Designing Sales Territory, Sales Objective, Incentives and Vacant Territory Management

1. Designing Sales Territory, Sales
Objective, Incentives and Vacant
Territory Management

2. A sales territory is the customer group
or geographical area for which an
individual salesperson or a sales team
holds responsibilities.
Territory can be defined on the basis of
geography, sales potential, history or a
combination of factors.
Group of towns, areas, localities,
retailers, markets, specific
geographical areas etc.

3. To obtain thorough better regular and planned coverage of the market
To manage time and control selling/travelling expenses
To establish a salesperson’s responsibility
To improve customer relations
To evaluate performance
To reduce sales expense
To maximize sales
To avoid repetition

4. Geographical area
Business potential
Workload
Travel time and expenses
Frequency of calls and productivity
Service requirement
Market share
Competition
Seasonality
Profitability

5. 1.Baseline current performance
• Analysis of each existing territory including prior revenue performance, product
service mix, customer counts, sales rep talents etc.
2.Analyze existing customer spend
• To understand the correlation between customer information.
3.Determine market potential
• Compile all information and understand total market potential.

6. 4.Produce initial territories
• Divide territories on the basis of workload, customer driven, cost driven
approaches.
5.Re-balance territory assignments
• Balance by number of existing customers, number of prospects, total market
potential ensuring best reps are assigned to best territories.
6.Create territory plans
• Including the prioritization of accounts and territory specific goals for revenue,
penetration levels, customers.

7. Number of states/towns
planned.
Number of
localities/areas/beats
planned.
Number of
wholesales/supermarket/
outlets planned.
Coverage of frequency-
monthly/weekly/daily.
Number of customers to
be covered per day

8.  Total localities to be covered
8*5=40
 No. of outlets to be covered
40*40=1600
 Monthly coverage
4*1600=6400 outlets
 Per day calls 6400/24days=267
 Total salespersons required
267/40=7
Towns 8
Localities per town 5
Outlets/customer per locality 40
Number of outlets coverage by a
sales person
40
Number of working days per
month
24
Frequency of coverage Weekly

9. Best selling efforts with best selling opportunities in the
market.
Checking ability index of individual sales person, because
of the variation in selling skills and effectiveness.
Ability index changes with different factors, important for
a company or specific to a product.
Relative individual contribution to profit in sales territory
should be high.
He/she should be able to deal with different types of
customers in different territories.

10. Skills and effectiveness
should vary with
different customers and
plans.
Doctors
Hospitals
Stockiest
Retailers
Organizing
of data
SMART
Plans

11.  Sales objective can be defined as a part of a company's marketing plan where
common goals are identified by the company's marketing team like revenue
targets, distribution partners, profit margins, targeted demographics and advertising
and work on it.

12. Sales objective helps in
deciding budget for
promotions
Hiring of sales personnel
Deciding distribution
channels to be utilised
Amount of products
produced or stocked

13. QUANTITATIVE
OBJECTIVE
e.g. Increase sales by 15%
Expand market share
QUALITATIVE
OBJECTIVE
e.g. use questionnaires or
surveys to measure
consumer satisfaction

14. To maintain contacts
with present
customers
To search out and
obtain new
customers
To keep customers
informed on
changes in product
line and other
aspects of
marketing strategy
To provide
technical advice
and assistance to
customers
To collect and
report market
information of
interest and use to
company
management.

15. The sales volume
objective i.e. the
dollar or unit sales
volume is the key
quantitative
objective
This objective
govern other
quantitative
objectives like:-
Market share
expansion
Profitability of
orders
Product
diversification
Control personnel
selling expenses

16. Quotas are quantitative objectives assigned to sales personnel
• Specify desired performance levels for sales volume, such budgeted
items as expenses gross margin, net profit, return on investment etc.
• Provide a means for determining which sales personnel are doing an
average, below-average or above-average job.
• Helps in obtaining tighter sales and expense control
• Motivates sales personnel to achieve assigned performance levels.

17. Sales volume Quotas:-
• “How much for what period”
• Appraising performances of
individual sales personnel
• Set for geographical areas,
product lines, marketing
channels, etc.
• Types:-
• Dollar sales volume quotas
• Unit sales volume quotas
• Point sales volume quotas
Budget Quotas:-
• Set for various units to
control expenses, gross
margin or net profit.
• Make personnel more
conscious-Company involved
in making profits
• Types:-
• Expense Quotas
• Gross margin or net profit
quotas

18. Activity Quotas:-
• Sales personnel allocate time
and efforts among different
activities.
• Important when personnel
perform important non-selling
activities.
• Eg:- Insurance selling, Drug
detail selling
Combination Quotas:-
• Control performance of both
selling and non-selling
activities
• Overcome the difficulty of
using different measurement
units to appraise different
aspects of performance.

19. Requires using statistical techniques
Could cause high pressure selling
Too much emphasis on sales
Guess estimates
Inordinate expenditures of time and
money

20.  Quantitative factors:-
Sales trends
Size and purchase rate of target market
Budget profit and pricing considerations
 Qualitative factors:-
Economic considerations
Competition
Product life cycle

21. Establish what you
want your business to
achieve in the near-
and mid-future.
Prioritize what you
want to do.
Turn these goals into
overall business
objectives.
Give a subset of the
sales objectives to
your managers.
Give a subset of the
manager’s objectives
to your staff, aligned
with their job roles.
Track progress
towards the
objectives on a
regular basis.
Reward staff who
meet or exceed their
sales objectives.

