Sales Management Planning
Sales Forecast
It is the estimate of a company 's sale for
a specified future period .
Sales forecasting provides the starting
point for assumptions used in various
planning activities.
It is used for the short - term financial
control systems. The financial budget
is dependant upon the sales forecast for
the projected revenue figures.
Sales Forecast - Uses
Human resource executives use sales
forecasts to project staffing needs
Financial executives use it in establishing and
controlling operating and capital budgets
Production managers use it to schedule
purchasing and production to control
inventories.
It is thus a very vital planning task for any
organization .
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 Market and Sales Potential
Sale ?; Forecasting Concepts

given time period.

Market Potential
Sales Potential
Actual Sales Forecasts Sales Potential
refers to an individual firm s market share of
the
Sales Targets/ Quotas market potential, where market share is defined as the
percentage of market controlled by a particular
Sales Budgets company or product. It is the maximum sales a firm
can hope to ootain.

Forecasts/Targets/ Budgets Sales Forecasting Procedures

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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1 . Forecasting General Economic Conditions
You can begin by measuring the GDP,
which is the value of goods and services
produced within a country during a given
year.
Some of the others factors are; stock
market fluctuation, personal income, level
of employment, consumer price index etc .
These data are usually available from
government or trade associations.
3. Estimating Company and Product Sales
Forecasting methods can be classified as
either qualitative or quantitative.
Qualitative methods rely upon subjective
opinions or judgments, whereas
Quantitative technique applies statistical
methods.
2 . Estimating Industry Sales
Small firms often rely on industry
estimates available from trade
associations and government sources .
In other cases more sophisticated
quantitative techniques are used to
determine. Large organizations have
economist and analysts who provides
support and information for sales
forecasts.
Qualitative Methods
(1) Jury of executive opinion:
Panel charged with developing a sales forecast .
The group has executives from different
departments like marketing, sales, marketing
research, finance, production, operations etc .
Each member is asked to provide an estimate of
future sales with written justification. The
opinions are then pooled and analyzed at group
meetings. The advantage is its simplicity and
can be done quickly , but might take too much
time of the executives involved.
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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.

( iv ) Survey of Buyer 's Intention Quantitative Methods

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

Exponential smoothing - a weighted

average time series analysis. Actual sales
of recent periods are weighted more Estimating future levels of revenue,
heavily then the average sales of earlier
periods. selling expenses, and profit
contributions of the sales function .
Regression and correlation analysis - aim
of regression analysis is to identify factors
that influence, or are closely associated
with changes in sales. A simple regression
is a forecasting technique using only one
independent variable. While multiple
regressions uses two or more independent
variables.

IMPACT OF SALES FOPECASTS ON 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

Financial statement that outlines firms intended

actions and the resulting cash flow consequences.
D

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 .

Major Types of Selling Expense Budgets Sales Budgeting Procedures

Objective and task method - budget allocation is
b isod on t ve objectse of the firm, tasks
necessary to achieve those objectives, and the
.
expenses related to those tasks It is known as
zero - based budgeting . .
Bidding system - In this the sales function
competes with other functions for limited funds
available on the bas ' s of payoffs .
.
1 Situational Analysis -
sales manaqers have to look at the
magnitude of past differences between budgeted and actual figures and
the reasons for these differences.
2 Identification of Problems and Opportunities the actual potential
threat and challenges has to he assessed and addressed to determine
the probabilities of occurrence their impact .
3 . Development of Sales Forecast - manager is equipped to forecast
sales, using one of the various methods . Projections are made about the
anticipated levels of soles by territory , product or type of account It is
expressed both in units and dollars .

Return on investment ( ROI ) - some sales
managers have begun to use this financial
management concept to choose between
alternative courses of action . ROI is determined
by dividing net income by total assets employed
to earn the income.
.
4 Formulation of Sales Objectives - once the forecast has been
?vhat objectfvesSto°pLHSh eS
t0 be l d what sales tar9et t0 strive aild
°'
.
5 Determination of Sales Tasks - sales manager and sales force
have to carry a broad array of sales activities, ranging from recruitment
to evaluation, and from prospecting to after sales service.

