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Sales quota

Sales quota is the target or goals assigned to sales units (such as sales person, dealer, distributor, territory) to be achieved in a specific period of time. Sales quotas (quantified objectives) may be expressed either in monetary terms or in volume terms. These quantified objectives should be realistic. The basis for fixing the sales quota should not only be potential of the territory and the past data but also factors such as territory's importance to the company, the market share expected from it and the profitability of sales in that territory. Participative approach while fixing the sales quota is desirable. The objective of fixing Sales quotas are : Motivating the sales force To bring in the right focus (products to be given importance) These form an important basis for feedback, evaluation of and reward for the performance of a sales unit Types of sales quota: Sales volume quota: These are basically of three kinds Monetary sales volume quota Unit sales volume quota ( resorted to because rupee value may vary price may vary)

Point sales volume quota ( followed in multi product situations. Relative weight age. An unit of a product may higher points than another product) Sales Budget quota: These quotas are set with the objective of controlling expenses, increasing gross margin /profit. Profit quotas are set. By this the salesmen are encouraged to sell more profitable products. Expenses are often controlled by setting an expense budget as a percentage of the territory sales. Sales activity Quota: Activity quotas are fixed for salesmen in addition to sales quotas. As an example the activity quota may be set for number of sales call to be made number of dealer contacts number of product demonstrations to be made number of new accounts to be created Methods for fixing sales quota:

Sales quotas can be fixed based on Sales potential / forecast Average of Past sale Executive judgment Judgment of salesmen

Recruitment and selection of sales Persons Creating an effective sales force is essential. The first step in creating a sales force is recruitment followed by selection. The recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization whereas selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts. The importance of right recruitment and selection process can never be over-emphasized. High turnover of sales persons can be very damaging to the organization for more many reasons -the cost of hiring a salesman and training them is high, customer dissatisfaction, loss of company information etc. So the recruitment process and selection process should be sound. The following steps need to be undertaken for recruitment Job analysis Locating prospective candidates / Sources Job analysis Job analysis is a systematic procedure to analyze the requirements for the job role and job profile. Job analysis can be further categorized into following sub components.1. Job position: This refers to the designation of the job and employee in the organization. Job position forms an important part of the compensation strategy as it determines the level of the job in the organization 2. Job description: It refers to the activities that an employee has to do in a particular job position. It describes the roles and responsibilities attached with the job position. It states the key skill requirements, the level of experience needed, level of education required, etc. It also helps in benchmarking the performance standards.3. Job Worth refers to estimating the job worthiness i.e. how much the job contributes to the organization. It is also known as job evaluation. Job description is used to analyze the job worthiness. It is also known as job evaluation. Roles and responsibilities helps in determining the outcome from the job profile. Once it is determined that how much the job is worth, it becomes easy to define the compensation strategy for the position. Locating the candidates ( sources)There are two categories Internal sources: The internal sources can be

Lateral and upward moves (Transfers, promotions etc.) Interns Employee referral ( existing salesmen as talent scouts) External sources: The external sources can be: Competitor company Other industries ( may be from customers Educational institutions By advertising Employment agencies / HR consultants Networking Internet / Web sources or suppliers industry)

Selection Process comprises of the following steps: Screening the candidates Personal interviews Reference check Physical examination Psychological and other tests like Intelligence tests, Aptitude tests, Personality tests etc. Negotiating / fixing the terms of services Appointment Screening applicants for an interview: The job analysis done previously helps in short listing candidates. The job description specifies the competencies required for a job position, hence this forms the guideline for short listing the applicants. The application form gives the details regarding the applicant's qualifications, experience, previous compensation, employment history, reasons for leaving previous organizations, health history, references etc. References should be used, in adiscernin /udicious manner, to verify information provided Scientific and psychological tests related to intelligence, ability, personality etc helps to gain insights about the candidates. Selecting Applicants: Personal interview is carried out for this. The following needs to be done: Preparation for the interview: An interview needs to be conducted effectively hence it needs preparation. The purpose is to effectively gather information about the candidate from the candidate himself. this generally includes receiving and screening of application forms

Behavioral interview is a popular method adopted for this purpose. Behavior based interviewing focuses on experiences, behaviors, knowledge, skills and abilities that are job related. It is based on the belief that past behavior and performance predicts future behavior and performance. Managing the interview: Broad based questions should be followed by specific questions. Questions should be posed in a manner so that it calls for long responses. Loaded or leading questions should not be asked. Interviewer should be a good listener and be able to sort out relevant / important information related to the job from the irrelevant/ unimportant ones.

