SDM Cheat Sheet

Chapter 1: Introduction to Sales Management

Scope of Sales Management:​ Recruiting, Selecting, Training, Motivating, Supervising

salespeople, Strategic Planning, Forecasting Sales, Taking part in the budgeting process,
designing sales territories, developing salesforce organization structure, coordinating internally
with various departments and externally with customers and advertising agencies.

Primary Target:​ To achieve the targeted/ budgeted sales volume.

Role of Modern Sales Manager:​ Strategic Planning, Coordination, Use of Technology(ERP &
CRM), and Managing multiple Channels(personal, telephonic, internet, and intermediaries).

Skills of Modern Sales Manager: People Skills, Managing Skills, Technical Skills.

Transactional Sale​: The process by which a sales deal is closed.

Relationship Selling:​ The process by which a long term symbiotic relationship is built between
the firm and the customer.
Strategic Planning:​ Long term, considers the market, and could look at the total market share
desired.
Tactical Planning:​ Looks at the action plans, like pricing, promotion, distribution,
communication, and customer service.

Team Selling:​ For major accounts, the team will include people from senior management,
technical function, customer service department, inside salesperson as well as Key Account
Executive.
Chapter 2: The Selling Process

Prospecting: Prospect​ is an individual, family or organization in need of the product the

salesperson is selling.​ Sales Lead ​is the name or address of a person who could be a prospect.
Identifying leads could be through existing customers, external sources, internet, cold
canvassing, and networking between salespeople.
Qualifying​: The lead should qualify to deserve further attention. After qualifying, they are
divided into ​Hot prospects​(likely to buy in near future), W
​ arm prospects​(wants to buy but
non-committal), and ​cold prospects​(likely to take a long time).
Pre-approach: ​Information gathering on the prospect(background), and planning the sales
call(what would he/she want to hear).
Approach​: Could be a ‘hello’, or an opening benefit statement(comes straight to the benefits of
the product - despo), a product approach(he carries the product personally) to show the utility.
Discovering and Understanding​: Why would he want to buy from us? Ask these questions.
Situational questions: How many people would occupy this hall that needs to be
air-conditioned?
Problem questions: Have you faced any problems in servicing your machines?
Implication questions: What effect do system failures have on your customers?
Need-Payoff question: If your power is saved by 20%, how much would that benefit your
customers?
Sales Presentation​: Several Methods -
Stimulus Response Method: A memorized presentation, sales pitch - the right stimulus will get
the required response.
Formula Method: AIDA(Attention, Interest, Desire, Action)
Need Satisfaction Method: Understand the reasons behind the answers for the discovering
questions, and then move to the features, advantages and benefits of the product.
Team Selling Method: Shows commitment to the customers. ​Eg - Company’s Architect visit to
site.
Demonstrating the Product​: Could be at customer premises, manufacturer’s premises, or
some other customer’s premises.
Handling Objections: ​Get them to talk, and then (a) Turn objections into benefit : ​4 week
example​, or (b) deny objections tactfully : ​car example bought 2 years back​, or (c) provide a
third-party certificate, or (d) offer compensation(valid objection).
Trial Closing​: Get their opinion after objections, get them to verify the product, ask questions
and become friendly and get opinion from others.
Closing Techniques​: Alternative Choice close : ​color choice of car​, Assumptive close : ​treating
as if the deal is already closed​, Summary of benefit close : ​reiteration of benefits​, Special-offer
close(if he is still resisting)
Follow Up​: Follow up visit, account penetration: ​sell them more //final ke liye bula lo​,
relationship management ​//ab ham smdhi hain​.
Chapter 3: Strategic Planning, Sales Strategy, Sales forecasting and Budgeting

Corporate Strategic Planning: ​Mission, Define SBUs, Allocate resources to SBUs, Long term
strategy.
Business Unit Strategic Planning: ​Includes the BU’s mission, long term goals, formulating
and implementing strategies and monitoring.
Functional Planning: ​Planning for short durations(generally 1 year), includes manufacturing,
sales, recruitment, production etc.
Developing Marketing Strategy:

Sales Strategy:

Customer Classification:
Class A- High Sales and Profit potential customers
Class B- Medium Sales and Profit potential customers
Class C- Low Sales and Profit, have relationships with competitors.
Customer Relationship Strategy:
Transactional Relationship: Class C customers; Will switch for lower costs.
Value-Added Relationship: Class B, understand the future needs of customers, to offer best
value.
Collaborative Relationship: Class A, mutually satisfying relationship, requires high efforts.

