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Sales Budget,

Sales Territories & Quotas

Vibhor Jain
Sales Budget
 Blueprint for making profitable sales
 Details of
◦ Who is going to sell
◦ How much
◦ Of what
◦ During the operating period
◦ To which customer
 Instrument of Planning

 Mechanism of control
◦ Composite of sales, expense & profit goal
◦ Yardstick to measure progress/ performance
◦ Identify weaknesses
◦ Revision or Correction
Form & Content
 Statement of projected sales revenue &
selling expenses
 Sales volume in units or currency
 Details of sales volume
◦ Unit sales of each product
◦ Unit sales by sales territories
◦ Unit sales by quarter/ month
◦ Unit sales by class of accounts
Budgetary Procedure
 Usual first stage is the sales budget in an
organizational budget
 Once Sales budget is okayed
◦ Production gives budget for manufacturing
expenses and inventory
◦ Financial Dept. gives budget for Capex,
administrative expenses etc.
 Production is more interested in Unit
sales projections & Finance in currency
sales figures
Planning Styles
 Top Down
◦ Based on Theory X (No one like to work)
 Bottom Up
◦ Based on Theory Y (People like to work &
take responsibility)
 At least partial Bottom Up approach
should be used
◦ Participation at all levels enhances confidence
in budget and leads to higher sales
Competition Within
 All managers in marketing/ sales present
their budgets
◦ Sales Manager
◦ Advertising Manager
◦ Market Research Manager
◦ Customer Service Manager
◦ Product Managers etc.
 ‘Sell’ your requirements to senior
Competition Outside
 All divisions fight for funds from top
 Top management is like a prospect
 Sales executive gives presentation on
budget like a sales pitch
 Focus should be on need/ wants (Profit)
of top management
 Correlate requirements with profits
Budget for Control
 Weekly or monthly progress report
prepared by Sales Manager
 Shows sales & expenses for week to date,
month to date & year to date
 Broken down sales figures are displayed
 Variance of actual from budgeted is
 Correction or Revision undertaken
 Not easy to change the budget
 Sales budget is a statement of projected
sales revenue & selling expenses
 Best prepared by Bottom Up approach
 Regular comparison between budgeted
and actual paves way for Correction or
Sales Territories
 Sales Territory is a group of customers &
prospects assigned to an individual sales
 May be planned geographically
 May be non geographical when
◦ Personal acquaintance selling is required
◦ Highly specialized salesperson
Reasons for having Sales Territories

1. To provide proper market coverage

2. To control selling expenses
3. To assist in evaluating sales personnel
4. To contribute to sales force morale
5. To aid in the coordination of personnel
selling & advertising efforts
Procedure of setting Sales
 Select a basic geographical control unit
 Determine Sales potentials in control
 Combining control units into tentative
◦ Shapes may be Wedge, Circular & Clover leaf
 Adjusting for coverage difficulty
How adjustment is done?
1. Determine number, location & size of
customers & prospects in each tentative
2. Estimate time required for each sales
3. Determine length of time between calls
(the amount of time required to travel
from one customer to the next)
4. Decide call frequencies
How adjustment is done?
5. Calculate the number of calls possible
within the given period
6. Adjust the number of calls possible
during a given period by the desired call
frequencies for the different classes of
customers & prospects
7. Finally, check out the adjusted territories
with sales personnel who work or who
have worked in each area & make
further adjustments if reqd.
Routing & Scheduling
 Main purpose of routing & scheduling is
◦ Maintaining the lines of communication
◦ Optimize Sales Coverage
◦ Minimize wasted time
 Quantitative objectives assigned to sales
organization units
 Specify desired performance levels for
sales volume
 Quotas are broken down at every
successive level
 Device for directing & controlling sales
 To provide quantitative performance
 To obtain tighter sales & expense control
 To motivate desired performance
 To use in connection with sales contests
Types of Quotas
 Sales Volume Quotas
◦ ‘how much, for what period’
 Budget Quotas
◦ Set for various units in sales organization to
control expenses, gross margins or net profit eg.
Expense Quota & Gross margin or net profit
 Activity Quota
◦ To control allocation of time/ efforts among diff.
activities like sales call, product demos.
 Combination Quotas
◦ Both selling & non selling activity quota
How to secure acceptance?
 Participation in Quota setting
 Keeping sales personnel informed of
 Need for continuous managerial control
Thank You