Sales management

1. Sales management The only business function that generates revenue.

2. sales management • Planning, direction and control of personal selling including recruiting, selecting, training, equipping, assigning, supervising, compensating and motivating as these tasks apply to the personal sales force.

3. Sales management • Management of the personal selling task. • Is there anything like ‘impersonal selling’ or ‘non-personal’ selling? • Selling is an exchange transaction. Exchange of Product or service for money • Money is the revenue or the earnings of an enterprise often called ‘turnover’ or ‘top line’ • Sales therefore is the only revenue generating function in an enterprise.

4. Objectives of sales management • 3 general underlying objectives: • SALES VOLUME • PROFITS • GROWTH Sales – cost of sales = gross margin. Gross margin – expenses =net profit.

5. Sales management: evolution • Industrial Revolution – 1760 • Small home industries – Large scale manufacturing –marketing – sales and sales support • Concept of hunters and farmers • The modern day sales manager is both an administrator in-charge of personal selling activity and a member of the group that makes marketing decisions of all types.

6. The salesman • …..they make more noise and more mistakes, create more cheer, correct more errors, adjust more differences, spread more gossip, hear more grievances, pacify more belligerence and waste more time under pressure, all without loosing their temper, than any other class of professionals –including politicians.

7. The salesman • …they live in hotels, cabs and tents on trains, buses, eat all kinds of food, drink all kinds of liquids –good and bad- sleep before, during and after business, with no sympathy from the office. • They draw and spend more money with less effort, they come at the most inopportune time, under the slightest pretext, ask more personal questions. • Yet they are a power in society…

8. The salesman • With all their faults, they keep the wheels of commerce turning, and the currents of human emotions running. More cannot be said any man. Be careful whom you call a salesman, lest you flatter him. -Donald Benenson in Ziglar on Selling

9. Sales Management “QUALITIES THAT LEAD TO EFFECTIVE SALES MANAGEMENT ARE OFTEN OPPOSITE THE ATTRIBUTES OF A SUCCESSFUL SALES PERSON”

10. Sales organization • With various tasks required to be performed the enterprise had to create a structure to ensure that work is done. (the Sears story) • Principles of structure: authority, responsibility, performance, support/co-ordinate.

11. Sales organization • Concept of organization: Group of individuals working jointly to achieve a defined goal and bearing formal and informal relations with one another. An organization is oriented towards and a co-operative endeavor and a structure of human relationships.

12. Purpose of organization • Eliminate waste of effort • Minimize friction • Maximize co-operation • Permit development of specialists • Ensure that all activities get done • Achieve co-ordination/balance • Define authority • Fix responsibility

13. Types of organization structures • Line organization: line managers perform sales and sales management activities. • Line and staff organization: Staff managers have advisory or support responsibility. e.g.Market research manager, Training manager.They are not directly responsible for achieving sales targets.

14. Organization structures • Functional organization: focus is on the principle of specialization. Each specialist has a functional responsibility and are permitted to direct and control the salesperson thru their immediate superior.

15. Organization structure • Horizontal structure. • Specialised structure: Geographical; Product; Market or customer; Combination of specialised structures.

16. Head –Marketing Line Sales Organization structure Sales Manager Area Sales Mgr Sales Force Sales Force Sales Force Sales Force Area Sales Mgr Area Sales Mgr Area Sales Mgr • Clear authority & Responsibility • Quick response & Decision, Low Cost • Weak on marketing inputs • Sales manager controlled

17. Functional Sales Organization • Administrative Simplicity • Access to Specialists • Multiple reporting • HOD is Pressures to co-ordinate

18. Research & Design team Customer Research Product / Service design Operations team Production QA Engineering Systems Planning Team Strategy Finance HR C O O Customer Support team Service Training Information Customer Satisfaction teams Sales & Marketing Pricing & Promotion Channels Logistics

19. Sales relation with marketing activities • Sales &Advertising: both stimulate demand. They need to be blended. Salespersons can improve advertising effectiveness. Advertising needs to support sales where and when they need it most. • Sales & Marketing information: data is needed for analysis of sales problems, for determining sales potential. Raw data is collected by sales people.

20. relationships • Sales and service: contributes to strategy success. • Sales and distribution: minimizes stock out situation; improves inventory control; helps sales to focus on demand generation. • Sales & Production: • Sales and R&D • Sales &Finance

21. SALES PLANNINGa managerial function • EXISTING BUSINESS LONG RANGE PLAN 3 TO 5 YEAR PROJECTIONS ANNUAL OPERATING PLAN REVISED YEAR TO YEAR SEGMENTWISE PLAN PAST TREND GEOGRAPHICAL PLAN PREVIOUS YEAR SALES CUSTOMERWISE PLAN CURRENT YEAR ACHIEVEMENT PLAN BY VALUE NEXT YEAR PLANS PLAN BY VOLUME ASSUMPTIONS