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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 .

10 . Budget approval - final levels are eventually approved aand

authorized for both the sales and the selling expense budgets, Here
onwards budgets are reviewed periodically looking at the on going
market conditions and othei external forces.

Developing a Prospect List

Sales Opportunity Management
Direct Inquiry
Advertising
Direct Kail
Trade publications
Generating Managing Sales Personal
Trade shows
New Existing Versus Time
Accounts Accounts Profits Management
Directories
Referrals
Cold Canvassing

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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

Rating scale applied to characteristics

by each salesperson 90% closure
Best few probability

The Sales Funnel

Drawing up a Prospect Profile Sales Force Costs Across Selected Industries

Industry Sales Force Costs as
A Percentage of Sales

Who purchases my autoclave ? Banking 0.9%

Business services 10.5
Small clinics / nursing homes / single - multiple Chemicals 3.4
practice physicians / specialists Communications 9.9
Construction 7.1
Family owned Electronic components 4.9
Electronics 12.6
Suburban locations in metros and tier 2 / tier 3 Fabricated metals 7.2
Food products
cities 2.7
Instruments 14.8
New practice / newly opened -- less than 5 years Machinery
Manufacturing
11.3
6.6
Good standing in the market Office equipment 2.4
Paper/allied products
8.2
May find large branded players too expensive . Pharmaceuticals
Printing/ publishing
5.6
22.2
Rubber/ plastics 3.6
Wholesale (consumer ) 11.2

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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

A 21 15% 910 65% 105 8, 667

c
CL- Invest heavily in selling
resources in heavily

B 28 20 280 20 140 2,000 Drag Problem

c
~c t a '
s
21_ 65
140 100%
210— 15
1, 400 100%
455 462
2 ,000
I3 Low
Accounts
\ccounts are moderately
Accounts
Accounts are very
700
< attractive
I ivest enough to maintat
unattractive
Minimal investment
current position of selline resources

S20.000

O
I
o
CL
£ SI 0.000
£
c
£ /
/
/

I 2 3 4 5 o
Number ot Sales Calls Per Quarter

Number of Sales C alls Response Function

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 Importance
High Low

High Emergencies
Time
o Wasters
a
5J)

Low Personal Recreation

Growth

Time Management

Determining Sales Force Size

Salespeople are among the most
productive assets of a company , and they
Sales Force Sizing are also among the most expensive!
How can an optimal sales force be
established?
Breakdown method

Sales Volume
Number of sales
personnel needed
Productivity

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 i Customers into
Determining Sales Force Size I catpcjories-

Dfitermine Frequency and

*

length of calls for accounts in

Workload method each -categoO
uses the buildup method to estimate the work Workload '
-
calculate ~
required to serve the entire market
Method j
1
workload to cover
Incremental method entire market —
suggests that sales representatives should be Determine rmve
added as long as the incremental profit produce available per
by their addition exceeds the incremental cost
Chain Ratio Method
Breaking down a problem into component parts I salesperson's time by i
I task-pecfocroed 1
and building it up to achieve the objectives .
1
calculate-?he-mjrnbe?i
of salesperson
41 needed

The Workload Formula Chain Ratio Method

The art of breaking down a problem and

building it up is also at the heart of the
"chain ratio method " .
Number of Frequency of Length of
Number of salespeople = Accounts X Sales Calls X a Sales Call Can be used by either first breaking down
Selling time available for one salesperson
the problem into smaller problems and
then building up, or estimating ( really
almost guessing ) the size of the total
market and then doing some fine tuning .

