MKTM508

Sales & Distribution

RAJEEV GUPTA

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Learning Outcomes

1 You will be able to formulate of

strategies to design various structures of
sales organization and determining the
sales team strength.
2 You will be able to identify the sources of
recruitment and motivational theories
and fixing compensation for the
sales force.
Size of the Sales Force

• The methods available to determine optimum sales force size are:

• Workload
• Sales Potential
• Incremental

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Workload Method

• Points to be considered while applying the workload method:

1. The assumption made in this method are:
1. All salespeople will have an equal workload.
2. Total workload in covering the market includes the number of
present and prospective customers, customer’s sales volume
potential, and travel time.

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Workload Method (Example)

• The steps involved in this method are:

• Classify present and prospective customers according to their

sales potential
• Suppose the company estimates 500 numbers of class A (Large

sales potential) and 1000 numbers of class B (Medium sales

potential) customers to be covered by the company’s salespeople
in the entire nation.

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Workload Method (Example)

• The steps involved in this method are:

• Decide the time required per sales call and desired call frequencies

for each customer class.

• Assume both present and prospective business customers require

the same time per sale call and the same call frequencies per year,
the decisions are as follows:
• Class A: 60 minutes per call X 36 calls a year = 36
hours/year/customers
• Class B: 30 minutes per call X 12 calls a year = 06
hours/year/customers
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Workload Method (Example)

• The steps involved in this method are:

• Calculate the total workload necessary to cover the entire market

• The calculation will be as follows:

• Class A: 500 business customers X 36 hours/year = 18000 hours

• Class B: 1000 business customers X 06 hours/year = 6000 hours

• Total = 24,000 hours

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Workload Method (Example)

• The steps involved in this method are:

• Decide the total work time available per salesperson

• Suppose the company decides that salespeople should work 40

hours/week, 45 weeks/year:
• Each salesperson has = 40 X 45 = 1800 hours/year (for selling,

non-selling activities)

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Workload Method (Example)

• The steps involved in this method are:

• Divide the total work time available by different activities per

salesperson
• Suppose the company decides that salespeople should divide their

worktime as follows:
• Selling activities: 40% = 720 hours
• Non-selling activities: 30% = 540 hours
• Travelling: 30% = 540 hours
• Total 100% = 1800 hours

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Workload Method (Example)

• The steps involved in this method are:

• Calculate the total number of salespeople needed

• This is done by dividing the total workload to cover the entire

market by the total selling time available per salesperson:

• = 24000/720 = 33.3 ie 33 salespeople needed

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Sales Potential Method

• In this method, the sales manager estimates the productivity of the

average salesperson with average performance and forecasts the
sales volume of the company.
• The method also considers the anticipated sales force turnover:
• The basic formula is : N = S/P(1+T)
• Where, N = Number of salespeople needed
S = Annual Sales forecast for the company
P = Estimated productivity of the average salesperson
T = Estimated percentage of annual sales force turnover
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Sales Potential Method (Example)

• If the firm’s sales forecast is Rs. 50 million for the next year
• The annual sales volume productivity for the average salesperson is
Rs. 2 million
• Anticipated annual sales force turnover is 20%
• N = 50,000,000/2,000,000 (1+0.20) = 25 X 1.20 = 30 salespeople

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Incremental Approach

• An approach used in determining the ideal size of a sales force

based on the difference between the expected gross profit that will
be earned by the addition of an extra salesperson and the cost of
hiring, training, and maintaining that salesperson.

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Sales force staffing process

The sales force staffing process consists of five major stages:

• Planning the recruitment and selection process

• Recruiting a sufficient number of applicants

• Selecting the most suitable applicants

• Hiring those applicants who have been selected

• Socialization of the new recruits into the organization

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Sales Training Process

• Identifying the training needs

• Methods used for identifying the training needs:
• Sales manager’s observation

• Sales force survey

• Customer survey

• Performance testing

• Job description

• Sales force audit

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Popular Sales Training Needs

• Product Knowledge
• Customer Knowledge
• Competitive knowledge
• Selling skills
• Company knowledge

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Sales Training Process

• Designing & Executing a Sales Training Program

• Aim/Objective of the sales training

• Content of the Training program

• Sales training methods

• Executing the sales training program

• Evaluation of the sale training program

• Reinforcement of sales training

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Sales Training Process

• Who will be the trainee?

• Who will conduct the training?
• When should the training take place?
• Where should the training be conducted?
• What would be the budgeted expenditure?
• What are the instruction materials to be used?
• What are training aids required?

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THANK YOU

RAJEEV GUPTA

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