ADVANCE MARKETING MANAGEMENT, T.Y.

BBA – SEM 6, VNSGU, SURAT

UNIT 2

SALES FORCE MANAGEMENT

Syllabus (20%)
1. Recruitment and Selection of Salesforce
2. Training of Salesforce
3. Motivating and Compensating Salesforce
4. Controlling the Salesforce
5. Designing Sales territories
6. Sales quotas
7. Sales organization structure
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SOURCES OF RECRUITMENT

The different sources of recruitment are classified into two categories, viz.,
1. Internal : sources of recruitment are from within the organisation.
2. External : sources of recruitment are from outside the organisation.

(A) INTERNAL SOURCES:

1) Promotions: Promotion means to give a higher position, status, salary and responsibility to the
employee of same organisation. So, the vacancy can be filled by promoting a suitable candidate from
the same organisation.
2) Transfers : Transfer means a change in the place of employment without any change in the position,
status, salary and responsibility of the employee. So, the vacancy can be filled by transferring a
suitable candidate from the same organisation.
3) Internal Advertisements : Here, the vacancy is advertised within the organisation. The existing
employees are asked to apply for the vacancy. So, recruitment is done from within the organisation.
4) Retired Managers : Sometimes, retired managers may be recalled for a short period. This is done
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 ADVANCE MARKETING MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

when the organisation cannot find a suitable candidate.

5) Call from Long Leave : The organisation may recall a manager who has gone on a long leave. This
is done when the organisation faces a problem which can only be solved by that particular manager.
After he solves the problem, his leave is extended.
Advantages of Internal Sources:
1. Improves morale: When an employee from inside the organisation is given the higher post, it helps
in increasing the morale of all employees. Generally every employee expects promotion to a higher
post carrying more status and pay.
3. No Error in Selection: When an employee is selected from inside, there is a least possibility of
errors in selection since every company maintains complete record of its employees and can judge
them in a better manner.
4. Promotes Loyalty: It promotes loyalty among the employees as they feel secured on account of
chances of advancement.
5. No Hasty Decision: The chances of hasty decisions are completely eliminated as the existing
employees are well tried and can be relied upon.
6. Economy in Training Costs: The existing employees are fully aware of the operating procedures
and policies of the organisation. The existing employees require little training and it brings economy
in training costs.
7. Self-Development: It encourages self-development among the employees as they can look forward
to occupy higher posts.
Disadvantages of Internal Sources:
(i) It discourages capable persons from outside to join the concern.
(ii) It is possible that the requisite number of persons possessing qualifications for the vacant posts
may not be available in the organisation.
(iii) For posts requiring innovations and creative thinking, this method of recruitment cannot be
followed.
(iv) If only seniority is the criterion for promotion, then the person filling the vacant post may not be
really capable.

(B) EXTERNAL SOURCES:

1. Advertisement: It is a method of recruitment frequently used for skilled workers, clerical and
higher staff. Advertisement can be given in newspapers and professional journals. These
advertisements attract applicants in large number of highly variable quality.
2. Employment Exchanges: Employment exchanges in India are run by the Government. For
unskilled, semi-skilled, skilled, clerical posts etc., it is often used as a source of recruitment. The
job-seekers and job-givers are brought into contact by the employment exchanges.
3. Schools, Colleges and Universities: Direct recruitment from educational institutions for certain
jobs (i.e. placement) which require technical or professional qualification has become a common
practice. A close relation between the company and educational institutions helps in getting suitable
candidates. Junior level executives or managerial trainees may be recruited in this way.
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4. Recommendation of Existing Employees: The present employees know both the company and the
candidate being recommended. Hence some companies encourage their existing employees to help
them in getting applications from persons who are known to them.
5. Factory Gates: Certain workers present themselves at the factory gate every day for employment.
This method of recruitment is very popular in India for unskilled or semi-skilled labour. The
desirable candidates are selected by the first line supervisors. The major disadvantage of this is that
the person selected may not be suitable for the vacancy. It is most economical method of
recruitment.
6. Central Application File: A file of past applicants who were not selected earlier may be
maintained. In order to keep the file alive, applications in the files must be checked at periodical
intervals.
7. Labour Unions: In certain occupations like construction, hotels, maritime industry etc., (i.e.,
industries where there is instability of employment) all recruits usually come from unions. It is
advantageous from the management point of view because it saves expenses of recruitment.
8. Labour Contractors: This method of recruitment is still used in India for hiring unskilled and
semi-skilled workers. The contractors keep themselves in touch with the labour and bring the
workers at the places where they are required. They get commission for the number of persons
supplied by them.
Merits of External Sources:
 Availability of Suitable Persons: Internal sources, sometimes, may not be able to supply suitable
persons from within. External sources do give a wide choice to the management. A large number of
applicants may be willing to join the organisation. They will also be suitable as per the requirements.
 Brings New Ideas: The selection of persons from outside sources will have the benefit of new ideas.
The persons having experience will be able to suggest new things and methods. This will keep the
organisation in a competitive position.
 Economical: This method of recruitment can prove to be economical because new employees are
already trained and experienced and do not require much training for the jobs.

Demerits of External Sources:

1. Demotivate: When new persons from outside join the organisation then present employees feel
demo because these positions should have gone to them. There can be a heart burning among old
employees. Some employees may even leave the enterprise and go for better avenues in other
concerns.
2. Lack of Co-operation: The old staff may not co-operate with the new employees because they feel
that their right has been snatched away by them. This problem will be acute especially when
persons for higher positions are recruited from outside.
3. Costly: The process of recruiting from outside is very expensive. It starts with inserting costly
advertisements in the media and then arranging written tests and conducting interviews. In spite of
all this if suitable persons are not available, then the whole process will have to be repeated.
4. Problem of Maladjustment: There may be a possibility that the new entrants have not been able to
adjust in the new environment. They may not adjust with the new persons. In such cases either the
persons may leave themselves or management may have to replace them.

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SELECTION PROCESS OF SALES FORCE

Definition of Selection:
 According to Harold Koontz, “Selection is the process of choosing from the candidates, from
within the organization or from outside, the most suitable person for the current position or for
the future positions.”
 David and Robbins said, “Selection process is a managerial decision-making process as to
predict which job applicants will be successful if hired.”

