MODULE -3

MANAGEMENT OF SALES
TERRITORY AND SALES QUOTAS
MODULE 3

Management of Sales Territory & Sales Quota: Sales territory, meaning, size,
designing, sales quota, procedure for sales quota. Types of sales quota, Methods of
setting sales Quota. Recruitment and selection of sales force, Training of sales
force.
Introduction:- Sales Territory: -- is defined as a group of present and potential customers
assigned to an individual sales person, a group of sales person, a branch,
dealers, a distributor or a marketing organization at a given period of time.
A sales territory comprises of a group of customers or a geographical area
assigned to a sales unit. The territory may or may not have geographic
boundaries.
A sales territory represents a group of customer accounts, an industry, a
market or a specific geographical area.
Definitions:\
David , Still &cundiff-grouping of customers & prospects assigned to an
individual salesperson.
Manard & Davis - Basic unit of sales planning and control.
A well planned territorial design for example, helps in matching the selling efforts
with the sales opportunities in that market.

Activities of sales territory management:

Trade relations/dealer relations

Potential business
Coverage
Territory size
Portfolio of accounts
Selling techniques
Customer satisfaction
Selling abilities

Importance of sales territories:

To obtain entire coverage of market

To establish a salespersons responsibility
To evaluate performance
To improve customer relationships
To reduce sales expenses
To allow better matching of salespersons to customer
To benefit salespeople and the company

Factors to be considered while designing territories:

Selecting a basic geographical control unit
Determining sales potential in control unit
Combining control units into tentative territories
Adjusting for coverage difficulty and reallocating tentative territories

Sales Territories are generally designed on the basis of Geographical areas but
there are sometimes companies decide to build territories on the basis of the urgent
frequency requirements of customersA sales territory helps in better sales
planning and effective operational control.
Advantages: better market coverage, effective utilization of salesforce, efficient
distribution of workload among people, convenient way to evaluate performance,
no enchroachment, understanding customer<-> better serving. Companies help to
get insight (for sales people) for their own territories.

DisadvantagesMany organization do not plan territories and orgaise sales on

the basis of geographic divisions.This include newly established enterprises,
organisations where sales are achieved more through personal relationship rather
than professional approach, and oraganiations selling highly sophisticated and
technically complex products.
Size of sales Territories:
There are various factors influence the size of a sales territory.
Density of the population, population spread within the territory, nature and
demand of the product, mode of physical distribution, the selling process and
transport and communication facilities.
If the product is a consumer durable with a longer shelf life, the company
may prefer to have a larger territory compared to smaller territories for the
perishable commodities.Territories can be established on the basis of the nature of
the product, namely consumer, industrial and durable and non-durable.
When companies decide to go through intermediaries they prefer to have a
larger territory. On the other hand, industrial buying, where bulk order booking is
done by a salesperson, or in situations where a company also handles the retailers,
the size of the territory is kept small.

DESIGNING OF SALES TERRITORY:

Designing a sales territory is one of the most difficult jobs for sales
managers. Various factors like Size organization; quality of sales person level of
competition, Level of Customer Support required considered while designing the
sales territory.
Territorial design is done when the market grows to such a size that it is not
possible for the same sales force to cater to the market. it is time consuming, and
manual process where chart, maps and topographical data are taken into account.
Salespeople at Marico Industries, for ex. use Geogrpahic Information systems
software to design territories.
Step 1Select geographic unitThe most often used units are states, counties, zip code areas, cities,
metropolitan areas and trading areas. Many companies have used state boundaries
in establishing territory boundaries. A state may be an adequate control unit if used

