Sales force Objectives

Definition of quotas

• Sales quota represents a specific sales goal that an

individual is responsible for satisfying over a period of

time, in a given territory.

• Quotas measure and define the appropriate

accomplishment level desired from an individual.

• Defined in either rupees or physical units of a given

product, product line, or service

Quotas

•

Why use quotas?

• Provides a uniform comparison of individuals throughout an organization

• Provides performance targets• Provides standards• Provides control• Provide as a tool to change the direction of the sales

force• Provide as a form of motivation

•

Developing quotas

• First ask why a quota may be of value– Motivator?– Basis for compensation?– Tool for evaluating performance?– Combination?

–

• What needs to be considered?• Company and departmental objectives• Customer mix• Salesperson level of performance• How diversified is the product line• Long term vs. short term• Environmental factors

Elements Important in Assigning Sales QuotasElements Important in Assigning Sales Quotas

• Concentration of Businesses within the Territory

• Geographic Size of Territory

• Growth of Businesses within the Territory

• Commitment by the Sales Manager to Assist the Sales Representative

• Complexity of Products Sold

• Sales Rep’s Past Sales Performance

• Extent of Product Line

• Financial Support (e.g., compensation) a Firm Provides

• Relationship of Product Line

• Amount of Clerical Support

Different types of quotas

• Sales Quotas

•

• Expense Quotas

•

• Profit Quotas

•

• Activity Quotas

•

• Combination Quotas

Different types of quotas

• Sales Quotas– Emphasis is place on volume

» Rupee volume

» Unit volume

» Point quota system

– Major problems

• Not focused on returns

• Not as focused on customer relationships

Different types of quotas

• Expense Quotas• Percentage of the territory’s sales volume

• Set limit on rupees spent on

– Meals

– Lodging

– Entertainment

– Problems:

• If expense quotas are low then the sales force may not be able

to perform their jobs correctly.

Different types of quotas

• Profit Quotas

•

– The focus is on profits and not volume

– Gross margin

– Contribution margin

–

–

– Problems

– May cause the sales force to only sell the most profitable items

Different types of quotas

• Activity Quotas- used to help ensure long-term goals

•

– Number of calls per day

– Calls on new accounts

– Dealer sales meeting held

– Proposals submitted

– Product demonstrations

Different types of quotas

• Combination Quotas- firms may use a combination of the

above types of quotas

Evaluation

• How often?

– Daily

– Weekly

– Monthly

– Yearly

Quantitative Performance Measures

Output related measures

• Sales revenue achieved

• Profits generated

• Percentage gross profit margin achieved

• Sales per potential account

• Sales per active account

• Sales revenue as a percentage of sales potential

• Number of orders

• Sales to new customers

• Number of new customers

Input related measures

• Number of calls made

• Calls per potential account

• Calls per active account

• Number of quotations

• Number of calls on prospects

Hybrid quantitative ratios

• Strike rate = No. of orders / No. of quotations

• Sales revenue per call ratio

• Profit per call ratio (call effectiveness)

• Order per call ratio

• Average order value = Sales revenue / No. of orders

• Prospecting success ration = No. of new customers / No. of prospects visited

• Average profit contribution per order = Profits generated / No. of orders

Qualitative Performance Measures

Includes the ability

• To do the entire selling job

• To service existing customers

• To locate and secure new customers

• To help intermediaries to sell on to users

• To provide technical advice

• To train retailer salespeople

• To provide information to customers and users on product changes and promotional support

• To secure display space and adequate stock with intermediaries

• To collect market and competitive information

• To be ambassadors for the company.

…other qualitative measures

• Attitude

• Product knowledge

• Selling skills

• Appearance

• Customer Knowledge

• Competitor and market knowledge

• Report writing and administration

• Company image and goodwill

Sales force Objectives

Definition of quotas

• Sales quota represents a specific sales goal that an

individual is responsible for satisfying over a period of

time, in a given territory.

• Quotas measure and define the appropriate

accomplishment level desired from an individual.

• Defined in either rupees or physical units of a given

product, product line, or service

Quotas

Why use quotas?

• Provides a uniform comparison of individuals throughout an organization

• Provides performance targets

• Provides standards

• Provides control

• Provide as a tool to change the direction of the sales force

• Provide as a form of motivation

Developing quotas

• First ask why a quota may be of value

– Motivator?

– Basis for compensation?

– Tool for evaluating performance?

– Combination?

• What needs to be considered? • Company and departmental objectives • Customer mix • Salesperson level of performance • How diversified is the product line • Long term vs. short term • Environmental factors

Elements Important in Assigning Sales Quotas

• Concentration of Businesses within the Territory

• Geographic Size of Territory

• Growth of Businesses within the Territory

• Commitment by the Sales Manager to Assist the Sales Representative

• Complexity of Products Sold

• Sales Rep’s Past Sales Perfor a ce

• Extent of Product Line

• Financial Support (e.g., compensation) a Firm Provides

• Relationship of Product Line

• Amount of Clerical Support

Different types of quotas

• Sales Quotas

• Expense Quotas

• Profit Quotas

• Activity Quotas

• Combination Quotas

Different types of quotas

• Sales Quotas

– Emphasis is place on volume

» Rupee volume

» Unit volume

» Point quota system

– Major problems

• Not focused on returns

• Not as focused on customer relationships

Different types of quotas

• Expense Quotas

• Perce tage of the territory’s sales volu e

• Set limit on rupees spent on

– Meals

– Lodging

– Entertainment

– Problems:

• If expense quotas are low then the sales force may not be able to perform

their jobs correctly.

