Page 210 - DMGT205_SALES_MANAGEMENT

recommendations to management.
Table I Comparative Performance of Salesmen
Average
Average Sales
Sales/Calls
Total
Total Calls
Sales On the basis of the data given in the following two tables, make appropriate
Total Customers
Area Orders Ratio by Salesman Salesman By
Order
A 1,900 1,140 60.0% 4,56,000 400 195
B 1,500 1,000 66.7 3,60,000 360 160
C 1,400 700 50.0 2,80,000 400 140
Sales Management
D 1,030 279 27.1 66,000 239 60
E 820 165 20.1 31,000 187 50
TOTAL 6,650 3,284 49.4 1193,000 363 605
Notes Table II: Comparative Cost of Salesmen
Table II: Comparative Cost of Salesmen
Sales Annual Expense Total Salesman Sales Cost/Sales Ratio
Area Compensation Payments Cost Produced
A 11,400 5,600 17,000 4,56,000 3.7%
B 10,800 7,200 18,000 3,60,000 5.0
C 10,200 5,800 16,000 2,80,000 5.7
D 9,600 12,400 22,000 66,000 33.3
E 10,000 16,000 26,000 31,000 83.8
TOTAL 52,000 47,000 99, 000 119,3000 8.3

13.7 Setting Performance Standards

For a realistic comparison, a judicious mix of qualitative and quantitative standards should be
decided and standards must be reflective of the company's analysis, its own market situation
vis-a-vis its competitors. Criteria of using sales volume as a yardstick is no longer prevalent as
managers realise that present sales can be made at the expense of future sales.

13.7.1 Quantitative Criteria

Sales Quotas

If sales targets in rupees or volume (units), are set realistically they can be used for performance
standards but if they are not realistic they loose their meaning.
Net Profit Ratio or Gross Margin Rates per Territory

Ratio of net profit or gross profit to sales are decided upon for the sales territories. Each sales
territory is considered as an organisational unit and contributor to corporate profit. In such a
situation high margin products are emphasised at the expense of new products or new accounts
with the result that the salesman concentrates on more lucrative accounts in their territory to
reduce expenses and give no importance to new accounts. Positive impact upon sales force is
that the sales personnel tends to meet the ratio by attaining a higher sales volume and by
reducing expenses.

Sales Expense Ratio

This is the ratio of selling expense to sales volume. Salesman can manage this ratio by either
controlling expense or by making sales or both. Control on this ratio inhibits salesman to make
extra effort in case of declining sales. Companies show different practices as far as defining
selling expenses is concerned. Some use only direct and indirect expenses.
Direct: Expenses incurred and controllable by salesmen to define norms for selling expenses.

Indirect: Those expenses over which salesman have no control.
This sales expense ratio is used more by industrial companies rather than consumer product
industries.

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