Sales Control and Cost Analysis PPT 6

Report
Sales Analysis
&
Sales & Cost
Control
Sales Control

Management policies and practices
aimed at ensuring that all sales are
recorded, made at correct prices,
and fulfilled to customers'
satisfaction.
Sales Control and Cost Analysis
Companies need to have proper mechanisms in place so that
salespeople adhere to the top line and bottom line objectives
Sales Audit is a systematic, critical & unbiased review and appraisal
of the basic objectives and policies of the selling function and of
the organisation, policies, methods, principles and personnel
employed to implement those policies and achieve those objectives
Ex- TLc in India
Salespeople tend to lose sight of this core objective over time; that is
why this becomes critical
Sales Audit – Areas of Coverage

1.
People
• Assessment of your key sales and marketing personnel, from the
executive team to the sales reps.
• Do you currently have the right resources and infrastructure to
reach your goals?
Processes
• Are your current sales and marketing processes operating
efficiently and maximizing profits
Marketing
• Are your marketing activities measured directly with sales
increases?
Measurements
• What are your Key Performance Indicators (KPI’s) and are they
being effectively measured, reported, and managed.
Technology
 Are your sales and marketing teams taking advantage of technology to
maximize profitability, or are they held hostage to technology that
hinders their effectiveness.
Strategy- Is your sales strategy in line with your core values?
Culture
• Is your team farmers or hunters? What is their level of satisfaction and
motivation?
• Does marketing, sales and other key departments or individuals in your
company communicate effectively with each other?
• Sales Channels
 Are you currently utilizing the most effective sales channels for your
service or product?
 Are you effectively managing your current channels to maximize the
relationship and profitability?
 Client Satisfaction
 Do your clients share the same opinion of you as you do? How do
they describe you as a company?
 Why did your clients choose you? What do they think of the sales
process they experienced with your team?
 Compensation Plans
 Are your management and staff effectively compensated to achieve
sales targets?
 Are you achieving the right balance between base and performancebased pay?
 Customer Satisfaction
WHAT IS SALES ANALYSIS?
Sales analysis is the detailed
examination of a company’s
sales data and involves
assimilating, classifying,
comparing, and drawing
conclusions.
Illustration of sales
analysis:
Quota
Sales
+/-
% age
achieved
New Delhi
5
3.78
-1.22
75.6%
Mumbai
7
8.35
+1.35
119.28%
Hyderabad
4
5.49
+1.49
137.25%
Chennai
3.5
3
-0.5
85.71%
Bangalore
2.5
2
-0.5
80%
Figures in Rs. Million unless otherwise
specified
The data must then be analyzed in New Delhi, Chennai
and Bangalore to ascertain which salesperson (s) in
these areas missed the quotas. Then we can further
analyze where he missed the quota by factors like sales
account type, or by product line
Analysis is necessary to uncover the
reason for poor performance:
1. Was the quota set too high?
2. Are salespeople having trouble with a
particular product line?
3. Can the problem be narrowed down
to a particular salesperson, sales
district, product, or price line?
4. Do any sales divisions or districts
have poor management?
Use of Sales Analysis
continued
• Planning sales force activities.
• Evaluation of salespeople’s
performance.
• Measuring the effect of advertising
and other sales promotional activities.
• Evaluating channels of distribution.
•Modifying channels of distribution
The 80/20 or “concentration”
principle states that the majority
of a company’s sales (or profits)
may result directly from a very
small number of the company’s
accounts, product or price lines,
or geographic areas.
Pareto principle

The term "Pareto principle" can also refer to Pareto efficiency.

The Pareto principle (also known as the 80–20 rule, the law of the vital few, and
the principle of factor sacristy) states that, for many events, roughly 80% of
the effects come from 20% of the causes.

Business-management consultant Joseph M. Juran suggested the principle and
named it after Italian economist Wilfred Pareto, who observed in 1906 that 80%
of the land in Italy was owned by 20% of the population.

he also observed that 20% of the pea pods in his garden contained 80% of the
peas






80% of your profits come from 20% of your
customers
80% of your complaints come from 20% of your
customers
80% of your profits come from 20% of the time you
spend
80% of your sales come from 20% of your products
80% of your salesIN
areBUSINESS
made by 20% of your sales
staff
Therefore, many businesses have an easy access to
dramatic improvements in profitability by focusing
on the most effective areas and eliminating,
ignoring, automating, delegating or re-training the
rest, as appropriate.
MARKETING COST ANALYSIS
Marketing cost analysis, or distribution cost
analysis, is the analysis of costs that affect sales
volume, with the purpose of determining the
profitability of different segment operations.
Profitability is determined by sales volume and its
associated costs and expenses.
Types of MARKETING COSTS
Marketing vs. Production Costs
A production cost is the cost
incurred by processing a product
from its raw elements to a finished
state.
Marketing, or distribution costs, can be
broken down into two distinct categories:
• Costs incurred by getting orders.
• Costs incurred by filling orders.
FIGURE 15.1 CATEGORIES OF MARKETING COSTS
Marketing (Distribution) Costs
Order-Getting Costs
• Direct Selling
Order-Filling Costs
• Physical Distribution
• Sales Promotion
Shipping
• Advertising
Transportation
• Market Research
Warehousing
Material Handling
• Administrative
• Credit and Collection
• Administrative
USES OF MARKETING COST
ANALYSIS
• An integral part of the decisionmaking process.
• Serves as the basis for management
decisions,
Allocating sales effort: ‘Iceberg principle’ says that only a
small part of the total situation is visible; the rest has to
be gauged through sales analysis.
There are customers who account for a smaller
percentage of sales but time, money and effort to tap
them is no less. These situations must be analysed &
corrective action taken.
The desirable outcome is that allocation be done based on
sales potential and actual sales.

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