Selling Methods:​ Stimulus response, Formula, need-satisfaction, Team selling and consultative
selling(like a consultant gauging their problems and then offering/creating solutions).

Marketing Channel Strategy​: Intermediaries, personal, internet, telemarketing, Manufacturers’

agents.

Developing Sales Forecast:

Market potential​: Maximum possible number of sales in the market

Market forecast​: Expected number of sales in a market
Sales Potential​: Best possible sale of products/ services in a particular area for a certain period
of time.
Sales forecast​: Expected sale of products/ services in a particular area for a certain period of
time.
Forecasting Techniques​:

1. Top-Down or Bread-Down Approach

Multi-Factor Index- ​dividing a region into parameters(population, disposable income etc.) and
build an index that is multiplied to the total potential.

2. Bottom-Up or Build-Up Approach

Sales Forecasting Methods:

Executive Opinion: ​Through discussion between executives(quick and inexpensive, but

difficult to breakdown)
Delphi Method: ​A panel of experts is selected, and they submit their forecasts
anonymously(more accurate, but still cannot be broken down into territories)
Sales Force Composite​: A bottom-up approach, suitable for B2B, done by people closest to
the market, but requires formal forecasting training.
Survey of Buyer’s intentions​: Directly asking the customer
Test Marketing​: Suitable for new products, selecting a few markets and testing a product to
identify market potential.

Moving Averages​: Sales forecast from previous years(done it in OM)

Exponential Smoothing​: Considers trends
Decomposition Method​: Previous years sales data is broken into trend, cycle, seasonal and
erratic events and then forecast is made.
Ratio(Naive) Method​: forecast=actual sales(this year)*[actual sales(this year)/actual sales(last
year)]
Regression Analysis​: Find independent variables for sales, create a relationship
Econometric Analysis​: Multiple regression relationships, evaluated together.

Sales Budget:
Planning​: forecasted sales-estimated cost of achieving sales
Coordination​: once budgeting is done by heads of production, finance, marketing, HR, it is then
divided into advertising, sales promotion, customer service and marketing research.
Control​: Measuring estimated performance against actual performance, to reward accordingly,
or take corrective measures by identifying reasons.

Methods of allocation of money:

1. Percentage sales​: allocated to each expense category(travel, advertising etc.)
2. Executive judgement
3. Objective and task method​: sales volume target -> breaking down the tasks that are
needed to achieve targets -> estimate costs for each task

Chapter 4: Management of Sales Territories and Quotas

Defining a Sales Territory:​ Existing and Potential customers assigned to a salesperson.

Generally has geographical boundaries, but need not be.
Benefits include ​Increased market and customer coverage, reduced selling expenses,
better sales force performance evaluation, Improved customer relationship, increased
salespeople effectiveness, improved coordination.

Procedure for defining sales territories:

Selecting a Control Unit​: A geographical territorial base, used in territory analysis. It should be
small enough to be able to calculate its potential. It could be a ​state​, ​metropolitan clusters​(
high income/ consumption bases responsible for maximum sales), or ​cities/ towns/ districts​.
Find Location and Sales potential of customers​: Finding the location and the sales potential
of the existing and prospective customers in each control unit.
Determine Basic Territories​:
Build-up method:

Break-down method:

Assign Salespeople to territories:

Relative ability of salesperson

Salesperson’s effectiveness in a territory - could be born and brought up there.

Manage Territorial coverage​:

Planning of efficient routes for salespeople(depending on the product, and type of the
salesperson’s job):
Scheduling the salesperson’s time:

Evaluate and Revise Sales Territories: ​When you find out that the sale territory was either too
large or too small(has to be revised 55% of the times).

Sales Quotas​: Sales goals set by a company for a certain period of time on its marketing
units(includes region, territory, branch office, salesperson, distributor, dealer). It could be on the
basis of sales volume, revenue, profit margin, customer satisfaction etc.
It helps in ​providing performance standards, controlling performance, motivating people,
and identifying strengths and weaknesses​(of individuals as well as territories).

