Mass production would be a shadow of what it is today if it had

waited for the consumers to make up his/her mind.

Forbes Magazine
 Primary Floor
QPS Sales Standing
VPS
Unit

Primary
Schemes Secondary
Schemes
Secondary
Sales Trade
Schemes

Strike Rate

FOC Beat Undercutting

 Sales-Cost of Sales= Gross Margin
Gross Margin-Expenses= Net Profit
Return on Investment= Return/Net Investment
Returns=Earnings –Expenses
Earnings=Gross Margin that the dealer enjoy
Expense= Direct+Indirect

Investment = Avg Closing Stock + Avg Market Credit

+ Avg. Claims Outstanding
Mr. Bhandari is the proud owner of his distribution firm Bhandari & Sons. His firm deals with distributing 4
companies in total of which ABC Pvt ltd is one for which you need to calculate the RoI. The firm has 1
dedicated (exclusive) salesmen working for ABC Pvt. Ltd. with a monthly salary of INR 6,000/- per month
per salesman. Apart from this, the firm also has an accountant-cum-manager with a monthly salary of INR
5,000/- per month, pays a monthly rent for the go-down which comes to INR 5,000/- per month, incurs
electricity & miscellaneous costs (supply units, chai-paani etc.) to the tune of INR 5,000/- per month.

(All figures are assumptions)

Monthly Business (Turnover) inclusive of all 4 companies: 20,00,000/-;
Monthly Business (Turnover) of ABC Pvt. Ltd. : 8,00,000/-
ABC Pvt. Ltd.’s Company Margin: 8%
Average Market Credit for ABC Pvt Ltd. Is 10,000/- INR
Average Closing Stock for ABC Pvt. Ltd is worth 2,50,000/- INR
Average Claims Outstanding in ABC Pvt. Ltd. Is worth 10,000/- INR.
 Product
knowledge
• Feature
• Benefits
• Styles
• Origin
• Price

Company Competitor’s
knowledge knowledge
• History • Industry
• Finances Salesperson’s structure
• Management knowledge • Market share
• Size universe • Market
• Policies and behavior
procedure • Other policies
Communication Style Matrix
 Sales Process
1. Prospecting and Qualifying
2. Pre-approach and Planning
3. Need identification
4. Presentation
5. Handling objections
6. Closing/Gaining commitment
7. Follow up
8. Maintaining the Relationship
 Trust Based Sales Process
• The essence of trust is that the industrial buyer believes that he can
rely on what the salesperson says or promises to do in a situation
where the buyer is dependent upon the salesperson’s honesty and
reliability.
• Sales Person Self-check
• Do you know what you are talking about?—competence; expertise
• Will you recommend what is best for me?—customer orientation
• Are you truthful?—honesty
• Can you and your company back up your promises?—dependability
• Will you safeguard confidential information that I share with you?—
customer orientation; dependability
Types of Resistance/Objections
LAARC
 Qualification Need Analysis Proposal Negotiation Closed Loss
• What's their business? • Why is our solution a • Where are they in the • Have you confirmed • What contributed to losing
good fit? buying cycle? all key decision this opportunity?
• What problems are they • What's the process to makers are on board?
trying to solve? • How is our solution better
than our competitors? generate purchase • What do we need to do
• How does solving these orders? • Have you focused differently to improve our
problems help them? • What resources are enough on selling the chances of winning?
available to implement • Who are the key decision
• Is the timing good for the solution? makers? Have you added value to negotiate the
them to the opportunity? best price? • Schedule a follow-up task
them?
or event for this account.
• What's their budget? • How can you
communicate the value
• What other solutions are of our solutions to those
they considering? decision makers?
• What's the status of
quantifying ROI with
them?

Closed Won
 CRM Software Various Roles Lead Type
• Act • Business User • New
• Homegrown
• Decision Maker • Unqualified
• Microsoft Dynamics
• Nimble • Economic Buyer • Working
• Oracle • Economic Decision • Nurturing
• Sage Maker • Qualified
• Salesforce.com • Evaluator
• SAP
• Influencer
• SugarCRM
• Zoho • Technical Buyer
 James R Steiner
• Seasoned sales manager, working in clinical devices sales
• Specializing in sale of pacemakers
• More than 10 years of experience and a top sales manager for the company
Background • Was relatively happy with his position
• Had shifted to the current company after a short unhappy stint as a sales trainer

• Customer :
• Specialized doctors, who have high reputational stake and are well off. Personal contact essential
• Product (Pacemaker)
Clinical • Critical and life saving device, requiring absolute trust and confidence
equipment • Territory (for pacemaker)
sales • Used only by hospitals which have open heart surgery functionality

