Management of Sales Territories and Quotas

1. Management of Sales
Territories and Quotas

2. Objective
 Concept of Sales Territories
 Designing Sales Territories
 Management of Territorial Coverage
 Types Of Sales Quotas
 Methods Of Setting Quotas

3. Sales Territory
It consists of existing and potential
customers assigned to a salesperson.
Reasons Of Setting Up ST
 Increase market coverage
 Control selling expenses
 Better evaluation of sales force performance
 Improve customer relations
 Increase sales force effectiveness
 Improve co-ordination
 Benefit Salesperson and company

4. Sales Territory
Reasons For Not Setting Up ST
1. Small company with few SP
2. Personal contact or relationship selling
3. SP’s de-motivated due to restriction sales
territories
4. Management of the company not aware of
the advantages.

5. Select A Control Unit
Find Location and
Potential Customers
Decide Basic Territories
Build Up Method Breakdown Method
PROCEDURE OF DESIGNING SALES TERRITORIES
States/Metros/Districts/Towns
•MP and SP should be possible to calculate
•Adjustments can be made.
•Market Potential
•Market size
•Sales Potential
•ABC Analysis

6. Decide Call Frequencies
Calculate Total no. of calls for each unit
Estimate Workload capacity of each SP
Make Tentative Territories
Develop Final Territories
BUILD-UP METHOD

7. District Nasik District Pune
Customer Type Call Freq/mnth No. Of Cust No. Calls/yr No. Of Cust No. Calls/yr
A 4 3 144 4 192
B 2 7 168 8 192
C 1 20 240 28 336
552 720
TABLE - Build up Method

8. Estimate co. sales potential for total mkt
Forecast sales potential for each unit
Estimate Sales volume estimated from each SP
Make Tentative Sales Territories
Develop Final Territories
BREAKDOWN METHOD

9. Samsung
%age
Cont
Mkt
Size Volume Curve% Flats% Curve Flats M/Share
Co. Sales
Potential Value
Pune 30% 1000000 300000 10% 90% 30000 270000 20% 54000 405000000
A'Nagar 5% 1000000 50000 20.0% 80.0% 10000 40000 20% 8000 60000000
Aurangabad 15% 1000000 150000 20.0% 80.0% 30000 120000 20% 24000 180000000
Nasik 15% 1000000 150000 20.0% 80.0% 30000 120000 20% 24000 180000000
Dhulia 7% 1000000 70000 40.0% 60.0% 28000 42000 20% 8400 63000000
Jalgaon 4% 1000000 40000 40.0% 60.0% 16000 24000 20% 4800 36000000
Bhusaval 3% 1000000 30000 40.0% 60.0% 12000 18000 20% 3600 27000000
Satara 4% 1000000 40000 30.0% 70.0% 12000 28000 20% 5600 42000000
Sholapur 7% 1000000 70000 30.0% 70.0% 21000 49000 20% 9800 73500000
Kolhapur 10% 1000000 100000 20.0% 80.0% 20000 80000 20% 16000 120000000
Sangli 5% 1000000 50000 35.0% 65.0% 17500 32500 20% 6500 48750000
Ratnagiri 5% 1000000 50000 35.0% 65.0% 17500 32500 20% 6500 48750000
TOTAL 244000 856000 171200 1284000000
Forecast sales potential for each unit
Estimate co. sales potential for total mkt
Market Potential unit-wise

10. Estimate Sales volume estimated from each SP
Direct selling cost = 6000000
Cost Of Goods Sold = 60% of sales
Profit = 15% of sales
Profit = Sales – COGS - DSC
Sales = 24000000
Annual Sales Expectation = 29 crs

11. Make Tentative Sales Territories
PUNE – 3 SP
Aurangabad/Nagar – 1 SP
Nasik/Dhulia/Jalgaon – 2 SP
Satara/Sholapur/Sangli – 1 SP
Kolhapur/Ratnagiri – 1 SP

12. Assigning Salespeople To Territories
Evaluation Factors Weightage Evaluation SP Score
(A) (B) (A) * (B)
Product Knowledge 0.15 0.90 0.135
Market Knowledge 0.10 0.80 0.080
Past Sales Performance 0.40 1.00 0.400
Communication 0.15 0.80 0.120
Selling Skills 0.20 0.90 0.180
1.00 0.915
1. Relative Ability of SP
2. Salesperson Effectiveness in a territory

13. Managing Territorial Coverage
How each person should cover each
territory. Consists of three activities:
1. Planning Of Efficient Routes
2. Scheduling sp time.
3. Using time management tools

14. Managing Territorial Coverage
Routing
A travel plan showing which path to take to reach the
customers.
Advantages
1. Reduction in travel time and cost.
2. Improvement in terms of coverage.
3. Improvement in communication inside/outside company.
Procedure
1. Straight Line/Hopscotch
2. Circular
3. Clover Leaf
Application
1. Nature of the product.
2. Type of job of salesperson.

15. Managing Territorial Coverage
Scheduling – 1.Allocation of time
Tasks Time spent
Administrative tasks 15%
Service calls 13%
Face - to- selling 32%
Waiting/Traveling 21%
Telephone Selling 19%
100
2.Customer Calls – State norms of visiting exiting
and new customers.

16. Sales Quotas
Sales quotas are sales goals set by company for its
marketing units for a certain period of time.
Region
Territory
Branch
Salesperson
Distributor
Dealer
Annual sales quotas are broken down in quarterly
and then monthly.

17. Objectives of SQ
 Making available performance standards
 Controlling performances
 Motivating People
 Identifying strengths and weaknesses.

18. Types Of Quotas
Sales Volume Quotas
Setting sales volume targets individual
sp, distributors, retailers, geographical
areas, or/and products for a specific
period of time.
1. Value sales volume
2. Unit sales volume
3. Point sales volume

19. Types Of Quotas …..cont.
 Financial Quotas
 Gross-margin or net-profit quota
 Expense quotas
 Activity quotas
 Combination quotas

20. Methods Of Setting Quotas
 Territory Potential
 Past Sales Experience
 Total Market Estimates
 Executive Judgment
 Salespeople’s Estimates
 Compensation Plan

21. Insights
 Set realistic quotas
 Understand problems in setting quotas
1. Underestimation and overestimation of market
2. Launching of too many new products
3. Salesperson having large territory
 Ensure Salespeople understand quotas
1. Participation in quota setting
2. Continuous Feedback
3. Flexibility In Administering Quotas
4. Purposes Of Quotas