Controlling the salesforce

Sales Force Expenses

Typical reimbursement
–Legitimate sales expenses

-Travel
-Meals
-Lodging
-Entertainment of customers
-Telephone
Expenses Plan = compensation plan
 Sales Force Expenses

Effective expense plan :-

-Fair to the salesperson

-Neither gain nor lose
-Fair to the company
-Eliminate padding of expenses by the S.P
-Simple and economical to administer
-Reports / forms to be precise
 Sales Force Expenses

Effective expense plan :-

-Allow difference in travel expenses

-A class cities and B class cities
-Reimbursement without much delay
-Tour advance and later settlement
 4 Types of Expense Plans
The salesperson pays all expenses :-
-compensated by straight commission
-Paid a little higher
-No cost of administration
-Non selling activities have no direct control
-Reports, intelligence
-SP is non answerable for expenses

-The company pays all expenses (unlimited payment plan)

-Honour system
-No limit (total / individual items)
- against actuals
-+Free from psychological anxiety about expenses
--Vehicle for padding expenses

-The company partially pays expenses (limited pay plan)

-Rs. 1000 for room and food each day – stay away overnight
-Rs. 150 for lunch / dinnerRs. 700 for lodging & Rs. 75 for breakfast
 4 Types of Expense Plans

-The company partially pays expenses (limited pay plan)

-Lump sum ( Weekly/daily)
-Rs. 1000 for room and food each day – stay away overnight
-Limited amount itemised
-Rs. 150 for lunch / dinnerRs. 700 for lodging & Rs. 75 for breakfast
-+ expenses can be forecasted
--Inflexible
--Unusual expenses
-Explanatory note
--Padding can happen
 Types of Expense Plans
-combination plan ( expense-quota plan)
-Limited / unlimited plans
-Food& lodging/ travel cost
-Expense-quota plan
-2% of net sales
-Rs. 10,000 set for a month since expected monthly sales is Rs.
5,00,000
-Mgmt has control on selling expenses
-SP have flexibility
 Marketing Audit

-A comprehensive, periodic & systematic

examination of a company’s marketing
environment, objective, strategies and
tactics with a view to find out opportunities
and problems and recommend and action
plan to improve the company’s marketing
performance.
 Marketing Audit
-Average US corporation
-Loses half of its customers in 5 yrs
-Half of its employees in 4 yrs
-Half of its investors in less than 1 yr

WEAKNESS
•Time consuming
•Difficult
•Expensive
 Marketing Audit

-Covers total marketing system

-Sales mgmt function
-Sales Force Audit
-Physical distribution dept
 Sales force audit (SMA)

-A periodic evaluation if goals are

achieved
-Objective
-Outside consulting firm
-Another functional area

THE PROCESS
What why it What to do
happened happened about it
 Sales force audit (SMA)

THE PROCESS
What why it What to do
happened happened about it

Compare actual performance with goals or targets

Eg :-
Actual performance on sales @ the end of first
quarter of the year is Rs. 90 million against sales
goal Rs. 100 million –ve variance Rs. 10 million
 Sales force audit (SMA)

THE PROCESS
What why it What to do
happened happened about it

What factors brought –ve variance

• Marketing mix ?
•Sales people ?
•Sales managers ?
 Sales force audit (SMA)

THE PROCESS
What why it What to do
happened happened about it

Corrective action to solve the problems

•Overcome harmful
•Leverage favorable conditions

Situation analysis
Customer services not as per customer expectation
Evaluation of Effectiveness
of Sales organisation
THE PROCESS
Effectiveness Sales analysis
of a sales
organisation Cost analysis

Profitability
analysis

Productivity
analysis
 Sales Analysis
WHEN A SALES TAKES PLACE – ORDER RECEIVED ? SHIPPED(& INVOICED)
OR PAID FOR

National level sales organisation

All levels in
Regional Level
the sales
Branch / District level
organisation
Territory level
Individual customer level
SALES
ANALYSIS Total sales of the company
Different
By type of products
types of
By type of distribution channels
sales
By type of customer classifications
By size of the orders

Comparisons with sales quota

Different
types of Comparisons with previous periods

Analsysis Comparisons with industry / competitiors

Comparisons within sales organisation
Comparisons with sales forecasts
 Sales Analysis
WHEN A SALES TAKES PLACE – ORDER RECEIVED ? SHIPPED(& INVOICED)
OR PAID FOR

Examining Sales volume :

-By territory
-By SR
-By Customer
-By product line
 Sales Analysis
Sales analysis by territory :
Territory Quotas Actual Performance as % of Quota
East 1650 1700 103%
West 1500 1500 100%
North 1780 1740 98%
South 1700 1840 108%
Sales analysis by SR : North
SR Quotas Actual Performance as % of Quota
Sharma 190 186 98%
Sadhu 230 234 102%
Singh 220 218 99%
- 212 220 104%
- 216 214 99%
- 220 224 102%
Rajan 260 212 82%
Reddy 232 232 100%
1780 1740 98%
 Sales Analysis

Sales analysis by product line :

Shri Rajan, SR’s Sale by product line

Product line Quotas Actual Performance as % of Quota

Anitbiotics 44 46 104%
Anti-inflamm 56 56 100%
Antacid 60 12 20%
Antidiabe 52 50 96%
Ointments 52 50 96%
260 212 82%
 Sales Analysis

Sales analysis by customer :

Shri Rajan, Customerwise performance for antacids

Customer Quotas Actual Performance as % of Quota

Doctors 4 4 100%
Big Hospitals 2 2 100%
Nursing 2 2 100%
homes
Retail 48 0 0%
chemists
Govt. Dept 2 2 100%
Canteens 2 2 100%
60 12 20%
 Sales Analysis

A frame work for sales analysis :

Customer Northern Eastern Western Southern

Sales (Rs. Mln) 23 22 28.5 27

Sales Quota (Rs. Mln) 25 20 30 25
Effectiveness index 92 110 95 108

Sales last yr (Rs. Mln) 22.5 19 28 24

Sales Growth (%) 2 16 2 12
Industry Sales (Rs. Mln) 250 200 300 250
Market share (%) 9 11 9.5 11