• James’s boss, Don, has left for another company

• Post of District Manager is open
• James enjoys sales, but is concerned about
The • Increasing family priorities
Situation • Career growth as sales manager
• He is opting for the position
 Levinson’s Theory

1. Early Adult Transition (Age 17-22). This is the stage in which a person leaves adolescence and begins to make
choices about adult life. These include choosing to go to college or enter the workforce, choosing to enter a serious
relationship, and choosing to leave home.
2. Entering the Adult World (Age 22-28). This is the stage in which a person makes more concrete decisions
regarding their occupation, friendships, values, and lifestyles.
3. Age 30 Transitions (Age 28-33). In this stage, there are often lifestyle changes that could be mild or more severe.
For example, marriage or having children impact one's lifestyle, and these changes have differing consequences on
how a person develops depending on how they embrace the event.
4. Settling Down (Age 33-40). In this stage, one often begins to establish a routine, makes progress on goals for the
future, and begins behaving like an adult. People in this stage are often parents or have more responsibilities.
5. Mid-Life Transition (Age 40-45). This time period is sometimes one of crisis. A person begins to evaluate his or
her life. Values may change, and how society views these people may change also. Some people make drastic life
changes, such as divorce or a career change. At this point, people begin thinking about death and begin to think
about leaving a legacy.
6. Entering Middle Adulthood (Age 45-50). In this stage, choices must be made about the future and possibly
retirement. People begin to commit to new tasks and continue to think about the legacy they are leaving.
7. Late Adulthood (Age 60+). In this stage, one begins to reflect on life and the decisions they have made.
 Methods of Sales Forecasting

Qualitative Quantitative

Consumer/us Panels of
Delphi Salesforce Non-
er survey executive Statistical
Method Composite Statistical
method opinion

Semi- Exponential Econometric

Naïve Graphical Regression
Average Smoothening Models

Linear Time-Series

AR Seasonality/Cyclicity/Trend
 Purpose

 Types

 Form and Content

 Budgeted Selling Expense

 Budgetary Procedure

 Targeting

 Types of Targets

 Procedure of Setting Targets

Sales Volume Details
Northeast Midwest West South Total
A 80 90 70 80 320 Unit Sales by
Sales Region
B 60 60 55 75 245
C 45 35 25 30 135

I II III IV Total Unit Sales by

A 25 20 15 20 80 Specific Region in
this case i.e.
B 15 15 15 15 60 Northeast
C 7 8 15 15 45

P Q R Total Unit sales by class of

account of a
A 15 8 2 25
particular quarter
B 9 3 3 15 and region in this
C 4 2 1 7 case i.e. I quarter
26
and Northeast
 Estimating Budgeted Selling Expenses

• Sales budget is prepared with a view toward obtaining an optimum

net profit not maximum net profit!
• Using Standard Costs: Pre-determined cost for having a standard
employee perform under standard conditions (one measurable unit
of the activity)
• Other Estimating Methods

27
Budgetary Procedure

• Planning Styles
• Top-Down -> Theory X
• Bottom-Up -> Theory Y
• Actual Budgetary Procedure
• Handling Competition for Available Funds within the Marketing Division
• “Selling” the Sales Budget to the Top Management
• Using the Budget for Control Purpose

28
Targeting
• Targeting is a process of directing and controlling sales operations.
• The effectiveness of targets depend upon the kind, amount and
accuracy of marketing information used in setting them……..+
Management skill in administering them
• Objectives of Targeting
• To Provide Quantitative Performance Standards
• To Obtain Tighter Sales and Expense Control
• To Motivate Desired Performance
• To Use in Connection with Sales Contests

29
Types of Targets

• Sales Volume Target: How much and for what period?

• Dollar Sales Volume Targets
• Unit Sales Volume Targets

30
Procedures for Setting Sales Volume Targets
• Derived from Territorial Sales Potential
• Derived from Total Market Estimates
• Based on Past Sales Experience Alone
• Based on Executive Judgment Alone
• Related only to Compensation Plan
• Personnel set their own Sales Volume Target
 Budget Targets

• Expense Targets
• Gross Margins or Net Profit Targets
• Activity Targets
• Combination of other Point System Targets

32
Clearion Software
• Primary Software Offering: Service Level Automation (SLA) Tool
focused on automating the management of IT infrastructure,
including hardware, operating systems, networks, and
applications. Its solution improved the efficiency of data center
resources.
• Founded in 1996
• Market Leader in its SLA and faced little direct competition

33
Sales Organization

Mr. Colin
(SVP)

Alex
Mark Jeff
(VP-Europe
(VP-America) (VP-Asia Pacific)
Region)

34
 Mr. Colin
(SVP)

Mark Alex Jeff

(VP-America) (VP-Europe Region) (VP-Asia Pacific)

Jerry (Director-East Steve (Director- Wally (Director- Allison (Director Melissa (Director-
Region) West Region) Latin America) Federal) Inside Sales)

35
Year Total Revenue
2004 $180 million
2005 $297 million (74 % license fees)
Average selling price of a license to use
the software was $95000.

