Sales Budget,

Sales Territories & Quotas

By:
Vibhor Jain
Sales Budget

Blueprint for making profitable sales

Details of
◦ Who is going to sell
◦ How much
◦ Of what
◦ During the operating period
◦ To which customer
Purpose

Instrument of Planning

Mechanism of control
◦ Composite of sales, expense & profit goal
◦ Yardstick to measure progress/ performance
◦ Identify weaknesses
◦ Revision or Correction
Form & Content

Statement of projected sales revenue &
selling expenses

Sales volume in units or currency

Details of sales volume
◦ Unit sales of each product
◦ Unit sales by sales territories
◦ Unit sales by quarter/ month
◦ Unit sales by class of accounts
Budgetary Procedure

Usual first stage is the sales budget in an
organizational budget

Once Sales budget is okayed
◦ Production gives budget for manufacturing
expenses and inventory
◦ Financial Dept. gives budget for Capex,
administrative expenses etc.

Production is more interested in Unit
sales projections & Finance in currency
sales figures
Planning Styles

Top Down
◦ Based on Theory X (No one like to work)

Bottom Up
◦ Based on Theory Y (People like to work &
take responsibility)

At least partial Bottom Up approach
should be used
◦ Participation at all levels enhances confidence
in budget and leads to higher sales
Competition Within

All managers in marketing/ sales present
their budgets
◦ Sales Manager
◦ Advertising Manager
◦ Market Research Manager
◦ Customer Service Manager
◦ Product Managers etc.

‘Sell’ your requirements to senior
Competition Outside

All divisions fight for funds from top
management

Top management is like a prospect

Sales executive gives presentation on
budget like a sales pitch

Focus should be on need/ wants (Profit)
of top management

Correlate requirements with profits
Budget for Control

Weekly or monthly progress report
prepared by Sales Manager

Shows sales & expenses for week to date,
month to date & year to date

Broken down sales figures are displayed

Variance of actual from budgeted is
analyzed

Correction or Revision undertaken

Not easy to change the budget
Conclusion

Sales budget is a statement of projected
sales revenue & selling expenses

Best prepared by Bottom Up approach

Regular comparison between budgeted
and actual paves way for Correction or
Revision
Sales Territories

Sales Territory is a group of customers &
prospects assigned to an individual sales
person

May be planned geographically

May be non geographical when
◦ Personal acquaintance selling is required
◦ Highly specialized salesperson
Reasons for having Sales Territories

1. To provide proper market coverage

2. To control selling expenses
3. To assist in evaluating sales personnel
4. To contribute to sales force morale
5. To aid in the coordination of personnel
selling & advertising efforts
Procedure of setting Sales
Territories

Select a basic geographical control unit

Determine Sales potentials in control
units

Combining control units into tentative
territories
◦ Shapes may be Wedge, Circular & Clover leaf

Adjusting for coverage difficulty
How adjustment is done?
1. Determine number, location & size of
customers & prospects in each tentative
territory
2. Estimate time required for each sales
call
3. Determine length of time between calls
(the amount of time required to travel
from one customer to the next)
4. Decide call frequencies
How adjustment is done?
5. Calculate the number of calls possible
within the given period
6. Adjust the number of calls possible
during a given period by the desired call
frequencies for the different classes of
customers & prospects
7. Finally, check out the adjusted territories
with sales personnel who work or who
have worked in each area & make
further adjustments if reqd.
Routing & Scheduling

Main purpose of routing & scheduling is
◦ Maintaining the lines of communication
◦ Optimize Sales Coverage
◦ Minimize wasted time
Quotas

Quantitative objectives assigned to sales
organization units

Specify desired performance levels for
sales volume

Quotas are broken down at every
successive level

Device for directing & controlling sales
operation
Objectives

To provide quantitative performance
standards

To obtain tighter sales & expense control

To motivate desired performance

To use in connection with sales contests
Types of Quotas

Sales Volume Quotas
◦ ‘how much, for what period’

Budget Quotas
◦ Set for various units in sales organization to
control expenses, gross margins or net profit eg.
Expense Quota & Gross margin or net profit
quota

Activity Quota
◦ To control allocation of time/ efforts among diff.
activities like sales call, product demos.

Combination Quotas
◦ Both selling & non selling activity quota
How to secure acceptance?

Participation in Quota setting

Keeping sales personnel informed of
progress

Need for continuous managerial control
Thank You