Sales Management and Control

Sales executives control the personal-selling effort of the organizational units they head. The purpose is to ensure that sales department objectives are reached. Control is part of management, as are planning, organizing, and coordinating. The several phases of control are presented in the fol­lowing discussion in the normal sequence, but in the “real world,” several phases can occur simultaneously or overlap in time.

Sizing up the situation. Sales executives start by reviewing the personal­selling objectives of the firm. They analyze these objectives with respect to the present, the past, and the future, in an attempt to answer four questions:

1. Where are we now?
2. How did we get here?
3. Where are we going?
4. How do we get there?

After satisfying themselves that the company’s personal-selling objec­tives, both long range and short range, are reconcilable, sales executives appraise them relative to the plans, policies, and procedures that have been used, are being used, or are intended for use in the effort to reach personal-selling objectives. In the course of sizing up the situation, sales executives find and correct weaknesses or imperfections in the sales plans and the policies and procedures used in their implementation.

Setting quantitative performance standards. After ironing out plan­ning weaknesses, sales executives set quantitative standards against which to measure performance. Standard setting requires continual experi­mentation, and lost standards are far from precise. The ultimate test of a particular standard’s appropriateness is whether it contributes more to personal-selling efficiency than it costs.

Intelligent standard setting requires identification of the individuals who are responsible for the activity or group of activities being put under control. No two salespersons or executives perform exactly alike, even though they may operate in circumstances identical in every other respect. Thus, standards are often expressed as ranges of acceptable performance. Although it is convenient to think of a standard as a fixed value, there should be an upper and lower limit within which human variation may take place. When the performance of an organizational unit passes either of these control limits, the danger flag is up, thus signaling that the situa­tion is out of control.

Gathering and processing data on actual performance. The type and amount of information needed for controlling sales depend upon the standards selected. But, regardless of the nature of this information, it should not be in excess of sales management’s real needs, nor should its cost of collection and processing be more than its worth. Conse­quently, sales management determines—at regular intervals—whether the information being reported is sufficiently important and being used often enough to justify its costs. Sales executives also keep in mind that changes in executives, basic policies, or other matters may alter the usefulness of information. Occasionally, too, they look for cases where the same or similar information is being obtained from more than one source, representing opportunities for savings through eliminating dupli­cations in reporting. Sometimes, also, savings is realized through reduc­ing or lengthening the intervals at which information is gathered and processed.

For standards to be of maximum value, sales executives must have information on actual performances soon enough to permit timely correc­tive action. An efficient system of sales control not only furnishes informa­tion necessary to managerial evaluation of performance but also promptly relays it, together with suggestions for actions, to the appropriate organi­zational unit. But information on actual sales performance is often slow in arriving on the sales executive’s desk, considerably delaying performance evaluations. For example, many companies, perhaps even most, require sales personnel to make weekly sales reports; in such cases, a week or more may pass before the sales executive acts on the report. But progress is being made in improving the timeliness of sales control information. Utilization of electronic data-processing systems for handling sales control data has sped up information evaluation and feedback.

Evaluating performance. Evaluation of performance means com­paring actual results with standards. Because of differences in territo­rial and other conditions, it is difficult to compare individual perfor­mances. However, it is possible to explain each individual salesperson’s variations from standard. Departures from standard are classified into uncontrollable and controllable variations. Variations beyond the con­trol of the person being appraised include those caused by rapid and unexpected changes in economic conditions; changes in governmental activities; and wars, strikes, floods, droughts, and other natural disas­ters. Variations over which the person has the responsibility include obtaining proper sales coverage, following up leads, selling a balanced line, securing adequate credit information, and the like. The principle is that subordinates should not be held responsible for conditions beyond their control. In appraising performance, it is important to exclude uncontrollable variations.

Action to correct controllable variation. Management corrects the variation explained by factors within the control of the person being evaluated. Management, in other words, takes steps to move the individ­ual’s performance in the direction of the standards. The specific actions taken differ with the nature of the variation. But management’s actions assume one or more of three forms: (1) direction, or pointing out more effective ways to perform certain tasks; (2) guidance, or providing additional instructions or training; and (3) restraint, or the installation of procedures and practices aimed at keeping results within desired bounds.

Adjusting for uncontrollable variation. The amount of uncontrolla­ble variation in the comparison indicates the relative need for adjusting sales plans and policies. If uncontrollable variation suggests that present sales objectives are unrealistic or not in line with current expectations, basic revisions in the objectives are made. Thus, if a comparison of results with standards reveals substantial uncontrollable variation, adjustment of standards to attainable levels is in order.

Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.