Sales Force Control

Learning Objectives

 Understanding concept of sales

force motivation

 Understanding how sales

compensation helps in keeping
sales-force motivated.

 Understanding how sales

control is done
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Sales-force Motivation

Motivation is generally regarded as the process of getting people to work towards the
achievement of an objective.

Ideally it should go beyond the achievement of company objectives, plans forecasts or

targets and help the company win commitment of salesforce to the company.

Salesforce is primarily responsible for achieving the sales targets and as the salesforce can
not be controlled, administered in the way factory workers or office staff can be monitored.

The salesforce is required to be self starters, highly ambitious, result oriented and go-
getters.

All the sales situations cannot be predicted and pre-planned in view of the dynamics of the
market place.
What is Sales-force Motivation

Salesforce motivation is the set of factors that drive salespeople to achieve their goals. It is
a complex phenomenon that is influenced by a variety of factors, including:

Intrinsic motivation: The desire to do something because it is enjoyable or satisfying.

Extrinsic motivation: The desire to do something because of external rewards, such as

money or recognition.

Regulatory motivation: The desire to comply with expectations or avoid negative

consequences.
Various Constructs of Salesforce Motivation

Intrinsic motivation:

Achievement: The desire to accomplish challenging goals.

Affiliation: The desire to connect with others and build relationships.
Autonomy: The desire to be self-directed and have control over one's work.
Competence: The desire to be good at one's job and master new skills.

Extrinsic motivation:

Compensation: Financial rewards, such as base salary, commissions, and bonuses.

Recognition: Non-financial rewards, such as praise, awards, and promotions.

Regulatory motivation:

Social norms: The expectations of one's peers and supervisors.

Fear of failure: The desire to avoid negative consequences, such as being fired or demoted.
Boosting Sales-force Motivation

Intrinsic motivation:

Provide salespeople with opportunities to achieve challenging goals.

Encourage salespeople to build relationships with their customers and colleagues.

Give salespeople the autonomy to manage their own territory and pipeline.

Provide salespeople with opportunities to learn and grow.

Boosting Sales-force Motivation

Extrinsic motivation:

Offer competitive compensation and benefits.

Recognize and reward salespeople for their achievements.
Create a positive and supportive work environment.

Regulatory motivation:

Set clear expectations and hold salespeople accountable for their performance.
Provide regular feedback and coaching.
Create a culture of continuous improvement.
Case Study: Sales-force Motivation in Action

Acme Corporation is a leading provider of cloud-based software solutions. The company's sales team is
one of its most important assets, and Acme is committed to keeping its salespeople motivated and
engaged.
One way that Acme does this is by providing its salespeople with opportunities to achieve challenging
goals. For example, Acme has a quarterly sales incentive program that rewards salespeople for exceeding
their targets.
Acme also encourages its salespeople to build relationships with their customers and colleagues. The
company has a number of programs in place to facilitate this, such as team-building activities and
customer appreciation events.
In addition, Acme gives its salespeople the autonomy to manage their own territory and pipeline. This
allows salespeople to work in a way that is most effective for them.
Finally, Acme provides its salespeople with opportunities to learn and grow. The company offers a variety
of training programs, both in-person and online.
As a result of its focus on salesforce motivation, Acme has a highly motivated and engaged sales team.
This has helped the company to achieve consistent sales growth and become a leader in its industry.
Designing the sales motivation program

Make the program simple and easy to understand. Sales reps should be able to focus on
selling, not on trying to figure out how to earn rewards.

Align the program with your company's values and culture. The rewards should be
something that your sales team values and that is consistent with your company's culture.

Make the program flexible enough to adapt to changing conditions. The sales landscape is
constantly changing, so your motivation program should be flexible enough to adapt to new
challenges and opportunities.

Get feedback from your sales team. Regularly solicit feedback from your sales team on the
motivation program. This will help you to identify areas where the program can be improved.
Sales Compensation

Sales compensation is the total amount of money that a salesperson earns, including base salary,
commission, bonuses, and other incentives. It is designed to motivate and reward salespeople for
achieving their sales goals and to align their behavior with the company's overall goals.