Process of Selection of Salesforce:

1. Recruitment of Salesforce:
Recruitment involves the following steps :-
 Job Analysis : The Personnel department first does job analysis. It is a process of collecting,
analysing information about the job (Job Description) and qualities required for doing the job (Job
Specification).
 Determining the Sources of Manpower : After this, they search for all possible sources of
manpower. For example, Advertising in newspapers, internet etc.
 Advertising the Vacancies : The Personnel department advertises the vacancies. The
advertisement should contain detailed information about the job, the required qualities of the
candidates, the company, etc. All suitable candidates are asked to submit their applications to the
company before a particular date.

2. Applications:
 Checking the Applications: The Personnel department examines these applications in detail.
The candidates who are not qualified for the job, incomplete applications, applications received
late, etc., are rejected.
 Sending Application Blanks: The remaining candidates are sent to "Application Blanks". It
collects information about the candidate's background, education, experience, reference, etc.

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3. Written Test:
 The candidates are sent call letters for "Written Tests".
 It is held to test the performance, aptitude, interest, intelligence, personality, etc. They may be a
descriptive or objective test.
 The candidates who are successful in these tests are given call letters for the interview.
 Personnel testing is a valuable way to measure individual characteristics.
 The use of tests is becoming more prevalent for assessing an applicant’s qualifications and
potential for success.
 Tests are used more in the public sector than in the private sector and in medium-sized and large
companies than in small companies.

Advantages of using tests

 Selection testing can be a reliable and accurate means of selecting qualified candidates from a
pool of applicants.
 It is important to identify the essential functions of each job and determine the skills needed to
perform them.

Problems using Selection tests

 Selection tests may accurately predict an applicant’s ability to perform the job, but they are less
successful in indicating the extent to which the individual will want to perform it.
 Applicant may not be honest in personality tests. They may hide their real personality to get the
job.
 Applicants feel anxious for the test and hence they may not perform as per their potential.

4. Interview:
 An interview is an oral examination of candidates. The main purpose of an interview is to match
candidates with jobs.
 An interview is a goal-oriented conversation in which the interviewer and applicant exchange
information.

Interview Planning
 Interview planning is important for effective employment interviews.
 The physical location of the interview should be pleasant and private with minimum
interruptions.
 The interviewer should possess a pleasant personality, empathy and the ability to listen and
communicate effectively.
 He or she should become familiar with the applicant’s qualifications by reviewing his application
and biodata.

Content of the Interview

 The specific content of interviews varies by an organization and the level of the job concerned.
 Occupational experience: experience requires determining the applicant’s skills, abilities,
and willingness to handle responsibility.
 Academic achievement: In the absence of work experience, a person’s academic
background takes greater importance.

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 Interpersonal skills: If an individual cannot work well with other employees, chances for
success are limited.
 Personal qualities: Personal qualities include physical appearance, speaking ability,
vocabulary, poise, adaptability, and assertiveness.
 Organizational fit: the degree to which the employee will fit in with organization culture
and environment.

Step 5 Testing:
1. Aptitude or psychometric tests
 These tests evaluate specific skills such as logic, reasoning, numeracy, verbal ability and
problem-solving that is likely to be used during the course of work. These are multiple-choice
tests.
Types of Aptitude Tests:
 Numerical Reasoning: Determines your ability to deal with numbers and interpret numerical
data such as averages, percentages, ratios, etc.,
 Verbal Reasoning: Determines your ability to understand language, comprehend written
passages and make deductions.
 Logical Reasoning: Determines your ability to think logically
 Inductive Reasoning: Determines your ability to solve problems by identifying patterns and
analysing data when faced with unfamiliar information.
 Situational Judgment: Determines your ability to think critically and make decisions.

2. Personality Tests
 These tests assess beliefs, communication style, work ethic, interpersonal, teamwork and
leadership skills, and how you respond to various situations.
 They help employers determine if your character traits are suited for a specific role. For example,
an assessment may determine if you will succeed in a sales job without experience.
 If a job is not a good fit for your personality, it could lead to lower productivity and satisfaction.

3. Specific Skills Tests

 These tests determine if you have skills specific to a highly specialized role.
 For example, knowledge of certain programming languages for IT roles or your ability to edit or
write for editor or writer roles.

4. Job Simulation Tests

 These determine how you will perform in actual work settings.
 Formats can vary and include in-person, online assignments, presentations or role-playing.
Presentations
 These assess your communication skills, public speaking, analytic and persuasive skills,
creativity and ability to convey the needed information in the allotted time.
 Microsoft PowerPoint is the most common software used by many companies.

6. Group activity tests

 These assess communication, enthusiasm, teamwork, leadership and problem-solving skills as
part of a team
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Step 6: Reference Check

 After the interview, the HR department checks the references of the successful candidates.
 These references are contacted personally or by telephone or by letter, and they are asked their
opinion about the candidate.
 Companies may prefer following types of references;
o Present employer/Past employer
o Past clients/customers
o Eminent personalities in the related field etc.

Step 7: Medical Examination

 The candidates have to go through a medical examination after the successful completion of tests
and interview.
 This is done to find out whether the candidate is physically fit to do the job.
 Sales job demands lot of travel. This requires more physical fitness in order to spend long hours in
travelling and meeting the clients.

Step 8: Final Selection, Placement and Induction

 The candidates who are successful in the medical examination are issued appointment letters, and
they are asked to join the organisation on a particular date.
 On the joining date, the candidate is properly placed and inducted.

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TRAINING SALES FORCE

Definition of Sales Training

 In the words of George R. Collins, “Sales training is an organized activity involving fact finding,
planning, coaching, practicing and purposive attempts to develop selling skill and to add these
skills to selected native ability, casually acquired knowledge and experience.”

