SlideShare a Scribd company logo
1 of 27
Chapter
4

Management of Sales
Territories and Quotas

SDM-Ch.4

1
Learning
Objectives

• To understand the concept of and reasons for
sales territories
• To learn designing sales territories and assigning
salespeople
• To know territory coverage, including routing,
scheduling, and time management
• To understand objectives and types of sales
quotas
• To learn the methods of setting sales quotas
• To get insight into setting and administration of
sales quotas
SDM-Ch.4

2
Sales Territories
• A sales territory consists of existing and potential
customers, assigned to a salesperson
• Most companies allot salespeople to geographic
territories, consisting of current & prospective customers

Major Reasons / Benefits of Sales Territories
• Increase market / customer coverage
• Control selling expenses and time
• Enable better evaluation of salesforce performance
• Improve customer relationships
• Increase salesforce effectiveness
• Improve sales and profit performance
SDM-Ch.4

3
Procedure for Designing Sales Territories
• Select a control unit*
• Find location and potential of present and
prospective customers within control units**
• Decide basic territories by using
• Build-up method,
Or
• Break-down method
*A control unit is a geographical territorial base
**Unnecessary & expensive for consumer
products
SDM-Ch.4

4
Procedure in Build-up
Method
• Decide customer call frequencies
• Calculate total customer calls in each control unit
• Estimate workload capacity of a salesperson
• Make tentative territories
• Develop final territories
Objective is
salespeople
SDM-Ch.4

to

equalise

the

workload

of

5
Procedure in Breakdown
Method
• Estimate company sales potential for total
market
• Forecast sales potential for each control unit
• Estimate sales volume expected from each
salesperson
• Make tentative territories
• Develop final territories
Objective is to equalise sales potential of territories
SDM-Ch.4

6
Assigning Salespeople to Territories
Sales Manager should consider two criteria:
(A)Relative ability of salespeople
• Based on key evaluation factors:
(1) Product knowledge, (2) market knowledge, (3)
past sales performance, (4) communication, (5)
selling skills

(B) Salesperson’s Effectiveness in a Territory
• Decided by comparing social, cultural, and physical
characteristics of the salesperson with those of the
territory
• Objective is to match salesperson to the territory
SDM-Ch.4

7
Management of Territorial
Coverage
• It means: How salesperson should cover the
assigned sales territory
• It includes three tasks for a sales manager:
• Planning efficient routes for salespeople
• Scheduling salespeople’s time
• Using time-management tools

SDM-Ch.4

8
Routing
• Routing is a travel plan used by a salesperson for
making customer calls in a territory
• Benefits of or Reasons for routing:
• Reduction in travel time and cost
• Improvement in territory coverage
• Importance of routing depends on the application:
• Nature of the product – Important for FMCG
• Type of jobs of salespeople – Important for drivercum-salesperson job, but creative selling job
needs a flexible route plan
SDM-Ch.4

9
Procedure for Setting up a Routing Plan
• Identify current and prospective customers on a territory
map
• Classify each customer into high, medium, or low sales
potential
• Decide call frequency for each class of customers
• Build route plan around locations of high potential
customers
• Computerised mathematical models are developed
• Commonly used routing patterns are:
Base
(B)

C
1

B
B

C
5

C
4

C
3

Straight line / Hopscotch

SDM-Ch.4

C
2

Circular

Clover Leaf

10
Scheduling
• Scheduling is planning a salesperson’s visit time to
customers. It deals with time allocation issue
• How to allocate salesperson’s time?
• Sales manager communicates to salesperson major
activities and time allocation for each activity
• Salesperson records actual time spent on various
activities for 2 weeks
• Sales manager and salesperson discuss and decide
how to increase time spent on major activities
• Companies specify call norms for current customers,
based on sales and profit potentials, and also for
prospective customers
SDM-Ch.4

11
Time Management Tools
To help outside salespeople* to manage their time
efficiently and productively, the tools available are:
• High-tech equipment like laptop computers and
cellular phones
• Inside salespeople to provide clerical support,
technical support, and for prospecting, and
qualifying, as they remain within the company
• Outside salespeople can then spend more time
getting more orders & building relationships with
major customers
*Outside
salespeople
travel
outside
the
organisation
SDM-Ch.4

12
Sales Quotas
• What are Sales Quotas?
• Sales quotas are sales goals or targets set by a company for
its marketing / sales units for a time period
• Marketing / sales units are regions, branches, territories,
salespeople, and intermediaries
• Generally, company sales budget is broken down to sales
quotas for various marketing units
• Objectives of Sales Quotas
• To use quotas as performance standards or performance
goals
• To control performance
• To motivate people by linking quotas to compensation plans
• To identify strengths and weaknesses of the company
SDM-Ch.4

13
Types of Quotas
• Organisations set many types of sales quotas: (1)
sales volume, (2) financial, (3) activity, (4)
combination
• Sales volume quotas
• For effective control, sales volume quota should
be set for the smallest marketing units, such as
salesperson, districts / branches, product items /
brands
• Sales volume quotas can be stated in (a) rupees /
dollars, (b) units, or (c) points
• Rupees / dollars sales volume quotas are
appropriate when salespeople are required to sell
many products
SDM-Ch.4

14
Sales Volume Quotas
(Continued)
• Unit sales volume quotas are suitable when
• Salespeople are selling a few products
• Prices of the product fluctuate rapidly
• Price of each product / service is high
• Point sales volume quotas are appropriate when
the company wants salespeople to sell products
that contribute more to profits
SDM-Ch.4

