SALES MANAGEMENTSales EffortSome of the important terms are as under;Market potentialSales potentialSales forecast

Analysing Market PotentialMarket identification who buys / who uses / who are prospective buyers and or sellersMarket Motivation how best to present product in sales talk / relative effectiveness of different selling appeals / the appropriateness of different promotional methodsAnalysis of Market Potential select the market factors associated with product demand / eliminate the segments not containing prospective buyers of the products

SALES MANAGEMENTSales EffortSALES FORECASTINGSales forecasting is the process of planning the sales of various products or services during the year in advanceSales forecasting is normally done by the sales departments directly involved in selling, since this in turn also sets the targets for the sales personSales forecasting is also the base for calculations of the financial figures and budgets of the organisationIt is therefore very important that every possible care is taken in forecastingFollowing are the sales forecasting methods;Jury of executive opinionPoll of sales force OpinionProjection of past salesSurvey of customers buying plansMathematical analysis (Regression analysis)Conversion of industry forecast into company sales forecast

SALES MANAGEMENTSales EffortBUDGETING AND QUOTASA sales budget is a blueprint of the sales plan product-wise, estimates of the revenue and profits of the organisation for a particular period (normally a financial year)The budget starts from the quantities forecast during the period, the revenue generated based on the expected price level, the value addition generated during the period and the expensesIn simple terms this would be as under;No of products sold x unit price = Revenue generatedCost of products + expenses + profits = Revenue generatedThe expenses would consist of;Salary and other personnel expensesAdministrative expenses, traveling expensesPromotional expenses, including advertising, special discounts, sampling costsTrade discounts and commissions and Training expenses

SALES MANAGEMENTSales EffortPURPOSE OF SALES BUDGETMechanism of Control - It is an instrument of control and serves as a yard stick for;Measurement of salesRevenueExpensesProfitVariance from plan etc.Instrument of planningThe total plan of the organisation for the periodDirection in which the organisation will moveIt shows the management visionIt shows path for future growth

SALES MANAGEMENTSales EffortBUDGETARY PROCEDUREBasically starts with sales department where the basic structure is prepared with the revenue expected (of course based on the sales forecast)Based on these figures, all departments prepare their expenses and other activities for the yearPlanning is either Top down or Bottom upIn case of Top down, the top management sets the objectives and targets which have to be followed and accordingly the budget is preparedThis follows the Theory X which says people need to be told what needs to be got done, since they dislike work and shirk responsibilityWhile bottom up follows Theory Y where people like work and take responsibility willingly and achieve objectives of the organisations.

SALES MANAGEMENTSales EffortActual Budgetary ProcedureThe process starts from lowest level, i.e. from the profit centersEach territory or area manager starts working the sales figures firstThis gets the revenue figures for the planned periodThe next step is to work out the details of expenses on the basis of what the actual expenses for the previous year were and the likely next yearThis is prepared for the area / territory and sent to head office / regional officeThe budgets for the different regions are then consolidated to make a full budgetThe budget is then discussed among the head of regions and the head office people and changes madeThe budget is then forwarded to the top management for approval

SALES MANAGEMENTSales EffortErrors in BudgetsConditions actually vary as compared to the time when prepared (change in demandSudden change in some raw material costs, and not necessarily be passed on to the customersChange in technologyChange in government policiesThe organisations therefore must have a system to review the operations regularly and in case of justified change in conditions, changes are accepted and made. Sometimes even correction is made and revised accordingly.Some companies even prepare flexible budgets because of not being able to get accurate data of forecast. They therefore prepare alternate budgets based on different estimates and assumptionsWhen the budget has errors due to faulty forecasting, the accepted procedure is to alter estimates by applying standard ratios of costs to the adjusted volumes of business. This practice is normally accepted by most companies.

SALES MANAGEMENTSales EffortQUOTASQuotas are the quantitative objectives assigned to an area, individual (a profit centre, an individual sales man, an agent/distributor )These then form the basis for appraising effectiveness, evaluation of the performance levels, of all budgeted items such as;The volume of salesExpenses etc.Quotas are therefore devices for directing and controlling operationsManagement bases quotas on;The derived information from sales forecastsMarket studiesSales potential andCost estimates

SALES MANAGEMENTSales EffortObjectives of using QuotasTo provide Quantitative Performance Standards

To obtain tighter sales & expense control

To motivate desired performance

To use in connection with sales contests

SALES MANAGEMENTSales EffortProfitability AnalysisA must for any organisation.Analysis basically starts with capturing the entire data of sales customer-wise, product-wise, area-wise, sales person wise, cost and expenses incurred on the sales, selling prices and discounts offered, credit controls, targets achieved etc.This answers following;Reveals area with good and poor performancesReveals the salespersons performancesThe accounts will disclose the sales to larger and small customers both and the efforts required for futureThe sales product wise will let you take a decision as to what ration of products to be maintained for selling and what extra efforts are required to sell more profitable itemsIt helps in realising the strengths and weaknesses of the organisation to take timely actions and make the organisation more profitable

SALES MANAGEMENTSales EffortTERRITORIZATIONThe placement of suitable staff/salesmen to look after a group of customers / locations are an important taskThis allocation of responsibility is called as territorizationThe ultimate aim is to break the total market into smaller areas classified as Territory which helps in planning and controlling the ultimate achievementsTerritorization is aimed at;Controlling selling expensesGood design of territory with deployment of proper sales force helps in optimising the sales volume and expensesSalesman out on tour with minimum time spent per call or Maximising calls with highest output at lowest costEvaluation of sales personnel

SALES MANAGEMENTSales EffortContributing to sales force MoraleGood design helps in reducing extra loads or over burdening of salesmanHelps in making each person as productive as possible to make higher earningMakes the field staff self confidant andMinimises conflicts since some customers transact business in more than one territoryAiding in coordination of personnel selling and advertisingProper coordination with advertisements planned to be released in the media can boost sales efforts since he can always plan his visits based on the release

SALES MANAGEMENTSales EffortProcedures for setting up or revising territoriesSetting up of territories involves four stepsSelecting a basic Geographical control unitThe first and foremost is the selection of the basic geographical unit consisting of various states, districts, towns and cities etc.This has to be based on the sales potential and the number of customers in the territory fixed or planned to be fixedThe statistical data of the area also helps in setting the territoryThe free movement and routing is necessary between the various areas of the territoriesDetermining sales potential present in each control unitCombining control units into tentative territoriesForming a shape of the territory so that travel is easy and connectivity is betterAdjusting for differences in coverage difficultyDeciding assignments of sales personnel to territories

SALES MANAGEMENTSales EffortROUTING AND SCHEDULING SALES PERSONNELProper coordination with advertisements planned to be released in the media can boost sales efforts since field sales force can always plan visits based on the releaseRegular scheduling of visits can help in developing relationship with the channels or the customers so that visits can be fruitfulA proper rout of the visit is a must, to save on the cost and time and if possible, less of surprise visits be made (surprise visits are also necessary and sometimes may be necessary without the direct in-charge of the area)This basically helps in maintaining proper control over the movement and expenses of the field sales persons

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