Objectives of Sales Training

1. Improve Company Knowledge:
 Sales training should allocate sufficient time, and include an appropriate amount of information, to
improve new and existing sales representatives' knowledge of the company.
 This should include its history, values and mission, and its policies and procedures with respect to
dealings with external stakeholders and internal co-workers and managers.
2. Clarify Responsibilities and Expectations
 An effective sales training program leaves sales representatives with a full understanding of their
day-to-day activities and responsibilities, as well as a clear vision of the process of advancement
within the company.
 Sales quotas or targets are highlighted in the training programme. It is important that salespersons
are aware about their performance targets.
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3. Improve Product Knowledge

 One of the primary objectives of a sales training program is to ensure a thorough understanding of
the products and services that the salespeople will be selling.
 Sales guides with product specifications, features and basic pricing should be distributed before the
training sessions so that sales representatives can review them beforehand--and raise any questions
during the sales training session.
 Salespeople should leave a training session with full confidence that they could effectively answer
any question raised by the customer about their products and services.
4. Enhance Sales Skills
 Sales training should also improve sales skills.
 Sales representatives should gain new knowledge about how to effectively prospect for and deal
with clients, and learn new techniques to persuade them to purchase the product.
 Upon completion of training, sales representatives should be fully confident in their ability to build
a solid business relationship with clients, convince them of the value of the product and persuade
them to purchase it.
5. Improve Morale
 Sales training programs can lift morale. Sales representatives should leave the training program with
a positive attitude and motivation to perform at a high level.
 They should feel like a respected and important part of a team and a sense of pride for their
company and the products and services they represent.

Methods for Training Sales Representatives

The various methods of sales training can be classified into two groups:
1. Group Training Methods.
2. Individual Training Methods.

1. Group Training Methods:

(i) Lectures or Class Room Instructions:

 They are regarded as one of the simplest ways of imparting knowledge to the trainees, especially
when facts, concepts, attitudes, theories and problem-solving abilities are to be taught.
 The lecture method may be used for a group containing good number of trainees and are to be
trained within a short period of time.
Merits:
 It becomes easier to impart knowledge on concepts and theories.
 A very large group can be trained within a short period of time.
 Doubts on a particular point can be cleared on the spot.
 It reduces the cost of training.
 Use of audio-visual equipment’s increases the effectiveness of training.
 Exchange of views with the trainer may also increase the effectiveness.
Demerits:
 The learners do not participate actively.
 Only the theoretical knowledge can be gained through this type of training
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Mob: 9586075954
 ADVANCE MARKETING MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

 One-way communication takes place and there is no feedback from the audience.
 It is difficult to evaluate the effectiveness of training.

(ii) Group Discussion Method:

 In this method of training, different groups are formed by limited number of persons (15-20).
 Each group gets guidance under the leadership of a senior officer.
 The group discusses the sales problems with the leader and efforts are made to find out a
commonly agreed solution to each problem.
 During group discussions, everyone gets an opportunity to learn from the ideas of others.
Merits:
 Every trainee is benefited from the ideas of each other’s.
 The group will be able to work out a best solution to the problems.
 The salesmen are able to learn much about their jobs.
Demerits:
 All the members in the group do not participate actively in the discussion
 There is possibility to deviate from the main subject of discussion
 This method is not suitable for training the new/fresh salesmen, who have very limited
knowledge about the sales function.

(iii) Sales Conference Method:

 In this method, the trainees discuss the points of common interest.
 It is a formal meeting conducted in accordance with an organized training plan.
 It lays emphasis on small group discussion, on specific subject matter.
 This method is suitable for training the persons holding managerial positions and having basic
knowledge on the subject of training.
Merits:
 This method is informative and arguments oriented.
 It provides opportunity to trainees to examine from different viewpoints.
 The trainees actively and continuously participate in the deliberations.
Demerits:
 Since the participants are in large numbers everybody may not get equal opportunity to express
views.
 It is a time consuming training programme.
 In such conferences, participations are mostly interested to establish their personal relationships
and thus, the training objective cannot be achieved.

(iv) Case Study Method:

 In this method, trainees are given cases to analyze. They are asked to identify any sales problem
and to recommend tentative solutions for it. The trainer points out the drawback and is given
guidance for improvement.
 Case study method is useful as a training technique suitable for supervisors to improve their
decision-making skills.
Merits:
 It provides practical knowledge to the trainees.
 It helps to develop the analyzing capacity, bargaining power, evaluation and decision-making
abilities of the trainees.
 The trainees receive orderly arrange training from experienced trainers. 9
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 ADVANCE MARKETING MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

Demerits:
 This method increases the training costs.
 Excessive involvement of time is another drawback.

(v) Role Playing Method:

 In role playing trainees act out a given role. Two or more trainees are assigned parts to play
before the rest of the members. The role- players are simply informed of a situation and roles
they have to play.
 For example, the trainees are given certain roles as salesmen, sales supervisors, customers and
others.
Merits:
 This is a creative method of training
 The trainee’s interest and involvement tend to be higher.
 It develops skills and ability to apply knowledge, particularly in area like human relations.
Demerits:
 It is a time consuming training programme.
 The trainees do not take interest seriously and consider it as acting only.

(vi) Simulation or Gaming Method:

 Simulation is a technique which duplicates; as nearly as possible, the actual conditions
encountered in a job.
 This method develops the decisions-making capacity of the trainees.
 The knowledge about various decision methods such as selling efforts, advertising, sales force
management, size of the orders, time for getting orders, etc. are learnt through such training, the
decisions taken by the trainers.
Merits:
 The salesmen get practical and theoretical knowledge.
 Expert knowledge to the problems is available.
 The actions of trainees closely related to real job situation.
Demerits:
 This method is not appropriate for consumer goods.
 It is not appropriate for new sales personnel.

2. Individual Training Methods:

(i) On the Job Training:

 In this type of training, salesmen are appointed to do their duties under the guidance of
experienced salesmen. T
 They learn by doing the selling job.
Merits:
 The trainees learn on the actual environment of job.
 It is economical since no additional facilities are required to be provided for training.
 The trainees learn the rules, regulations, and procedures by observing their day-to-day
applications.
 Immediate evaluation of the progress made by the trainees is possible.
 It ensures motivation and self-confidence among the trainees.
Demerits: 10
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 The training programme is highly discouraged and not properly supervised.

 In case the numbers of trainees are more, this method is not all suitable.
 The principle of a good training programme cannot be followed, as the working salesmen may
not be able to devote sufficient time for the trainees.