Sales compensation is a major expense for most companies, so it is important to design a plan that is
effective and affordable. A good sales compensation plan should be:

Aligned with the company's goals. The plan should incentivize salespeople to sell the products or
services that the company wants to sell and to achieve the company's overall sales targets.

Fair and equitable. The plan should be fair to all salespeople and should give them an equal opportunity
to earn a good living.

Motivational. The plan should offer salespeople incentives that they find valuable and that will motivate
them to work hard and achieve their goals.

Affordable. The plan should be affordable for the company and should not put undue strain on the
company's budget.
Objectives of Sales Compensation

The primary objective of sales compensation is to motivate and reward salespeople for
achieving their sales goals. A well-designed sales compensation plan can help to:

Increase sales revenue

Improve sales productivity

Reduce turnover

Attract and retain top talent

Align sales behavior with company goals

Types of Sales Compensation

Types of Sales Compensation Plans

Base salary plus commission: This is the most common type of sales compensation plan. Under this
plan, salespeople receive a base salary plus a commission on their sales. The commission rate can be flat
or tiered, and it can be based on sales volume, sales revenue, or other factors.

Straight commission: Under this plan, salespeople only earn commission on their sales. This type of plan
is often used for inside sales representatives or for salespeople who sell high-value products or services.

Salary plus bonus: Under this plan, salespeople receive a base salary plus a bonus if they achieve their
sales goals. The bonus can be a lump sum payment or a percentage of their sales.

Combination plans: Many companies use a combination of the above plans to create a sales
compensation plan that is tailored to their specific needs and goals. For example, a company might pay
its salespeople a base salary plus commission plus a bonus if they achieve their sales goals and exceed
certain milestones.
Strategy Description Pros Cons
Salary Only Annual, monthly, semi- •Consistent expense—your •Challenging to keep reps
monthly, or bi-weekly business knows exactly motivated without rewards
amount of income to be paid what they will pay for exceeding expectations
to a rep regardless of •Consistent income for new •Caps a sales reps ability to
production sales reps trying to build a increase earnings based on
book of business performance
•Shows reps you value them
regardless of their
performance

Commission Only The rep's income is based •Limited risk to the business •Difficult to recruit sales
on a set percentage of sales as it's strictly performance- reps because of the risk
or revenue generated by the based •Makes sales reps feel
sales rep during a set time •Good earning potential for undervalued and only
period highest-performing sales important for revenue
reps
Strategy Description Pros Cons
Salary + Combination of base or •Balanced—values sales •Low performers may
Commission set income amount plus reps and rewards them stay longer because of
percentage of revenue for performance the guaranteed income,
generated by the sales •Allows for an adjusted regardless of
rep method that slowly performance
transitions reps into
more performance-
based compensation
Salary + Combination of set •Offers balance for •May be difficult to
Commission + income, percentage of guaranteed, understand for sales
Bonus the revenue generated performance-based, and reps if the measurable
by the sales rep, and milestone-based income parameters are not clear
cash rewards for hitting and specific
milestones •Can become
challenging for
management to track
Strategy Description Pros Cons
Salary + Combination of set •Can be used on an •May be difficult to
Bonuses income and cash individual or team basis understand for sales
rewards for hitting •Offers balance for reps if the parameters
milestones such as a guaranteed income and are not clear, specific,
stretch goal, closing a goal-based performance and fully measurable
certain size deal, or •Could result in a binary
exceeding a goal by a performance system
certain amount that gives sales reps no
credit for any level of
performance; for
instance, if a rep had a
productive quarter but
fell just short of a bonus
threshold, they won’t
receive anything for the
production they had
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Role of Artificial Intelligence in Designing Compensation Plan

Artificial Intelligence (AI) is playing an increasingly important role in sales compensation

design. AI can be used to:

Analyze large amounts of data to identify trends and patterns. This can help companies to
better understand how their sales teams are performing, and to identify areas where
compensation plans can be improved.

Simulate different compensation models and scenarios. This can help companies to choose
the compensation plan that is most likely to drive the desired results.

Develop more personalized compensation plans for individual sales reps. This can help to
motivate and reward sales reps more effectively.
Role of Artificial Intelligence in Designing Compensation Plan

Benefits of using AI in sales compensation design:

Increased accuracy and consistency: AI can help to eliminate errors in commission

calculations, and to ensure that all sales reps are compensated fairly and consistently.