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 —

Market Sales Potential and Profitability Example

Chain Ratio Method -
Chain Ratio Method
Market Potential for cola - flavored
carbonated drink .

l. Population ( P ) = 32,000, 000

Market Sales Potential is a function
of :
The number of Prospective Buyers ( B )
The Quantity Purchased ( Q )
The Price of an Average Unit ( P )
Market Sales Potential = B x Q x P
consumes carbonated beverages ( R )
2 Proportion of P that
= 95 %
consumes cola - flavored carbonated
3. Proportion of R that
beverages ( C ) = 70%
4. Average number of liters of cola consumed per cola -
consumer per week ( L) = 1.7 liters
5. Average price per liter of cola ( A ) = $ 0.50
Market Sales Potential = P x R x C x L x A
= 32 Million x 0.95 x 0.70 x 1.7 x 52 x 0.50 =
$ 94.06 Million

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

Organizational Individual Operational

Level Level Level

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 :

preferred styles of learning .

Kinesthetic Learner :
l earns best by te?;n q 0r experiencin }

I
'

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Visual Learning Style Auditory Learning Style

Someone with a Visual learning style has a

preference for seen or observed things,
including pictures, diagrams,
demonstrations, displays, handouts, films,
flip- chart, etc. These people will use
phrases such as ' show me', ' let ' s have a
look at that' and will be best able to
perform a new task after reading the
instructions or watching someone else do
it first . These are the people who will work
from lists and written directions and
instructions.
Someone with an Auditory learning style has a
preference for the transfer of information
through listening: to the spoken word, of self
or others, of sounds and noises. These people
will use phrases such as ' tell me ', 'let ' s talk it
over' and will be best able to perform a new
task after listening to instructions from an
expert . These are the people who are happy
being given spoken instructions over the
telephone, and can remember all the words
to songs that they hear

Visual Auditory Kinaesthetic

Kinesthetic Learning Style Posters YouTube clips Note tak - ng

Mind maps Dictapnone Copying out notes

Someone with a Kinaesthetic learning style Post it notes Discussions Garres

has a preference for physical experience -
touching, feeling, holding, doing, practical
Note taking Question/ Answer sessions -
Talking Walking Study

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

Reasons For Establishing Sales Territories

Reasons For Establishing Sales Territories

Improved customer service

Better coverage
salespeople cannot cherry pick; territory
assignments constrain salespeople to
work with less profitable customers or
prospects as well as the most desirable
accounts
Controlling selling costs
assigning responsibility to a single
salesperson ensures there are no
overlaps ; customers and prospects are
called upon by only one salesperson
assigning responsibility to a single
salesperson helps to ensure that all
customers and prospects receive adequate
servicing
More accurate evaluation of
performance
if territories are relatively equal with regard
to workload and potential, then salesperson
performance can be compared on an equal
basis; if territories are unequal in a known
way, then adjustments can be made in
o w a l i i ^i H r n r f i non i , r> l r
> \ \ Q

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Reasons For Establishing Sales Territories
When Not To Establish Sales Territories
-
i Contributes to sales force morale
Effort and reward are correlated
Convenient to cover
Reasonable work load
Z To aid in coordination of persona! selling
and advertising efforts
PC ? and Dealer briefings can be coordinated
prior to launch of new products
i erritory Decisions
Territory Design : Reasons for Realignment
Number and type of Salespeople to
cover accts
Z Location and boundaries of territories
D Assigning Salespeople
sales coverage is far below sales
potentia l
e.g ., a new company wants to cherry pick
for the most profitable prospects first
the sales force is highly specializ ed
e . g ., when the salesforce is organized along
the lines of product specialty rather than
along the lines of customer location
sales are made on the basis of
personal contacts and by referrals
A change in sales force size
A change in sales force structure
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
unable to cover all the valuable
customers and prospects effectively .
" Easy accounts" phenomenon .
In a territory with too little work spends
too much time with unprofitable
customers and prospects.
Increase in sales
increasing
By realigning territories - and
sales from high - potential areas
And reducing personnel in low - potential
areas

