Professional Documents
Culture Documents
LBSIM
10th Oct 2016
Sales Territories
A sales territory consists of existing and potential
customers, assigned to a salesperson
Most companies allot salespeople to geographic
territories, consisting of current & prospective
customers
salesforce
Procedure in Build-up
Method
Decide customer call frequencies
Calculate total customer calls in each
control unit
Estimate workload capacity of a
salesperson
Make tentative territories
Develop final territories
Objective is to equalise the workload of
salespeople
District X
District Y
Custome Call
r Type
Freq./Mont
h
No. of
Customer
s
No. of
calls/Year
No. of
Customer
s
No. of
calls/Year
144
192
168
192
20
240
28
336
Total
552
720
Procedure in Breakdown
Method
Estimate company sales potential for total
market
Forecast sales potential for each control
unit
Estimate sales volume expected from each
salesperson
Make tentative territories
Develop final territories
Objective is to equalize sales potential of
territories
Breakdown
Estimate company sales potential for
total market
Forecast sales potential for each
control unit
Assigning Salespeople to
Territories
Sales Manager should consider two criteria:
(A)Relative ability of salespeople
()Based on key evaluation factors:
(1) Product knowledge, (2) market knowledge,
(3)
past
sales
performance,
(4)
communication, (5) selling skills
Evaluation Factor
Weightage Evaluation
Salesperson
s Score
Product Knowledge
0.15
0.9
0.135
Market Knowledge
0.10
0.8
0.080
Past sales
performance
0.40
0.400
Communication
0.15
0.8
0.120
Selling Skills
0.20
0.9
0.180
Ability Index
1.00
0.915
Management of Territorial
Coverage
It means: How salesperson should cover
the assigned sales territory
It includes three tasks for a sales manager:
Planning efficient routes for salespeople
Scheduling salespeoples time
Using time-management tools
Routin
g
Routing is a travel plan used by a salesperson
for making customer calls in a territory
Benefits of or Reasons for routing:
Reduction in travel time and cost
Improvement in territory coverage
Importance
application:
of
routing
depends
on
the
Base
(B)
C
1
B
B
C
5
C
4
C
3
C
2
Circular
Clover Leaf
Scheduli
ng
Scheduling is planning a salespersons visit time
to customers. It deals with time allocation issue
How to allocate salespersons time?
Sales manager communicates to salesperson
major activities and time allocation for each
activity
Salesperson records actual time spent on
various activities for 2 weeks
Sales manager and salesperson discuss and
decide how to increase time spent on major
activities
Companies specify call norms for current
customers, based on sales and profit potentials,
and also for prospective customers
Sales
Quotas
Types of
Quotas
(b)
when
Financial
Quotas
Financial quotas control (a) gross margin or net profits,
and (b) expenses of marketing units
Gross-margin / Net-profit quotas
Calculate gross margin by subtracting cost of goods
sold (i.e. cost of manufacturing) from sales volume.
Sales managers are not responsible for cost of
manufacturing
Net profit quotas are generally accepted by sales
mangers as it is calculated by subtracting direct
selling expenses from the gross margin
Sunil
Ramesh
Total
Sales
41008000(a
)
38515000
46007000
125530000
Cost of
sales
30756000(b
)
28886250
34505250
94147500
Gross
Margin
10252000(a
-b)
9628750
11501750
31382500
Salary
124000(X)
115000
140000
379000
Other
selling
expenses
390000(Y)
310000
470000
1170000
Total
Selling
Expenses
514000(X+Y 425000
)
610000
1549000
10891750
29833500
Profit
9738000(Z)
contributio
9203750
Finance Quota
Expense quotas
In many companies, expense quotas are stated
as a percentage of sales(Mostly 1% of sales)
Expense quotas to be administered with
flexibility, to make salespeople cost conscious,
allowing reasonable expenses
Activity
Quotas
These are set when salespeople
perform both selling and non-selling
activities
Objective is to direct salespeople to
carry out important activities
For effective implementation, activity
quotas are combined with sales
volume and financial quotas
E.G. Calling on high potential
customers, payment collection from
defaulting customers
Priori
ty
Quotas
4 calls/month
5 calls/2months
Calling on retailers
All retailers of
territory should at
least be called
once in a month
4 times a month
Combination
Quotas
Quota
Actual
Percent
Weight
Quota (Importance)
5,00,000 4,50,000
Percent
Quota x
Weight
90
270
Receivables (days)
45
50
89
178
New Customers
(Nos)
04
05
125
125
573
Total
Type of
Quota
Quota
Actua
l
Perce
nt
Quota
Weight
(Importa
nce)
Percent
Quota x
Weight
Sales Volume
(Rs)
450000
427500 95
285
Selling
Expenses
450
495
90
90
New
Customers
(Nos)
24
29
120
240
615
by
established