(ii) Job Rotation Training:

 This method is used to provide knowledge to the trainees in respect of functions of different
departments; such as, research department, accounts, advertising, purchase etc.
 It develops the practical knowledge of the trainees on different aspects of sales.
Merits:
 The trainees get sufficient opportunity to learn well about the organization and departments.
 The role of sales department and sales function of the organization can easily be understood.
Demerits:
 More time is involved in the training.
 The work of other departments may also suffer.

(iii) Personal Discussion:

 In this method of training, salesmen contact with his Sales Managers and Senior Managers from
time to time and discuss with them the individual problems. The Managers give good advices
and suggestions, on the basis of their experience in the field. The guidance relating to marketing
their effectiveness, route planning, call scheduling, management of sales timings, and other
matters related to sales are given by the Manages to the sales trainees.
Merits:
 The practical problems of each salesman can be solved.
 It is helpful for favourable evaluation of salesman’s performance.
 The trainer gets opportunity to maintain high morale among the trainees and can motivate them.
Demerits:
 Personal matters get more importance in such training and the sales problems are given little
importance.
 A regular contact with the higher authorities by the trainees create formal relationship between
them, but later on, problem may arise before the sales authorities in controlling the salesmen.

(iv) Correspondence Courses:

 When the sales trainees are appointed to work at distant place from the headquarters, it becomes
difficult for them to assemble at the headquarters. In such cases, training is imparted through
correspondence. The training materials are printed and circulated to the sales trainee at different
places where they are working.
 The trainees read the materials carefully and learn to adopt or follow the guidance and
instructions received through the study materials, in practice.
Merits:
 A specific timing is not required for the training.
 The study materials circulated to salesmen serve as guides for future use.
Demerits:
 Personal contacts are not possible between trainer and trainees.
 This method is not advisable to train the new and in experienced sales trainees.
 Face to face discussions between the trainer and trainees are not possible.
 It is a time consuming and expensive method of training.
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 ADVANCE MARKETING MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

MOTIVATION OF SALES FORCE

Importance of Motivation:
1. Motivation helps change negative attitude to positive attitude:
 Without motivation the employees try to perform minimum activities in the organisation. But the
motivation fills in the desire to perform to their maximum level.
 All the resources of the organisation are of no use unless and until the employees use these
resources. The motivated employees make best use of the resources.
2. Motivation improves performance level of employees:
 The motivation improves the efficiency level of employees which means the employees start
performing the job to the best of their ability with minimum wastage of time and resources
because motivated employees always go for best utilisation of resources.
 The motivation bridges the gap between the ability to work and willingness to work and
willingness always improves efficiency.
3. Helps in Achieving the Organisational Goal:
 The motivated employees always try to achieve the organisational goal and contribute their best
efforts for the realisation of organisational goal as they know with the achievement of
organisational goal only they can achieve their personal goal.
 All the employees contribute their efforts in one direction of accomplishment of goal.
4. Motivation creates Supportive Work Environment:
 In motivation the relations between superior and subordinates are always improved.
 When the employees get their need satisfied or get the recognition and respect in the organisation
then they always offer a supportive hand to superiors.
 There is more cooperation and co-ordination in the organisation and all the employees work with
the team spirit.
5. Motivation helps the managers to introduce changes:
 The motivated employees show less resistance in accepting the changes according to changes in
the business environment because they know if the changes are not implemented in the
organisation, not only the organisation will lose by this but the employees also will find it
difficult to get their needs fulfilled.
 Motivated employees are always supportive and co-operative in accepting changes in the
organisation.
6. Reduction in Employees’ Turnover:
 The motivation creates confidence in the employees to get their needs satisfied in the
organisation itself.
 They always select the alternative to remain in the organisation and increase their earning rather
than leaving the organisation and increasing their earnings.

Methods / Techniques of Motivation

 Be specific.
Many sales managers will say to their salesperson, "good job." If a sales manager really wants to
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say well to the salesperson, he must be specific. For example, sales manager must say "I
appreciate your ability to talk with customer so well”. This is a specific statement.
 Realistic Targets:
Targets for the sales team must be realistic and achievable. Don’t ask for anything which you
yourself know is not possible. Don’t expect miracles overnight.
 Be focused.
Whenever a manager gives a complement to the salesperson then at that time he must have eye
to eye contact and congratulate the salesperson. Do not work with something else when you are
giving complement to salesperson.
 Give public recognition.
Sales manager must appreciate the work of the salesperson in public. i.e. salesperson must be
given credit in front of all the colleagues, customers and other team members. Appreciation plays
an important role in motivating the employees. Praise those who perform well. A pat on their
back can actually do wonders. Let them feel special and important for the organization.
 Involve the family.
The sales manager must not only give credit to salesman but he must also say thanks to his wife,
brother, sister, mom or dad. This will motivate him more to work hard.
 Make the salesperson the teacher/coach.
When you have a salesperson doing excellent work, don’t keep it a secret. Ask the salesman to
teach and train the rest of the sales team. This will motivate him more.
 Give feedback immediately.
Don’t wait until you have time to give the compliment or feedback. If a salesperson does a good
job then the manager must not wait for long time. He must immediately give credit to him.
 Give credit to attitude.
The salesperson must also be given credit for his attitude towards work. This will satisfy him
more and he shall work harder.
 Give proper incentives.
If a salesperson does a good job, then the company must give him proper incentives. Handsome
incentive goes a long way in motivating the sales professionals. Nothing works better than
money. Attractive incentive schemes prompt the employees to work hard and make the
maximum use of their ability. Performers must be rewarded with attractive gifts, coupons, cash
prizes or certificates for them to feel motivated and deliver the same performance every time.

