ADJUSTING FOR COVERAGE DIFFICULTIES AND REDISTRICTING TENTATIVE TERRITORIES

To remove unrealistic assumption that geographical control units have similar characteristics.

Large cities have greater sales potential than states requiring lesser coverage time at lower expense.
Differences in coverage difficulty represent differences in workloads. Control units are taken away from difficult to cover territories and added to easily covered territories. Total workload in any territory must not exceed the MAXIMUM DESIRABLE WORKLOAD. Ultimately territories defined have varying amounts of sales potential and different-sized workloads. Optimum territorial arrangement is reached when incremental sales for marginal selling expense is equated in all territories.

STEPS FOR REDISTRICTING TERRITORIES

Determine number, location and size of customers and prospects in each tentative territory.

Estimate time required for each sales call.

Determine length of time between calls, i.e. time required to travel from one customer to the next. Decide call frequencies. Calculate the number of calls possible within a given period. Adjust the number of calls possible during a given period by the desired call frequencies for different classes of customers and prospects. Finally check out the adjusted territories with sales personnel who work or who have worked in each area and make further adjustments as required.

DECIDING ASSIGNMENT OF SALES PERSONNEL TO TERRITORIES

territorial planning implicit assumption is that all sales persons are average. Sales personnel vary in ability, initiative & effectiveness as well as in physical condition & energy. Reasonable & desirable workload for each sales person can differ. Effectiveness can also vary with the territory assigned.

In assigning sales personnel to territories, management seeks the most profitable alignment of SELLING EFFORT to SALES OPPORTUNITY.
The principle is to Assign each sales person to the particular territory where his/her relative contribution to profit is highest.

ILLUSTRATION OF ASSIGNING SALES PERSONNEL TO TERRITORIES

Assignment of Sales Personnel to Territories of Equal Potential

Territory Potential Sales Person assigned Ability Predicted Contributi Sales on (25 % of sales)

500,000

1.00

500,000

125,000

500,000

0.8

400,000

100,000

500,000

0.7

350,000

87,500

Total

1,500,00 0

1,250,00 0

312,500

Assignment of Sales Personnel to Territories containing Sales Potentials proportionate to Salespersons abilities
Territory Potential Sales Person assigned Ability Predicted Contributi Sales on (25 % of sales)

600,000

1.00

600,000

150,000

480,000

0.8

384,000

96,000

420,000

0.7

294,000

73,500

Total

1,500,00 0

1,278,00 0

319,500

Assignment of Sales Personnel to Territories containing differential Sales Potentials

Territory Potential Sales Person assigned Ability Predicted Contributi Sales on (25 % of sales)

1000,000

1.00

1,000,00 0 240,000

250,000

300,000

0.8

60,000

200,000

0.7

140,000

35,500

Total

1,500,000

1,380,00 0

345,000

Assignment of Sales Personnel to Territories containing Sales Potentials proportionate to Salespersons abilities
Territory Potential Sales Person assigned Ability Predicted Contributi Sales on (25 % of sales)

600,000

0.9

540,000

135,000

480,000

1.0

280,000

120,000

420,000

0.7

294,000

73,500

Total

1,500,00 0

1,314,00 0

328,500

Assignment of Sales Personnel ToTerritories where Ability Indexes vary with the Assignment.

ROUTING AND SCHEDULING SALES PERSONNEL

Maintain lines of communication Optimize sales coverage Detailed information is required on the numbers & locations of customers the means & methods of transportation connecting customer concentrations trading area boundaries arising out of natural travel barriers Minimize wasted time Backtracking, travel time & non-selling time is reduced NOTE: A sales person has a different route each time he travels in a territory if he has to achieve the desired call frequencies and to incorporate calls on new prospects. Routing Scheduling & Control Call reports are compared with route & call schedules.

MOTIVATION
Motivation is goal-directed behavior to achieve NEEDS lack of something that reaching a goal could satisfy DESIRES positive ardor or strength of feeling Aspects affecting quality of salespersons job and why additional motivation is necessary:

 Inherent nature of Sales Job Succession of ups & downs Interaction with pleasant & courteous people on one extreme to unpleasant & rude people Working time as well as after-work hours away from home missing out on family life.

