Unit 4: Sales force management
Advertising and Sales Management notes · PTU syllabus (BBA 512-18)
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Unit summary
A sales force is only as good as its management. This unit covers the role and objectives of the sales force, determining sales force size, financial and non-financial rewards, compensation plans, and designing sales territories and quotas.
After this unit you can
- Explain the role, objectives and strategy of the sales force
- Determine the size of the sales force
- Explain compensation plans and financial and non-financial rewards
- Design sales territories and set quotas
PTU syllabus topics
- Meaning and role of the sales force
- sales force objectives and strategy
- sales force size
- financial and non-financial rewards
- compensation
- defining and designing sales territories and quotas
- Sales territory
- A group of customers or area assigned to a salesperson
- Sales quota
- Target set for a salesperson or territory
- Workload method
- Sizes the sales force from calls needed
- Straight salary
- Fixed pay, security
- Straight commission
- Pay linked to sales
- Combination plan
- Salary plus commission or bonus
Topic 1
Role and objectives of the sales force
The sales force finds customers, communicates value, sells, services accounts, gathers market information and builds relationships. Sales force strategy decides structure — territorial (by area), product (by product line), customer/market (by customer type) or a combination.
Topic 2
Determining sales force size
Workload method
Total calls needed / calls per salesperson
Sales potential method
Expected sales / sales per person
Incremental method
Add people while extra profit exceeds extra cost
Example
1,000 customers × 24 calls a year = 24,000 calls; each salesperson makes 1,200 calls a year → 20 salespeople.
Topic 3
Compensation and rewards
Straight salary
Fixed pay
Long selling cycles, service-heavy roles
Straight commission
Percentage of sales
Aggressive selling, new markets
Combination
Salary + commission or bonus
Most firms; balances security and incentive
Financial rewards: salary, commission, bonus, profit sharing and fringe benefits. Non-financial rewards: recognition, awards, promotion, training, contests and job enrichment.
Topic 4
Sales territories and quotas
A sales territory is a group of present and potential customers assigned to a salesperson.
- 1Select a control unit
District, city, PIN code
- 2Estimate market potential
- 3Combine units into territories
Equal potential and workload
- 4Assign salespeople
- 5Review periodically
A sales quota is a performance target for a salesperson or territory. Types: sales volume, profit, expense and activity quotas (calls, demonstrations). Good quotas are realistic, fair, simple, flexible and accurate.
Key terms
- Sales territory
- Customers assigned to a salesperson
- Sales quota
- A performance target for a salesperson
- Workload method
- Sizing the sales force by calls needed
- Straight commission
- Pay purely as a percentage of sales
- Non-financial rewards
- Recognition, promotion, contests, training
Quick revision
- Structures: territorial, product, customer.
- Workload method = total calls / calls per rep.
- Salary, commission, combination plans.
- Quotas: volume, profit, expense, activity.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.What is a sales territory?
- Q2.What is the workload method?
- Q3.Differentiate between straight salary and straight commission.
- Q4.Name four types of sales quotas.
- Q5.List three non-financial rewards for salespeople.
Long-answer questions
- Q1.Explain the methods of determining sales force size.
- Q2.Explain sales force compensation plans and motivation.
- Q3.Explain the design of sales territories and the setting of quotas.
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