LECTURE 2

PLANNING THE SALES TEAM'S EFFORTS

PLANNING THE SALES TEAMS
EFFORTS

Sales managers are involved in planning, organizing,

setting sales objectives, forecasting market demand,
budgets, sales quotas, and overseeing the operation of
individual sales territories.
These activities form the bases of sales planning, included
in:
Chapter 3: Building Relationships through Strategic Planning
Chapter 4: The Market-Driven Sales Organization
Chapter 5: Forecasting Market Demand and Sales Budgets
Chapter 6: Design and Size of Sales Territories
Chapter 7: Sales Objectives and Quotas

2
Chapter 03.
BUILDING RELATIONSHIPS THROUGH STRATEGIC
PLANNING

3
Chapter 3 Outline

Important of corporate planning

What is marketing
Marketings importance to the firm
Essentials of a firms marketing efforts
Relationship marketing
Technology builds relationship and partners
Relationship marketing and sales force
Strategic marketing and the sales management
process
4
IMPORTANCE OF CORPORATE
PLANNING

Planning is the conscious, systematic process of making

decisions about goals and activities that an indiviual, group,
work unit, or organization will pursue in the future and the
use of resources to obtain them.
Planning is not an informal or haphazard response to a crisis;
it is a purposeful effort, directed and controlled by managers
and often drawing on the knowledge and experience of
employees throughout the organization.
Planning provides individuals and work units with a clear
map to follow in their future activities, but at the same time
this map may allow for individual circumstances and
changing conditions.
5
IMPORTANCE OF CORPORATE
PLANNING

Strategic planning
Strategic planning involves making decisions about the
organizations long-term goals and strategies.
Strategic goals are major targets or end results that
relate to the long-term survival, value, and growth of the
organization.
Strategy is a pattern of actions and resource allocations
designed to achieve the goals of the organization.

6
IMPORTANCE OF CORPORATE
PLANNING

Tactical and Operational planning

Tactical Planning translates broad strategic goals and
plans into specific goals and plans relevant to a definite
portion of the organization, often a functional area such
as marketing or human resources.
A tactic is the operational means by which an
organization intends to reach its objectives.
Operational Planning identifies the specific
procedures and processes required at lower levels of the
organization.

7
IMPORTANCE OF CORPORATE
PLANNING

Establishing a Mission and Vision - The first step in strategic

planning is establishing a mission and vision for the organization.
The mission is the basic purpose and values of the organization, as well as its
scope of operations.
The strategic vision moves beyond the mission statement to provide a
perspective on where the company is headed and what the organization can
become.
The company's mission, vision, values, objectives, strategies, and tactics are
often referred to as a strategic plan. These six factors interrelate, ensuring the
best allocation of the firm's resources to fulfill its mission and objective. This is
achieved by answering four key questions.
Where are we?
Where do we want to be?
How should we get there?
Can we afford it?

8
Figure 3.1 Kodaks Vision, Mission, and Values
VISION
Our heritage has been and our future is to be
the World Leader in Imaging.

MISSION
Build a world-class, results-oriented culture
by providingsolutions to capture, store, process, output,
and communicateimages to people and machines
anywhere, anytime...bringing differentiated, cost-effective
solutionsto the marketplace and with
flawless qualitythrough a diverse team of energetic
employees with the world-class talent and skills
necessary to sustain Kodak as the World Leader in Imaging.
In this way, we will achieve our
fundamental objective of Total Customer Satisfaction,
and our consequent goals of Increased Global
Market Share and Superior Financial Performance.

VALUES
9
(1) Respect for the Dignity of the Individual
Figure 3.2 Relationship between the organizations strategic plan and operational
plans

O r g a n iz a t i o n s S t r a t e g ic P l a n
M is s io n
O b j e c t iv e s
S tr a te g ie s
P o r t f o li o p l a n

O p e r a t io n a l P la n s
P r o d u c t io n P la n M a r k e t in g P la n H u m an R eso u rc es F in a n c ia l P la n
P la n
O b je c t iv e s O b je c t iv e s O b je c t iv e s O b je c t iv e s
F o recast F o recast F o rec ast F o rec ast
B u d g e ts B u d g ets B u d g e ts B u d g e ts
S t r a t e g ie s a n d S t r a t e g ie s a n d S t r a t e g ie s a n d S t r a t e g ie s a n d
p ro g ram s p ro g ram s
P o lic ie s P o lic ie s P o lic ie s P o lic ie s
10
WHAT IS MARKETING?