Benefits of Good Territory Alignment Benefits of Good Territory Alignment

Rewards and Morale Reduction of Travel Time

Reducing disparities in earnings by
avoiding incentives for territories
Study incentive payouts of salespeople
and assess whether ability alone can
cause huge differentials.
Do not reward the territory, reward the
salesperson
Reduction in costs and availability of
time
Increase in morale due to more time at
home
Remote areas covered by other channels

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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»

sourced by the sales person in question of blind s|>ots -

- J •• •c -;
or grown to the cuirent levels 6»’ v » '/ •

In some cases, u is neccssaiv to Relocation allow,uice oi a hard: hip -

U S+J

.
relocate salespeople ind managers
Disruption of sales force relationships
may be difficult for customers as well
Thus is pamcularly true in cases where
-
a salesperson needs in depth customer
knowledge to be effective
allowance Increments
No strong relationships with accounts under $ 50, 000
A good relationship iiansiiion prior to the realignment Change in relationship had .
program little or no impact on sales .
Transition incentive compensation Over $ 50,000 salesperson relationships before the
plan whereby both salespeople share
realignment were much stronger. Hence, change had a
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 .

Obstacles to Territory Realignment Alignment Balance

A C <X a 4> lv4»i> uf «* v Ihe U ,

I \ ;
’
«
•
* •xft

Incentive Compensation Programs ' .AVf Hr*

> uf l*» — .
Problems with incentive programs
The resistance to realigning sales V»'

territories increases as the proportion of -

‘l «

pay based on incentive ( as opposed to

salary ) increases. ( Refer chart ) " Mostly salary " territories were better balanced both
before and after the realignment . Fear of the potential
impact on salesperson earnings prevented the
companies with "high incentive" territories from
achieving better alignment balance .
On occasion a sales organization may need to modify
the incentive plan to ensure a successful realignment .

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 m

alignment
A process for territory
Obstacles to Territory Realignment
‘' -*

Realignment is a Cumbersome Task

1,000 ways to assign just ten accounts r r
'

to two salespeople .
T T I
Made easy by software
Data requirements not readily
available
Inconsistent recording
Inaccuracies
r

Territory Alignment Process Alignment Criteria

Four common alignment objectives :

Step 1: Alignment criteria
such as " balance workload" and balance workload across territories so that sales
force coverage of customers and prospects is
" minimize disruption " are selected optimized,

balance potential across territories to allow fair

salesperson evaluation and rewards,

minimize disruption of relationships to facilitate

a smooth transition to the new alignment, and
build geographically compact, workable
territories to minimize travel time and travel
costs, and to improve coverage

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Territory Alignment
Process Territory Design: Sample Alignment Metrics

Pharmaceuticals : Office Products :

Step 2 : Database development Doctor Specialty Counts Number of White Cellar Workers

.
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

Territory Alignment Process ( contd. ) Territory Alignment Process ( contd . )

Step 3 : Sales Territory centers determination
Optimal sales territory centers ( or salesperson
locations) are determined centrally, based on
business needs.
Step 4 : Territory centers are audited and
finalized by the national arid regional
managers
At the end of this step, management can start
hiring salespeople ( if an expansion is planned),
decide who stays with the sales force ( if a
downsizing is anticipated), or decide who is
relocated ( if several sales forces merge and are
integrated ).
Step 5 : Regional alignments are developed centrally ,
based on well - defined, objective criteria .
Step 6: The regional alignments are audited and
finalized, again by the national and regional
managers .
Step 7 : Optimal territory alignments are developed
centrally .
Step 8 : Alignments are audited and finalized with the
help of first - line sales managers ( managers who
manage the salespeople directly; they usually report
to the regional sales managers ) .

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Merits of the process

The process builds an alignment that is

" good for the business" because the central
benchmarking activity defines consistent,
objective alignment criteria that support
the sales force ' s strategic goals.
A central benchmark also ensures that
salesperson resources are distributed
appropriately across the nation .
At the same time, the process builds an
alignment that is " good for the people"
because the input of local management is a
fundamental part of the process.

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