15
Financial Quotas
• Financial quotas control (a) gross margin or net profits, and (b)
expenses of marketing units
• Gross-margin / Net-profit quotas
• Calculate gross margin by subtracting ‘cost of goods sold’
(i.e. cost of manufacturing) from sales volume. Sales
managers are not responsible for cost of manufacturing
• Net profit quotas are generally accepted by sales mangers
as it is calculated by subtracting direct selling expenses
from the gross margin
• Expense quotas
• In many companies, expense quotas are stated as a
percentage of sales
• Expense quotas to be administered with flexibility, to make
salespeople cost conscious, allowing reasonable expenses
SDM-Ch.4

16
•
•
•
•

Activity
Quotas
These are set when salespeople perform
both selling and non-selling activities
Objective is to direct salespeople to carry
out important activities
For effective implementation, activity
quotas are combined with sales volume
and financial quotas
E.G. Calling on high potential customers,
payment
collection
from
defaulting
customers

SDM-Ch.4

17
Combination Quotas
• Used when companies want to control salesforce performance
on key selling and non-selling activities
• Focus on a few types of quotas, to avoid confusing
salespeople. An example:
Type of Quota

Sales Volume (Rs)

Quota

Actual

Percent
Weight
Quota (Importance)

5,00,000 4,50,000

Percent
Quota x
Weight

90

3

270

Receivables (days)

45

50

89

2

178

New Customers
(Nos)

04

05

125

1

125

6

573

Total

• Total point score=573/6=95.5 for a salesperson
• Typically use ‘points’ as a common measure to resolve the
problem of different measures used by various types of quotas
SDM-Ch.4

18
Methods for Setting Sales
Quotas

• Several methods are used for establishing sales
quotas
• In practice, companies use more than one of the
following methods to increase their confidence in
sales quotas
• Total market estimates
• Territory potential
• Past sales experience
• Executive judgement
• Salespeople’s estimates
• Compensation plan
We shall briefly discuss each of the above methods
SDM-Ch.4

19
Total Market Estimates
Method
•

The Process followed
companies is as under:

by

established

1) Estimate next year’s total market demand, or
industry sales forecast, using sales forecasting
methods
2) Decide the company’s estimated market share
for next year
3) Company’s next year sales forecast= (1) x (2)
4) Find each territory’s percentage share out of the
total company sales in the previous year
5) Territory sales quota = (3) x (4)
SDM-Ch.4

20
Territory Potential Method
• The procedure followed by new companies is as under:
1) Estimate next year’s industry sales forecast or market
potential, using sales forecasting methods
2) Estimate multiple factor index (MFI) for each territory,
based on factors that influence sales of the product.
These factors are given weights corresponding to the
degree of sales opportunity.
3) Industry sales forecast in a territory (or territory market
potential=(1)x(2)
4) Territory sales quota = (3) x estimated market share of
the company in the territory
SDM-Ch.4

21
Past Sales Experience
Method
• The process consists of taking past one year’s
sales (or an average of previous 3 to 5 year’s
sales), adding an arbitrary percentage (or a
percentage by which the market is expected to
grow), and thus setting each territory sales quota
• The assumption that future sales are related to
past sales may not be always correct
• This method should not be the only method used
• Past sales should be one of the factors used for
deciding sales quotas
SDM-Ch.4

22
Executive Judgement Method
• Senior executives use their judgement when the
product, territories, and the company are new or
very little market information is available
• Executives predict company sales budgets and
also territory sales quotas
• This method should generally be used along with
other methods

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
SDM-Ch.4

23
Salespeople’s Estimate Method (Continued)
• For setting proper quotas, many sales managers use 2 or
3 of above methods, discuss with salespersons to get
their inputs, and decide sales quotas

Compensation Plan Method
• Some organizations set quotas to fit with their sales
compensation plan
• E.G. 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)
• Sales quotas should not be based only on this method,
because it would “put the cart before the horse”
SDM-Ch.4

24
Insight into Setting & Administration of Sales
Quotas
• Set realistic quotas
• Understand problems in setting quotas
• Ensure salespeople understand quotas
• By allowing salespeople to participate in the process
• By continuous feedback to salespeople on their
performance compared to quotas
• Have flexibility in administering quotas
• Change quotas in cases of major changes in market
demand or company strategies
• Use monthly or quarterly quotas for incentives and
annual quotas for performance evaluation
• Select a few quotas that have relationships with
marketing environment and sales situations
SDM-Ch.4

25
Key Learnings
• A sales territory consists of existing and prospective
customers, assigned to a salesperson
• While assigning salespeople to territories, sales
manager should consider relative ability of salespeople
and salesperson’s effectiveness in the territory
• Management of territorial coverage includes routing,
scheduling, and time-management tools.
• Routing is a travel plan used by a salesperson for
making customer calls in a territory
• Scheduling is planning a salesperson’s visit time to
customers, based on sales and profit potentials of
customers

SDM-Ch.4

26
Key Learnings (Continued)
• Time management tools available to outside salespeople
are high-tech equipment and inside salespeople
• Sales quotas are sales goals or targets set by a
company for its marketing units like regions, territories,
salespeople
• Firms set many types of quotas like sales volume,
financial, activity, and combination of above
• Companies use more than one of the several methods
used for setting sales quotas. These are: total market
estimates, territory potential, past sales experience,
executive judgement, salespeople’s estimates, and
compensation plan
• Companies should select a few quotas, which should be
realistic and should be administered with flexibility
SDM-Ch.4