SALES FORCE COMPENSATION PLANS

1. Straight Salary Method:

The salary is the payment made to a person for carrying out his job or performing his duties over a given
period of time. Mostly, salary includes basic pay plus dearness allowance. It is based on total time (for
example, days, weeks, or months) spent on the work. For example, salary is paid monthly, weekly,
fortnightly, or may be any other duration of time. Salary is paid according to fixed scale of pay. There is
provision for increments in the basic pay. For example, 3000-200-4000-400-6000.
Merits:
1) It is very simple to understand and administer.
2) It gives a definite guaranteed income. Business fluctuations do not affect salesmen’s remuneration.
Salesmen can work without tension of any reduction in payment. 13
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 ADVANCE MARKETING MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

3) It gives security. Salesmen can have a tension-free life. They can concentrate on their work.
4) High level of cooperation exists among sales force as they are earning equally.
5) Salesmen do not resist to transfer at any place or to carry out other assignments as their income
will not be affected by change in place or work.
Demerits:
1) There are no incentives for better performance.
2) Generally, those salesmen who are capable, enthusiastic, and ambitious are discouraged because
they do not get incentives for better work.
3) Highly ambitious salesman may not stay with the company in a long run.
4) Salary is paid irrespective of sales volume. Company has to incur fixed expenses regardless of sales
or profits.
5) Salesmen may avoid work because they are paid fixed amount. They become rigid.
6) In case when adequate increment is not given regularly, it is difficult for salesmen to cope with
rising living expenses.
7) In a slack season, a company cannot reduce selling costs. On the other hand, during prosperity,
salesmen are not benefited with additional income.

2. Straight Commission Method:

 Commission is the incentive given to the salesman for the activities decided by the company.
 Amount of commission is calculated as certain percentage of either total sales an individual
salesman has achieved or on the basis of sales of particular territory. Commission is also
associated with new customer generated by salesman.
 Company may prefer fixed or variable commission rates for different products or for different
territories
 Sometimes, the rate of commission is associated with the volume of sales. For example, a firm
may pay commission to its sales force monthly along with minimum fixed salary or otherwise.

Merits:
1) It motivates salesmen to do a better job. This method acts as incentive for efficient salesmen.
2) It is also simple to understand and implement.
3) This scheme provides unlimited opportunities for capable and skillful salesmen.
4) There is freedom of activities for the salesman. He is not bound for specific hours of work in a day.
5) This method leads to the increased productivity. Company and sale force both are benefited.
6) Salesman can easily be prepared to undergo for training, or to attend/participate seminars,
discussions, and conferences organised for improving better skills to achieve more sales.
7) There is no complaint for overwork and underpayment. Every salesman can earn as per his ability to
generate sales.
8) During recession, selling costs can be reduced.
9) Attractive commission rate can attract salesmen of competing firms.
10) Company is not required to supervise and control them.

Demerits:
1. It is difficult to manage sales force as it has no direct control over salesmen. They are independent.
2. In order to increase sales, salesman may try some unfair practices. For example, salesman may offer
price concession against the company’s pricing policy.
3. Salespeople concentrate only on the easy-sold products and territories. 14
DR. ZAKIR PATEL, PROFESSOR, NLCCM, NAVSARI
Mob: 9586075954
 ADVANCE MARKETING MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

4. Since they are constantly engaged in raising sales volume, they do not provide satisfactory services
to customers or attend customer complaints.
5. This method doesn’t guarantee steady income. Income is highly fluctuating. In recession, salesmen
find it difficult to cover living expenses.
6. Salesmen develop the money-oriented mentality. They frequently change the jobs.
7. This method is time-consuming and expensive because a company has to maintain sales records of
each salesman in terms of different products and territories to calculate amount of commission.

3. Salary plus Commission Method:

 This is a popular and widely practiced method/plan to remunerate sales force. Under this method,
along with regular salary, a salesman is paid commission, too. Rate of commission may be fixed
or variable, may be common or different to all products and territories.
Merits:
1. It satisfies both types of salesmen – fixed regular income seekers, and ambitious salesmen.
2. Company has to bear minimum fixed costs of selling.
3. It is suitable for both salesmen – a new salesman and an experienced salesman.
4. It ensures stability in staff.
5. They give full time and energy for selling the products.

Demerits:
1. The major problem with this method is to determine the proportion of fixed salary and rate of
commission.
2. It is a complex plan. Company has to maintain record of individual salesman to decide on rate of
commission and/or amount of commission.
3. There is no uniformity among companies. For example, some companies pay commission for any
level of sales; some pay commission after certain level of sales; some pay at fixed rate, while some
pay at variable rate.
4. Sometimes, when companies pay minimum amount as a fixed salary, it is difficult for salesman to
achieve more sales during slack seasons.
5. Company frequently changes the proportion of fixed salary and rate of commission. Hence,
salesmen’s interest is affected.

4. Combination Plans:
 In combination plan, various aspects are combined to make remuneration plan more attractive.
Bonus and profit sharing are used with straight salary and/or commission.
 Combination plan involves combination of one or more of following elements:
1. Salary and bonus
2. Commission and bonus
3. Salary plus commission plus bonus method
4. Profit sharing with salary, commission and/or bonus.

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DR. ZAKIR PATEL, PROFESSOR, NLCCM, NAVSARI
Mob: 9586075954
 ADVANCE MARKETING MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

CONTROLLING SALESFORCE

What is Control?
 The last phase is control of sales force operations. Supervision and control of salesmen is
important to achieve the maximum success.
 Control is a process to establish the standard of performance measuring the work done. Through
control, salesman’s performance can be appraised.

Need for Salesforce Control:

The need for supervision arises because of:
 Coordination: Salesmen may be working independently and may be at a longer distance from the
sales manager. There may arise a problem of co-ordination, of salesmen’s effort with the other sales
efforts i.e., publicity, sales promotions etc. Control is necessary to ensure coordination of all
activities.
 Corrective steps: The sales manager compares the actuals with the targets, to find negative
variation, which should be removed by corrective actions. There may be mistakes in the approach of
a salesman, laziness in activities etc. These must be found out and the salesman must be guided in
order to channelize his efforts into desired path.
 Utilisation of men and material: Efforts of the salesman have to be directed to maximize profits in
the light of progressive ideas and techniques to ensure the proper utilization of men and materials.
 Satisfy customers: The salesman is guided by the sales manager, who tries to satisfy the customers
through salesmen. Thereby, it is possible to build a good image in the minds of the public

Elements/ Steps Involved in Control:

1. Analysis of Performance:
 All controls involve the setting of a standard and the measurement of performance
 The performances are analysed and compared with reference to the objectives & standards.
 This will reveal the variances between the performance and the standard.

