Management of Sales

Territory & Sales Quota

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Sales territory
Sales territory

 A sales territory is defined as a group

of present and potential customers
assigned to an individual salesperson,
group of salesperson, a branch, a
dealer, a distributor or a marketing
organization at a given period of time

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Advantages

 Better market coverage

 Effective use of sales force
 Convenient way to evaluate the performance of a
sales person.
 Enhance employee morale
 Understand and serve customers I a better way
 Develop loyalty.
 Develop specific marketing programs for the specific
territory.
 Develop trade promotion strategy
 Cost control
 etc.

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Disadvantages

 This type of territory designing may

not be possible for some companies.
 New companies.
 Small companies.
 Where customers are geographically
dispersed.
 Some organizations may need industry
specific groups.
 etc.

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Size of sales territories

 Nature and demand of the product.

 Mode of physical distribution.
 Selling process.
 Transport and communication
facilities.
 Other factors
 Government regulations
 Density of population

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Size of sales territories contd…

 Population spread within the territory

 Market potential
 Growth rates
 Level of competition
 Co’s sales policy
 Ability of sales people
 Overall economic condition etc.

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Allocation of Sales Territories

 Assigning a particular sales man to a

specific territory.
 He knows the customers closely and
 Customer know him
 Uniform distribution of work for all
sales people
 This motivates the sales man to
perform.

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Allocation of Sales Territories contd…

 Duplication of work is avoided.

 Economies of scale can be achieved.

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Designing a sales territory
1.Select the basic geographic
Factors influencing The
Control units
modification Of
a territory

•Merger 2.Decide on the criteria for

allocation
•Market consolidation

•Split in division
3.Determine basic territories
•Sales force T/O

•Customer relocation 4.Assign sales force to new

territories
•Product life cycle
change

•Product line change 5.Revising sales territories

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Designing Sales territory
1. Select basic geographic control units-

 While designing territories, the first step

is to select a geographical control unit as
a territorial base. Commonly used units
are states, countries, cities, pin codes
etc.

 A typical territory may compromise

several individual units.

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Designing Sales territory contd…
2. Decide on the criteria for allocation-

 Management should determine the location and

potential of both present and prospective
customers within each selected control unit.

 The get above information company can make

use of lot of data which is easily available. For
eg. Per capita income, employment situation,
FMCG sales figures, house rents and lot of data
available from various research institutes or
reports.

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Designing Sales territory contd
3. Determine basic territories- at this
stage territories are established

 Methods of determining the territory

are-

 Build up method

 Breakdown method

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Buildup method

Management Desirable call Total calls

must Pattern needed
Determine: (call frequency) In each control group

Tentatively set
Territorial lines by
Modify territories
workload capacity Combining control units
As needed
Until total calls needed
= total calls possible

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 Breakdown method

sales potential
Management company sales
In each control
Must determine potential
unit

Tentative territorial
Sales volume boundary lines by Territorial
expected from combining control modifications
each units until total As needed
salesperson sales potential =
expected sales volume

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Designing Sales territory contd …
 Routing the sales force

 Routing is the managerial activity that establishes

a formal pattern for sales reps to follow as they
as they go through their territories

 Territory shapes

 Circle

 Wedge

 cloverleaf

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4. Assigning salespeople to territories

 Till this point we have assumed that all the sales

people are equal in aspects. But this is not true.

 Sales representative’s age, selling skill,

experience, initiative, creativity etc. has to be
taken into account while allotting the territory.

 Many companies design territories of unequal

sizes to take care of this aspect.

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Sales quota
 A sales quota is the sales goal set for
the product line, company division, or
sales representative. It is primarily a
managerial device for defining and
stimulating sales efforts

- Philip Kotler

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Introduction

 Quota is a type of plan

 It is expected performance objective
 Quotas are assigned to departments,
divisions, and individuals.
 They are goals, which are to be
achieved in a specific period of time.

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Importance of Sales Quota

 Motivate sales people.

 Quota helps management by
exception.
 It gives direction to the sales people’s
efforts and resources for specific
ends.
 It serves as a control.

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Principles of Quota Setting
 SMART
 Quota should be Specific, Measurable,
Attainable, Realistic, Time specific

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 Selling by Objectives (Charles Futrell)

 Organization of sales job

 Territory Management
 Account Management
 Call Management
 Self Management

 Defining Annual Objectives

 These objectives are of three types
 Regular/Recurring Objectives
 Problem solving Objectives
 Creative objectives

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Types of Sales Quota

 Sales Volume Quota

 Sales Budget Quota
 Sales Activity Quota
 Combination Quota

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Methods of Setting Quota

 Based on sales potential

 Based on forecast
 Based on Past Sales
 Based on Executive Judgement
 Based on Sales Person’s Judgement
 Based on Compensation

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Recruitment and selection of
Sales Force
Hiring process

 Phases of hiring process

 Human resource planning process

 Recruitment
 Selection
 Socialization

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Challenges in Sales Force Selection

 The determination of characteristics

that differentiate candidates who
perform better, measuring these
characteristics, evaluation of the
motivation level of candidates for the
job and for the organization, followed
by a decision on who will make the
ultimate selection decision.

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1. Human Resource Planning
 It is a systematic procedure that describes
the way a sales job is to be performed and
the skills and abilities needed to perform
the job.

 Determination of performance measures.

 The identification of critical success factor.
 The performance dimensions of the position.
 The determination of performance measure
dimensions.
 The operationalization and the establishment of
performance.
 Standards and the design of the assessment
tools.

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1. Human Resource Planning contd…

 Turnover

 Job Analysis

 Job qualification and Job Description

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2. Sales Force Recruitment

 Sources

 Internal

 External

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3. Selection
 Inviting application  Personality

 Personal interview  Aptitude test

 Reference checks  Determination of terms

of service
 Physical examination
 Appointment
 Psychological tests
 Initial orientation
 Intelligence

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4. Socialization

 Anticipatory Stage

 Encounter Stage

 Setting in

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Training the Sales Force
 Importance of training

 Objectives of sales training

 Challenges in sales training

 Role of a trainer

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The training process

1. Training need assessment.

2. Design and conduct of training

programme.

3. Evaluation of a training programme.

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1. Training need assessment

 Organizational level analysis

 Task level analysis

 Individual level analysis

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Discovery of the training need involves
the following five tasks
 Listing the duties, responsibilities, or tasks of the job
under consideration on the basis of the job description
guide.

 Listing the standards of work performance related to

the job.

 Comparing the actual performance against standards.

 Determining the part of the job that creates a

problematic environment for the sales person and
whether or not he is performing the job, as per the
standards.

 Determining the kind of training needed to overcome

specific difficulties and problems.
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2. Design and conduct of training
programme.

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4. Evaluation

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