Types of Sale Quotas​:

Sales Volume Quota
Profit contribution Quota​ - sales minus CGS
Expense Quota ​- to reduce marketing costs - given as percent of sales to ensure focus on
volume as well
Activity quota​ - telling them what all to do, suited when we know the contribution of each
activity
Combination quota​ - combination of all.

Methods of setting sales volume quotas​:

1. Territorial Sales Potential - Used by large companies
2. Past Sales Experience - When the trend is likely to be same
3. Total Market estimates - By MSMEs due to lack of data(market potential -> market share
becomes the target)
4. Executive Judgement - When the company is new, and there is no data
5. Salespeople’s estimates - Useful to keep the morale up, but needs monitoring by
managers
6. Compensation Plan - If achieved X million last year, target again is X million, and
anything above that attracts commision.
Chapter 5: Organizing and Staffing the Salesforce

Purposes of a Sales Organization:

1. Determining the Degree of Centralization: How much should the organization be
centralized/decentralized. Generally, Pricing and Purchasing decisions are centralized,
but it should be a mix, with caution.
2. Determining the degree of Specialization: Focus on specific tasks, become experts,
beneficial for the organization(but what specialization, product, market, geography is a
decision for the organization)
3. Defining Line and Staffing Positions: Line managers responsible for performance in their
line(subordinates reporting), staff managers advise and recommend roles in their areas
of expertise.
4. Ensuring a Reasonable Span of Control: Number of people reporting to one person
directly. Generally should be 6-8, but increasing with flat organizations.
5. Achieving Effective Coordination: Promoting harmony between departments.

Types of Sales Organizational Structure:

Line Sales Organization​: Advantages-clear authority, quick DM || Disadvantages- too reliant
on head of sales, who gets no support from market research/advertising divisions.
Line and Staff Sales Organization​: Medium and Large sized companies, better marketing
decisions because of support, sales managers can focus on selling. Disadvantages are higher
cost, slower decision making.

Functional Sales Organization​: Principle of specialization is fully used. However, it is not

suited to the original version, only modified versions work.
Horizontal Sales Organization​: Hierarchies completely removed, companies like GE using it.
Substantial reduction in costs and supervision, high efficiencies.

Specialization in Sales Organizations:

Geographic Specialization:
Product Specialization: ​When there are a number of products.
(a)Sales Organizations with product managers as staff specialists(lack of product specialization)

(b)Sales Organizations with product specialized salesforce(same customer approached by more

than one salesperson-customer dissatisfaction)

Market Specialization: ​when customers are classified by types, user industry or by channel of
distribution
Combination Sales Organization​:
Management of Key Accounts​:
1. Identification of Key Accounts- Purchasing large volume, requires high service, high
profitability products, looking for long term associations.
2. Managing Key Accounts- Appoint a key account manager(with a cross-functional team),
provide added values according to the needs of the customer.
3. Creating a Sales Organization for Key accounts- Through a new KA Management team,
Using existing Territory Sales manager, or by creating a separate division of salesforce.

Size of the Salesforce:

1. Workload method- Total Customers according to potential, time required for different
activities per customer, total time, time available per salesperson, division to calculate
number of salesperson(assumption: workload same for all salespersons)
2. Sales Potential Method-

3. Incremental Method- States that a salesperson should be added only when the revenue
added by him exceeds the costs. Complete calculation is done.

Staffing the Salesforce:

Planning:​ Who all are responsible for the staffing, how many and what type of salespeople
needed(Job analysis, preparing JD).
Recruiting​: Sources(internal and external sources)
Selecting​:

Hiring​: Making Job Offer(with all details), acceptance of the job offer(by HR)
Socialization​: Teaching values and norms of the organization to candidates, managers to
spend time with them in the initial days and introduce to others(assimilation).

Chapter 6: Training, Motivating, Compensating, and Leading the Salesforce

Understanding the Sales Training Process:

Identifying who should be trained:
New recruits, existing salespersons(refresher courses), intermediaries’ sales
representatives(technical products) and Sales Managers(send them to IIM)
How to find out? - manager’s observation, salesforce survey, customer survey, performance
testing, salesforce audit.
Train in what(popular needs) - Product knowledge, customer knowledge, company knowledge,
selling skills, competitive knowledge(prices, competitors etc.)