Businesses have two major functions:

1. Production of goods or creation of services.
2. Marketing those goods and services.
Marketing is defined as the process of planning and
executing the conception, pricing, promotion, and
distribution of goods, services, and ideas to create
exchanges that satisfy individual and organizational
objectives. (AMA, n.d)

11
Figure 3.3 The marketing group the link between customers and the organization

Top Management

H u m an
Functional Departments M a r k e tin g P r o d u c tio n
R eso u rc es

Salespeople

Customers Manufacturers Service Wholesalers Retailers Consumers

12
MARKETINGS IMPORTANCE TO
THE FIRM

Marketing people typically have these four basic objectives to

accomplish:
Maximize sales of existing products in existing markets.
Develop and sell new products.
Develop new markets for existing or new products.
Provide the quality of service necessary for customers to be satisfied with
their transactions and to continue doing business with the organization.
Marketing Generates Sales - As is apparent from the first three
objectives, the main role of marketing is to generate revenue.
Marketing Provides Quality Service - Marketing provides more
to the marketplace than a needed product. It helps generate sales by
providing the quality of service customers expect.

13
ESSENTIALS OF A FIRMS
MARKETING EFFORT

The essentials of a firms marketing effort include

its abilities to
determine the needs of its customers and
create and maintain an effective marketing mix that
satisfies customer needs.
Marketing mix consists of four main elements:
Product
Price
Distribution or Place
Promotion.
14
 Figure 3.4 Four marketing-mix elements and four promotion activities

M a r k etin g M ix

Product Price Place Promotion

P er s o n a l S el li n g A d v er t i s i n g S a les P r o m o ti o n P u b li ci ty

15
 Figure 3.6 Typical distribution channels for consumer and industrial products

C o n su m e r P ro d u c ts

H o u se h o ld C o n su m e r
facturer

R e ta ile r H o u se h o ld C o n su m e r
Manu

W h o le sa le r R e ta ile r H o u se h o ld C o n su m e r

I n d u s tria l P ro d u c ts
M anufacturer

I n d u st r ia l U se r

W h o le sa le r I n d u st r ia l U se r

16
RELATIONSHIP MARKETING

Relationship Marketing is the creation of customer

loyalty. Organizations use combinations of products, prices,
distribution, promotions, and service to achieve this goal.
Levels of relationship marketing
Transaction Selling customers are sold to and not contacted
again.
Relationship selling the seller contacts customers after the
purchases to determine if they are satisfied and have future needs.
Partnering the seller works continually to improve its
customers' operations, sales, and profits.

17
 e
p ris ip
nter onsh
E ati
l
Re
Investment
by ti ve
ta ip
Supplier s ul nsh
n o
Co lati
Re

n al
ti o p
s a c n s hi
an o
Tr elati
R

Investment by Customer

Figure 2-a1: Alternative Types of Account Relationships 18

 Different Sales Orientations

Product Sales Solution Sales Value Sales

Sales Best products Solutions to your needs Impact on your
Argume business results
nt
Profile Product Expert Solution provider business consultant
of
Sales
Custom Narrow Space Function/ department All levels
er (e.g., purchasing)
Contact
s Valuable solutions to
Best products with a Product and service
Offerin solutions to customer needs support competitive advantage
competitive price
g

Success Product excellence and/ Understanding the Driving customer

or cost leadership customers needs profits and EVA
Factors
19
TECHNOLOGY BUILDS RELATIONSHIPS
AND PARTNERS

Most dramatic force shaping an organizations

marketing efforts today.
Helps salespeople increase the speed with which
they can find leads, gather information, reduce
paperwork, and provide service.
Technology is expensive.

20
RELATIONSHIP MARKETING AND
THE SALES FORCE

These four basic questions are guidelines that define the role of the
sales force:
1. How much selling effort is necessary to gain and hold customers?
2. Is the sales force the best marketing tool, compared to advertising and
other sales promotion methods, in terms of cost and results?
3. What type of sales activities for example, technical assistance and
frequent or infrequent sales calls will be necessary?
4. Can the firm gain strength relative to its competition with its sales force?
The answers to these questions come largely from an analysis of
competition, the target markets, and the firms product offerings.
These help determine (1) sales force objectives, (2) the level of
resources allocated to sales force activities, and (3) the important of
personal selling in the marketing mix.

21
RELATIONSHIP MARKETING AND
THE SALES FORCE

Salespeople generate revenue.

Salespeople provide service.
Service quality is a subjective assessment that
customers arrive at by valuating the service level
that they perceive being delivered.
Salespeople implement relationship
marketing.

22
23
STRATEGIC PLANNING AND THE
SALES MANAGEMENT PROCESS
Planning A Sales Strategy
The Development of Sales Strategies
1. The present situation
2. Preparation of the multiyear strategic plan
3. Financial planning is a part of the sales strategy
Setting Next Years Sales Plan
1. Establish key objectives
2. Compare present with future
Objective-based Thinking means of prioritizing activities in which everything the sales force does is aimed at
achieving stated objectives.
3. Allow field managers to participate
4. Develop the budget
5. Establish progress checkpoints
6. Formalize your plan
7. Convert plans into individual objectives
Sales Objectives Direct Other Activities

24
STRATEGIC PLANNING AND THE
SALES MANAGEMENT PROCESS

A sales strategic plan includes the following four major

questions:
1. What is the sales departments present condition?
2. What trends are apparent?
3. What are the most important objectives?
4. What are the strategies for getting these objectives accomplished?
Setting next years sales plan, the sales force may have
objectives measured on the basis of the following:
. Contribution to profits.
. Return on assets (ROA) managed by the sales force.
. Sales/cost ratio.
. Market share.