27

More Related Content

What's hot

Integrated Marketing Communications
Integrated Marketing CommunicationsIntegrated Marketing Communications
Integrated Marketing CommunicationsDavidt123
 
Designing and Managing Integrated Marketing Communications
Designing and Managing Integrated Marketing CommunicationsDesigning and Managing Integrated Marketing Communications
Designing and Managing Integrated Marketing CommunicationsChoudhry Asad
 
Sales organization structure
Sales organization structureSales organization structure
Sales organization structureVivek Gautam
 
Industrial Marketing Environment
Industrial Marketing EnvironmentIndustrial Marketing Environment
Industrial Marketing EnvironmentBHOOMI AHUJA
 
Design and size of sales territories
Design and size of sales territoriesDesign and size of sales territories
Design and size of sales territoriesShimranz Skillls
 
Retail buying behaviour
Retail buying behaviourRetail buying behaviour
Retail buying behaviourSumit Malhotra
 
How to choose the most attractive target markets.
How to choose the most attractive target markets.How to choose the most attractive target markets.
How to choose the most attractive target markets.Sameer Mathur
 
Business to business marketing ppt
Business to business marketing  pptBusiness to business marketing  ppt
Business to business marketing pptSukriti Mal
 
Sales Organisation and Structures.ppt
Sales Organisation and Structures.pptSales Organisation and Structures.ppt
Sales Organisation and Structures.pptKwekuJnr
 
Testing Advertising Effectiveness
Testing Advertising Effectiveness Testing Advertising Effectiveness
Testing Advertising Effectiveness Anubha Rastogi
 
Consumer Behaviour.ppt
Consumer Behaviour.pptConsumer Behaviour.ppt
Consumer Behaviour.pptssuser89412d1
 
Global marketing channels and physical distribution
Global marketing channels and physical distributionGlobal marketing channels and physical distribution
Global marketing channels and physical distributionStudsPlanet.com
 

What's hot (20)

Integrated Marketing Communications
Integrated Marketing CommunicationsIntegrated Marketing Communications
Integrated Marketing Communications
 
Designing and Managing Integrated Marketing Communications
Designing and Managing Integrated Marketing CommunicationsDesigning and Managing Integrated Marketing Communications
Designing and Managing Integrated Marketing Communications
 
Sales organization structure
Sales organization structureSales organization structure
Sales organization structure
 
Sales territory
Sales territorySales territory
Sales territory
 
Industrial Marketing Environment
Industrial Marketing EnvironmentIndustrial Marketing Environment
Industrial Marketing Environment
 
Sdm 1.1
Sdm 1.1Sdm 1.1
Sdm 1.1
 
Sales management
Sales managementSales management
Sales management
 
Design and size of sales territories
Design and size of sales territoriesDesign and size of sales territories
Design and size of sales territories
 
Marketing Communication Process
Marketing Communication ProcessMarketing Communication Process
Marketing Communication Process
 
Retail buying behaviour
Retail buying behaviourRetail buying behaviour
Retail buying behaviour
 
How to choose the most attractive target markets.
How to choose the most attractive target markets.How to choose the most attractive target markets.
How to choose the most attractive target markets.
 
Sales quota
Sales quotaSales quota
Sales quota
 
Business to business marketing ppt
Business to business marketing  pptBusiness to business marketing  ppt
Business to business marketing ppt
 
Sales Organisation and Structures.ppt
Sales Organisation and Structures.pptSales Organisation and Structures.ppt
Sales Organisation and Structures.ppt
 
Sdm(unit 2)
Sdm(unit 2)Sdm(unit 2)
Sdm(unit 2)
 
Testing Advertising Effectiveness
Testing Advertising Effectiveness Testing Advertising Effectiveness
Testing Advertising Effectiveness
 
CONSUMER BEHAVIOR
CONSUMER BEHAVIORCONSUMER BEHAVIOR
CONSUMER BEHAVIOR
 
Retail information system by suman saha
Retail information system by suman sahaRetail information system by suman saha
Retail information system by suman saha
 
Consumer Behaviour.ppt
Consumer Behaviour.pptConsumer Behaviour.ppt
Consumer Behaviour.ppt
 
Global marketing channels and physical distribution
Global marketing channels and physical distributionGlobal marketing channels and physical distribution
Global marketing channels and physical distribution
 

Viewers also liked

ALLOCATION OF SALES TERRITORIES & SALES QUOTA
ALLOCATION OF SALES TERRITORIES & SALES QUOTAALLOCATION OF SALES TERRITORIES & SALES QUOTA
ALLOCATION OF SALES TERRITORIES & SALES QUOTADhruv Sood
 
10. sales training territory management
10. sales training   territory management10. sales training   territory management
10. sales training territory managementEarl Stevens
 
Territory Management
Territory ManagementTerritory Management
Territory ManagementMike Kunkle
 

Viewers also liked (7)

ALLOCATION OF SALES TERRITORIES & SALES QUOTA
ALLOCATION OF SALES TERRITORIES & SALES QUOTAALLOCATION OF SALES TERRITORIES & SALES QUOTA
ALLOCATION OF SALES TERRITORIES & SALES QUOTA
 
10. sales training territory management
10. sales training   territory management10. sales training   territory management
10. sales training territory management
 
31373639 sales-territory-design
31373639 sales-territory-design31373639 sales-territory-design
31373639 sales-territory-design
 
Sales territory
Sales territorySales territory
Sales territory
 
Territory Management
Territory ManagementTerritory Management
Territory Management
 