Reduced costs: AI can automate many of the time-consuming and expensive tasks
associated with sales compensation management, such as data entry and calculation.

Improved transparency: AI can provide sales reps with real-time visibility into their earnings
potential, and can help sales compensation managers to communicate compensation plans
more effectively.

Better alignment with business goals: AI can help companies to design compensation plans
that are aligned with their specific business goals and objectives.
Role of Artificial Intelligence in Designing Compensation Plan

Examples of how AI can be used in sales compensation design:

 AI-powered sales compensation software can automate the calculation of sales commissions and
bonuses. This can free up sales compensation managers to focus on more strategic tasks, such as
designing and implementing new compensation plans.

 AI can be used to identify top-performing sales reps and to create special compensation plans for
them. This can help to retain top talent and to motivate sales reps to achieve even greater results.

 AI can be used to develop more complex and sophisticated compensation plans. For example, AI can
be used to create compensation plans that take into account factors such as the sales rep's
territory, the size and complexity of their deals, and the customer's lifetime value.

Overall, AI is a powerful tool that can be used to improve the design and implementation of sales
compensation plans. AI can help companies to make more informed decisions about how to compensate
their sales teams, and to develop compensation plans that are more motivating and rewarding.
Sales Control

Sales control is the process of monitoring and evaluating

sales performance to ensure that sales goals are being
met.

A key part of sales control is evaluation and

performance appraisal, which is the process of assessing
the performance of individual sales reps.

Goals of Sales control

• Optimize number of sales

• Maximize profit
• Control revenue
Types of Sales Control
Sales budget and sales programs are the basic available tools to control the efforts. Other
available tools are

1. Sales Budget

2. Sales Programs

3. Sales Audit

4. Sales Analysis
Sales Budget

Sales budget creates a overall constraint for the sales team to operate within.

Budget in terms of expenses and efforts spent can control the sales activities well and align
them with company's sales objectives and profit targets.

A sales team may be able to perform well and meet sales target but if the cost spent to
achieve the same is very high then the profit would be less.

Hence companies assign a sales budget for the sales activities.

Sales Programs

Sales program are a set of activities, training and best practices which a company follows
for performing sales activities.

A sales program can train the sales force well on the companies values so that the sales
team follows them when they go on field to sell the products and services.

Through a program it can be ensured that all the sales team members follow similar
approach and system to achieve it.
Sales Audit

Sales audit is the systematic and unbiased review of the basic objective and policy of the
selling function of an organization. Sales audits help in improving the effectiveness of the
sales arm of the organization. Audits normally examine six aspects such as

• Objective of the company

• Internal policies
• Structure of the organization
• Sales methods
• Procedures
• Sales personnel
Sales Analysis

Sales analysis is the study of sales volume operations to find the sales and profit trend.

It helps in achieving better sales performance.

It also provides insights on the sales territories, type of customers and products.
Sales Control Process

The sales evaluation and performance appraisal process typically involves the following steps:

Setting goals and objectives: The sales manager and sales rep work together to set specific goals and
objectives for the sales rep. These goals should be aligned with the overall sales goals of the company.

Monitoring performance: The sales manager monitors the sales rep's performance throughout the
year. This may involve tracking sales metrics such as number of calls made, number of meetings held,
and number of deals closed.

Evaluating performance: At the end of the year, the sales manager and sales rep meet to evaluate the
sales rep's performance. This evaluation should be based on the sales rep's goals and objectives, as
well as their overall performance relative to other sales reps on the team.

Providing feedback: The sales manager provides the sales rep with feedback on their performance.
This feedback should be specific and actionable. The sales manager should also work with the sales rep
to develop a plan for improvement.
Criteria for evaluating sales performance

The criteria for evaluating sales performance vary depending on the industry and the specific sales role.
However, some common criteria include:

Sales revenue: This is the most important criterion for evaluating sales performance.

Number of new customers acquired: This is important for measuring the sales rep's ability to grow the
company's customer base.

Customer satisfaction: This is important for measuring the sales rep's ability to build and maintain
relationships with customers.