22. PLANNING FOCUS AREAS: • PROFITABILITY IMPROVEMENT • A REGION OR TERRITORY CEASES TO CONTRIBUTE • DISCONTINUATION OF SALES TO AN ACCOUNT • DE-EMPHASISING PRODUCTS • ACCEPTING A PRIVATE BRAND ORDER • VARIANCE BETWEEN BUDGET AND ACTUAL SALES

23. SALES PLANNING • NEW BUSINESS • VISION MISSION GOALS • STRATEGY • *ACTION PLANS

24. Key Deliverables of the Sales function • Planning • Organizing • Training • Motivating • Controlling • Leading

25. Sales planning • Forecasting a key planning tool PRODUCT LEVEL – total sales - industry sales company sales product line sales product variant sales

26. Time period forecast • Long Range • Medium range • Short term (range)

27. Planning process • Sales plan • Capacity plan • Production plan • Cash flow plan • Procurement plan Human resource plan

28. Sales forecast • Why forecast? One of the keys to success in sales is knowing where customers are located and being able to predict how much they will buy.

29. Sales forecasting; Industry estimates • Objective definition • Identifying critical factors (assumptions) • Selecting method of forecasting • Collecting, analysing, interpreting data. • Concluding predictions.

30. Geographic Area forecast • Nation • Region ( REGION OR ZONE ) • Territory ( BRANCH / DISTRICT ) • Customer

31. Forecasting Approaches • Top - down / Break –down approach An SBU level forecast broken down to region, district, territory, salesperson and individual customer sales quotas • Bottom –up / Build – up approach Individual customer to branch to zone to company level forecast

32. Methods of sales forecast • Qualitative methods: Executive opinion Delphi method – prediction by a panel Sales force composite – ‘grass roots’ approach. Test marketing –controlled or simulated

33. Sales forecast methods • Quantitative methods: Moving averages Exponential smoothing Regression analysis Econometric analysis

34. Selling situations • Customer’s intention and expectation are specific. (insurance, mobile service) • Customer is contacted over phone • Customer is an organizational buyer • Customer seeking service or solution • Customer in a retail store • Cold calling situation • Pharmaceutical selling • Creative selling ( ad.campaign)

35. The sales budget • To the sales department, the budget is a blue print for making sales. It involves money invested in distribution facilities, promotion efforts, and sales personnel. It is the foundation on which to plan sales objectives and the means of achieving them during the coming year.

36. Sales budget • A budget is a quantitative expression of plans. Most well managed enterprises use a budget which is a comprehensive and coordinated plan for the operations and resources of the enterprise. • It is a formal and intricate process • Approaches are either incremental or zero based. • In a volatile economic climate organizations estimate optimistic, realistic and pessimistic scenarios.

37. Sales budget Critical factors considered: • past trends • Sales force estimates • Trade prospects • Present scenario • Customers: existing and potential • Government policies • Industry environment

38. Number of sales people • Decision on the size of the sales force is very complicated because structure of the customers vary in each territory, the level of competition varies across territories, the connectivity for travel varies etc. • There are 3 generally accepted approaches: affordability, incremental and workload methods.

39. Sales territories • Definition : A sales territory consists of existing and potential customers assigned to a sales person. The territory may or may not have geographic boundaries.

40. Reasons for territories • Increase / improve customer coverage • Control selling expenses • Effective evaluation of salesman’s performance. • improve customer relations

41. Territory design • Main procedural steps: • Selection of a basic geographical control unit • Determination of sales potential present in each unit • Combining the basic units into tentative territories • Adjust for differences in coverage difficulty and readjust the tentative territories ( build up / break down method )

42. Territory design • Build up method: Decide call frequency Calculate total no of calls in the unit Estimate workload capacity of salesman Make tentative territories Develop final territories

43. Territory design • Break down method: Estimate company sales potential for total market. Forecast sales potential for each control unit. Estimate sales expected from each salesman. Make tentative territories. Develop final territories.

44. Routing Scheduling and control • Reasons / advantages: • Maintain lines of communication • Improve territory coverage • Minimize wasted time • Closer scrutiny of sales force movement • Journey plans for improving customer satisfaction

45. Quotas • Quotas are quantitative goals assigned to individual sales persons for a specified period of time. • One of the most widely used tools in sales management. • Should not be confused with sales potential or sales forecast. • Quotas may be set equal to ,above or below the sales forecast.

46. Why Quotas ? • To help management motivate sales people. • To direct sales people where to put there efforts. • To provide standards of performance evaluation

47. Types of Quotas • Sales volume Quotas : Rupee volume / Unit volume • Profit based Quotas: contribution / gross margin • Activity Quotas: calls per day; sales meetings; product demos; ( efforts = results.) • Expense Quotas

48. QUOTA SETTING MECHANISM • S-specific • M-measurable • A-achievable • R-realistic • T-time bound

49. What is Motivation?? • Driveto initiate an action. • The intensity of effortin an action • Thepersistence of effortover

50. Why motivation • Frequent rejection • Physical separation from company support • Direct influence on quality of sales presentation • Indirect influence on performance