Orientation and socialization Orientation Programs: Effective orientation programs are designed to introduce new employees to a company's mission so that they begin to feel they are a vital part of the team. These are key to early productivity and improving employee retention. They need to be designed with the following in mind Make new employees feel welcome and valued as key players on the team.-Explain the mission/purpose of the company and the job so employees can see the big picture.-Familiarize employees with rules, policies and procedures.-Help employees adapt to their new surroundings, learn who all the players are and how they work together.-Establish friendly relationships among co-workers managers.-Ensure new employees have all the information and tools they need to do their jobs.-Develop the long-term commitment to the organization

Training the sales force Training is a process of learning a sequence of programmed behavior and application of knowledge. It givespeopleawarenessoftherulesandprocedurestoguidetheirbehavior.Itattemptstoimprovetheirperformanc eonthecurrentjoborpreparethemforanintendedjob. Types of training:

ON THE JOB TRAINING( OJT) : This is the most common method of training. On-the-job training (OJT) is conducted at the work sites and in the context of the actual work.

This method is basically learning by doing, while working. In this method the employee is placed in to the real work situation and shown the job and the method of work by an experienced employee or the supervisor. The trainee is placed on the job and the manager or mentor shows the trainee how to do the job and receive immediate feedback. To be successful, the training should be done according to a structured program that uses task lists, job breakdowns, and performance standards as a lesson plan.

On the job training methods: Job Instruction Training Coaching Mentoring Job Rotation Job Instruction Training: Job instruction training (JIT) is a systematic approach to the job training. This is a proven and systematic method to teach workers how to do their current jobs. The method also called training through step bystep learning involves: Preparation of the trainees for the instruction. Presentation of trainees for instruction. Performance of the job by the trainee. Motivating the trainee to follow up the job regularly

Coaching: Coaching is a continuous process of learning by doing. In this, the superior guides his sub-ordinates & gives him/her jobinstructions.Thesuperiorpointsoutthemistakes&givessuggestionsfortheimprovement.Merits Itrequirestheleastcentralizedstaffcoordinationaseveryexecutivecancoachhissubordinates. Periodicfeedbackandevaluationgivesimmediatebenefitstoanorganisation.Demerits Thetrainingatmospherefreefromworriesofthedailydutiesisnotavailable. Mentoring: Mentoringisarelationshipinwhichaseniormangerinanorganisationassumestheresponsibilityforgroomingajun iorperson.Technical,interpersonalandpoliticalskillsaregenerallyconveyedinsucharelationshipfromthemoree xperiencedperson.Mentorshelpemployeessolveproblemsboththroughtrainingtheminskillsandthroughmodel ingeffectiveattitudesandbehaviors.Merits

There is an excellent opportunity to learn. Constant guidance helps the mentee to be on track, using facilities togood advantage.Demerits Itmaycreatefeelingofjealousyamongotherworkerswhoarenotabletoshowequallygoodperformance. Ifmentorsformoverlystrongbondswithtrainees,unwarrantedfavoritismmayresult.Thiscanhaveademoralising effectonotherworkers. JobRotation: Thisinvolvesthemovementoftraineefromonejobtoanother.Thetraineeisgivenseveraljobsinsuccession,togain experienceofawiderangeofactivities.Merits Improvesparticipant sjobskills,jobsatisfaction. Providesvaluableopportunitiestonetworkwithintheorganisation. Offersfasterpromotionsandhighersalariestoquicklearners.Demerits Increasedworkloadforparticipants. Constantjobchangemayproducestressandanxiety. Meremultiplicationofdutiesdonotenrichthelifeofatrainee. Developmentcostsmayshootupwhentraineescommit mistakeshandletaskslessoptimally.

OFF -THE-JOB TRAINING: Off-the jobtraining simplymeansthattrainingisnotapartofeverydayjobactivity.Theactuallocationmaybeinthecompan y,classroomorinplacewhichareownedbythecompanyinuniversitiesorassociationswhichhavenoconnectionwiththec ompany. SomemethodsofOff-the jobTrainingare: Lectures Conferences The Case Study Role Playing In-Basket Method LECTURES:

Lecture are regarded as one of the most simple ways of imparting knowledge to the trainees, especially when facts,concepts or principles, attitudes, theories and problemsolving s abilities are to be taught.Merits:Presenting basic material that will provide a commonbackground for subsequent activity. Illustrating the application of rules, principles, reviewing,clarifying and summarizing. The main advantage of the lecture system is that it issimple and efficient and through it more material can bepresented within a given time than by any other method

