Sale Force metrics

 Defining the most common measure for determining whether sales force effort
and geographic coverage are adequate.

Sales Force coverage: Territories

 Sales force territories are the geographic area for which individual salespeople or
sales team hold responsibility.
 Under-servicing - When sales personnel are assigned work beyond the
capability, the result can be under-servicing of customers. They seek out too few
leads, identify too few prospects and spend too little time with current
customers.
 Over-servicing – The sales force is allocated task less than its capability, this
leads to increase in cost and decrease in efficiency. Over-servicing of one
territory may leads to under-servicing of another territory.

 Workload – [(Current account * Average time to service an active account) +

(Prospects * time spent to convert a prospect into an active account)]

 Sales Potential – No. of possible accounts * Buying power

 Among the sales prospects in one of its territories, a copier manufacturer has
identified six small businesses, eight medium sized firms, and two large
companies. Enterprises of these size have historically made annual copier
purchases that average $ 500, $700 and $ 1000 respectively. Calculate the
sales potential.

Sales Potential = No. Of possible account * Buying power

= [(6 *500) + 8 * 700) + (2 * 1000)]
= $ 10,600
 Sales Force objectives: Setting Goals

 Purpose: To motivate sales personnel and establish benchmarks for

evaluating and rewarding their performance

 Sales goals are generally needed to motivate sales people. These can have
negative effects if set too high or too low.

 Under SMART strategy goals should be Specific, Measurable, Attainable,

Realistic and Time-bound
 Sales Goal ( Based on Prior year sales) -
Salesperson’s share of prior-year sales in district * Forecasted
sales for the district

 Sales goal (Based on Sales Potential) –

[Salesperson’s prior year sales + ( Forecasted sales increase for
the district * Territory share of sales potential in district)]

 Weighted shares of sales allotment = [(salesperson’s prior year sales *

assigned weighting) + ( Territory share of sales potential * {1 – Assigned
weighting})]
 Sales Goal = Based on weighted share of sales allotment * Forecasted sales

 A salesperson achieved prior-year sales of $ 1620, which represented 18% of the sales in
her district. This salesperson was responsible for a territory that held 12% of the sales
potential in the district. If the salesperson’s employer mandates a district sales goal of
$10,000 for the coming year – representing an overall increase of $ 1000 over prior-year
results – then calculate the salesperson’s sales goal

Sales Goal based on Prior-year sales = 18% * $ 10,000

= $1800

Sales Goal based on Sales Potential = 12% * $ 10,000

= $1200

Weighted share of sales allotment (weighting factor is 50%)

= [(18 % * 50%) + (12% * 50%)
= 15%

Sales Goal based on Weighted shares of sale allotment = 15% * $ 10,000

=$1500
 Sale Force Effectiveness: Measuring Effort, Potential and
Results

 Purpose: To measure the performance of the sales force and of individual

salespeople
 Sales Force Effectiveness Ratios:
= Sales / Contact with clients(calls)
= Sales / Potential accounts
= Sales / Active accounts
= Sales / Buying Powers
= Expenses / Sales

 If an individual sales per call ratio is low, this may indicate that the salesperson
lacks closing skills and he needs training in moving towards the larger
purchases.
 If sales per potential account or sales per buying power is low, than
salesperson may not be doing enough to seek new accounts
 The sales per active account metric indicates salesperson’s effectiveness in
maximizing the value of existing customers.
 If expense / sales ratio is high - salesperson has poor control over his expenses