Designing and Executing a Sales Training Programme​:

Aims ​- Increase productivity, sales, customer satisfaction, lower turnover, written objectives
help in budgeting and measuring effectiveness.
Content ​- key customers, time and territory management, legal issues
Methods ​-

Execution ​- who, by who(internal/external), when, where(centralized/decentralized),

what(manuals/publications), how(computer/physical)
Evaluation ​-

Relevance of Motivational Theories to Salespeople​:

Maslow​: Different Salespeople need different types of motivations

Herzberg Two-Factor Theory​: Hygiene(good work environment, sensible supervision, job
security etc.) and Motivation(opportunities for growth, recognition, responsibility)
Vroom’s Expectancy Theory​: Expectancy(effort->performance),
instrumentality(performance->reward), Valence(value placed on a particular reward)
Churchill, Ford and Walker Model of Sales Force Motivation​:

Selecting an efficient Mix of Motivational Tools:

Sales Contest​ - short-term selling campaigns

Team compensation​ - to encourage team selling(particularly in B2B)
Global Compensation issues​ - Financial rewards in different countries have to be
different(team/individual/commision etc.)

Sense of accomplishment ​- communicating to others how a salesperson has been achieving

targets year on year
Personal Growth opportunities​ - webinars, workshops
Recognition ​- formal and informal
Sales Meetings​ - Some meetings can be to just break the routine and motivate people.
Job enrichment​ - more responsibility, more autonomy, variety of tasks
Effective Supervision​ - the above can only be done through good supervision
Objectives of a compensation plan for Salesforce​:
The company’s viewpoint​: control activities(through incentives), attract and retain quality, be
flexible(new products, new territories, some cases even allow employees to choose
fixed/variable components)
Salesperson’s viewpoint​: Regular and incentive income, simple and easy to understand plan,
a fair plan

Designing an effective Sales Compensation Plan:

Establish the Level of Compensation​ - levels of pay for similar positions in the industry,
comparable jobs in the company, education/experience/skills.
Evolve the Method of Compensation​ - Types of compensations plans:
1. Straight salary- fixed sum, regular intervals(no incentive, could lead to average
performance, burden on company, but provides security to employees)
2. Straight Commission- only financial incentives(commission base-say sales volume, etc.)
commission rate(per unit), commission start(after a unit, or after a quota), commission
payout(after billing, or after complete receipt or money from customer)
3. Combination Plan- Salary plus commission, salary plus bonus, salary plus commission
plus bonus(lump sum amount).
Payment of Fringe benefits - ​medical reimbursements, travel allowances, health insurance
etc.
Pretest, Administer and Evaluate Plan​ - Pretesting(simulation in computer or in a branch
sales office), administer(announce well in advance), and evaluate(quarterly/half/yearly whether
the objectives have been attained or not)

Personal Characteristics of a Leader: ​Visionary, Honesty, Energetic, Self-Starter, Decisive

Leadership Styles:
1. Transformational - Team Building, Leading by example, creating a vision, giving an
individualized attention.
2. Transactional - Task oriented, day to day, mostly seen(taareef aur gaaliyan)
3. Situational - mix of transformational and transactional

Leadership Skills:​ Communication, Problem Solving, Interpersonal

Supervising Salespeople:
Direct ​- Telecommunications, Sales Meetings, Personal Contact, Coaching
Indirect ​- Sales Reports(calls made, orders obtained etc.), Compensation Plans, Sales
Analysis(How much was sold), Expense accounts/reports(how much was spent).

Chapter 7: Evaluating and Controlling the Salespeople

Sales Force Expenses:

Ways of Controlling: ​Employee pays all(no cost for company, can be a burden for
salesperson), Company pays all(good way to monitor costs), Company partially pays(a limit per
transaction, or a fixed lump sum from company, reduces disputes), Combination(say cap on
food but not on travel)

Marketing Audit:​ comprehensive, periodic, and systematic examination of a company’s

marketing plan, environment, objectives, strategies, tactics, performance, organization, and
people with a view to find out opportunities and problems, and recommend an action plan.