25
Figure 3.8 The strategic sales force planning process

S a l es F o r ce O b j e ct i v es

D e fi n e R o l e s, A ct i v i t i es , E sta b lish O r ga n iz a tio n a l

a n d M a r k e t s o f S a l e s F o r ce D e s i g n a n d S t r u ct u r e

S t a ff i n g T ra in in g D i r ect i n g

S a l es A n a l y s i s a n d
E v a lu a tio n o f S a les P er so n n el

26
STRATEGIC PLANNING AND THE
SALES MANAGEMENT PROCESS

Content of a Sales Plan

1. Objectives and Tasks of Sales Force
2. Establish Sales Policy
3. Choose Sales Skills/Techniques, Customer
Relationship model, Products to sell
4. Organize the sales force structure, Design and Size of
Sales Territories
5. Sales supporting programs
6. Sales budget estimation
7. Schedules.

27
Sales plan building process
Identify business objectives, Marketing objectives

Analyze market & business

Establish sales objectives

Construct sales alternatives

Building supporting policies

Estimate expense

Draft Sales plan

Asking for comments from experts, Finalizing, & Issuing

28
The planning process (Jobber &
Lancaster, 2009)

29
Chapter 04.
THE MARKET-DRIVEN SALES ORGANIZATION

30
Chapter 4 Outline

Factors influencing organizational design and structure

Marketing and market
Sales job are varied and can be classified
The salespersons job activities as a territorial manager
Sales organizational design
Sales organizational structure
New forms of organizations
Coordination and technology

31
FACTORS INFLUENCING ORGANIZATIONAL
DESIGN AND STRUCTURE

The operation of a sales force requires the

coordination of numerous or interdependent groups
and activities. In deciding on the organizational
design and structure of a sales force, managers:
Examine customers in each market.
Determine the types of sales jobs needed to serve a market.
Note the job activities salespeople must do.
Design sales jobs around customers.
Set up the sales force organizational structure, which
includes the various sales jobs and geographic territories.

32
 Figure 4.1 the relationships among markets, jobs, and activities influence sales
job design and organizational structure

P er f o r m a n ce

C u sto m ers T y p es R eq u ir ed D esign E sta b lish S a les

a n d M a r k et s of Jobs J o b A ct i v i t i es th e J o b O r ga n iz a tio n a l
S t r u ct u r e

Q u a lity o f
W o rk L ife

33
MARKETING AND MARKETS

Salespeople work in two markets

Consumer markets
Business markets

34
SALES JOBS ARE VARIED AND
CAN BE CLASSIFIED

Seven major categories:

Category One position where the salesperson is predominantly an
inside order taker, like the McDonald's hamburger salesperson behind
the counter.
Category Two positions where the salesperson predominantly
delivers the product, such as milk, bread, fuel, oil, and so forth.
Category Three positions where the salesperson is predominantly
an order taker but also works in the field, such as selling soap, food, or
health and beauty aids to retailers.
Category Four positions where the salesperson is not expected or
permitted to take an order but is asked only to build goodwill or to
educate the actual potential userthe textbook publisher's salesperson
or the medical detailer representing an ethical pharmaceutical house.

35
SALES JOBS ARE VARIED AND
CAN BE CLASSIFIED

Seven major categories:

Category Five positions where the major emphasis is
placed on technical knowledge, such as an engineering
salesperson who is primarily a consultant.
Category Six positions that demand the creative
(specialty) sale of tangibles such as vacuum cleaners,
refrigerators, house siding, encyclopedias, and so on.
Category Seven positions that require the creative sale
of intangibles such as insurance or advertising services.

36
SALES JOBS ARE VARIED AND
CAN BE CLASSIFIED

Application of the Sales Job Classifications

1. Order Takers the salesperson in the first five
classifications that wait for the customer to order.
The main problem with order takers is that they create only one
distinction in the customers mind: price.
2. Order Getters obtain, retain, and increase business
with customers. They get new and repeat business using a
creative sales strategy and well-executed sales
presentation
This salesperson must often create discontent with what the
prospect already has and has to overcome the most powerful and
obstinate resistance.

37
SALES JOBS ARE VARIED AND
CAN BE CLASSIFIED

Application of the Sales Job Classifications

1. Order Takers
2. Order Getters
. Order getters build relationships
They develop relationships with customers.
They listen more than talk.
Their sales calls are more productive.
They have an objective in mind.
They evaluate and respond to the customers changing needs.

38
SALES JOBS ARE VARIED AND
CAN BE CLASSIFIED

True Salespeople are hard to Find

People with the prerequisite traits and attributes for
success in creative sales are rare.
Often, 100 to 150 or even more applicants must be
interviewed to find one qualified candidate.