Sales territory
Sales territorySales territory
Sales territory
 
Sales quota
Sales quotaSales quota
Sales quota
 

Similar to Management of Sales Territories and Quotas

Management of Sales Territories and Sales Quotas OK.ppt
Management of Sales Territories and Sales Quotas OK.pptManagement of Sales Territories and Sales Quotas OK.ppt
Management of Sales Territories and Sales Quotas OK.pptRohitPawar477072
 
Chapter 4 Management of Sales Territories and Quotas
Chapter 4 Management of Sales Territories and QuotasChapter 4 Management of Sales Territories and Quotas
Chapter 4 Management of Sales Territories and QuotasNishant Agrawal
 
Ch4 management of sales territories and quotas
Ch4 management of sales territories and quotasCh4 management of sales territories and quotas
Ch4 management of sales territories and quotaspinkeshparvani
 
Ch4 090721090522-phpapp01
Ch4 090721090522-phpapp01Ch4 090721090522-phpapp01
Ch4 090721090522-phpapp01akansha808
 
Ch4: Management of Sales Territories and Quotas
Ch4: Management of Sales  Territories and QuotasCh4: Management of Sales  Territories and Quotas
Ch4: Management of Sales Territories and Quotasitsvineeth209
 
Management of Sales Territory.pptx
Management of Sales Territory.pptxManagement of Sales Territory.pptx
Management of Sales Territory.pptxAshisKedia1
 
planning , sales forecasting and budgeting
planning , sales forecasting and budgetingplanning , sales forecasting and budgeting
planning , sales forecasting and budgetingSunil Chichra
 
Territory and quota mgt
Territory and quota mgtTerritory and quota mgt
Territory and quota mgtVidhu Arora
 
Controlling the sales force
Controlling the sales forceControlling the sales force
Controlling the sales forceGurjit
 
Staffing and organising
Staffing and organisingStaffing and organising
Staffing and organisingAtulSharma751
 
Module 5 marketing Strategies and plans.pptx
Module 5 marketing Strategies and plans.pptxModule 5 marketing Strategies and plans.pptx
Module 5 marketing Strategies and plans.pptxBaluJagadish1
 
Organising and Staffing the Salesforce
Organising and Staffing the SalesforceOrganising and Staffing the Salesforce
Organising and Staffing the SalesforceSameer Chandrakar
 
sales staffing and organizing sales force
sales staffing and organizing sales forcesales staffing and organizing sales force
sales staffing and organizing sales forceAnshul Sharma
 
Evaluation and Control of Sales Performance
Evaluation and Control of Sales PerformanceEvaluation and Control of Sales Performance
Evaluation and Control of Sales PerformanceDr. Parveen Kaur Nagpal
 

Similar to Management of Sales Territories and Quotas (20)

Management of Sales Territories and Sales Quotas OK.ppt
Management of Sales Territories and Sales Quotas OK.pptManagement of Sales Territories and Sales Quotas OK.ppt
Management of Sales Territories and Sales Quotas OK.ppt
 
Sdm ch4
Sdm ch4Sdm ch4
Sdm ch4
 
Ch4 management of territories
Ch4 management of territoriesCh4 management of territories
Ch4 management of territories
 
Chapter 4 Management of Sales Territories and Quotas
Chapter 4 Management of Sales Territories and QuotasChapter 4 Management of Sales Territories and Quotas
Chapter 4 Management of Sales Territories and Quotas
 
Ch4 management of sales territories and quotas
Ch4 management of sales territories and quotasCh4 management of sales territories and quotas
Ch4 management of sales territories and quotas
 
Ch4 090721090522-phpapp01
Ch4 090721090522-phpapp01Ch4 090721090522-phpapp01
Ch4 090721090522-phpapp01
 
Ch4: Management of Sales Territories and Quotas
Ch4: Management of Sales  Territories and QuotasCh4: Management of Sales  Territories and Quotas
Ch4: Management of Sales Territories and Quotas
 
Management of Sales Territory.pptx
Management of Sales Territory.pptxManagement of Sales Territory.pptx
Management of Sales Territory.pptx
 
Sdm 2.1
Sdm 2.1Sdm 2.1
Sdm 2.1
 
planning , sales forecasting and budgeting
planning , sales forecasting and budgetingplanning , sales forecasting and budgeting
planning , sales forecasting and budgeting
 
Territory and quota mgt
Territory and quota mgtTerritory and quota mgt
Territory and quota mgt
 
Sales quotas
Sales quotasSales quotas
Sales quotas
 
Controlling the sales force
Controlling the sales forceControlling the sales force
Controlling the sales force
 
Salesand distribution
Salesand distributionSalesand distribution
Salesand distribution
 
Managing Sales Force
Managing Sales Force Managing Sales Force
Managing Sales Force
 
Staffing and organising
Staffing and organisingStaffing and organising
Staffing and organising
 
Module 5 marketing Strategies and plans.pptx
Module 5 marketing Strategies and plans.pptxModule 5 marketing Strategies and plans.pptx
Module 5 marketing Strategies and plans.pptx
 
Organising and Staffing the Salesforce
Organising and Staffing the SalesforceOrganising and Staffing the Salesforce
Organising and Staffing the Salesforce
 
sales staffing and organizing sales force
sales staffing and organizing sales forcesales staffing and organizing sales force
sales staffing and organizing sales force
 
Evaluation and Control of Sales Performance
Evaluation and Control of Sales PerformanceEvaluation and Control of Sales Performance
Evaluation and Control of Sales Performance
 