Salespersons boundary position & Role Conflicts Conflict of Identification Customer or Company? Advocacy Conflict Identifies with & advocates customers position to other groups in Company Conflict in interests of customer & company versus own interests of earning based on selling as much as possible.

 Tendency towards Apathy Dealing with same customers in same territory over years leads to losing interest & enthusiasm Familiarity on both sides leads to incomplete use of effective techniques.

Maintaining a group identity Working alone most of the time team spirit is weak Participating in a cooperative endeavor requires motivation & working conditions to promote group feeling for achieving group performance standards.

NEED GRATIFICATION & MOTIVATION

All human activity - including salespersons behavior is directed towards satisfying certain needs. Different patterns of behavior arise out of different sets of needs. Particular persons behave according to the nature of their fulfilled & unfulfilled needs. PRIMARY NEEDS Inborn and fulfillment is basic to life itself Physiological needs like food, water, rest, sleep, air etc. Until these are satisfied others have little motivational influence. SECONDARY NEEDS Arise from individuals interaction with the environment Develop with maturity Include safety & security; belonging & social relations; selfesteem & self-respect.

REQUIREMENTS OF A GOOD SALES COMPENSATION PLAN

Provides a living wage preferably a secure income Does not conflict with motivational program belonging to a team Fair does not penalize for factors beyond the salespersons control Easy for sales personnel to understand Adjusts pay to changes in performance

Economical to administer
Helps to attain objectives of the sales organization.

DEVISING A SALES COMPENSATION PLAN

Define the Sales Job

Consider the Companys General Compensation Structure Use Job Evaluation systems to compare with different jobs Job Evaluation procedure is not scientific but judgment based Ranking / Ordering of jobs without considering individuals doing it Purpose to arrive at fair compensation relationship amongst jobs.

Contd

Job Evaluation Methods:

Simple Ranking only overall appraisal Classification or Grading based on job responsibility, skills required, supervision given & received, exposure to unfavorable / hazardous working conditions. All jobs in same class or grade have same base compensation. Point System establishing & defining factors common to most jobs e.g. mental & physical skills, responsibility, supervision given & received, personality required, minimum education required etc. Each factor is given minimum & maximum points, the ranges depending on the relative importance of the factors. Appraised factor scores are combined into total point values for each job. Different bands of point scores signify different compensation classes.

Contd
Factor Comparison Method

resembles

point system but uses a scheme of ranking & crosscomparisons. Generally evaluated in value terms. Job Evaluations are made whenever decisions are made about the relative worth of jobs sometimes informally Many sales executives feel sales personnel compensation levels should be based on the external demand & supply factors.

 Most companies choose various combinations depending on their particular selling situation. Proportions of different elements vary most however split the fixed to variable elements on a 60:40 to 80:20 basis.

Special Company Needs & Problems

A company can usually construct a plan, which increases marketing effectiveness to solve specific problems like: Emphasizing high margin products To obtain large volume orders More effort on non-selling activities like more displays / local advertisements by dealers / retailers Focusing on getting new customers Controlling traveling & other expenses and making collections Gathering market information & reporting.

Consult present Sales Force Reduce tentative Plan to writing & pretest it Normally pre-testing is done mathematically usually computerized reworking on past year/s data. Revise the Plan Implement the Plan & provide for Follow-up Periodic checkups indicate needs if any for further adjustments / revisions.

TYPES OF COMPENSATION PLANS

Straight Salary Plan

Fixed sum at regular intervals total payments for their services Common amongst industrial goods companies; jobs requiring extensive missionary / educational work; jobs including servicing and providing technical & engineering advice; salespersons doing considerable sales promotion / non-selling work; trade selling order-taking salespersons Provides strong financial control over sales personnel and management can direct their activities along most productive lines with minimum opposition. Provides stability of income & freedom from financial uncertainties to the sales personnel Since there are no monetary incentives many sales people
end up doing just an average job.