2. Analysis of Variance:
 After finding out the variance, the first question is whether this variance is significant.
 If the variance is significant, the next question is usually, “What went wrong with the
performance?” and possibly a better question will be “What is wrong with the standard?”
 Effective sales control should reveal poor execution of sales policies or indicate when sales
policies need a change.
 Sales Control may not disclose the reasons for poor execution. For instance, poor execution may
be due to ignorance of sales policies, inability to perform the tasks etc.
 The significant variances are considered carefully to enable the authority to take corrective steps.

3. Measures to Deal with Unfavourable Variance:

 The function of control is to identify the weakness and errors in the sales efforts.
 Reasons and causes are found out and their remedial measures are formulated in order to correct
the weakness and errors.
 These enable the sales manager to guide the individual salesman when necessary.
 All these are done in order to improve the sales programme performance.
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DR. ZAKIR PATEL, PROFESSOR, NLCCM, NAVSARI
Mob: 9586075954
 ADVANCE MARKETING MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

Methods of Control:
1. Personal Contact:
 Personal contacts are more effective than other methods. Sales manager himself or through
branch managers or field supervisors, exercises controls over the salesmen. Salesmen can be
inspired and corrective steps can be taken.

2. Correspondence:
 This method is commonly accepted and is economical. Through correspondence, instructions are
passed on to the salesmen and replies received from the salesmen. The salesmen are supervised
or controlled through letters.

3. Reports:
 They are not in the form of letters. Printed report forms are used by the salesmen to make reports
to the sales manager. In certain cases, the report may be oral.

Bases of Control:
 The control of salesman is based on:
(1) Reports and Records (4) Field Supervision and
(2) Sales Territories and Sales Quotas (5) Remuneration Plans.
(3) Determination of salesman’s authority

DESIGNING SALES TERRITORIES AND SALES QUOTAS:

SALES TERRITORY:
 Almost all the firms divide their markets, after the sales field is located into different territories.
 Sales territory is a grouping of customers and prospects assigned to a salesman.
 A sales territory is a geographical area which contains present and potential customers, who can
be served effectively and economically by a single salesman.
 An efficient salesman can successfully discharge his duties and responsibilities if the territory
allotted to him is of workable and suitable size.
 A good sales planning is based on sales territory, rather than taking the whole market area. That
is, the market of a firm’s product is divided into small segments or territories or areas, so that
each territory can be allotted to each salesman.

Objectives of setting Sales Territories

1. Sales effort can be fruited more effectively in the assigned territory.
2. It is possible to have increased market coverage, not losing the orders to competitors. He meets the
competition wisely as it is pre-planned, because he knows the local condition.
3. It prevents the duplication or overlapping sales efforts.
4. Headquarters of each sales territory can be located in a place, where greater number of customers is
located.
5. Work load for each salesman can equitably be distributed, in terms of sales volume.
6. A good territorial allocation brings higher sales volume at lower sales expenses.

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Mob: 9586075954
PERSONAL SELLING & SALES FORCE MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

7. It allows salesman to spend more time on calling customers rather than in journey, to serve the
customers, to whom the products have to be sold. Customers can be served advantageously.
8. The activities of salesman can easily be controlled, more effectively, by the sales manager through
comparisons of selling opportunities.
9. The interest and morale of each salesman can be improved in the respective territories.
10. A control of selling expenses is possible and at the same time it increases the sales volume.
11. It is a good basis to evaluate the salesman’s performance.
12. Disparities in the work load can be known and be rectified easily.
13. A salesman can gain good knowledge over his territory, in respect of local problems and the
existing competition.
14. The duties and responsibilities of each salesman can easily be defined, and thus salesman becomes
more duty-conscious.

DESIGNING SALES TERRITORIES

The procedure for developing sales territories and allocating them to the salesperson is discussed below;

STEP 1. Select Basic Control Units:

Sales managers first try to select basic control units and their boundaries. Basic control units can be;
 States.  Major/Key customers.
 Districts.  A combination of two or more factors.
 Cities and PIN code areas.
Different companies decide different basic control units for their products. Whenever a sales territory is
designed, companies always try to focus on its current customers and prospects.

STEP 2. Analyse Salespeople's Workloads:

Workload is the amount/quantity of work given to sales persons. Following factors affect the workload
of a salesperson;
a. Nature of Job -
The nature of the job determines the job activities of sales-people. Companies shall assign a larger
geographical area to the salesman if his job is only to sell and if there is no technical service work in his
selling activity.
Many companies selling consumer goods use both a senior salesperson and a service salesperson. The
senior salesperson contacts buyers, while the service salesperson provides technical services to the
customers. In this way, a larger area can be covered by two salespeople.
Hence we can say that if a salesperson has to do both selling and technical work then his workload is
more.
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Mob: 9586075954
PERSONAL SELLING & SALES FORCE MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

b. Intensity of Market coverage –

Workload of a salesperson also depends on how much company wants to sell its products in the market.
There are 3 strategies for this;
1. Intensive distribution: Company sells its product in every shop. For example toothpaste
companies.
2. Selective distribution: Company sells its product in limited number of wholesalers and
retailer in market. For example, TV, Washing machines etc.
3. Exclusive distribution: Company sells its product through only one wholesaler or retailer
in a given market. For example 2 wheelers and cars.
Firms using an intensive distribution strategy will require more territories as compared to a firm using a
selective or exclusive distribution strategy.

c. Type of Product:
The workload of a salesperson also depends on the type of products. There are many types of products
like convenience, shopping, or specialty goods.
Salesperson selling convenience products like toothpaste will have more workload because he has to
make this product available to every shop in his territory.
Salesperson selling shopping goods like garments has lesser workload because he has to make this
product available to few shops in his territory.
Salesperson selling specialty goods like furniture has less work because he has to make this product
available to very few shops.

