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Market and Sales Potential
Sale ?; Forecasting Concepts
Sales Forecasts
is the sales estimate the company actually expects to
There are basically 3 steps in sales
obtain, based on the market conditions, company forecasting process:
resources, and the firm's marketing plan. Sales forecast
is less then the sales potential since it is based on a
realistic set of circumstances.
1. Preparing a forecast for general
Sales Targets/ Quota economic conditions
is a sales goal assigned to a sales person, region or a
team . They are usually derived from the sales forecasts.
Sales goals and objectives sought by management. 2 . Preparing a forecast of industry sales
Sales Budgets
a management plan for the expenditure to accomplish 3 . Preparing a forecast of the product or
sales goals. company sales
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2 . Estimating Industry Sales
1 . Forecasting General Economic Conditions
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( ii ) Delphi Technique
( iii ) Sales Force
Composite
T*
Group of experts used to make long - range projections.
Issues like future direction of business conditions,
business activities, technology, new product
development, and market conditions.
° territories.
These experts are kept apart from each other so that Field sales people should be
motivated to
their opinions are established independently . quotas when they know that the
accept sales
They prepare individual forecasts, which are then supplied played a major role
compiled and then given back to them for a second information they
round of projections. in forecasting .
This process continues until a consensus forecast of the A major disadvantage is that sales
people
future emerges . The Delphi technique has the or
advantage of eliminating the group pressures of a might be a poor judge of future sales level
typical committee meeting. market conditions . They can have biased
opinions as well.
Forecast survey of a limited and well - Continuity Extrapolation - technique that attempts
defined group of buyers. This is when the to project the last increment of sales change into
the future.
potential customers are well defined and
limited in number, such as industrial
Time series analysis - projection of the average
products.
increment of sales change into the future.
A time data series is determined by four basic
Disadvantage is that a customer might not elements of sales variations
1. trends or long run changes
always do what they say and they plan to
2. cyclical changes
do. Secondly customer - buying behavior
.
rr ight alter in response to change in the
3 . seasonal variations
4. unexpected factors.
operational environment . Most form of times series analysis use a moving average
to analyze and project sales.
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Quantitative Methods Sales Budgeting
Sales forecasts
t
Sales budget
4
Production budget
4
Direct labor materials
and overhead budgets
4
Cost of goods
sold budget
* profit .
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Selling Expense
Budgets
Major Types of
Types of Budget
SIEfSSsFJS '/:
desired profit level.
=n the
.
Most sales budgets covers a period of one year, but
they are often broken down into quarterly or even
monthly targets. Dorrvntaap of sales method - the funding
'
Sales budget - projection or revenue computed from
forecast unit soles and average prices. SETS
based
.? WKS? historical tt
1
anticipated
on rather then
’ Selling expenses budget - approved amount that the revenue.
department will spend to obtain the revenues projected
in the sales budget.
Competitive parity method - sales budgeting
Profit budget - merged sales budget and the selling
method based on the competitive practices in
expense budget to determine gross profit. an industry . They refer to either a specific
competitor or the industry average .
.
4 Formulation of Sales Objectives - once the forecast has been
Return on investment ( ROI ) - some sales
managers have begun to use this financial ?vhat objectfvesSto°pLHSh eS
t0 be l d what sales tar9et t0 strive aild
°'
management concept to choose between .
5 Determination of Sales Tasks - sales manager and sales force
alternative courses of action . ROI is determined have to carry a broad array of sales activities, ranging from recruitment
to evaluation, and from prospecting to after sales service.
by dividing net income by total assets employed
to earn the income.
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Sales Budgeting Procedures
.
6 Specification of Resource Requirement - the resources that will
be required to implement the specified activities and achieve the
objectives. Sales Opportunity Management
.
7 Completion of Projections - here all the input and requests from
various units of the sales function are assembled and tied into a
comprehensive package.
.
8 Presentations and Review - present and defend its sales budget
proposal to the management .
.
9 Modification and revision - sales managers have to engage in a
series of compromise sessions. Here the sales targets and budgets
might be adjusted by the higher management, reflecting both to the
needs of the corporation and the true potential of the marketplace .
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Unqualified
Qualifying Prospects V
50% closure
Needs for your products / services probability
Authority to make purchase
Qualified
Ability to pay and past record 75% closure
probability
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ABC Account Classification Portfolio Model
Competitive Position
Strong Weak
'Jo. ofotel Ss.es Total Totai calls Sales Core Growth
Account
Classification
- cots Accts
(1) ( 2) ( 3)
Sales Per C.'assif .
(4 ) ( 5)
Per Call
( 6)
cz High
Accounts
Accounts ate very
Accounts
Accounts ate potentially
attractive
“ attractive
May want to invest
S20.000
O
I
o
CL
£ SI 0.000
£
c
£ /
/
/
I 2 3 4 5 o
Number ot Sales Calls Per Quarter
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Importance
High Low
High Emergencies
Time
o Wasters
a
5J)
Time Management
Sales Volume
Number of sales
personnel needed
Productivity
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i Customers into
Determining Sales Force Size I catpcjories-
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—
Overview
SALES & its Evolution
Sales Training Changes in the Buying Process
Identifying the gaps
Alignment & Training
Guest Session - Anand Vardhan
How People Learn
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Evolution of Sales 1
Sales Insight
fi
Technology changing the way organizations
buy .