Different types of quotas

• Profit Quotas

– The focus is on profits and not volume

– Gross margin

– Contribution margin

– Problems

– May cause the sales force to only sell the most profitable items

Different types of quotas

• Activity Quotas- used to help ensure long-term goals

– Number of calls per day

– Calls on new accounts

– Dealer sales meeting held

– Proposals submitted

– Product demonstrations

Different types of quotas

• Combination Quotas- firms may use a combination of the

above types of quotas

Evaluation

• How often?

– Daily

– Weekly

– Monthly

– Yearly

Quantitative Performance Measures

Output related measures

• Sales revenue achieved

• Profits generated

• Percentage gross profit margin achieved

• Sales per potential account

• Sales per active account

• Sales revenue as a percentage of sales potential

• Number of orders

• Sales to new customers

• Number of new customers

Input related measures

• Number of calls made

• Calls per potential account

• Calls per active account

• Number of quotations

• Number of calls on prospects

Hybrid quantitative ratios

• Strike rate = No. of orders / No. of quotations

• Sales revenue per call ratio

• Profit per call ratio (call effectiveness)

• Order per call ratio

• Average order value = Sales revenue / No. of orders

• Prospecting success ration = No. of new customers / No. of prospects visited

• Average profit contribution per order = Profits generated / No. of orders

Qualitative Performance Measures

Includes the ability

• To do the entire selling job

• To service existing customers

• To locate and secure new customers

• To help intermediaries to sell on to users

• To provide technical advice

• To train retailer salespeople

• To provide information to customers and users on product changes and promotional support

• To secure display space and adequate stock with intermediaries

• To collect market and competitive information

• To be ambassadors for the company.

…othe ualitative measu es

• Attitude

• Product knowledge

• Selling skills

• Appearance

• Customer Knowledge

• Competitor and market knowledge

• Report writing and administration

• Company image and goodwill

Key Attributes of a successful sales

person

Starting Exercise

• Does selling come naturally?

• Are salespersons born or can they be developed?

• What makes a good salesman?

• What are the essential selling skills that makes a

salesman successful in sales?

What Does a Salesperson Do?

• Creates new customers

• Sells more to present customers

• Builds long-term relationships

• Pro ides solutio s to usto er’s pro le s

• Provides service to customers

• Helps customers resell products to their customers

• Helps customers use products after purchase

• Builds goodwill with customers

• Provides company with market information

Attributes of Sales person

• Behavioral and mental characteristics by means of which an individual is recognized as being unique.

• Desirable attributes: • Enthusiasm

• Confidence

• Intelligence

• Self-worth

• Knowledge

• Skills

• Communication skills

• Listening skills

• Matching skills

• Conflict resolution, Persuasion and negotiation skills

4 FACTORS FOR SUCCESS

• KNOWLEDGE – Own product

– Own company

– Own territory

– Competition

– Customer

– Market Place

• EFFECTIVE COMMUNICATION

• PLANS

• DIFERENT TARGET SEGMENT

The Salesman . . . .

• The Good Salesman..

• Honest

• Admits mistakes

• Solves problems

• Friendly but professional

• Dependable

• Adaptable

• Well-prepared

• Patient

• K o s the usto er’s business

• The Bad Salesman..

• Walks in without

appointment

• Fails to ask about needs

• Lacks product knowledge

• Puts do o petitor’s products

• Has poor listening skills

• Makes too many phone calls

• Does not follow-up

• Gets personal and pushy

The salesman and the customer

• Modern-day sales rests on building a good relationship with

customers.

• The relationship becomes long-term when it is built on mutual

trust.

• Trust between salesman and customer depends on:

– Truth of words communicated by the salesman

– Predictability of action

– Competency (ability/knowledge/resources)

– I te t or e pathy ( uyer’s i terest upper ost, pro le -solving,

responsive, etc)

– Likeability

Types of Personal Selling

• Broadly classified into

– Industrial Selling

– Retail Selling

– Services selling

• Salesperso ’s approa hes ary due to i here t differences in the selling type.

• Differences are linked to

– Custo er’s hoi e eha ior

– Importance the customer gives to the purchase

– Risks involved in buying the product

Industrial Selling

• Manufacturing sector selling or B2B Selling

• Using consumer as base, can be grouped into:

– Selling to Resellers

• An intermediary who buys to resell

– Selling to Business Users

• A producer who buys to use as input to his product

– Institutional Selling

• A firm which uses the product in their daily operations

– Selling to Governments

• Where the government /undertakings and its employees are the

ultimate consumers

Retail Selling

• Retailing: all activities directly related to the sale of

goods and services to the ultimate consumer for

personal or non-business use or consumption.

• Features:

– Buyers seek the sellers

– Buyers buy in bulk to sell in smaller assortments

– Effected at the level of a retailer, a dealer or a wholesaler

Services Selling

• Services: activities or benefits provided to

consumers

• Four unique characteristics

– Intangible

– Inseparable from their sources

– Cannot be stored for future use

– Individualised

Selling Situations

• Maintenance Selling

– Servicing existing accounts, securing promotional co-

operation, counting inventory, taking replenishment

orders, delivering the products.

– No prospecting involved.

• Developmental Selling

– Prospect from leads, qualifying potential buyers, securing

specifications and approvals for the purchase, closing the

sale with actual order.

– Seek potential customers and get order.