by a company with a small sales force. The county is much smaller unit than the
state and acts a better focal point for dividing territories. Another control unit used
for establishing sales territories is the trading area. The trading area is a
geographic region that consists of a city and the surrounding areas that serve as the
dominant retail or wholesale center for the region
Step 2:---Decide on the criteria for allocation
Once the selection of the basic geographical control unit is complete, the
next task is to analyse the consumer a characteristics, buying patterns, market share
data and the competitive position of a firm in order to identify both the present and
prospective customers on the basis of information such as sex, age, group, likes
and dislikes, requirements and standard of living.
Many Indian firms take into account 3 key factors while deciding on the size
of the territory.
1.The customer base compreses of current customer, potential customerssize and
geographic size interms of square kilometers or square miles to be covered by the
salespeople.
2. Market Potential
3. Topographical data
step 3: Decide on the Starting Point:
After ascertaining the sales potential in control units, the sales manager
should form tentative sales territories as the starting point by selecting geographic
location. A common choice is the location point( often the residence of the
salesperson) This is done to avoid the relocation cost of the salesperson and
provides emotional support by keeping the salesperson closer at home with his
family and relatives.
There are 3 types of territory shapes that affects sales expenses and coverage and
time:
Circle- Salesperson located at centre- Maruthi, Hyundai follows this(urban
Market)
Wedge- radiates from densely populated to smaller rural area(both urban and rural)
Clover Leaf when accounts are distributed randomly
Hopscotch sales person starts at the fartherst point from the office and makes call
on the way back to office
Step 4:-- Combine control units adjacent to sales territories

Once the decision about the starting point is taken, the sales managers then
combine control unit to build up the market. The sales manager keep on running
total on the allocation criteria for each newly designed territory.
Step 5:-- Allocates criteria and workload Analysis
-Compare territories (customer per square mile and support detail outlets per
square mile)
Many times, small and large territories in a particular geographic spread may have
an equal potential on customer size. In such cases there is a need to allocate control
units on the basis of traveling and call norms in order to reach customers.
Adjustment is made keeping in view the sales potential, customer size, market
growth rate and sales expenses involved in the market coverage.
Workload analysis consist of how much of selling effort is require to meet
the sales objectives for a given region.( Refer sales organisation chapter for
workload analysis)
Strategic planning matrix
To determine account call rate, Account planning matrix is used here.There
are two dimensions; 1. Overall opportunity rate 2. Firms ability to produce
--2 dimensionOverall opportunityhigh flow
--firms atrocity to capitalize
High Low
High opportunity/sales organization
have different advantage
Strategy:- commit high level of
research to take advantage
Stable opportunity
Strategy:- Allocate model of research
to retain current advantage
Strong

Good opportunity- Forms overcome

company disadvantage
Strategy:- Improve the position and
tarde advertising of opportunity
Little opportunity
Strategy:-Either commit a minimum
level or conduct abandoning account
together
Weak

Account planning matrix uses computer simulation model for taking

decision on call norms for the accounts. A popular computer program ( call
plan Xerox) response function to each account is generated from each
salepersons input.
Step 6: Assign Sales force to New Territories
After determining the final form of sales territories and making
necessary adjustment in tentative sales territories, the last step is to assign the
territories to the individual sales force. Suitable salespeople are appointed for each
territory and the exact responsibilities are assigned to these people. This is done
keeping in view the characteristics of each territory, needs of the territory, and the
appointment of intermediaries.
One of the important factors in the territory designing is that the boundaries
of the territories are never kept constant and evolve over a period of time,
depending on the nature and number of customers in these areas.

Use of information technology:

A modern day sales organisation uses IT enabled service and computer
programs for deciding on the sales territories, workload & call norms
Computer program also used for Territory mapping, simulation,
optimization of Route and call norm behavior
--Sales Manager feeds basic data Market potential, use of
Present accounts, homes location of sales people, geography boundary of control
units and
Drawtentative territory boundaries.
Revision of territory:Sales manager may need to revise territories at time to cope with challenges.
Reason
-Revision is needed if a territory is over estimated.
-Where the territory is too small for a good salesperson
- overlapping territories
-Environmental changes
Effects of Revisionbuilt mutdamage morale
--Compensation adjustment