With the proliferation of information and
advice on the internet , a client is already
60% of the way through their buying
decision by the time they reach out to a
salesperson .
As a result, they don't need information
Pioduct from a salesperson, they need insight .
Consultative
Pusher e
Solutions Sales Insight According to a recent study, 53% of d ent
Expert
loyalty is a function of the salesperson s
'
Order
Taker ability to deliver insight that challenges the
way the client thinks about the world .
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Training Cycle
Training Need Analysis
Training
Need
Visual Learner :
How People Learn Learns best by seeing
Auditory Learner :
The VAK learning styles model suggests that
most people can be divided into one of three
learns best by r
-
atm :
I
'
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Visual Learning Style Auditory Learning Style
hands- on experiences. These people will use YouTube clips Mnemonics Re- enactments
phrases such as ' let me try ', ' how do you Colour coding Revision songs/rhymes Trace words w . th finger
feel ? ' and will be best able to perform a new
Timelines TV Programmes Doodling
task by going ahead and trying it out,
learning as they go . These are the people Grids / Tables /Charts Revision Videos Tnpt and Vis ts
who like to experiment, hands- on, and never Fact Lists Listening to music whilst Construct posters and otner
look at the instructions first!
Facebook Prof les revising revision i esources
Study Groups
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Territory
Definition :
Territory Management prospect s
Grouping of customers and
individua l salesperso n
assigned to an
that are
Entities in a geographic area
salesperso n:
assigned to an individual
Customers
Distribution outlets
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Reasons For Establishing Sales Territories
When Not To Establish Sales Territories
-
i Contributes to sales force morale sales coverage is far below sales
Effort and reward are correlated potentia l
Convenient to cover e.g ., a new company wants to cherry pick
Reasonable work load for the most profitable prospects first
Z To aid in coordination of persona! selling the sales force is highly specializ ed
and advertising efforts e . g ., when the salesforce is organized along
the lines of product specialty rather than
PC ? and Dealer briefings can be coordinated along the lines of customer location
prior to launch of new products
sales are made on the basis of
personal contacts and by referrals
i erritory Decisions
Territory Design : Reasons for Realignment
Number and type of Salespeople to
cover accts
A change in sales force size
Z Location and boundaries of territories
A change in sales force structure
D Assigning Salespeople
Mergers and acquisitions
Shifts in market opportunities
Demographic shifts
New Products
Need to shake things up
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Territory Alignment
Benefits of Good Territory Alignment Benefits of Good
Coverage
In a territory with too much work is Increase in sales
increasing
unable to cover all the valuable By realigning territories - and
customers and prospects effectively . sales from high - potential areas
" Easy accounts" phenomenon .
And reducing personnel in low - potential
In a territory with too little work spends areas
too much time with unprofitable
customers and prospects.
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Obstacles to Territory Realignment Disruption impact study analysis
Sales Forces Resist Change
« rv .ihii j • i
Kiutors musing stirs
* Mitigunts
Giving up lucrative accounts Accounts belong to the organization
. -
Kspecmlly in case the iccouut .tie \ fresh perspective helps reduction
A v»
.
relocate salespeople ind managers allowance Increments
No strong relationships with accounts under $ 50, 000
Disruption of sales force relationships A good relationship iiansiiion prior to the realignment Change in relationship had .
may be difficult for customers as well program little or no impact on sales .
Thus is pamcularly true in cases where Transition incentive compensation Over $ 50,000 salesperson relationships before the
-
a salesperson needs in depth customer plan whereby both salespeople share
realignment were much stronger. Hence, change had a
knowledge to be effective m ihe continued success of lie account
.
lelalionsl'ip
’ significant impact .
At the largest accounts ( purchasers of over $100,000 ) ,
relationship transition was good. No sales loss occurred .
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m
alignment
A process for territory
Obstacles to Territory Realignment
‘' -*
to two salespeople .
T T I
Made easy by software
Data requirements not readily
available
Inconsistent recording
Inaccuracies
r
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Territory Alignment
Process Territory Design: Sample Alignment Metrics
.
includes
. . customer and prospect
.
locations, travel time data, and
Patient Volumes
Epidemiology Data
Influential Doctors
Office and Distribution Locations
Headquarter Locations
Number of Accounts
alignment attributes such as Teaching Institutions Customer Types
market Managed Care Org. Diagnostic Equipment:
potential, sales, and workload
. Surgical Procedures Testing Volume
Total Hospital Beds Installed Machines
Health and Beauty Aids: Contract Information
Retail Outlets Building Materials:
Store All Commodity Volume Housing Starts
Call Activity Requirements tt of Architects, Builders,
Contractors
Projected Population Growth
Step 3 : Sales Territory centers determination Step 5 : Regional alignments are developed centrally ,
Optimal sales territory centers ( or salesperson based on well - defined, objective criteria .
locations) are determined centrally, based on
business needs.
Step 6: The regional alignments are audited and
finalized, again by the national and regional
Step 4 : Territory centers are audited and managers .
finalized by the national arid regional
managers Step 7 : Optimal territory alignments are developed
At the end of this step, management can start centrally .
hiring salespeople ( if an expansion is planned),
decide who stays with the sales force ( if a
downsizing is anticipated), or decide who is Step 8 : Alignments are audited and finalized with the
relocated ( if several sales forces merge and are help of first - line sales managers ( managers who
integrated ). manage the salespeople directly; they usually report
to the regional sales managers ) .
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Merits of the process
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