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Sales Force Management and Measurement Notes

The document discusses sales force management and measurement. It covers topics like base salary versus incentives for salespeople, why sales force management is important, where conflicts can arise in sales force management, measuring sales results, and sales force compensation. Pipeline analysis is also discussed as a method to track potential sales progress and identify issues.

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0% found this document useful (0 votes)
16 views4 pages

Sales Force Management and Measurement Notes

The document discusses sales force management and measurement. It covers topics like base salary versus incentives for salespeople, why sales force management is important, where conflicts can arise in sales force management, measuring sales results, and sales force compensation. Pipeline analysis is also discussed as a method to track potential sales progress and identify issues.

Uploaded by

aamnakamalkq
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Sales Force Management and Measurement Notes

Base Salary v. Incentives

Base Salary Incentives


+ Stable income + Highly motivated
+ Reduced employee turnover + Impactful recognition and transparency
+ Lesser cost + Promotion
- Less motivated - Sales target not achieved for next month
- More supervision needed -

 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.

Why is Sales force management important?

 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?

1. Population; number of potential accounts that may exist in a territory


2. Size of the territory; how much geographical area it covers

 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.

Measuring Sales Results

1. Number of calls made: Sales/per call


2. Total accounts active: Sales/Active accounts
3. Total potential accounts: Sales/Potential accounts
 If the "Sales per Potential Account" metric is low, the salesperson may not be doing enough to
seek out new accounts in the territory
 It is difficult to measure when the link between effort and outcome cannot be easily traced in
sales results.
 For instance, in Customer Service, measuring sales results can be challenging, but some metrics
can be used to quantify the level of service being provided to customers.
- Such as, develop a survey with an itemized scale to put some numbers to the opinions of
customers
- Once surveys are completed, an average score for different service metrics can be
calculated.
- Then, when compared against sales figures, a company can correlate sales with customer
service and grade salesperson performance.
Sales force Compensation
Four key areas to consider when designing a compensation plan:

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.

Salary, Bonus and Commission


Four key areas to consider for the sales force compensation plan:

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.

Complications of using compensation plans

 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

 Cold lead: A lead that has not specifically expressed interest.


 Warm lead: A lead that is expected to be responsive
 Pre-purchase: Identifying prospects among cold and warm leads.
 Prospect: A potential customer who has been identified as a likely buyer.
 Prospecting: A process by which information is gained to ensure prospects and clients will
benefit from them to make a impactful sales presentation.
 Purchase: Traditional selling occurs following persuasion, negotiation or bidding leading to an
agreement of purchase.
 Post-purchase: Providing after sales services, collection of payment etc.

Pipeline analysis can be done to point out possible issues with inventory or goals that have not been
met.

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