More from Sameer Chandrakar

Market Logistics & Supply Chain Management
Market Logistics & Supply Chain ManagementMarket Logistics & Supply Chain Management
Market Logistics & Supply Chain ManagementSameer Chandrakar
 
Training, Motivating, Compensating, and Leading the Salesforce
Training, Motivating, Compensating, and Leading the SalesforceTraining, Motivating, Compensating, and Leading the Salesforce
Training, Motivating, Compensating, and Leading the SalesforceSameer Chandrakar
 
Personal Selling: Preparation and Process
Personal Selling: Preparation and ProcessPersonal Selling: Preparation and Process
Personal Selling: Preparation and ProcessSameer Chandrakar
 
Introduction to Sales and Distribution Management
Introduction to Sales and Distribution ManagementIntroduction to Sales and Distribution Management
Introduction to Sales and Distribution ManagementSameer Chandrakar
 
Introduction and nature of entrepreneurship
Introduction and nature of entrepreneurshipIntroduction and nature of entrepreneurship
Introduction and nature of entrepreneurshipSameer Chandrakar
 
finance and institutional support for entreprenurship
finance and institutional support for entreprenurshipfinance and institutional support for entreprenurship
finance and institutional support for entreprenurshipSameer Chandrakar
 
Rural entrepreneurship in detail
Rural entrepreneurship in detailRural entrepreneurship in detail
Rural entrepreneurship in detailSameer Chandrakar
 
role of universitites and colleges in entrep
role of universitites and colleges in entreprole of universitites and colleges in entrep
role of universitites and colleges in entrepSameer Chandrakar
 
Entrepreneur sources of venture capital
Entrepreneur sources of venture capitalEntrepreneur sources of venture capital
Entrepreneur sources of venture capitalSameer Chandrakar
 

More from Sameer Chandrakar (10)

Market Logistics & Supply Chain Management
Market Logistics & Supply Chain ManagementMarket Logistics & Supply Chain Management
Market Logistics & Supply Chain Management
 
Training, Motivating, Compensating, and Leading the Salesforce
Training, Motivating, Compensating, and Leading the SalesforceTraining, Motivating, Compensating, and Leading the Salesforce
Training, Motivating, Compensating, and Leading the Salesforce
 
Personal Selling: Preparation and Process
Personal Selling: Preparation and ProcessPersonal Selling: Preparation and Process
Personal Selling: Preparation and Process
 
Introduction to Sales and Distribution Management
Introduction to Sales and Distribution ManagementIntroduction to Sales and Distribution Management
Introduction to Sales and Distribution Management
 
Introduction and nature of entrepreneurship
Introduction and nature of entrepreneurshipIntroduction and nature of entrepreneurship
Introduction and nature of entrepreneurship
 
finance and institutional support for entreprenurship
finance and institutional support for entreprenurshipfinance and institutional support for entreprenurship
finance and institutional support for entreprenurship
 
social entrepreneurshil
social entrepreneurshilsocial entrepreneurshil
social entrepreneurshil
 
Rural entrepreneurship in detail
Rural entrepreneurship in detailRural entrepreneurship in detail
Rural entrepreneurship in detail
 
role of universitites and colleges in entrep
role of universitites and colleges in entreprole of universitites and colleges in entrep
role of universitites and colleges in entrep
 
Entrepreneur sources of venture capital
Entrepreneur sources of venture capitalEntrepreneur sources of venture capital
Entrepreneur sources of venture capital
 

Recently uploaded

會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽
會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽
會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽中 央社
 
Spring gala 2024 photo slideshow - Celebrating School-Community Partnerships
Spring gala 2024 photo slideshow - Celebrating School-Community PartnershipsSpring gala 2024 photo slideshow - Celebrating School-Community Partnerships
Spring gala 2024 photo slideshow - Celebrating School-Community Partnershipsexpandedwebsite
 
Trauma-Informed Leadership - Five Practical Principles
Trauma-Informed Leadership - Five Practical PrinciplesTrauma-Informed Leadership - Five Practical Principles
Trauma-Informed Leadership - Five Practical PrinciplesPooky Knightsmith
 
An overview of the various scriptures in Hinduism
An overview of the various scriptures in HinduismAn overview of the various scriptures in Hinduism
An overview of the various scriptures in HinduismDabee Kamal
 
Major project report on Tata Motors and its marketing strategies
Major project report on Tata Motors and its marketing strategiesMajor project report on Tata Motors and its marketing strategies
Major project report on Tata Motors and its marketing strategiesAmanpreetKaur157993
 
How To Create Editable Tree View in Odoo 17
How To Create Editable Tree View in Odoo 17How To Create Editable Tree View in Odoo 17
How To Create Editable Tree View in Odoo 17Celine George
 
SPLICE Working Group: Reusable Code Examples
SPLICE Working Group:Reusable Code ExamplesSPLICE Working Group:Reusable Code Examples
SPLICE Working Group: Reusable Code ExamplesPeter Brusilovsky
 
Basic Civil Engineering notes on Transportation Engineering & Modes of Transport
Basic Civil Engineering notes on Transportation Engineering & Modes of TransportBasic Civil Engineering notes on Transportation Engineering & Modes of Transport
Basic Civil Engineering notes on Transportation Engineering & Modes of TransportDenish Jangid
 
Observing-Correct-Grammar-in-Making-Definitions.pptx
Observing-Correct-Grammar-in-Making-Definitions.pptxObserving-Correct-Grammar-in-Making-Definitions.pptx
Observing-Correct-Grammar-in-Making-Definitions.pptxAdelaideRefugio
 
e-Sealing at EADTU by Kamakshi Rajagopal
e-Sealing at EADTU by Kamakshi Rajagopale-Sealing at EADTU by Kamakshi Rajagopal
e-Sealing at EADTU by Kamakshi RajagopalEADTU
 