Year Total Revenue

2004 $129 million
2005 $155 million

36
Who is Mark?

• 48 Years Old
• Responsible for Latin America Sales Territories
• 25 years of experience (6 years in Clearion)
• In 2003 and 2004 exceeded his quotas by 25%
• His performance faltered in 2005. First time he missed his target

37
Challenges
• Sandbagging
• Lobbying
• Gaming

38
Overview
• Mark wanted to re-evaluate his strategies for setting quotas,
allocating headcount and assigning territories.
• Setting quotas was important because compensation for any
employees in his sales organization was performance based and wide
variations in achievement were possible. Bonus compensation raged
between 80-200 % of base salary. Most sales managers had the
unilateral power to assign quotas to their sales employees as they see
fit. As a result they have an absolute massive power to influence their
employees income.
• They had two jobs: number of headcount to support a territory and
territory size.

39
• Unfortunately, the consequences of getting quotas wrong are really
enormous for organization. People who cannot hit their goals and yet
are over-achieving will be frustrated and people who are hitting easy
goals will have an inflated view of their performance. Together, poor
goal-setting can create major morale problems.

40
Units by Position
Position Abbreviation Units
Corporate Account Manager CAM 2
Territory Sales Manager TSM 1
System Engineer SE 1
Channel Sales Manager CSM 1.5
Channel System Engineer CSE 1
Manager of TSMs TSM Mgr 1.3
Manager of SEs SE Mgr 1.5
Manager of field Reps Field Mgr 2.5
Other Other 1

41
Headcount by Region
Region CAMs TSMs SEs CSMs CSE TSM Field SE Mgr Other Total Total
Mgr Mgr Headcou Units
nt
East 38 40 38 7 5 4 8 6 0 145 200

West 40 42 40 8 8 4 8 6 0 156 214

Latin 4 4 2 0 0 0 2 0 0 13 19
America
Federal 10 12 10 4 4 1 2 2 2 47 64

Totals 92 98 90 19 17 9 20 14 2 361 496

42
 Clearion Software - Exhibit 5 : Contribution by Region (Second half of 2005)
%
Achieved quota H2 2005 Revenues Headcount Revenues/ Unit
Region Shortfall /
in H2 2005? ($ MM) (in units) ($ MM)
% Surplus
East No -15% 32.00 200 0.16
West Yes 20% 39.60 214 0.19

Latin America
No -10% 2.50 19 0.13
Federal No -19% 7.00 64 0.11
Totals No -1% 81.10 497 0.16

Clearion Software - Exhibit 6 : Quota and Headcount Allocation by Region (First Half of 2006)
Quota Headcount
H1 2006 Total
New Headcount Revenues/ Unit %
Region Revenues ($ % growth % growth Headcount (in
(in units) ($ MM) growth
MM) units)
East 38.20 19% 20 10% 220 0.17 9%
West 45.10 14% 28 13% 242 0.19 1%

Latin America
2.80 12% 5 26% 24 0.12 -11%
Federal 6.30 -10% 8 13% 72 0.09 -20%
Totals 92.40 14% 61 12% 558 0.17 1.5%

43
Question

• How Equitable and Sensible were the specific headcount and quota
allocations given out by Mark in January 2006? Which region would
likely yield most profitable investment of headcount?

44
Sales Territories
• A Sales Territory is a grouping of customers and prospects assigned to
an individual salesperson. These groups can be accessed conveniently
and economically by an individual salesperson.
• To provide proper market coverage
• To control selling expenses
• To assist in evaluating sales personnel
• To contribute to Salesforce morale
• To aid in the coordination of personal-selling and advertising efforts

48
Procedure for Designing Sales Territories

Select a Determine Location Determine

Control Unit and Potential of Basic
Customers Territories

Assign Set Up Evaluate

Salespeople to Territorial Effectiveness
Territories Coverage of Design
Plans
 Selecting a Basic Geographical Control Unit.
• The starting point is the selection of basic geographical control unit
• It is advisable to select a small control unit precise geographical
identification of sales potential, easy to draw boundaries or
combining them when required.
• Countries, states, Districts, Division, Block, Regions
• Trading Areas

50
Determine Sales Potential Present in Each
Control Units.
• The maximum possible opportunities open to a specific company
selling a good or service during a stated future period to particular
market segments.
• Avoiding Vague identification of your customers
• When there is no direct contact with the buyers?