39
THE SALESPERSON'S JOB ACTIVITIES
AS A TERRITORIAL MANAGER

A. Territorial Manager planning, organizing, and executing

activities that increase sales and profits in a given territory.
B. Sales Territory composed of a group of customers assigned
within a geographic area.
.A sales territorial manager performs the following activities:
1. Provides solutions to customers problems.
2. Provides services to customers.
3. Sells to current and new customers.
4. Helps customers resell products to their customers.
5. Helps customers use products after purchase.
6. Builds goodwill with customers.
7. Provides company with market information.

40
SALES ORGANIZATIONAL DESIGN

Organizational Design refers to the formal,

coordinated process of communication, authority,
and responsibility for sales groups and individuals.
Purposes and Importance of Job Design
Content duties, tasks, behaviors, functions,
responsibilities.
Qualifications required to perform it skills, abilities,
experiences.
Returns and rewards for performing it pay, promotions,
intrinsic satisfaction.

41
SALES ORGANIZATIONAL
STRUCTURE

Organizational Structure is the relatively fixed, formally

defined relationship among jobs within the firm.
The Line Organization
In the pure line organization, the chief executive usually the
president does the decision making for the firm. The president has
complete authority.
Lewis Stone
President-Owner

Jake Preston
Vice President of sales

Two Salespeople
42
SALES ORGANIZATIONAL
STRUCTURE

Specialized design - The structure of an organization can be

based on a variety factors such as functions, geography,
product, customers, or a combination of these factors.
1. Functional specialization: Functional Organizational Design
sometimes called line and staff organization, is the grouping of
work according to its characteristics. It is the most common
organizational design. John Abbot
Vice President of
Marketing

John Friedman Peter Liker

Charles Thompson
Advertising/Promotion Market research
Sales Manager
Manager Manager

Ten Salespeople
43
SALES ORGANIZATIONAL
STRUCTURE

Specialized design
2. Staff positions with line authority
Line Authority means that people in management positions have
formal authority to direct and control immediate subordinates.
Staff Authority is narrower that line authority and includes the
right to advise, recommend, and counsel in the staff specialists'
areas of expertise.

3. Geographical specialization - Many large corporations

are organized by geographic territory. This type of
organization is generally used by companies with more
than strictly local distribution of their products.

44
Figure 4.4 Textron chemical corporation geographic specialization

M a n a g e r ia l V ic e P r e s i d e n t
L evel o f M a r k e tin g

O p e r a tin g
L evel
E a s t e r n D iv i s io n a l
S a le s M a n a g e r
N a tio n a l S a le s
M an ager
C e n t r a l D iv i s i o n a l W e s t e r n D iv i s i o n a l
S a le s M a n a g e r S a le s M a n a g e r

7 R e g io n a l S a le s 6 R e g io n a l S a le s 5 R e g io n a l S a le s
M an ag ersA M an ag ersA M an ag ers A

3 5 D is t r i c t S a le s 3 0 D is t r i c t S a le s 2 5 D is t r i c t S a le s
M an ag ers B M an ag ers
B
M an ag ers B

2 4 0 S a le s p e o p le C
2 4 0 S a le s p e o p le C
2 0 045S a l e s p e o p l e C
SALES ORGANIZATIONAL
STRUCTURE

Specialized design
4. Product specialization - Another common type of organization
in large companies is based on the firms product. The entire
company may be organized by product, with separate sales,
advertising, marketing, and so on, along with staffs for each, or
some functional units may remain centralized.
. Advantages
Allows focusing of sales effort
Expertise developed in limited number of products
. Disadvantages
More expensive to operate
May result in duplication of sales calls to clients

46
 Figure: Product Specialized Sales Force

National Sales
Manager

Eastern Regional
Sales Manager

Northeast District Mid-Atlantic Southern District

Sales Manager District Sales Sales Manager
Manager

Printer Server Minicomput Programmab Copier Large

Equipment Salesperso er le Salesperso Computer
Salesperso n Salesperson Calculator n Salesperson
n Salesperson

47
SALES ORGANIZATIONAL
STRUCTURE

Specialized design
5. Customer specialization - Companies with several separate and
distinct markets accounting for major portions of their sales often
organize based on these markets or customers.

. Advantages
Consistent with market driven strategy
Salespeople become customer experts
Customer segments receive appropriate resources
. Disadvantages
May conflict with marketing organization
Product expertise may be lacking
More expensive

48
 Figure: Customer Specialized Sales Force

National Sales
Manager

National Accounts Eastern Regional Manager of

Manager Sales Manager Export Sales

Northeast District Mid-Atlantic Southern District

Sales Manager District Sales Sales Manager
Manager

Salesperson Salesperson Salesperson Salesperson

For for Retail for for Bank
Educational Customers Government Customers
Institutions Agencies
Salesperson Salesperson
for for Wholesale
Manufacturers Customers

49
SALES ORGANIZATIONAL
STRUCTURE

Specialized design
6. Combination of design elements - Many companies
organize on the basis of some combination of
functional, geographic, product, or customer design.