ANTI PARKISON DRUGS.pptx
ANTI         PARKISON          DRUGS.pptxANTI         PARKISON          DRUGS.pptx
ANTI PARKISON DRUGS.pptxPoojaSen20
 
Sternal Fractures & Dislocations - EMGuidewire Radiology Reading Room
Sternal Fractures & Dislocations - EMGuidewire Radiology Reading RoomSternal Fractures & Dislocations - EMGuidewire Radiology Reading Room
Sternal Fractures & Dislocations - EMGuidewire Radiology Reading RoomSean M. Fox
 
PSYPACT- Practicing Over State Lines May 2024.pptx
PSYPACT- Practicing Over State Lines May 2024.pptxPSYPACT- Practicing Over State Lines May 2024.pptx
PSYPACT- Practicing Over State Lines May 2024.pptxMarlene Maheu
 
SURVEY I created for uni project research
SURVEY I created for uni project researchSURVEY I created for uni project research
SURVEY I created for uni project researchCaitlinCummins3
 
How to Send Pro Forma Invoice to Your Customers in Odoo 17
How to Send Pro Forma Invoice to Your Customers in Odoo 17How to Send Pro Forma Invoice to Your Customers in Odoo 17
How to Send Pro Forma Invoice to Your Customers in Odoo 17Celine George
 
會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文
會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文
會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文中 央社
 

Recently uploaded (20)

會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽
會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽
會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽會考英聽
 
Spring gala 2024 photo slideshow - Celebrating School-Community Partnerships
Spring gala 2024 photo slideshow - Celebrating School-Community PartnershipsSpring gala 2024 photo slideshow - Celebrating School-Community Partnerships
Spring gala 2024 photo slideshow - Celebrating School-Community Partnerships
 
Trauma-Informed Leadership - Five Practical Principles
Trauma-Informed Leadership - Five Practical PrinciplesTrauma-Informed Leadership - Five Practical Principles
Trauma-Informed Leadership - Five Practical Principles
 
An overview of the various scriptures in Hinduism
An overview of the various scriptures in HinduismAn overview of the various scriptures in Hinduism
An overview of the various scriptures in Hinduism
 
Major project report on Tata Motors and its marketing strategies
Major project report on Tata Motors and its marketing strategiesMajor project report on Tata Motors and its marketing strategies
Major project report on Tata Motors and its marketing strategies
 
How To Create Editable Tree View in Odoo 17
How To Create Editable Tree View in Odoo 17How To Create Editable Tree View in Odoo 17
How To Create Editable Tree View in Odoo 17
 
SPLICE Working Group: Reusable Code Examples
SPLICE Working Group:Reusable Code ExamplesSPLICE Working Group:Reusable Code Examples
SPLICE Working Group: Reusable Code Examples
 
Mattingly "AI & Prompt Design: Named Entity Recognition"
Mattingly "AI & Prompt Design: Named Entity Recognition"Mattingly "AI & Prompt Design: Named Entity Recognition"
Mattingly "AI & Prompt Design: Named Entity Recognition"
 
Basic Civil Engineering notes on Transportation Engineering & Modes of Transport
Basic Civil Engineering notes on Transportation Engineering & Modes of TransportBasic Civil Engineering notes on Transportation Engineering & Modes of Transport
Basic Civil Engineering notes on Transportation Engineering & Modes of Transport
 
Observing-Correct-Grammar-in-Making-Definitions.pptx
Observing-Correct-Grammar-in-Making-Definitions.pptxObserving-Correct-Grammar-in-Making-Definitions.pptx
Observing-Correct-Grammar-in-Making-Definitions.pptx
 
e-Sealing at EADTU by Kamakshi Rajagopal
e-Sealing at EADTU by Kamakshi Rajagopale-Sealing at EADTU by Kamakshi Rajagopal
e-Sealing at EADTU by Kamakshi Rajagopal
 
VAMOS CUIDAR DO NOSSO PLANETA! .
VAMOS CUIDAR DO NOSSO PLANETA!                    .VAMOS CUIDAR DO NOSSO PLANETA!                    .
VAMOS CUIDAR DO NOSSO PLANETA! .
 
ANTI PARKISON DRUGS.pptx
ANTI         PARKISON          DRUGS.pptxANTI         PARKISON          DRUGS.pptx
ANTI PARKISON DRUGS.pptx
 
Sternal Fractures & Dislocations - EMGuidewire Radiology Reading Room
Sternal Fractures & Dislocations - EMGuidewire Radiology Reading RoomSternal Fractures & Dislocations - EMGuidewire Radiology Reading Room
Sternal Fractures & Dislocations - EMGuidewire Radiology Reading Room
 
PSYPACT- Practicing Over State Lines May 2024.pptx
PSYPACT- Practicing Over State Lines May 2024.pptxPSYPACT- Practicing Over State Lines May 2024.pptx
PSYPACT- Practicing Over State Lines May 2024.pptx
 
SURVEY I created for uni project research
SURVEY I created for uni project researchSURVEY I created for uni project research
SURVEY I created for uni project research
 
How to Send Pro Forma Invoice to Your Customers in Odoo 17
How to Send Pro Forma Invoice to Your Customers in Odoo 17How to Send Pro Forma Invoice to Your Customers in Odoo 17
How to Send Pro Forma Invoice to Your Customers in Odoo 17
 