STEP 3. Determine Basic Territories:

Once sales managers have selected the basic control units and carefully analyzed salespeople's workload,
they are ready to determine how to design the sales territories.
 Step One Forecast sales and determine sales potentials. By using the forecasting methods, the
firm forecasts sales for its total market and for each geographic region (for example each state,
district etc).
 Step Two Determine the sales volume needed for each territory. Next, management determines
the level of sales needed from each territory. Cost must be considered for each territory. Cost
includes salesperson’s salary and travelling expenses.
 Step Three Determine the number of territories. There are two approaches to determine the
number of territories as explained below;

1. BREAKDOWN APPROACH: Suppose a firm forecasts sales of Rs 18 Crores. This company

feels that each territory must generate Rs 1 Crore. Using the following formula, it finds that 18
territories are needed:

No. of Territories = Forecasted Sales

Expected Sales per Territory
2. BUILD-UP METHOD: This method uses the number, location and size of customers and
prospects. Once a firm determines the number, location, and size of customers, it needs to
determine the frequency of sales calls and amount of time a call takes by using such data as:
 Time required for each sales call.  Travel time around territories.
 Frequency of sales calls per given  Non-selling time.
customers.
 Time intervals between sales calls.
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DR. ZAKIR PATEL, PROFESSOR, NLCCM, NAVSARI
Mob: 9586075954
PERSONAL SELLING & SALES FORCE MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

SALES QUOTA

DEFINITION:
 “Sales quotas are sales targets set by a company for its salesperson or territories for a particular
time period”.
 For example, Colgate may set sales quota for a salesperson in Surat city as 2 lakhs per month.
This means that the salesperson has to sell products of 2 lakhs Rupees every month.

OBJECTIVES OF SALES QUOTAS:

 Quotas Provide Performance Targets: Sales quota means the target given to the salesperson.
Because of the target, salesperson will make efforts to achieve the target. If there is no quota / target,
then salesperson will not make more efforts to sell the products.
 Quotas help Company in achieving Profits: Hence sales quota give target to the salesperson and
when salesperson achieves this target then the company can achieve its annual profit goals.
 Quotas Provide Standards: Management compares the salesperson's quotas with actual
achievement. Hence quota is the standard with which management compares the performance of the
salesperson.
 Quota help in deciding Salary: sales quotas are used to evaluate the performance of a salesperson
and to determine his salary increase and promotion.
 Quotas Provide Control: Quotas help in controlling salespeople. If the salesperson is not achieving
the targets then his boss can control him by giving him training or by punishing him.
 Quotas Are Motivational: When quotas are given to salesperson, they will try their best to achieve
it because if they achieve their targets then they might get rewards from the company. Hence in
order to get reward, salesperson will be motivated to achieve his target.

TYPES OF QUOTAS:
Organisations set many types of sales quotas: (1) sales volume (2) financial (3) activity (4) combination;

1. Sales volume quotas

 Sales volume quotas can be in (a) rupees / dollars, (b) units (no. of products). For example: 500
products per month.
 This always includes sales in monetary terms or units sold for a specific period of time. This type of
sales quotas is always set for a given year. The sales teams are then assigned their yearly quotas to
be accomplished. These quotas are set in the areas mentioned below:
(i). Product line
(ii). Product range
(iii). Branch offices
(iv). Individual sales person
 Unit sales volume quotas are suitable when
 Salespeople are selling few products
 Price of the product fluctuate rapidly
 Price of each product is high

2. Financial Quotas (Profit and Expense quota

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Mob: 9586075954
PERSONAL SELLING & SALES FORCE MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

 Financial quotas are appropriate when salespeople have to sell many products.
 Financial quotas help in controlling (a) net profits, and (b) expenses.
 Similarly if the company wants to control its expenses on selling activity, then it may give
expense quota (financial quota) to its salespersons. Eg. A company may set quota that
salesperson will be given only Rs 2 per kilometer of travelling. This is expense quota.
 Because of expense quotas salespeople become aware about the cost or expenses in selling.
 Profit quotas: The advantage of this type of sales quota is that the sales person can use his time
optimally.
 Expense Quotas: The sales team may be given an expense budget which is a percentage of a
particular region’s sales volume. He/She should spend only that sum as expenses.

3. Activity Quotas
• These quotas are set when salespeople perform both selling and non-selling activities.
• Here the objective is to direct salespeople to carry out important activities.
• Eg. A company may ask the sales person to sell the products as well as collect payment from
those customers who have not made the payment in past. So both activities are to be performed
by the salesperson. Therefore this method is called activity quota.
• When it comes to the Indian companies we have few common types of these quotas as
mentioned below:
(i) Quantity of sales presentation made
(ii) Amount of calls made
(iii) Number of dealer visits
(iv) Recovery calls made
(v) New clients procured

4. Combination Quotas:
• Here the company makes use of sales volume quota, financial quota and activity quota together
• An example: A salesman is given the following sales for April month;
- He has to sell 200 products in a month (sales volume quota)
- He also has to contact at least 10 customers in a day (activity quota)
 The above example proves that a company can set combination quotas also for its salespersons.

5. Forecast Quotas:
 A company may base a sales quota on a combination of a sales forecast for a particular
geographic area and historic sales data. For example, assume that region A was responsible for
25 percent of the prior year's sales and the sales forecast for the current year is $150,000. The
current quota for region A might be 25 percent of $150,000 or $37,500.

METHODS FOR SETTING SALES QUOTAS:

1. Total Market Estimates Method -

The Process used by existing companies is as under:
 Forecast next year’s total market demand
 Decide the company’s estimated market share for next year
 Company’s next year sales forecast= (1) x (2)
 Find each territory’s percentage share out of the total company sales in the previous year
 Territory sales quota = (3) x (4)

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DR. ZAKIR PATEL, PROFESSOR, NLCCM, NAVSARI
Mob: 9586075954
PERSONAL SELLING & SALES FORCE MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

2. Territory Potential Method

The procedure followed by new companies is as under:
 Estimate next year’s industry sales forecast
 Estimate multiple factor index (MFI) for each territory, based on factors that influence sales of the
product.
 Industry sales forecast in a territory = (1) x (2)
 Territory sales quota = (3) x estimated market share of the company in the territory

3. Past Sales Experience Method

 In this method, sales quota is fixed on the basis of past sales data.
 For example sales quota for the month of April 2014 is decided on the basis of sales of April 2013.

4. Executive Judgment Method

• In this method, senior sales executives use their judgment as per their experience.
• This method is generally used when the product is new.

