Description
What is sales territory, basis for setting up sales territory, stages in territory design, what is sales quota, different types of sales quotas.
SALES TERRITORIES
WHAT IS A TERRITORY
A group of current and potential customers assigned to a salesperson, branch, dealer, or distributor for a given period.
ADVANTAGES
•Higher employee morale •Better market service •Efficient evaluation and control •Matching marketing programs
• Geographic Areas • Customer Types
SOME BASES FOR SETTING SALES TERRITORY
– District/State/Country etc – Verticals/OEMs/Dealers etc
• Account Size
– Large/Medium/Small
• Any Combination of the above
STAGES IN TERRITORY DESIGN
Select Basic Control Unit Estimate Market Potential in Each Control Unit Combine Control Units into Tentative Territories Perform Workload Analysis Adjust Tentative Territories to Allow for Sales Potential and Coverage Difficulty Differences Assign Salespersons to Territories
STAGES IN TERRITORY DESIGN
Select Basic Control Unit
The basic control unit is the most elemental geographic area to be used in forming the sales territories. States, trading areas, counties, cities, MSAs, zip codes
Estimate Market Potential in Each Control Unit
Subjective Methods • Users’ expectations • Sales force composite • Jury of executive opinion Objective Methods • Test Market • Time series analysis • Statistical demand analysis
STAGES IN TERRITORY DESIGN
Combine Control Units into Tentative Territories
The goal at this stage is to make each tentative territory as equal as possible with respect to market potential Do not take into account differences in workload or sales potential at this stage.
Perform Workload Analysis
• Determining the engagement schedule for the sales force
STAGES IN TERRITORY DESIGN
Adjust Tentative Territories to Allow for Sales Potential and Coverage Difficulty Differences
Need to adjust the sales potential by the amount of effort (workload) each of the initial territories will require.
Assign Salespersons to Territories
Up to now, we have not considered differences in abilities between salespeople. This step takes individual ability differences into account.
OTHER CONSIDERATIONS
• Tax Implications • Warehouse Operations • Customer Spread and Logistics • Cost to serve • Hybrid Channels • Firm Policies
TERRITORY DISCIPLINE
• Territory Poaching
– Company Bypassing Dealers – Dealer Bypassing Dealer
• Territory Pricing
– Justified Differential Pricing – Differential Pricing based on power.
SALES QUOTAS
WHAT IS QUOTA ?
• Time bound quantitative objectives assigned to a selling unit that specify desired levels of performance
WHY QUOTAS
• To Provide Quantitative Performance Standards • To obtain tighter Sales & Expense Control • To Motivate desired performance • To use in connection with Contests
QUOTA – SALARY LINK
• Straight Salary • Salary plus Commission • Straight Commission
REGULAR QUOTAS – AD HOC TARGETS
• Salary + Commission • Incentives Outside Salary + Commission
TYPES OF QUOTAS
• SALES VOLUME QUOTAS
– Rupee Volume – Unit Volume – Point Quotas
• BUDGET QUOTAS
– Expense Quotas – Net / Gross Margin Quotas
• ACTIVITY QUOTAS
– Calls Made – Demos Done – New Customers etc
Potential Problems: 1.Cutting price and no maximum profit 2.Large sales expenses
BUDGET QUOTAS
?Gross margin quotas ?Net profit quotas Gross Margin= Sales Volume – Cost of Goods Net Profit= Sales Volume – Cost of Goods – Direct Selling Expenses
Potential Problems: 1. Sales personnel generally do not set prices and have no control over the cost. They are not responsible for the gross margin. 2. Salespeople may cut the sales expenses and therefore harm the sales when the net profit measure is used.
EXPENSE QUOTAS
? A salesperson may receive an expense budget that is a percentage of the territory’s sales volume. ? Other firms may set up rupee limits. ? Others may have limits on items such as lodging, meals, and entertainment but pay all the expenses on cars and office expenses.
ACTIVITY QUOTAS
Activity quota set objectives for jobrelated duties useful toward reaching the performance target. Examples are prospects, calls and presentations. Activity Quotas typically are not the basis for reward. They are more for control and better customer service.
CONVERSION QUOTAS
Conversion Quotas E.g. Call/Presentation and Call/Sales Ratio Quota Combinations The most common practice is sales volume and activity quotas. These quotas influence both selling and non-selling activities.
GOOD QUOTAS
QUOTA VARIABLES
• Levels – Individu al – RO/ASO – Group – Dealers • Periodicity – Annual – Quarterly – Monthly – Weekly
• Approach •Top Down •Bottom Up
BOTTOM UP APPROACH
• Corporate
• Regional Office
• Area Sales Office
• Unit
• Individual / Dealer
TOP DOWN
• What is the Forecast ? • Is it in line with our Expectations ? • What are the problems ? • Can we overcome these problems ? • If yes, is there a Gap still ?
CONSIDERATIONS
• New Products ? • Market Capacity / Growth • Sales Executive
– – – – Experience Track Record Aptitude Ability to take Stretch
doc_288289624.ppt
What is sales territory, basis for setting up sales territory, stages in territory design, what is sales quota, different types of sales quotas.