Product knowledge: This is important for measuring the sales rep's ability to sell the company's products
or services effectively.

Sales skills: This is important for measuring the sales rep's ability to generate leads, qualify prospects,
and close deals.
Benefits of Effective Sales Performance Evaluation

Improved Sales Performance: Regular evaluations identify areas for improvement and provide
actionable feedback, leading to enhanced sales performance.

Increased Employee Motivation: Recognition of achievements and opportunities for development

boost employee morale and motivation.

Reduced Turnover: Fair and transparent evaluations foster employee satisfaction, reducing turnover and
retaining top talent.

Improved Customer Satisfaction: Effective sales performance evaluations contribute to a more skilled
and customer-centric sales team, enhancing customer satisfaction.

Better Alignment with Sales Goals: Evaluations ensure that individual salesperson efforts are aligned
with the company's overall sales strategy and goals.
Performance Rating

Performance rating is the process of assigning a numerical or descriptive score to an employee's

performance. Performance ratings are typically used in sales compensation plans to determine how
much commission or bonuses a sales rep will receive.

Performance ratings can be based on a variety of factors, such as:

Sales revenue
Number of new customers acquired
Customer satisfaction
Product knowledge
Sales skills

The specific factors that are used to determine a sales rep's performance rating will vary depending on
the company and the specific sales role.
Frequency

Sales performance appraisals are typically conducted annually. However, some companies may conduct
more frequent appraisals, such as semi-annually or quarterly.

Benefits of regular sales performance appraisals

Improved sales performance: Regular appraisals can help sales reps to identify and address areas where
they need to improve.

Increased employee motivation: Sales reps are more likely to be motivated when they know that their
performance is being evaluated and that they will be rewarded for their achievements.

Reduced turnover: Sales reps are more likely to stay with a company if they feel that they are being
treated fairly and that they have opportunities for advancement.

Improved customer satisfaction: Sales reps who are performing well are more likely to have satisfied
customers. This is because they are more likely to be knowledgeable about the company's products or
services and to be able to meet the needs of their customers.
Contrasting actual sales performance

Contrasting actual sales performance with expected or planned sales performance is a vital aspect of
sales management and performance evaluation.

It provides valuable insights into the factors that are driving sales growth or decline, identifying areas
for improvement, and making informed decisions about sales strategies and resource allocation.

Comparing actual sales performance to expected or planned targets is a crucial tool for sales
managers and organizations to track their sales performance, identify opportunities for improvement,
and make strategic decisions that drive sales growth and achieve business objectives.

By consistently monitoring and analyzing sales data, companies can optimize their sales efforts,
maximize revenue generation, and maintain a competitive edge in the marketplace.
Marketing Audit

A marketing audit is a systematic and objective evaluation of an organization's marketing

function.

It is a comprehensive assessment of all marketing activities, including strategies, goals,

systems, and processes.

The goal of a marketing audit is to identify areas for improvement and to develop
recommendations for optimizing marketing effectiveness.

Marketing audits can be conducted internally or by an external consultant. They are

typically performed on an annual basis, but may also be done more frequently if there have
been significant changes to the business or its marketing environment.
Benefits of a marketing audit

 Identify areas for improvement in marketing strategies, tactics, and processes.

 Improve marketing effectiveness and efficiency.

 Increase marketing ROI.

 Align marketing with overall business goals.

 Gain a competitive advantage.

Steps in a marketing audit

1. Define the scope of the audit. What areas of marketing will be evaluated? What are the
specific goals of the audit?

2. Gather data. This may include internal data (e.g., sales data, marketing
budget, customer surveys) and external data (e.g., market research reports, industry
trends).

3. Analyze the data. Identify strengths, weaknesses, opportunities, and threats (SWOT
analysis).

4. Develop recommendations. Based on the findings of the analysis, develop

recommendations for improving marketing effectiveness.

5. Implement the recommendations. Develop a plan for implementing the

recommendations and track progress over time.
Examples of areas covered in a marketing audit

 Marketing strategy: Are marketing goals aligned with business goals? Is the target
market clearly defined? Are the right marketing channels being used?

 Marketing organization: Is the marketing team structured effectively? Are there the right
skills and resources in place?