THE CONFERENCE METHOD: In this method, the participating individuals confer todiscuss the points of common interest to each other. Aconference is a formal meeting, conducted in accordancewith an organized plan, in which the leader seeks todevelop knowledge and understanding by obtaining aconsiderable amount of oral participation of the trainees. There are three types of conference methods.1. Directed discussion :-The trainer guides the discussionso that the facts, principle or concepts are explained.2. Training conference:-The instructor gets the group topool its knowledge and past experience and bringsdifferent points of view to bear on the problem.3. Seminar conference problem:-The instructor definesthe problem, encourages and ensures full participation in the discussion. CASE STUDY Theindividualisexpectedtostudytheinformationgiveninthecaseandmakedecisionsbasedonthesituation.ifthe studentisprovidedacaseinvolvinganactualcompany,heisexpectedtoresearchthefirmtogainabetterappreciati onofitsfinancialconditionandcorporateculture. Typically,thecasemethodisusedintheclassroomwithaninstructorwhoservesasafacilitator. Analytical,problem-solvingandthinkingskillsaremost important. TheKSAs(Knowledge,Skills,Abilities)requiredarecomplexandparticipantsneedtimetomasterthem. Activeparticipationisrequired. Theprocessoflearningisasimportantascontent. Teamproblemsolvingandinteractionarepossible.

ROLEPLAYING Itisatechniqueinwhichsomeproblems realorimaginaryinvolvinghumaninteractionispresented&spontaneou slyactedout.Participantsassumerolesofspecificorganizationalmembersinagivensituation&thenactout theirroles.

Itdevelopsinterpersonalskillsamongparticipants.Theylearnbydoingthings.Immediatefeedbackhelpsthemcor rectsmistakes,change&reorienttheirfocusinaright way. Onthenegativeside,realismissometimeslackinginrole-playing,sothelearningexperienceisdiminished.Itisnot easytoduplicatethepressures&realitiesofactualdecisionmakingonthejob;&individuals,oftenactverydifferentlyinreallifesituationsthantheydoinactingoutasimulatedex ercise. IN-BASKETMETHOD Theparticipantisgivenanumberofbusinesspaperssuchasmemoranda,reports&telephonemessagesthatwoul dtypicallycrossamanagersdesk. Thepapers,presentedinnoparticularsequence,callforactionsrangingfromurgenttoroutinehandling.Thepartici pantisrequiredtoactontheinformationcontainedinthesepapers. Assigningaprioritytoeachparticularmatterisinitiallyrequired. Ifthetraineeisaskedtodecideissueswithinatimeframe,itcreatesahealthycompetitionamongparticipants. Onthenegativeside,themethodissomewhatacademic&removedfromreallifesituations.

Compensation plan for sales force A motivated sales force is essential for sales performance. Agood well structured and balanced compensation plan isrequired to attract and retain a quality sales force and keep it motivated. An effective compensation plan (characteristics): Directs the sales force toward activities that are consistent with overall marketing objectives. Connects efforts, performance and rewards Helps to attract and retain competent sales persons. Is based on the principles of equity. Helps to stimulate sales persons to put in their best efforts Has two components, one as an assured income another asan additional income for superior performance. Is flexible to adjust to changes in the environment. Is simple to understand and administer.

Designing the compensation plan involves following steps: Consider Job analysis, job evaluation and overallcompensation structure of the company

Consider Industry practice ( What competitors offer?) Decide compensation level after discussions. Decide compensation mix: Financial Direct payment like salary. Indirect payment -medical care, paid vacation, LTA etc. Non financial Promotions, better designation etc. Recognition Decide on weightage of different elements in the mix. Implement , evaluate / review and improve.

Types of compensation plans: Straight salary Straight commission Salary plus group commission. Salary plus commission Straight salary plan:Merits Simple and easy to design and administer. Gives a sense of security. Is suitable when the company adopts a pull strategy.

the product/ territory is new efforts and actual sales are loosely correlated. Negotiation and purchase cycle is long (Eg: technical projects) Demerits Is not a stimulant to increase sales Cost of fixed salar is to incurred even if the sales is oor

Straight commission plan:Merits Incentive to perform better. Commission is a variable cost and is linked with volume/ profits.

It is suitable when: Company has adopted a push strategy.

Not much of non-selling activities are involved. Market is highly competitive and sales effort is directly linked withsales results. Demerits Often difficult to design and administer. May be ineffective when there are many new salesmen. May lead to unhealthy rivalry/ jealousy among salesmen. May lead to unhappiness when market is down due to externalreasons. Income of salesmen can be unstable. Overaggressive salesmanship might dissatisfy customers.

Motivating the workforce

The mettle of a sales manager lies in his ability to motivate hissales force. The greater is this ability greater are the chances of sales force. The greater is this ability greater are the chances of his success.his success. The elements of the motivational mix are:The elements of the motivational mix are: Compensation planCompensation plan Recognition (like trophies, certificates, praiseRecognition (like trophies, certificates, praiseencouragements, job enrichment )encouragements, job enrichment ) PromotionsPromotions Fair and transparent performance evaluationFair and transparent performance evaluation Good forecasting, budgeting, Fair quotas/territory definition. Good forecasting, budgeting, Fair quotas/territory definition. Good sales coaching and supervision Good sales coaching and supervision Regular sales meeting & conventions Sales contest Sales contest Effective trainingEffective training programmes A good leadership style. A good leadership style