SALES TERRITORIES
WHAT IS A TERRITORY
A group of current and potential customers assigned to a salesperson, branch, dealer, or distributor for a given period.
ADVANTAGES
•Higher employee morale •Better market service •Efficient evaluation and control •Matching marketing programs
• Geographic Areas • Customer Types
SOME BASES FOR SETTING SALES TERRITORY
– District/State/Country etc – Verticals/OEMs/Dealers etc
• Account Size
– Large/Medium/Small
• Any Combination of the above
STAGES IN TERRITORY DESIGN
Select Basic Control Unit Estimate Market Potential in Each Control Unit Combine Control Units into Tentative Territories Perform Workload Analysis Adjust Tentative Territories to Allow for Sales Potential and Coverage Difficulty Differences Assign Salespersons to Territories
STAGES IN TERRITORY DESIGN
Select Basic Control Unit
The basic control unit is the most elemental geographic area to be used in forming the sales territories. States, trading areas, counties, cities, MSAs, zip codes
Estimate Market Potential in Each Control Unit
Subjective Methods • Users’ expectations • Sales force composite • Jury of executive opinion Objective Methods • Test Market • Time series analysis • Statistical demand analysis
STAGES IN TERRITORY DESIGN
Combine Control Units into Tentative Territories
The goal at this stage is to make each tentative territory as equal as possible with respect to market potential Do not take into account differences in workload or sales potential at this stage.
Perform Workload Analysis
• Determining the engagement schedule for the sales force
STAGES IN TERRITORY DESIGN
Adjust Tentative Territories to Allow for Sales Potential and Coverage Difficulty Differences
Need to adjust the sales potential by the amount of effort (workload) each of the initial territories will require.
Assign Salespersons to Territories
Up to now, we have not considered differences in abilities between salespeople. This step takes individual ability differences into account.
OTHER CONSIDERATIONS
• Tax Implications • Warehouse Operations • Customer Spread and Logistics • Cost to serve • Hybrid Channels • Firm Policies
TERRITORY DISCIPLINE
• Territory Poaching
– Company Bypassing Dealers – Dealer Bypassing Dealer
• Territory Pricing
– Justified Differential Pricing – Differential Pricing based on power.
SALES QUOTAS
WHAT IS QUOTA ?
• Time bound quantitative objectives assigned to a selling unit that specify desired levels of performance
WHY QUOTAS
• To Provide Quantitative Performance Standards • To obtain tighter Sales & Expense Control • To Motivate desired performance • To use in connection with Contests
QUOTA – SALARY LINK
• Straight Salary • Salary plus Commission • Straight Commission
REGULAR QUOTAS – AD HOC TARGETS
• Salary + Commission • Incentives Outside Salary + Commission
TYPES OF QUOTAS
• SALES VOLUME QUOTAS
– Rupee Volume – Unit Volume – Point Quotas
• BUDGET QUOTAS
– Expense Quotas – Net / Gross Margin Quotas
• ACTIVITY QUOTAS
– Calls Made – Demos Done – New Customers etc
Potential Problems: 1.Cutting price and no maximum profit 2.Large sales expenses
BUDGET QUOTAS
?Gross margin quotas ?Net profit quotas Gross Margin= Sales Volume – Cost of Goods Net Profit= Sales Volume – Cost of Goods – Direct Selling Expenses
Potential Problems: 1. Sales personnel generally do not set prices and have no control over the cost. They are not responsible for the gross margin. 2. Salespeople may cut the sales expenses and therefore harm the sales when the net profit measure is used.
EXPENSE QUOTAS
? A salesperson may receive an expense budget that is a percentage of the territory’s sales volume. ? Other firms may set up rupee limits. ? Others may have limits on items such as lodging, meals, and entertainment but pay all the expenses on cars and office expenses.
ACTIVITY QUOTAS
Activity quota set objectives for jobrelated duties useful toward reaching the performance target. Examples are prospects, calls and presentations. Activity Quotas typically are not the basis for reward. They are more for control and better customer service.
CONVERSION QUOTAS
Conversion Quotas E.g. Call/Presentation and Call/Sales Ratio Quota Combinations The most common practice is sales volume and activity quotas. These quotas influence both selling and non-selling activities.
GOOD QUOTAS
QUOTA VARIABLES
• Levels – Individu al – RO/ASO – Group – Dealers • Periodicity – Annual – Quarterly – Monthly – Weekly
• Approach •Top Down •Bottom Up
BOTTOM UP APPROACH
• Corporate
• Regional Office
• Area Sales Office
• Unit
• Individual / Dealer
TOP DOWN
• What is the Forecast ? • Is it in line with our Expectations ? • What are the problems ? • Can we overcome these problems ? • If yes, is there a Gap still ?
CONSIDERATIONS
• New Products ? • Market Capacity / Growth • Sales Executive
– – – – Experience Track Record Aptitude Ability to take Stretch
doc_288289624.ppt