 Marketing systems: Are marketing systems and processes efficient and effective?

 Marketing activities: Are marketing activities effective in reaching and converting target
customers?

 Marketing environment: Are the organization's marketing activities aligned with the
external environment, such as market trends, competitor activity, and regulatory
changes?
Sales Audit

A sales audit is an in-depth analysis of a company's sales process and performance. It is designed to
identify areas for improvement and to help companies develop and implement more effective sales
strategies.

Sales audits can be conducted internally by a company's own sales team or by an external consultant.
They can be focused on a specific aspect of the sales process, such as lead generation, qualification, or
closing, or they can be more comprehensive and cover all aspects of the sales cycle.

Benefits of a sales audit:

 Identify areas for improvement in the sales process and performance.

 Increase sales productivity and profitability.
 Improve customer satisfaction.
 Reduce sales risk.
 Gain a competitive advantage.
Steps in a sales audit

1. Define the scope of the audit. What specific areas of the sales process will be
evaluated?

2. Gather data. This may include internal data (e.g., sales pipeline, win/loss
ratios, customer feedback) and external data (e.g., industry benchmarks, competitor
analysis).

3. Analyze the data. Identify strengths, weaknesses, opportunities, and threats (SWOT
analysis).

4. Develop recommendations. Based on the findings of the analysis, develop

recommendations for improving the sales process and performance.

5. Implement the recommendations. Develop a plan for implementing the

recommendations and track progress over time.
Examples of areas covered in a sales audit

Sales process: Is the sales process clearly defined and documented? Are all of the necessary
steps being followed?

Sales team: Are the right sales people in place? Are they properly trained and equipped?

Sales pipeline: Is the sales pipeline healthy and well-managed?

Sales performance: Are sales goals being met? Are there any areas where performance
could be improved?

Customer satisfaction: Are customers satisfied with the sales experience? Are they satisfied
with the products or services they have purchased?
Sales force control: Input-Output approach

Input-output approach is a management methodology that uses both input and output
measures to assess and improve sales performance.

Input measures focus on the activities that salespeople perform, such as the number of calls
made, presentations given, and proposals submitted.

Output measures focus on the results of salespeople's activities, such as sales revenue,
profit margin, and customer satisfaction.

By using both input and output measures, sales managers can get a more complete picture
of how salespeople are performing and identify areas where they can improve.

By using a sales force control-input-output approach, the sales manager can increase the
chances of the sales team achieving its goals and objectives.
Input measures: Output measures:

• Number of calls made • Sales revenue

• Number of presentations given • Profit margin

• Number of proposals submitted • Customer satisfaction

• Time spent prospecting • Number of new customers acquired

• Time spent visiting customers • Number of existing customers retained

• Time spent on administrative tasks • Market share

A Real world example of Input-Output Approach

The sales manager then tracks the sales team's performance on these input and output
measures on a regular basis. If the sales team is not meeting its targets, the sales
manager can provide feedback and coaching to help them improve.
Setting Control Policies
Examples of sales control policies

Sales quotas: Sales quotas are specific targets for sales revenue, profit margin, or customer acquisition.

Sales territories: Sales territories are geographic areas that are assigned to individual salespeople.

Sales compensation plans: Sales compensation plans outline how salespeople are paid, including base
salary, commissions, and bonuses.

Sales expense policies: Sales expense policies outline how salespeople can reimburse themselves for
expenses incurred while selling, such as travel and entertainment expenses.

Customer relationship management (CRM) policies: CRM policies outline how salespeople should use
CRM software to manage customer relationships.

Ethical sales practices policies: Ethical sales practices policies outline the company's expectations for
salespeople in terms of honesty, integrity, and fairness.
Setting sales control policies

Make them realistic and achievable. Salespeople should be able to achieve their goals
without having to resort to unethical or unprofessional behavior.

Make them fair and equitable. Salespeople should feel that the policies are fair and that
they are not being singled out for unfair treatment.

Make them consistent with the company's sales culture. Sales control policies should be
aligned with the company's overall sales strategy and culture.

Make them flexible enough to adapt to change. The sales landscape is constantly
changing, so sales control policies should be flexible enough to adapt to new realities.