50
 Figure 4.5 Multiple design factors

P r e s id e n t

F u n c t io n a l V ic e P r e s id e n t V ic e P r e s id e n t V ic e P r e s id e n t
P r o d u c tio n M a r k e t in g E n g in e e rin g

G e o g ra p h ic U .S . I n t e r n a t io n a l
M a r k e t in g M a r k e t in g
M an ag er M an ager

C u sto m e r C o n su m er I n d u s tria l I n t e r n a t io n a l
G oods G oods S a le s
M an ag ers M an ag ers M an ag er

P ro d u c t S o ap P ro d u c ts P a p e r P ro d u c ts F o o d P ro d u c ts L a tin A s ia n a n d
E u ro p ean
D iv is io n a l D iv is io n a l D iv is io n a l A m e r ic a n A f r ic a n
D iv is io n
M an ager M an ager M an ager D iv is io n D iv is io n

E a ste rn C en tral W estern

S a le s S a le s S a le s
D iv is io n D iv is io n D iv is io n 51
SALES ORGANIZATIONAL
STRUCTURE

Organizing for selling to major customers

Companies use four basic organizational methods.
1. A separate division to deal with major accounts.
2. Select members of the current sales force.
3. Sales managers.
4. A combination of 1, 2, and 3.

52
NEW FORMS OF ORGANIZATIONS

Strategic Alliances
A strategic alliance is a formal relationship created with
the purpose of joint pursuit of mutual goals. In a strategic
alliance, individual organizations share administrative
authority, form social links, and accept joint ownership

Team-Based Organizations
Many organizations are more responsive to their
environment because they use work teams as their basic
building blocks.

53
Figure 4.6 Cross-functional selling team

C u sto m e r

T e c h n ic a l
S a le s M a r k e tin g M a n u f a c t u r in g
Su p p o rt
S u p p lie r S e llin g T e a m

54
COORDINATION AND
TECHNOLOGY

Coordination refers to the quality of

collaboration across groups. Without coordination, a
company's left hand will not act in concert with the
right hand, causing problems and conflicts.
International Coordination - The most important
methods for achieving coordination are information
systems, task forces and teams, and integrating
managers.
Coordination Provides Customer Service

55
Chapter 5.
FORECASTING MARKET DEMAND AND SALES
BUDGETS

56
Chapter 5 Outline

Managing sales information

Forecasting market demand
Uses of sales forecasts
The forecasting process
Sales forecasting methods
The top brass approves the final forecast
The sales manager's budget

57
Chapter 6.
DESIGN AND SIZE OF SALES TERRITORIES

58
Chapter 6 Outline

WHAT IS A SALES TERRITORY?

FACTORS TO CONSIDER IN DESIGNING
SALES TERRITORIES
THE SALES TERRITORY IS A BUSINESS
USING COMPUTERS TO DESIGN
TERRITORIES

59
LEARNING OBJECTIVES

The design, size, and operation of sales territories

are critical to a firm's success because they allow
the firm to provide service to customers.
This chapter will help you to understand:
1. The definition of a sales territory.
2. Who is responsible for territorial development.
3. The factors to consider when designing sales
territories.
4. The importance of reducing sales leakage.
5. How computers can help design territories.
60
WHAT IS A SALES TERRITORY?

A sales territory is composed of a group of

customers or a geographic area assigned to a
salesperson. The territory may or may not have
geographic boundaries. Typically, however, a
salesperson is assigned to a geographic area
containing present and potential customers.

61
WHAT IS A SALES TERRITORY?

A. Who is Responsible for Territorial Development?

1. Development of sales territories is usually the responsibility
of the sales manager overseeing the larger sales units within
the organization.
2. Why Establish Sales Territories?
a) To obtain thorough coverage of the market
b) To establish a salesperson's responsibility
c) To evaluate performance
d) To improve customer relations
e) To reduce sales expense
f) To allow better matching of salesperson to customer
g) To benefit salespeople and the company

62
WHAT IS A SALES TERRITORY?

B. Why sales territories may not be developed:

Salespeople may be more motivated if they are not
restricted.
The company may be too small.
Management may not want to take the time, or have the
know-how.
Personal friendship may be the basis for attracting
customers.

63
FACTORS TO CONSIDER IN
DESIGNING SALES TERRITORIES

Sales force objectives may be based on factors such

as contribution to profits, return on assets, sales/cost
ratios, market share, or customer satisfaction.
The attainment of sales force objectives is realized
at the territorial level. These broad objectives are
eventually converted into individual sales territorial
goals based on the factors such as sales increases,
individual product sales, number of sales calls, and
number of new customers obtained.