22. Sales Force Capacity
Salesperson Capability
Product Focus Objectives
Customer Focus Objectives

23. When a company wants to encourage
productivity among its employees, one
option available is an employee incentive
program. Employee incentives describe a
system of rewarding success and effort in
the workplace by allowing employees to
earn prizes or recognition.

24. Increasing
Productivity
Improving
Safety
Increasing
Morale
Customer
Incentive
Programs
Obtaining
desired
result

25. Bonuses:- normal
incentive payment
that is given beyond
standard wages of
employee.
Merit pay:-
performance based
incentive.
Commission:- based
on sales made by
employee.

27.  Incentive is paid based on individual’s performance or output.
 Individual incentive plans can be either time based or production based.
 Some of the time based incentive
plans are:
I. Halsey Incentive Plan.
II. Rowan Incentive Plan.
III. Emerson Efficiency Plan.
IV. Bedeaux Incentive Plan.
 Some of the production based
incentive plans are:
I. Taylor’s differential piece rate
system.
II. Merrick’s multiple piece rate plan.
III. Gantt’s task and bonus wage plan.

28.  Halsey Incentive Plan:
If a worker performs his job in less than standard time, he is given incentive. The
incentive will be equal to 50% of the time saved by the worker.
W=TR+(S-T)R%
Where
W=Total Wages
S=Standard time
T=Time taken to complete the job
%=Percentage of wages of time saved to be given as incentive
R=Rate
 Rowan Plan:
This plan is quite similar to Halsey plan. It differs only in terms of calculation of
incentive for time saved.
W=T x R(S-T)/S x T x R

29.  Emerson’s Efficiency Plan:
Incentive is given on the basis of efficiency. Incentive will be given to those
workers who attains more than 2/3rd i.e. 66.67% of efficiency.
 Bedeaux Point Plan:
Those who complete the job in less time are paid bonus. The bonus paid to the
worker is 75% of the wages for time saved.
W=TR+75% (S-T)R

30.  Taylor’s Differential Piece Rate System:
The main characteristics of this system are that two rates of wage one lower and
one higher are fixed.
A lower rate - who are not able to attain the standard output within the standard
time;
higher rate – who are in a position to produce the standard output within or less
than the standard time.
 Merrick’s Multiple Piece Rate Plan:
To overcome the limitations of Taylor’s differential piece rate system, Merrick
suggested a modified plan in which, three-piece rates are applied for workers
with different levels of performance.
These are:
 Workers producing less than 83% of the standard output are paid at basic rate.
 Workers producing between 83% and 100% of standard output will be paid
110% of basic piece rate.
 Those producing more than 100% of the standard output will be paid 120% of
basic piece rate.

31.  Gantt’s Task and Bonus Plan:
Worker’s actual performance is compared with the standard time and his efficiency is
determined.

32. A group incentive plan scheme is designed to promote effective teamwork, as
the bonus is dependent on the performance and output of the team as a whole.
Some of the group incentive plans are:
I. Priestman’s Plan.
II. Scanlon’s Plan.

33. I. Priestman’s Plan:
Bonus is paid in proportion in excess of standard output per week. If in a year, the
output increases either above the standard output or the output of the previous
year, the wages are increased in the same ratio.
II. Scanlon’s Plan:
A Scanlon plan is a type of gain sharing plan that pays a bonus to employees when
they improve their performance or productivity by a certain amount as
measured against a previously established standard.

34. Financial incentives-
Non-financial
incentives-
• Pay and allowances
• Bonuses
• Commission
• Stock option
• Fringe benefits
• Tours
• Gifts
• Dinner with CEO
• Coupons
• Event passes

35.  A process that helps inside sales reps by defining geographical sales territories
based on market factors and customer intelligence data.
 Key benefits:
Avoid complex data
sharing structure
Forecast sales for each territory
and set clear goals.
Provide a focused work
environment
Get an accurate event of the
sales team

36. • Minimize the amount of time spent on the road, or
backtracking from city to city or neighbourhood to
neighbourhood.
Divide a territory in a way
that make sense
• Decide the current customers and look if they need
any call or email.Create a call rotation plan
• Start confirming and slotting meeting with top
priorities and fill gaps with lower priorities
account.
Set priorities
• to have a series of qualifying questions
Stick to the big picture view
• Paperwork is no fun, but putting it off doesn’t
make things any easierDo the tough stuff
• Set meeting-specific goals so you know what you’re
trying to accomplish in each encounter. And finally,
make sure you get your daily dose of positivity
Make meetings count

37. • People keep on changing their organization
due to restlessness, job satisfaction.
• Young generation tend to find job security.
• Increasing job opportunities.
• Relocated
• emolument
Ideally no territory
should be vacant
but vacancies do
exist due to high
attrition of the
sales personnel:

38. Sales will decline
Separations cost, the expenses associated with departure of current
employee
Replacement cost, cost of finding a new representative.
Training expenses
Payment problems

39. Management of vacant territory is one of the important KRA.
Contact the stockiest of that area to
check availability of your product
Proactive
Look for the
capable candidate
Ensure the regular coverage of all
the important doctors in that
territory
Till suitable replacement, territory
Manager have to maintain the
sales of that area.

40. Any Questions?