--guarantee previous level income

SALES QUOTAS
Meaning :
Sales quotas are the targets that salespeople try to achieve within a specific
period of time, which contributes towards achieving the organisational goal
regarding sales forecasts.
It is an expected performance objective routinely assigned to the sales units, such
as depts., divisions and individual.
Quotas are established in terms of sales volume, profit or Gross margin, expenses,
activities or some combination of these.
Importance:---divise in strategic planning

--Standard to specify derived level of performance

--guided by time element/controlling tool
--lead organization towards management by exception
(Mgt focuses on highly performance oriented people)
--guiding the behavior of people.
The purpose of sales quota
Providing goals and Incentives
Evaluating performance
Controlling the Salespersons activities
Calling minimum no. of amounts per day
Calling on new accounts
Giving minimum no of demos
Uncovering strengths of weaknesses in selling structure
If sales fall in a particular territory the cause must be determined
Improving the compensation plans Effectiveness
Controlling the selling Expenses

Types of quotas:-1.Sales volume quota(sv):-Based on svmost of this quota uses dollar sales, some unit sales,
sales of new products or sales of neglected products.
--They are established on the basis of geographic area, PDT line and
customer type.
a> Dollar sales volume:---easily understood by salesperson
--can guage their performance directly against a dollar figure
-- Easier to manage when the salesperson is responsible for many products

b> Unit sales volume:---Useful when the salesperson is responsible for selling only few products
-- set in terms of no. of unitsUse of dollar quota could perhaps even backfire
and level overall performance
c> Point Sales volume: -- Combine dollar or sales unit sales both into unit
points. For e.g. $100 might equal one point, $200 equal to 2 pts
Companys use this approach because they have problems trying to
implement either a dollar or unit volume quota. It helps in maintaining
balance.
2.Financial Quotas:-1> Gross margin or net profit quotas
Coys use these quotas to emphasis to the salesperson that the cry would
prefer a large profit to selling a large volume.
By spending so much time as less profitable products, the sales reps are
limit the coys opportunity to earn higher profits from the high margin
products.
2> Expense quota:- designed to make sales people aware of the costs involved
in this
selling efforts.eg Salespeople may be allowed to spend 5% of
their sales fore expenses.
3> Activity Quotas:-In an effort to ensure that salespeople are conducting their daily activity by
conscientiously many loys require that their salesperson must activity quotas.
--Used to control many different activities. Common type of activity quotas
include
--no of prosunts called on
--no of demos made
--no of displays set/service calls made, new accounts established
--no of deals training given
4> Combination quotas: -- Used when they want to control performance of
both selling and non-selling authorities.

Methods of setting Sales Quota:-1> Quotas based on sales Forecasts and potentials:---Organization forecast the total sales for entire territories which is then
divided into territories and then brought to the individual sales level.
2> Quotas based on past experience:-collect sales data for previous year, average them out for each geographic
territory and then add an arbitrary % for next year quota.
3> Quotas based on Executive judgment:-4>Quotas established by sales people:---some companie allow the sales representatives to establish their own
quotas because sales people are closest to the market and therefore thought to
be the ones who know the most about its potential.
--The drawback is that sales people may either set exclusively high
quota or ridiculosely set large quotas
Administration of Sales Quota:
Setting realistic quota:
Salesperson should be motivated . It shoud be determined by the attainability
of that quota and recognition and incentives
creating understandable quota:
1. including the sales person in quota setting
2. keeping the salesforce updated
3. maintaining control

RECRUITMENT
SALES FORCE

AND

SELECTION

OF

THE

Recruitment,
It is the planned process whereby the scientific principles of
management is utilized for finding out and filling up the
positions in the right territory with the right people.