64
FACTORS TO CONSIDER IN
DESIGNING SALES TERRITORIES

S elect B a s ic A n a lyz e D eter m i n e B a s ic

C o n tr o l U n it W o rk lo a d T er r ito r ies

E v a l u a t e, R e v i s e C u s to m er A ssign to
i f N eed ed C o n t a ct P l a n T er r ito r ies

Figure 6.1 Factors to consider when designing territories

65
1. Select Basic Control Units

Based on sales force objectives, sales managers can

create, revise, or evaluate basic geographic control units
and their territorial boundaries. Usually, territorial
boundaries are based on:
States
Counties
Cities and zip-code areas
Metropolitan statistical areas
Trading areas
Major accounts
A combination of two or more factors
66
2. Analyze salespeoples workloads

Workload is the quantity of work expected from sales

personnel. Three of the main influences on workload
involve:
The nature of the job;
Intensity of Market Coverage
Distribution methods:
Intensive distribution: Sell the product in every outlet where final
customers might reasonably look for it.
Selective distribution: Use a limited number of wholesales and retailers in
a given market.
Exclusive distribution: Use only one wholesaler or retailer in a given
market.
Type of products sold.

67
3. Determine basic territories

Six steps to consider when determining a firms

basic territories
1. Forecast sales and determine sales potentials.
2. Determine the sales volume needed for each territory.
3. Determine the number of territories.
4. Tentatively establish territories.
5. Determine the number of accounts for each territory.
6. Finalize the territories, and draw the boundary lines.

68
Determine the number of territories

There are several ways to determine the number of

territories needed to sell and service a firms market.
The breakdown approach is the simplest.
The breakdown approach uses factors such as
sales, population, or number of customers.

69
Determine the number of territories

The Equalized Workload approach - This method uses

the number, location, and size of customers and
prospects 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.
Frequency of sales calls per given customer.
Time intervals between sales calls.
Travel time around territories.
Nonselling time.
70
4. Assign to territories

Some salespeople can handle large territories and

the travel associated with them; some cant.
Some territories require experienced salespeople;
some are best for new people.
Some people want to live in metropolitan areas;
others prefer territories with smaller cities.

71
5. Customer Contact Plan

The customer contact plan involves scheduling sales calls

and routing a salespersons movement around the territory.
Scheduling refers to establishing a fixed time when the
salesperson will be at a customers place of business.
In theory, strict formal route designs enable the salesperson
to:
1. Improve territorial coverage.
2. Minimize wasted time.
3. Establish communication between management and the sales
force in terms of the location and activities of individual
salespeople.

72
Figure 6.2. Three basic routing patterns

S t r a ig h t - L i n e P a t t e r n
F i r s t C a ll
B ase c
c c c c W o rk B ac k

C lo v e rle a f P a tte r n c M a jo r- C it y P a tte r n

c c

2 3
c c
c c c c
1
c B ase c
5 4
c c c c
c c c c

c c
1 - D o w n to w n
c
E ach L eaf O u t an d
B ack Sam e D ay
73
5. Customer Contact Plan

Using the Telephone for Territorial Coverage

1. Sales generating
Selling regular orders to smaller accounts.
Selling specials, such as offering price discounts on an individual product.
Developing leads and qualifying prospects.
2. Order processing
Ordering through the warehouse.
Gathering credit information.
Checking if shipments have been made.
3. Customer service
Handling complaints.
Answering questions.

74
5. Customer Contact Plan

Most people can benefit from adopting the

following practices:
Satisfying part of the service needs of accounts by
telephone.
Assigning smaller accounts to telephone selling.
Doing prospecting, market data gathering, and call
scheduling by telephone.
Carefully scheduling visits to distant accounts, replacing
some with telephone calls.

75
6. Evaluation and revision of sales
territories

Territorial control is the establishment of standards

of performance for the individual territory in the
form of qualitative and quantitative quotas or goals.

76
THE SALES TERRITORY IS A
BUSINESS

The Right Salesperson Pays Off

Open Sales Territories
1. Open Sales Territories are those left vacant until new
salespeople are assigned to them. Vacant territories
experience the following:
Lost sales due to the vacancy.
Lost sales due to the time needed for the new salesperson to
build sales productivity.
2. Sales Leakage refers to the lost sales due to both the
vacancy and the time required for the new salesperson
to produce at average.
77
THE BOTTOM LINE OF CHAPTER 6

According to salespeople, managing time and territory is the most

important factor to be considered when carrying out their selling duties.
Developing sales territories has advantages as well as certain
disadvantages.
Sales force objectives are usually converted into individual sales
territorial goals.
The three main influences affecting the sales personnels workload are
nature of the job, intensity of market coverage, and products sold.
Before designing sales territories, managers must consider six factors.
The customer contact plan includes scheduling sales calls and routing
salespersons movement around the territory.
Territorial control allows actual performance to be compared with
standards of performance for evaluation purposes.