5. Salespeople’s Estimate Method

• Some firms ask their salespeople to set their own quotas
• Many salespersons either set very high or too low sales quotas

6. Compensation Plan Method

• Some organizations set quotas to fit with their sales compensation plan
• Eg. A company wants to pay a monthly salary of Rs 5000, and a commission of 3% on monthly
sales above Rs 1,00,000. The quota of Rs 1,00,000 is set in such a way that salesperson would find
it very difficult to cross total compensation of Rs 8000 per month (5000+3000)

BENEFITS OF SALES QUOTA:

1. The sales quota can be used as yardstick to assess the performance of the salesmen.
2. It is a measuring rod with which the sales operations are directed and controlled to more profitable
channels.
3. It is possible and easier to locate strong markets and weak markets.
4. It is a device to adopt more effective compensation plans.
5. It fixes the responsibility on each salesman and so they work hard to attain the goal. The salesmen
never allow the sales to fall below the quota.
6. It facilitates sales contests and is a base.

LIMITATIONS OF SALES QUOTA:

1. In many cases the sales quota is fixed arbitrarily.
2. If situations are changed, the quota fixed may become ineffective.
3. If the quota is too small, the salesman will relax and if the quota fixed is too large or unattainable,
the salesman loses initiative.
4. It is difficult to set an accurate quota.
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Mob: 9586075954
PERSONAL SELLING & SALES FORCE MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

SALES ORGANISATION STRUCTURE

1. LINE SALES ORGANISATION

The line sales organisation is the most basic forms of sales organisation. There is a chain of command
running from the top sales executive down to the level of the salesman. All executives have line
authority over their subordinates who in turn are accountable only to their immediate superior.

Merits:
1. Simple: This system is very simple and can operate very easily. Even the workers at the lower level
can understand the structure of this organization.
2. Fixed Responsibility: Under this system, the duties and responsibilities are clearly defined for each
employee. Therefore, they can proceed with their work without any confusion or misunderstanding.
3. Unity of Command: The workers are responsible only to one superior.
4. Discipline: The vertical arrangement of authority of responsibility ensures excellent discipline.
5. Economical: It is economical because it is less complicated. Minimum number of employees is
required to adopt line organization.
6. Direct Communication: There is a direct contact between the superior and his subordinates. This
avoids all kinds of misinterpretation of any policy.
7. Coordination: Coordination is easy as there is effective communication between all levels.
8. Quick Decision: Quick decisions are taken by the employees because of unity of authority and
responsibility.
Disadvantages:
15. Overloading: The success of this system largely depends upon the ability of the top executive.
Hence, this system overloads him.
16. Inadequate Communication: Though this system ensures direct communication from the top level
to the lower level, it provides no arrangement for communication for the bottom and top level. This
may lead to wrong decision-making.
17. Instability: As the success of the system mainly depends upon the ability of one or two persons, the
whole organization shall upset and collapse if they leave the enterprise. Hence, this is unstable.
18. Scope for Favoritism: Chances for favoritism are more under this system. Since one man controls
the whole show, the subordinates have to dance according to his tune.
19. Red Tapism and Bureaucracy: Concentration of authority in the hands of a single man shall result
in red tapism at all levels.
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DR. ZAKIR PATEL, PROFESSOR, NLCCM, NAVSARI
Mob: 9586075954
PERSONAL SELLING & SALES FORCE MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

2. LINE AND STAFF SALES ORGANISATION:

The line and staff department consists of staff specialists of staff assistants to advise and assist the top
sales executive. These specialists are experts in their own fields which could be sales training, service,
sales analysis and planning, dealer relations, sales promotion, sales personnel development and so on.
While staff executives and assistants do not have the line authority to command, they advise the line
executives through recommendations and provide the benefit of specialization in the organization.

Merits:
1) There is a planned specialization of staff and line functions
2) There is a well defined authority and responsibility. The line of command is maintained.
3) There is division of conceptual (to design policies) and executive function (to implement policies).
4) The staff with its expert knowledge provides opportunities to the line officers for adopting a logical
and expert view towards a problem.
5) This type of organisation increases organisation growth as each man grows in his own specialty.
6) It also helps co-ordination through co-operation and leadership.

Demerits:
1) There are occasions when line and staff may differ in opinion. This may result conflict of interest &
prevents a good relationship.
2) There is a misinterpretation of expert advice by incompetent line executives.
3) The staff people feel themselves status-less without authority.
4) Staff becomes ineffective in absence of authority.

3. FUNCTIONAL SALES ORGANISATION:

 In the functional sales organization, all sales personnel receive direction from, and are
accountable to different executives, on different aspects of their work.
 The functional organizational structure gives all specialist executives a direct authority to issue
orders to his functional authority. Hence, a sales person could be under instruction from a
number of executives.
 Here each sales person is under direction of several executives.
 In larger firms where the size of the sales force is more, the degree of centralization renders the
operation inefficient.
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DR. ZAKIR PATEL, PROFESSOR, NLCCM, NAVSARI
Mob: 9586075954
PERSONAL SELLING & SALES FORCE MANAGEMENT, T.Y. BBA – SEM 6, VNSGU, SURAT

Merits:
(1) Specialisation—It ensures a greater division of labour and enables the firm to take
advantage of specialisation of functions.
(2) More efficiency—Efficiency of workers is increased as the workers and other have to perform a
limited number of operations and they get suggestions and instructions from specialists.
(3) Separation of mental and physical functions—It ensures the separation of mental and physical
functions. This ensures better control of the working of the different sections.
(4) Economy—Standardisation and specialisation in results in lower costs.
(5) Expansion—It offers a greater scope for expansion as compared to line organisation. It does not
face the problem of limited capabilities of a few line managers. The expert knowledge of the
functional managers facilitates better control and supervision in the organisation.

Demerits:
 Confusion—The operation of functional organisation is too complicated. Workers are
supervised by a number of bosses. This results overlapping of authority and thus creates
confusion in the organisation
 Lack of coordination—The work is divided into parts. It poses difficulties in coordinating the
functioning of different parts. Thus it is difficult to take quick decisions.
 Difficulty in fixing responsibility—Because of multiple authorities, responsibility for poor
performance cannot be fixed easily on a particular person.
 Conflict- Supervisory staff of equal rank may not always agree on certain issues. Therefore,
there may be frequent conflicts which may lead to non-performance.
_________________________________________________________________________________

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DR. ZAKIR PATEL, PROFESSOR, NLCCM, NAVSARI
Mob: 9586075954