries to balance workload and potential |
SALES QUOTA
- According to Philip Kotler "A sales quota is the sales goal set for a product line, company division, or sales representative. It is primarily a managerial device for defining and stimulating sales force”
- It is an expected performance objective.
- They are sales assignments or goals, which are to be achieved in a specific period of time.
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IMPORTANCE OF SALES QUOTA
- Motivating sales force- measurement & linking with rewards
- Lead organizations towards management by exception-Take care of highly performers and help poor performers
- Helps in giving directions to the salespeople's efforts
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PROCEDURE FOR SALES QUOTA
- Planning
- Conferencing with the salesperson
- Arriving at a summarized written quota statement
TYPES OF SALES QUOTA
- Sales volume quota
- Sales budget quota (expense quota, profit quota)
- Sales activity quota
- Combination quota
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SALES VOLUME QUOTA
- This quota communicates the organization's expectations in terms of what amount of sales for/in what period.
- Ex:
- General motors uses the number of cars and commercial.
- If a sales person has to sell 30000 units of a product from March to August then it is called sales volume quota.
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SALES BUDGET QUOTA
- These kinds of quotas are set for various units by the organization in order to control expenses (expenses quota), gross margins, and net profits.
- The overall intention of setting a budget quota is to the sales people they are more of responsible centre where the job includes not only obtaining the desired sales volume but also making good profits.
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SALES ACTIVITY QUOTA
- Here the quota can be fixed on the activity a sales person has to perform, rather than the final outcome.
- In addition to sales activity, the sales person is expected to do some non selling activity and quota can be set as a mix of these activities.
- Mostly seen in insurance where they do prospecting, generate sales lead and develop new business.
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COMBINATION QUOTA
- Many organization uses the combination of these quota.
- Ex: achieving 2000 units along with developing 20 new key accounts, identifying 200 prospects and bringing back 50 sales lost customers.
METHODS OF SETTING QUOTA
- Quotas based on sales potentials
- Quotas based on forecast
- Based on past sales & experience
- Based on executive judgment
- Based on salespeople judgment
- Quotas based on compensation
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RECRUITMENT AND SELECTION OF THE SALES FORCE
RECRUITMENT SOURCES
- Word of mouth
- Internal sources of recruitment
- Employee agencies
- Sales representatives of competitors
- Representatives Non competing companies
- Internal transfer
- Campus recruitment
- Placement firms
- Advertisements
- Interns
- Employee referral
- Walk ins
- Web sources
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HIRING PROCESS OF SALES FORCE
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