78
CHAPTER 7
SALES OBJECTIVES AND QUOTAS

79
Chapter 7 Outline

What is a quota?
Why are quotas important?
Types of quotas
Methods for setting sales quotas
Examples of setting sales quotas
SBO sets future targets
Basic levels of individual objectives
The procedures of setting objectives and quotas with salespeople
A good objective and quota plan is smart
Selling by objectives management
The sales territory is where quotas are made

80
LEARNING OBJECTIVES

Objectives and quotas are fundamental parts of a company,

because they provide the sales force with direction and goals.
Selling by objectives (SBO) is a system that unites the sales
force. This chapter should help you understand:
1. The relationship between sales objectives and quotas.
2. Why quotas are important.
3. The various types of quotas.
4. The methods for setting quotas.
5. Criteria needed for a good quota plan.
6. Major areas for establishing objectives.
7. How organizations set objectives.
8. The selling by objectives process.

81
WHAT IS A QUOTA?

A quota refers to an expected performance

objective.
Quotas are tactical in nature and thus derived from
the sales forces strategic objectives.

82
WHY ARE QUOTAS IMPORTANT?

Quotas provide performance targets.

Quotas provide standards.
Quotas provide control.
Quotas provide change of direction.
Quotas are motivational.

83
TYPES OF QUOTAS

1. Sales Volume Quotas

Sales Volume Quotas a performance objective that includes
dollar or product unit objectives for a specific period.
Breakdown total sales volume
a) To do this, ask these questions: To whom are we going to sell? Where are
they located geographically? Which products will be sold? Which
products will sell the best? During what time period will the sales occur?
b) While answering these five questions, salespeople will establish sales
volume quotas for the following:
Product lines;
Individual established and new products;
Geographic areas based on how the sales organization is designed, which
would include sales divisions, sales regions, sales districts, and individual sales
territories.

84
TYPES OF QUOTAS

2. Profit Quotas - The two types of profit quotas:

Gross Margin Quota a quota determined by subtracting cost of
goods sold from sales volume.
Net Profit Quota a quota determined by subtracting costs of
goods sold and salespeople's direct selling expenses from sales
volume.
3. Expense quotas are aimed at controlling costs of sales
units. Often expenses are related to sales volume or to the
compensation plan.
4. Activity Quotas objectives set for job-related duties
useful toward reaching salespeople's performance targets.
85
Table 7.1 Comparative Total Yearly Sales
Volume for the Midwest Sales District

86
Table 7.2 Condensed comparative Profit for Midwest
Sales Districts Territories

87
88
TYPES OF QUOTAS

5. Customer Satisfaction a customer's feelings

about any differences between what is expected
and actual experiences with a purchase.
1. Customer Satisfaction Index an index usually
compiled of all customer satisfaction data rated into
one number or percentage.
6. Quota Combinations

89
METHODS FOR SETTING SALES
QUOTAS

Quotas based on forecasts and potentials.

Quotas based on forecasts only.
Quotas based on past experience.
Quotas based on executive judgments.
Quotas salespeople set.
Quotas related to compensation.

90
Table 7.4 Levels of organizational sales planning
LEVEL PURPOSE: WHAT IS PLANNED WHO
(USUALLY) IS
INVOLVED
1. Organizational goals (increase in market share or penetration, Upper management
Marketing increase in customers, increase in sales dollars and units sold) and sales and
Priorities (which regions, markets, and products to emphasize) marketing
Dollar allotment (for promotion, advertising, new employees, sales executives
incentives, and so on)

2. Regional Goals for number of new customers and for increased business with Regional and
plan old customers in each region and territory district sales
Priorities (which accounts to emphasize) managers (which
Responsibilities (which accounts sales representatives will handle, input from sales
what unit or dollar volume they will have to deliver) reps)

3. District Goals to contribute to each customers business, fulfill customers District managers
plan needs, and solve customers problems. and sales
Projected return on time invested and how much time to invest. representatives

4. Precalls (research, setting objectives, strategies) Sales

Territorial Each sales call representatives
plan Evaluating results of each sales-call plan
91
SELLING BY OBJECTIVES (SBO)
SETS FUTURE TARGETS

Two basic steps to implementing sales strategies:

Step 1: Organize the jobs.
Step 2: Define annual objectives in important areas.

Responsibilities should be defined by four key

organizational areas of concern (Figure 7.2), not only for
management and supervision but for every salesperson on
the payroll. The four arears of organization are territorial,
account, call management and self-management.

92
 Figure 7.2 The four major areas to establish objectives with each salesperson

SALES
Step 1: Organizing the Job MANAGEMENT

Salesperson

Territorial Management Account Management Call Management Self-Management

Limits Portfolio of Preparation Appearance
Potential Business Accounts Selling Technique Manner
Size Potentials Training Communication
Customer Base Coverage Communication Skills
Prospects Records Buyer Behavior Abilities
Leads Order Size Impact Attitudes
Market Share Penetration Handling Resistance Selling Abilities
Growth Reports
Trade Relations Customer
Dealer Relations Satisfaction

Step 2: Defining Annual Objectives

1. Regular
2. Problem Solving
3. Innovative
93
SELLING BY OBJECTIVES SETS
FUTURE TARGETS

1. Treating the territory as a business.

2. Managing each account.
Tactical plan for managing accounts:
1. Build the stars.
2. Harvest the cash cows.
3. Fix the problems.
4. Divest the dogs.