 The selection and recruitment of efficient people is always a

competitive advantage for an organization.
Sales manager perform the sales force right functions. They
execute entire Human Resource Management function
Recruit , select , train ,
Motivate, lead, control and compensate the sales staff for achieving the
desired goals of the organizations.
HIRING PROCESS 3 STAGES: Manpower (HR) planning (examine labor turn over, positive
equipment analysis, hiring objective, deciding number of people
required for particular time).
Recruitment stage (identifying best source for generating pool of
candidates).
Selection ( screening, interview)
RECRUITMENT:
Importance of recruiting
Customer, Cost, EEO, Qualified applicants.
Who does recruiting?
What interviewer can and can not ask.
Sex, Marital status, Children, Physical data, Medical history, Criminal
record, military status, Age, House.

The Recruitment process

o
Conducting job analysis
Conducting job analysis:-1> Analysis the (nature of competitors, nature of customers, what degree of
knowledge/skill)
2> Determine duties/responsibilities
3> Spend time making calls with several people, observe record the various
tasks of the job as they are actually performed
Preparing job descriptions

-- Result of formal job analysis is job descriptions. It should be in writing. Its

used in recruiting, selecting training, compensating, evaluating the sales force.
Developing a set of job qualifications:---The duties and responsibilities set forth in the job descriptions should be
converted into a set of qualifications that a recruit should have in order to
perform the sales job satisfactory.
Personality traits :-- Industrial psychologist suggest that a successful
salesperson needs only 2 personality traits: empathy and ego drive.
Empathyability to feel as the other follow does. Thus empathic feeling &
provides feedback from the client which enables.

Levels of qualification :- Sales manager should keep in mind certain

characteristics
- Travels, sometime overnight
-Supervision
-Little work experience
-High turnover
Model of success: - A comparison of characteristic of good, average
and poor sales people will suggest traits that can predicts success in sales
career with the company.

SELECTION OF SALES FORCES

Involves choosing the candidates who best meet the qualification and have
the greater aptitude for the job.
Steps:
1. Application

form

2. Internal

screening

(Interview:-

3. In

depth

interview

4. Reference
5. Physical

clubs

Major

concern

(45%
(43%

exam

for

candidate)

causes

path)

causes
(6%

path)
relative)

6. Test ( Intelligence, knowledge, sales aptitude, vocational interest, personality

test,
polygraph,
attitude
and
lifestyle)
ATTRACTING POOL OF CANDIDATES:If there are too few applicants, the property is highlighted that a person with
inferior selling attitudes will be hired when a large number of applicants are
processed; recruiting program serves as an automatic screening system.
SOURCESS OF SALES PEOPLE:Persons within the company
Competition (sales force) - advantage is already trained
New competing companies
Educational institutions
Advertisements
Employment agencies
FACTORS TO CONSIDER IN EVALUATING PROCESS

1. Nature of the population , nature of the market, policy of promotion from

within,
sales
training
providing
by
the
company
Selecting the sales force
The selection process involves choosing the candidates to best meet the
qualification
and
have
the
greatest
aptitude
for
the
job.
2.
Selection process vary from company to company depending in the size of the
company, the number of sales people needed and the importance of the position to
be filled
APPLICATION FORM:Information about address, position applied for, physical condition,
educational background, work experience, participation in social organization.
INITIAL SCREENING INTERVIEW:Lasts from 20 30 minutes and are conducted by assistant personnel
manager, assistant sales manager, sales personal and sometimes computer.
Internal screening may start with application form, an interview are some
type of test. But no matter which tool is initially used, it should be brief.
TESTS; Intelligence test ( measure the raw intelligence and trainability)
Knowledge test (the tests are designed to measure what applicant knows
about product service).
Sales aptitude test (persons innate and acquired social services).
Vocational interest / personality test.
Polygraph test (measure blood pressure respiration, heart beat and skin
response).
Attitude and life style.

INTERVIEW: - Sustained / unsustained interviews

In depth interview to know the heights of the candidates. Sustained
interviews use at the preliminary stage where as no sustained is used
at the final stage.
Reference characters

 Employment offer
Induction / socialization introduced with product, department and
helping them to acquire skill and adjust to role behavior.

