Sales Force Management and Measurement Notes
Sales Force Management and Measurement Notes
Shoot salesperson: dumps the goods and pushes sales target to the later months.
- Company does not supply more than the demand leading to lesser products sold in the next
month thus effecting sales target.
- Important to select right combination of incentive and compensation to motivate the
employee.
To achieve targets
To align organizational and sales goals
- Important to align targets and revenues
- Helps with the brand manager objectives, individual products/brands should have different
revenue targets according to their degree of profitability
Get an effective sales manager on board to manage the high costs.
Sales Territories
Where do conflicts arise from in sales force management?
1. How territories are assigned; prioritize accessible areas with higher sales potential
2. How to be rewarded; compensation plans
The main reasons why territories are allocated include:
- To reduce travelling time
- To reduce waiting time
- To balance territory potential
- To balance workload (issue faced here is that efforts are difficult to be rewarded)
Underservicing: A situation where salespeople are not providing enough attention or service to
their customers, which can lead to lost sales and reduced customer satisfaction. This can happen
when salespeople are given too much work to do, or when territories are unbalanced.
Overservicing: This can result in lower sales such as when a salesperson continually calls a
customer until they become alienated.
Disruptions: when one salesperson leaves their position, the position left vacant for too long
results in customer losing interest and shifting to competitor’s product leading to loss in
responsiveness and sales.
Sales Potential, Territory Changes and Sales Goals
How can it be represented?
Salespeople are sensitive to territory changes as a relationship has already been established with
its existing and potential accounts.
SMART goals should be set with goals that are specific (department/territory), measurable (%
increase or $), attainable (visualized/understood), realistic (achievable/ motivating) and time-
bound (exact time frame where goals must be met)
It is important to reevaluate sales goals during the year to make sure they are on track. This will
keep sales force from lowering their productivity too early.
Forecasting Sales
Why is forecasting important?
1. Resource allocation
2. Production targets for the future
Formula 1: Previous year sales (%) x forecasted/corporate sales goals for district ($)
Formula 2: Previous year sales ($) + sales potential of district (%) x forecasted sales increase in district.
1. Stay constant with the compensation plan: Do not change the compensation plan once after
communicated with the salespeople. If in case sale boosts, the company is liable to pay the
decided bonuses as per the compensation plan.
2. Compensation plan easily understood: Objectives set should be clear for the salesforce with
what is expected and what outcomes lead to financial rewards.
3. Set metrics that are objective: If metrics must be subjective, make sure the process is
transparent and that the sales force is clear about what the rules are and how success is
measured.
4. Non-financial incentives: recognition programs should also be considered.
The compensation plan should be aligned with the salesperson’s activities and the firm’s
objectives.
1. Level of pay: if selling requires high levels of knowledge due to industry complexity or requires
multi-lingual ability, there may be fewer available salespeople and a need to have a higher level
of pay.
2. Mix between salary and incentive: it is important to be able to accurately measure the role the
salesperson plays in each sale.
3. Measures of performance: the company will need to establish objectives and design their
metrics around these goals.
4. The performance payout relationship: the way in which the incentive is paid out. It is important
to set metrics that are objective.
Difficult to assign causality to individual salespeople, especially in team-based selling. This can
lead to disputes over who deserves what reward.
Timing is a major consideration with incentive plans. For e.g., company tries to reward with
weekly incentives, it could be an expensive program to administer, too time-consuming for both
the company and the salespeople. A period that is too long runs the risk of having forecasts and
goals that are drastically inaccurate.
Measuring sales performance is difficult, and it can be hard to determine the role that each
salesperson plays in each sale.
Salespeople may resist changes to the compensation plan, especially if they feel that the
changes will negatively impact their earnings.
Incentive plans can sometimes lead to an overemphasis on short-term results at the expense of
long-term goals.
However, incentive plans can be effective in motivating salespeople and driving the appropriate
behavior.
Pipeline Analysis
Method used to track the progress of potential sales and identify potential issues with inventory
or concerns that goals are not being met.
Objective: to provide sales managers with a clear understanding of the sales funnel and to help
them make informed decisions about how to allocate resources and prioritize sales efforts.
The Sales Funnel is a visual representation of the different stages of the sales process, from
identifying potential customers to closing the sale and providing post-purchase support
Pipeline analysis can be done to point out possible issues with inventory or goals that have not been
met.