94
SELLING BY OBJECTIVES SETS
FUTURE TARGETS

3. Managing each call. Questions about the content of calls:

Is the sales rep properly armed with information, leads, and materials before
the call occurs?
Is the sales rep applying the major principles of selling technique during the
presentation? Or is the sales rep inventing his or her own and perhaps making
every mistake every salesperson in history has made?
Has the salesperson planned some coherent attack for the sales presentation,
and is it working well?
Does the sales rep have enough training in communication, in meeting sales
resistance, in understanding buyer behavior, in improving call impact, in
gaining greater account penetration, in follow-through methods to do the job?
Does the sales rep have enough knowledge of the product and its
applications, service and system backup, and technical problems to handle
the toughest calling situation?

95
SELLING BY OBJECTIVES SETS
FUTURE TARGETS

4. Managing oneself. Self-management in selling includes the

following:
Since selling involves making contact with strangers, dress, style,
demeanor, and personal decorum are part of the salespersons tool kit.
Communication skills, memory, logical speaking habits, and writing
competence are vested in the person.
Attitudes and outlook toward the job, the product, the company, and
the customers all have an important bearing in the results to be
achieved.
The knowledge of selling techniques, what the various kinds are and
how and when to use them, are personally vested in the sales rep and
can be produced and polished by training.

96
BASIC LEVELS OF INDIVIDUAL
OBJECTIVES

These objectives will go beyond the ordinary and

will include three types of objectives for each
person:
1. Regular; ongoing, and recurring objectives.
2. Problem-solving objectives.
3. Innovative or creative objectives.
The highest level of excellence is reserved for
people who are attaining all three.

97
THE PROCEDURES FOR SETTING
OBJECTIVES AND QUOTAS WITH
SALESPEOPLE

1. Prepare the way.

2. Schedule conferences with each salesperson.
3. Prepare a written summary of goals agreed upon.
4. Optional group meeting to share objectives.

98
 Figure 7.3 Selling by objectives form
N am e
F o r Y ear
L i s t Y o u r R e s p o n s ib i l it y A r e a

R e s u lts E x p e c te d

O u tp u t P e s s i m is t i c R e a li s t i c O p t im i s t i c R e s u lts

1 . $ V o lu m e / m o n t h
2 . $ E x p e n se / m o n th
3 . G r o s s m a rg in / m o n th
4.
5.
6.
7.
8.
9.
10.
11.
12.
O th er

I n s t r u c t io n : L is t t h e r e g u l a r , o n g o i n g , r e c u r r in g o b j e c t iv e s . C o v e r t h e t e n m a j o r r e s p o n -
s i b il i t i e s o f y o u r jo b n e x t y e a r t o m a n a g e t e r r it o r y , a c c o u n t s , c a l l s , a n d y o u r s e l f .
99
A GOOD OBJECTIVE AND QUOTA
PLAN IS SMART

Specific
Measurable
Attainable
Realistic
Time specific
100
A GOOD OBJECTIVE AND QUOTA
PLAN IS SMART

A simple three-way test to judge how well quotas

and objectives are written:
Test 1: Does this quota state exactly what the intended
result is?
Test 2: Does this quota specify when the intended result
is to be accomplished?
Test 3: Can the intended result be measured?

101
SELLING-BY-OBJECTIVES
MANAGEMENT

Selling By Objectives (SBO) a process in which

the manager and salesperson jointly identify
common goals, define major responsibility areas,
and agree on the results expected.
The Basic Process Is A Two-Way Approach
SBO is more than a philosophy; it is a method of
managing that allows both managers and salespeople
maximum involvement and participation in setting goals
and defining methods of measuring accomplishments.

102
Figure 7.4. Setting objectives and quotas is a two-way process between manager
and salesperson

M u tu a lly S et
M ea s u r e
O b j ect i v es a n d
P er f o r m a n ce
Q u ota s

E va lu a te
P er f o r m a n ce

P u b l i ci z e
R ew a r d
P e r fo r m a n ce
o r P en a l t y
R es u l t s

103
THE SALES TERRITORY IS WHERE
QUOTAS ARE MADE

The sales territory is where the action is!

104
THE BOTTOM LINE

Quotas are important to a company because they

establish the end state sought, and they change
according to external and internal forces.
Many different types of quotas exist.
Methods for setting quotas may vary.
Setting a sales quota can be an involved process.
Selling by objectives (SBO) is a common concept
and is widely used by sales organizations.

105