TRAINING THE SALESFORCE

Need for training:
-

Guidance to perform the job efficiently

Exploit the talent of new recruits
Adapt itself to changing market condition
To reduce cost by serving customer efficiently
To bring behavioral changes
Win-win situation (org & individual benefit)
To correct deficiencies

Training and development:

Training focuses on current job (short term oriented, addresses performance
problems, (immediate problems of the organization)
Development stresses on the current as well as future job, long term
oriented (growth & success of orgn)
Challenges in sales training:
- Will the training programme effective?
- Will
- Will it produce desired/intended results?
Not all problems require training; some can be solved by compensations.
A sales mgr weigh how much the current problem will cost vis--vis the cost
of eliminating through the training programme.

Theories & principles of sales training:

Training is based on the process of learning a sequence of programmed
behavior and the application of knowledge to the work environment.
Learning is more effective when there is more level of reinforcement in the form of
rewards and punishment for non-compliance
Learning in itself is a human process by which with, habits attitudes and
knowledge are acquired and utilized in such a way that behavior is underfeed.
1. Conditioning theories:
Assumption: there is a desired response to stimulus
- When any action causes satisfaction it will be associated with a particular
situation and the same action shall be repeated when a stimulus situation
arises
Eg: pavolos experiment with dog
2. Stimulus operant conditioning:
Theories: Every human, irrespective of his position in the orgn is capable of
learning. Every one has an intellectual capacity and the ability to learn training
programs.
In a typical training programme, a salesperson is expected to have the knowledge
of the company, product, competitor, knowledge of the market, himself.

THE TRAINING PROCESS:

Training need Assessment

Design & conduct of training Programme

Evaluation of a training Programme
(1) Training Need Assesment Phase:
Orgl Level
Analysis

Task Analysis

Sales mgr evaluates the orgn struc, culture,

mission,
Business
Climate/goals- It provides
strategic info on the
resource commitment to support the
programme.

Focusses on all the function & jobs in the

sales dept &
determine which are of them which need
attention.

Individual Level
Analysis

Assess the performance of sales staff &

determine all
those people who need training.
The programme can occur not only in key sales areas but also in soft areas such as
team working behavior, interpersonal communications &conformity to sales group
norm.

Training needs are identified in the following manner:

(a) Identification of the specific problems( product, organisation, job related
knowledge deficiency)

(b) Anticipating impending & future problems:

Problems likely to arise due to factors such as Market expansion, pdt
diversification as entry into new territories.
(c) Mgmt request: request by supervisors to fill the performance gap.
(d) Interviewing or observing the personnel on the job.
(e) Questionnaire Survey- opinion of salesforce on topics related to commn,
job satisfactions, attitude toward working condition.
(f) Che.
(g) Attitude survey
(h) Interpersonal skill test
(2) Designing & conduct phase:
- Location:
- On the job/ off the job
- Inside orgn/outside orgn
- Trained Expert or co. people.
- Timing (how long); Cost
- Types of Training
(a) Skills or retraining:
- for improving customer handling, listening, presentation and
interpersonal skills.
- Retraining, a subset of skills training focuses on giving the employees
those skills that are needed to keep pace with changing job
requirements.
Eg. Torrent Gujrat, a pharmaceutical firm, allow the sale staff to
undergo training in periodic intervals to keep pace with the
changing technology & tactics in performing the sales job in a
highly competitive environment.
(b) Cross functional Training:
A method of job enrichment where employees are trained to perform
activities and duties in functional areas other than their assigned job
responsibilities.