Evaluation of Effectiveness of a Sales Organization:

Sales Analysis​: detailed analysis of the company’s sales data-collecting, classifying, comparing
and drawing conclusions.

Marketing Cost and Profitability Analysis​: A study of marketing costs to understand the
profitability of Sales
1. State the purpose of the Analysis​: Whether it is to find the profitability of a product, or
a territory, or an office
2. Identify Functional Expenses​:

3. Convert natural accounting expenses into functional expenses​: Pick up numbers

from accounts, and allocate them to different marketing activities
4. Allocate functional expenses to market segments/products/other units​: Direct
expenses(pertaining to a product or a location), Indirect costs(can be tough to allocate)
5. Prepare the profitability of the sales unit​: Full Cost(Revenues minus total costs of that
unit), or Contribution approach(direct costs allocated, and then contribution calculated)
Productivity Analysis​: Ratio of output vs input, considers a lot of other things like the number
of salesforce, calls per person, quotations per person etc. and comes up with solutions like
reducing sales force, using other communication modes, removing unprofitable
products/territories etc.

Evaluating and Controlling the Performance of Salespeople: ​For promotions, pay hike,
motivation, termination.

Set Policies on Evaluation​:

1. Frequency - quarterly/ half yearly/ yearly
2. Who conduct evaluations - generally field sales manager
3. Assessment Techniques - 360 degree feedback, multiple raters(self, team, customer)
4. Management by Objectives(MBO) - manager and salesperson together define the
objectives, and conduct periodic reviews for corrective actions.
5. Sources of Information - sales report, calls report, expenses report, local business report
etc.
Decide Bases of Evaluation​:
1. Outcome/Result Based - quantitative, no bias
2. Behavior/Activity/Effort Based - both quantitative and qualitative(good for morale)
3. Both Outcome and Behavior Based - hybrid approach mixes the best of both
4. Criteria/Bases - a lot of other criteria need to be considered for a comprehensive
assessment, like sales, expenses, orders, calls, customer retention, knowledge etc.
Establish Performance Standards​: sales quotas(quantitative) generally derived from sales
forecasts
Compare Actual Performance with Standards​: Evaluation Methods:
1. Graphic Rating - Qualitative, Semantic Differential on a 5/7 point scale, with opposite
words on the ends
2. Ranking - relative
 3. Behaviorally Anchored Rating Scales(BARS) - Identify decisive events, convert them into
behavior anchor statements, rate effectiveness of behavior statements, select
statements for performance dimension

4. MBO - both stay on the same page in MBO.

5. Description Statements - short descriptions, could be subjective, poorly written, more
detailed though
Review Performance Evaluation with Salespeople​: sensitive activity, explain the parameters
of rating, good qualities, weak areas, mutual agreement, good explanation needed in case of
serious disagreement, mail immediately after meeting, and send a copy to senior manager
Decide Sales Management Actions and Control​:
1. Identify Problem areas
2. Find Causes
3. Decide Sales Management Actions

Sales Force Automation(SFA)​: Application of computerized technologies to help and support

salespeople and sales management in the achievement of work related objectives. It helps in
better conversion(micro), better monitoring of salespersons, and better market share and
product performance(macro).
Functionality​:
1. Account(Customer) Management: Customer details, orders, payments, quotations,
unresolved issues etc.
 2. Lead Management: Allocation of sales leads to sales people based on territory, product
expertise etc.(workload management)
3. Territory Management: Establish, modify and balance territories(again workload
management)

Benefits of Social Media​: Real Time Communication, Improved Visibility, Increased Customer
Relationship/Loyalty. Great way to keep up with the generation, and also stay in constant touch
with prospects/ customers.

Ethical issues​:
1. Gifts: price of gifts should be low, follow company guidelines, not to spouses, not before
business is done.
2. Misrepresentation: No exaggeration on capability of product
3. Entertainment: should be appropriate, for long term business and not one order

No price discrimination among customers, No price fixing with competitors, No false claims on
products, and no bribing(All ​legal responsibilities of Sales Management​). Follow laws of the
country(​legal responsibility​), be impartial with stakeholders(​ethical responsibility​), make
goods that maximize value for customers, owners and shareholders(​economic
responsibilities​).

That was a lot of hard work. Hope this helps!