會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文
會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文
會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文會考英文
 
Mattingly "AI and Prompt Design: LLMs with NER"
Mattingly "AI and Prompt Design: LLMs with NER"Mattingly "AI and Prompt Design: LLMs with NER"
Mattingly "AI and Prompt Design: LLMs with NER"
 
Including Mental Health Support in Project Delivery, 14 May.pdf
Including Mental Health Support in Project Delivery, 14 May.pdfIncluding Mental Health Support in Project Delivery, 14 May.pdf
Including Mental Health Support in Project Delivery, 14 May.pdf
 

Management of Sales Territories and Quotas

  • 2. Learning Objectives • To understand the concept of and reasons for sales territories • To learn designing sales territories and assigning salespeople • To know territory coverage, including routing, scheduling, and time management • To understand objectives and types of sales quotas • To learn the methods of setting sales quotas • To get insight into setting and administration of sales quotas SDM-Ch.4 2
  • 3. Sales Territories • A sales territory consists of existing and potential customers, assigned to a salesperson • Most companies allot salespeople to geographic territories, consisting of current & prospective customers Major Reasons / Benefits of Sales Territories • Increase market / customer coverage • Control selling expenses and time • Enable better evaluation of salesforce performance • Improve customer relationships • Increase salesforce effectiveness • Improve sales and profit performance SDM-Ch.4 3
  • 4. Procedure for Designing Sales Territories • Select a control unit* • Find location and potential of present and prospective customers within control units** • Decide basic territories by using • Build-up method, Or • Break-down method *A control unit is a geographical territorial base **Unnecessary & expensive for consumer products SDM-Ch.4 4
  • 5. Procedure in Build-up Method • Decide customer call frequencies • Calculate total customer calls in each control unit • Estimate workload capacity of a salesperson • Make tentative territories • Develop final territories Objective is salespeople SDM-Ch.4 to equalise the workload of 5
  • 6. Procedure in Breakdown Method • Estimate company sales potential for total market • Forecast sales potential for each control unit • Estimate sales volume expected from each salesperson • Make tentative territories • Develop final territories Objective is to equalise sales potential of territories SDM-Ch.4 6
  • 7. Assigning Salespeople to Territories Sales Manager should consider two criteria: (A)Relative ability of salespeople • Based on key evaluation factors: (1) Product knowledge, (2) market knowledge, (3) past sales performance, (4) communication, (5) selling skills (B) Salesperson’s Effectiveness in a Territory • Decided by comparing social, cultural, and physical characteristics of the salesperson with those of the territory • Objective is to match salesperson to the territory SDM-Ch.4 7
  • 8. Management of Territorial Coverage • It means: How salesperson should cover the assigned sales territory • It includes three tasks for a sales manager: • Planning efficient routes for salespeople • Scheduling salespeople’s time • Using time-management tools SDM-Ch.4 8
  • 9. Routing • Routing is a travel plan used by a salesperson for making customer calls in a territory • Benefits of or Reasons for routing: • Reduction in travel time and cost • Improvement in territory coverage • Importance of routing depends on the application: • Nature of the product – Important for FMCG • Type of jobs of salespeople – Important for drivercum-salesperson job, but creative selling job needs a flexible route plan SDM-Ch.4 9
  • 10. Procedure for Setting up a Routing Plan • Identify current and prospective customers on a territory map • Classify each customer into high, medium, or low sales potential • Decide call frequency for each class of customers • Build route plan around locations of high potential customers • Computerised mathematical models are developed • Commonly used routing patterns are: Base (B) C 1 B B C 5 C 4 C 3 Straight line / Hopscotch SDM-Ch.4 C 2 Circular Clover Leaf 10
  • 11. Scheduling • Scheduling is planning a salesperson’s visit time to customers. It deals with time allocation issue • How to allocate salesperson’s time? • Sales manager communicates to salesperson major activities and time allocation for each activity • Salesperson records actual time spent on various activities for 2 weeks • Sales manager and salesperson discuss and decide how to increase time spent on major activities • Companies specify call norms for current customers, based on sales and profit potentials, and also for prospective customers SDM-Ch.4 11
  • 12. Time Management Tools To help outside salespeople* to manage their time efficiently and productively, the tools available are: • High-tech equipment like laptop computers and cellular phones • Inside salespeople to provide clerical support, technical support, and for prospecting, and qualifying, as they remain within the company • Outside salespeople can then spend more time getting more orders & building relationships with major customers *Outside salespeople travel outside the organisation SDM-Ch.4 12
  • 13. Sales Quotas • What are Sales Quotas? • Sales quotas are sales goals or targets set by a company for its marketing / sales units for a time period • Marketing / sales units are regions, branches, territories, salespeople, and intermediaries • Generally, company sales budget is broken down to sales quotas for various marketing units • Objectives of Sales Quotas • To use quotas as performance standards or performance goals • To control performance • To motivate people by linking quotas to compensation plans • To identify strengths and weaknesses of the company SDM-Ch.4 13
  • 14. Types of Quotas • Organisations set many types of sales quotas: (1) sales volume, (2) financial, (3) activity, (4) combination • Sales volume quotas • For effective control, sales volume quota should be set for the smallest marketing units, such as salesperson, districts / branches, product items / brands • Sales volume quotas can be stated in (a) rupees / dollars, (b) units, or (c) points • Rupees / dollars sales volume quotas are appropriate when salespeople are required to sell many products SDM-Ch.4 14