Eg. Cadila pharmaceuticals, sales people are sometimes given

corporate responsibilities.
(c ) Team Training:
An organization where a sale has to be done through a team, training
programme need to be conducted around teams.
Training & Interpersonal skills.
Eg. Hughe Telecom, Infosys & satyam train sales people by taking them
outdoor and inculcating team skills through experimental learning.
(d) Creativity Training:
Popular approach in brainstorming. The sales Trainee is given
opportunity to generate ideas without fear of judgment- based on
assumptions that creativity can be learned and fostered and that sales
people can solve their problems in newer and more creative ways.
(e) Literary training:
Mean mastery over basic & functional skills.(reading, writing &
commn)
TRAINING METHODS:
The choice of training method is influenced by
-

Training Programme obj

Team available
Participant level of understanding
Previous experience
Equipment needed/ degree of interaction required/ participation
required/ size of group/ facilities available.

(1) Lecture Method:

The trainee is knowledgeable (expert) & the lecture is delivered to a
no. of people at the same time and cover specific topics rather than a
range of subjects.

Structure the Lecture- The sequence of the delivery should be

streamlined to aid retention.
Reinforce the message
The presentation should be limited to the attention span of the
participants 9usually 20 minutes).
But a change in style, pace of delivery, session for question &
distribution handouts can help in extending attention span.
(2) Conferences:
Highly structured device for conveying message on a large scale and
often to an audience of 100 people.
Used to motivate sale people & presented with some entertainment.
(3) Seminar:
It is a conference on a smaller scale with in corporate a greater degree
of participation from the members.
Centered on a single theme, which is examine in same depth.
Speakers are specialists who make brief presentation.
(4) Discussion:
Common method useful for the presentation of ideas and plan
particularly when issues related to sale have to be clarified or
expanded & the views of different sales groups are ascertained.
(5) Role Play:
Innovative Method- To expand the sale trainees experience by
presenting them with a commonly encountered situation and asks
them to pair themselves in the role of parties (customers) involved &
then act in the way in which the circumstances might reach an
appropriate conclusion through the play.
(6) Case study:

Objectives- present the sale trainees with real life business situation &
provide considerable background information from which they are
either expected to analyze & compile the outcome of a series of events
as to provide solution to specific problem.
(7) Fish Bowl:
- To train 2 teams
- 1st team discuss a topic for 30 minutes
- 2nd team is seated around the first team & they are asked observes
comment, criticize (15 minutes)
- The 1st team has no right to reply or even to comment as any criticism at
this stage
- The roles of two teams are then reversed both the teams came together
in full group sessions share/exchange as the process which were
observed
(8) Workshops:
- Method of designing training around identified work problem in order
to find the solutions in the training programme
Objectives:
Obtain contribution from all individuals who are affected & to
optimize the resources available to solve the problem.
(9) Sensitivity Training:
(T. group, study group, group dynamics & group relationship) a type
of laboratory training
Objectives:
- Increase the awareness of our own behavior and to understand how it is
received & interpreted by other.
- Develops sensitivity to the behavior exhibited by other and enables the
trainee to diagnose the causes of that behavior.
This technique relies on its effectiveness in creating a climate in which
participants are willing to be frank, open, & honest with each other.
Focus is on personal behavior & the discussion focuses on ones private
thoughts.
(10) Transaction Analysis:

Popular method for studying interpersonal relationships- Developed

by Eric Berne.
Trainee operates as the ego states of participants and try to find out the
transaction of people by analyzing the various ego states and
transaction among them.
(11) In Tray Exercise:
This exercise provides the trainees with a days mail, both
internal/external.
Trainees are required to study all the documents, decide priorities and
allocate time.
To add to the realism of the in-tray exercise, other features of normal
working, such as interpretation from telephone calls, unexpected
mission including customers are often built into the programme.

Evaluation Phase:
Effectiveness is measured either in monetary or non-monetary terms.
Also, by the collection of ratings by both the trainee & the trainee in
every programme.
Companies also conduct a test before & after the training programme.
Designing a sales Training Program:
(1) Deciding as the Training objectives
(2) Deciding on the content
(3) Deciding on the method

(4) Deciding on the arrangements made for the execution of training

programme
(5) Deciding on the procedure to evaluate training programme.