51
 Buildup Method of Territorial Design
Management must determine:

Desirable call patterns:

Call frequency per account per year

Total calls needed

in each control group

Workload capacity:
Total calls possible per rep per year =
number of daily calls x days selling
Tentatively set territorial boundary lines
by combining control units until total
calls needed = total calls possible

Modify territories as needed

 Territory Design: Build-Up Method Worksheet
Control Units
Chandkheda Maninagar Vastrapur
Customer Call Calls Calls Calls
class frequency Accounts per year Accounts per year Accounts per year
A 2 per month 10 240 7 168 5 120
B 1 per month 30 360 17 204 10 120
C 1 every 2 months 68 408 55 330 27 162
108 1,008 79 702 34 402

Distribution of one rep’s calls 1,008 + 491 or 402

year (1,500)*
Possible control combinations 100% 70% or 100%
Chandkheda Maninagr Vastrapur
Alternative territories 100% Chandkheda + 100% Vastrapur
100% Chandkheda + 70% Maninagar
*6 calls/day x 5 = 30 calls/week x 50 = 1,500 calls/year
Breakdown Method of Territorial Design
Management must determine

Company sales potential Multiple Factor

Index

Sales potential in each control unit

Sales volume expected from

each sales person

Tentatively set territorial

boundary lines by combining
control units total sales potential
= total sales volume expected

Modify territories as needed

Workload Factor Territory Size
Increase/Decrease
Nature of Job: Lots of presale and post-sale activity Decreases
Nature of product:
A frequently purchased product Decreases
A limited repeat-sale Increases
Market development stage:
New market--fewer accounts Increases
Established market--more accounts Decreases
Market coverage
Selective coverage Increases
Extensive coverage Decreases
Competition:
Intensive Decreases – unless
market is oversaturated
Limited Increases
Combining Control Units into Tentative
Territories
• Tentative arrangement
• At this stage planner assumes that no significant differences in the
physical or other characteristics of individual control unit exists.
• First approximation
• At this point planner decides the number of territories, and this,
assuming that all sales personnel are of average ability, is identical to
deciding Salesforce size.

56
Procedure for Designing Sales Territories

Select a Determine Location Determine

Control Unit and Potential of Basic
Customers Territories

Assign Set Up Evaluate

Salespeople to Territorial Effectiveness
Territories Coverage of Design
Plans
Assigning Sales People to Territories
Relative Ability of a Sales person
Sales Person’s Effectiveness
Territory Shapes
• Companies uses different kinds of shapes for designing sales
territories (Figure given below).
• The shape of the territory affects the sales expenses and the ease of
sales coverage. It also helps a sales person to spend less time on
travel and keeps salespeople motivated to work hard.
• The three popular territory shapes used in the Indian market are
wedge, circle, and cloverleaf.

59
Territory Shapes
• The wedge-shaped territory is most applicable for fast moving
consumer goods and is used by companies like Marico Industries,
Procter and Gamble Limited, and HUL.
• These companies serve both the urban and the rural markets in
India.
• The design radiates from a densely populated urban area to small
rural areas.
• The travel time among adjoining wedges can be equalized by
balancing the travel time between the urban and rural areas.

60
Territory Shapes
• The circle-shaped territory is appropriate when companies have their
accounts distributed across equally sized areas.
• In a circle-shaped territory, a salesperson is based in the central part
of the area and travels uniformly to different areas.
• Companies concentrating in urban areas like Maruti Udyog Limited,
Hyundai Motors etc follow this kind of territorial design.
• The cloverleaf design is used when accounts are distributed randomly
throughout the territory.
• Careful call-planning makes each visit to the clover a timely affair on
the basis of a weekly, daily, or a periodic schedule for salespeople.

61
Adjusting for Differences in Coverage Difficulty and
Redistricting Tentative Territories.
Redistricting to adjust the coverage difficulty
• Determine number, location, and size of customers and prospects in each
tentative territory
• Estimate time required for each sales call
• Determine length of time between calls, that is the amount of time
required to travel from one customer to the next
• Decide call frequencies
• Calculate the number of calls possible within a given period
• Adjust the number of calls possible during a given period by the desired call
frequencies for the different class of customers and prospects
• Finally check out the adjusted territories with sales personnel who work or
who have worked in each area, and make further adjustments as required
62