  • 15. Sales Volume Quotas (Continued) • Unit sales volume quotas are suitable when • Salespeople are selling a few products • Prices of the product fluctuate rapidly • Price of each product / service is high • Point sales volume quotas are appropriate when the company wants salespeople to sell products that contribute more to profits SDM-Ch.4 15
  • 16. Financial Quotas • Financial quotas control (a) gross margin or net profits, and (b) expenses of marketing units • Gross-margin / Net-profit quotas • Calculate gross margin by subtracting ‘cost of goods sold’ (i.e. cost of manufacturing) from sales volume. Sales managers are not responsible for cost of manufacturing • Net profit quotas are generally accepted by sales mangers as it is calculated by subtracting direct selling expenses from the gross margin • Expense quotas • In many companies, expense quotas are stated as a percentage of sales • Expense quotas to be administered with flexibility, to make salespeople cost conscious, allowing reasonable expenses SDM-Ch.4 16
  • 17. • • • • Activity Quotas These are set when salespeople perform both selling and non-selling activities Objective is to direct salespeople to carry out important activities For effective implementation, activity quotas are combined with sales volume and financial quotas E.G. Calling on high potential customers, payment collection from defaulting customers SDM-Ch.4 17
  • 18. Combination Quotas • Used when companies want to control salesforce performance on key selling and non-selling activities • Focus on a few types of quotas, to avoid confusing salespeople. An example: Type of Quota Sales Volume (Rs) Quota Actual Percent Weight Quota (Importance) 5,00,000 4,50,000 Percent Quota x Weight 90 3 270 Receivables (days) 45 50 89 2 178 New Customers (Nos) 04 05 125 1 125 6 573 Total • Total point score=573/6=95.5 for a salesperson • Typically use ‘points’ as a common measure to resolve the problem of different measures used by various types of quotas SDM-Ch.4 18
  • 19. Methods for Setting Sales Quotas • Several methods are used for establishing sales quotas • In practice, companies use more than one of the following methods to increase their confidence in sales quotas • Total market estimates • Territory potential • Past sales experience • Executive judgement • Salespeople’s estimates • Compensation plan We shall briefly discuss each of the above methods SDM-Ch.4 19
  • 20. Total Market Estimates Method • The Process followed companies is as under: by established 1) Estimate next year’s total market demand, or industry sales forecast, using sales forecasting methods 2) Decide the company’s estimated market share for next year 3) Company’s next year sales forecast= (1) x (2) 4) Find each territory’s percentage share out of the total company sales in the previous year 5) Territory sales quota = (3) x (4) SDM-Ch.4 20
  • 21. Territory Potential Method • The procedure followed by new companies is as under: 1) Estimate next year’s industry sales forecast or market potential, using sales forecasting methods 2) Estimate multiple factor index (MFI) for each territory, based on factors that influence sales of the product. These factors are given weights corresponding to the degree of sales opportunity. 3) Industry sales forecast in a territory (or territory market potential=(1)x(2) 4) Territory sales quota = (3) x estimated market share of the company in the territory SDM-Ch.4 21
  • 22. Past Sales Experience Method • The process consists of taking past one year’s sales (or an average of previous 3 to 5 year’s sales), adding an arbitrary percentage (or a percentage by which the market is expected to grow), and thus setting each territory sales quota • The assumption that future sales are related to past sales may not be always correct • This method should not be the only method used • Past sales should be one of the factors used for deciding sales quotas SDM-Ch.4 22
  • 23. Executive Judgement Method • Senior executives use their judgement when the product, territories, and the company are new or very little market information is available • Executives predict company sales budgets and also territory sales quotas • This method should generally be used along with other methods 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 SDM-Ch.4 23
  • 24. Salespeople’s Estimate Method (Continued) • For setting proper quotas, many sales managers use 2 or 3 of above methods, discuss with salespersons to get their inputs, and decide sales quotas Compensation Plan Method • Some organizations set quotas to fit with their sales compensation plan • E.G. 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) • Sales quotas should not be based only on this method, because it would “put the cart before the horse” SDM-Ch.4 24
  • 25. Insight into Setting & Administration of Sales Quotas • Set realistic quotas • Understand problems in setting quotas • Ensure salespeople understand quotas • By allowing salespeople to participate in the process • By continuous feedback to salespeople on their performance compared to quotas • Have flexibility in administering quotas • Change quotas in cases of major changes in market demand or company strategies • Use monthly or quarterly quotas for incentives and annual quotas for performance evaluation • Select a few quotas that have relationships with marketing environment and sales situations SDM-Ch.4 25
  • 26. Key Learnings • A sales territory consists of existing and prospective customers, assigned to a salesperson • While assigning salespeople to territories, sales manager should consider relative ability of salespeople and salesperson’s effectiveness in the territory • Management of territorial coverage includes routing, scheduling, and time-management tools. • Routing is a travel plan used by a salesperson for making customer calls in a territory • Scheduling is planning a salesperson’s visit time to customers, based on sales and profit potentials of customers SDM-Ch.4 26
  • 27. Key Learnings (Continued) • Time management tools available to outside salespeople are high-tech equipment and inside salespeople • Sales quotas are sales goals or targets set by a company for its marketing units like regions, territories, salespeople • Firms set many types of quotas like sales volume, financial, activity, and combination of above • Companies use more than one of the several methods used for setting sales quotas. These are: total market estimates, territory potential, past sales experience, executive judgement, salespeople’s estimates, and compensation plan • Companies should select a few quotas, which should be realistic and should be administered with flexibility SDM-Ch.4 27