1. Sales Force Management
11th Edition
Mark W. Johnston
Greg W. Marshall
Routledge 2013

2. The Strategic Role of Information in Sales Management
CHAPTER 5
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3. IT in Perspective Tools enable rather than transform
Implement successful business processes
Support w/new technology
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4. Market Potential, Sales Potential, and Sales Forecasting Process
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5. Learning Objectives
Discuss differences between market potential, sales potential, sales forecast, and sales quota
Understand methods by which sales managers develop sales forecasts
Outline process of setting a sales quota
Explain types of quotas used in sales management
Discuss approaches to determining sales force size
Describe sales territory design process
Understand importance of sales analysis
Conduct sales analysis
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6. Information for Managers
Sales forecasts
Territory estimates
Quotas
Sales force size
Sales territory design
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7. Market Opportunity Analysis
Market potential – estimate of possible sales for an entire industry in a market during a stated period under ideal conditions
Sales potential – portion of market potential the firm can expect to reasonably achieve
Sales forecast – estimate of dollar or unit sales for a specified future period
Sales quotas – sales goals assigned to a marketing unit to manage sales efforts
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8. Sales Forecasting Methods
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9. Subjective Sales Forecasting
User expectations – relies on buyers’ expressed intention
Sales force composite – sales force opinions
Jury of executive opinion - key experts’ opinions
Delphi technique – participants prepare estimates which are compared anonymously and iteratively to reach consensus
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10. Objective Sales Forecasting
Market test – places product in select areas
Time series analysis – relies on historical data to develop predictions
Statistical demand analysis – attempts to determine the relationship between sales and factors that influence sales
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11. Objective Time Series Analysis
Moving average – averages sales results over previous time periods to forecast
Exponential smoothing – type of moving average where most recent years given more weight
Decomposition – applied to monthly or quarterly data where seasonal pattern is evident
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12. Example: Moving Average Forecast
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13. Example: Moving Average Analysis
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14. Example: Seasonal Index
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15. Choosing a Forecasting Method
No method remains superior under all conditions.
Apply multiple forecasting methods to a problem
Scenario planning prepares “what-if” questions and produces possible outcomes
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16. Effects of Territory Estimates
Design of sales territories
Procedures for identifying potential customers
Establishment of sales quotas
Compensation and subcomponents
Evaluation of salesperson performance
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17. Planning Tools North American Industry Classification System (NAICS)
Developed by US Bureau of the Census,
Organizes reporting of business information
Each US industry is assigned a two-digit number
Buying Power Index (BPI)
Published by Sales Marketing Management Magazine
Considers income, population and retail sales
Most useful with low-priced convenience goods
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18. Sales Quotas Goals assigned to salespeople Apply to specific periods
Tool for planning and controlling field selling activities and results
Benchmark for evaluating sales effectiveness
Motivate sales people
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19. Quota Purposes Provide incentives for sales representatives
Provide measures to evaluate salespeople's’ performance
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20. Process for Setting Quotas
Identify types of quotas to be used
Select level of each type of quota
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21. Good Quota Characteristics
Attainable
Easy to understand
Complete
Timely
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22. Sales Process and Quota Attainment
Level
Level 1 Ad Hoc
No clearly defined process and approximately half of sales staff are not attaining quota. Large variation in performance levels.
Level 2 Tribal
Limited process used by certain "tribes" within the company. Still only 50% of staff attaining quota but less variation between best and worst performers.
Level 3 Religion
Everyone is using the process but not to its full capability. More salespeople making the quota than not making it.
Level 4 Dynamic World-Class
Fully utilizing people, processes, and technology. Low
variation in performance levels of salespeople with very few not attaining quota.
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23. Quota Types Sales volume – emphasize sales or some aspect of sales
Activity – focus on certain sales activities
Financial – examine financial criteria such as gross margin or contribution to overhead
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24. Sales Volume Quotas Most popular Often based on past sales
Related directly to market potential, thus credible and easily understood
May be expressed in dollars, physical units, or points
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25. Activity Quotas Reflect territorial conditions
Require a detailed analysis of work required for effective territorial coverage
Customers influence activity quotas through:
Account and order size
Purchasing patterns
Support required for satisfaction
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26. Common Types of Activity Quotas
Calls on new accounts.
Letters to potential customers.
Proposals submitted.
Field demonstrations arranged.
Service calls made.
Equipment installations supervised.
Displays arranged.
Dealer sales meetings held.
Meetings and conventions attended.
Past-due accounts collected.
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27. Financial Quotas
Direct salespeople to more profitable products and customers
Common bases
Gross margin
Net profit
Selling expenses
Calculation not straightforward
Profit produced affected by factors beyond a salesperson’s control
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28. Quota Level Considerations
Territory available potential
Quota’s impact on motivation
Long-term company objectives
Short-term profitability impact
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29. Sales Force Deployment Considerations
Sales force size or number of territories
Design of individual territories
Allocation of total selling effort to accounts
Simultaneous decisions implemented through software
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30. Determining Sales Force Size
Breakdown method
Workload method
Incremental method
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31. Breakdown Method Forecasted (S)ales volume
(N)umber of sales personnel needed =
Estimated (P)roductivity of each salesperson
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32. Workload Method Total # hours required to service market
Total # salespeople required =
# Hours available to each salesperson
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33. Workload Method Steps
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34. Incremental Method
Add salespeople until incremental profit produced equals incremental cost
Decreasing returns associated with addition of salespeople
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35. Example: Incremental Method
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36. Territory Design Stages
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37. Ten Largest US MSAs in Decreasing Order of Size
Rank
Area
2010 Population (in 000s) 1
New York-Northern New Jersey-Long Island, NY-NJ-PA
18,897.1 2
Los Angeles-Long Beach-Santa Ana, CA
12,828.8 3
Chicago-Joliet-Naperville, IL-IN-WI
9,461.1 4
Dallas-Fort Worth-Arlington, TX
6,371.8 5
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
5,965.3 6
Houston-Sugar Land-Baytown, TX
5,946.8 7
Washington-Arlington-Alexandria, DC-VA-MD-WV
5,582.2 8
Miami-Fort Lauderdale-Pompano Beach, FL
5,564.6 9
Atlanta-Sandy Springs-Marietta, GA
5,268.9 10
Boston-Cambridge-Quincy, MA-NH
4,552.4
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38. Account Planning Matrix
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39. Sales Analysis
Gathering, classifying, comparing, studying company sales data
Highlights sales concentration in products, customers, orders, territories
80:20 principle
Decisions
Evaluation system
Sources of information
Information aggregation type
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40. Decisions When Conducting a Sales Analysis
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41. Evaluation Systems Determine how analysis will be conducted Simple
Comparative
Basis for comparison?
Reporting and control system?
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42. Simple Sales versus Comparative Sales
Sales Representative
2012 Sales($)
2012 Quota($)
Performance Index
Diana Barrington
760.9
700
108.7
John Bendt
793.5
690
115.0
James Dawson
859.2
895
96.0
Gloria Richardson
837.0
775
108.0
Walter Keyes
780.3
765
102.0
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43. Information Aggregation Type
Possible groupings
Region
Product
Customer
Market
Method of sale
Order size
Financial arrangement
Considerations
Company size
Product diversity
Sales area
Number of markets/customers
Management level/type to receive report
Hierarchical reports most effective
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44. Example of Several Sales Reports
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