A sales audit is a systematic and comprehensive appraisal of the total selling operation. It appraises integration of the individual inputs to the personal selling effort and identifies and evaluates assumptions underlying the sales operation. More specifically, a sales audit is a systematic, critical, and unbiased review and appraisal of the basic objectives and policies of the selling function and of the organization, methods, procedures, and personnel employed to implement those policies and achieve those objectives.
Proponents of the sales audit stress the importance of focusing on overall selling strategy and the methods for implementing it rather than examining individual components piecemeal. Sales executives, for example, may become so involved in programs to reduce sales personnel turnover or some new technique for motivating sales personnel that they lose sight of some key objective, which might be, for instance, to increase the profitability of small accounts. Existing sales personnel may do a poor job in working with small accounts, yet management focuses more on retaining these sales personnel than on making them more effective with small customers. Worse yet, the new motivational technique may be counter- productive—it may be encouraging sales personnel to concentrate upon getting the “cream of the business from the largest customers.” Sales audits detect situations of this type.
A sales audit uncovers opportunities for improving the effectiveness of the sales organization. An audit identifies strengths and weaknesses— strengths have potential for exploitation, weaknesses have potential for improvements. While “audit” implies an after-the-fact evaluation (a carry-over from financial usage), a sales audit provides information useful for planning sales strategy.
Sales audits have no standardized formats. Each company designs a sales audit to fit its needs. Every sales audit examines six main aspects of selling operations:
- Objectives. Each selling input should have clearly stated objectives that are related to desired outputs. For example, a firm might have the objective of raising its market share from 15 to 20 percent without reducing per unit profit.
- Policies. Both explicit and implicit policies are appraised for their consistency in achieving the selling objectives. If, for example, a policy of promoting only from within prevents management from finding a district manager capable of bringing district A up to a 20 percent market share, the policy is re-evaluated.
- Organization. Does the organization possess the capabilities for achieving the objectives? Are planning and control systems appropriate? If an organization is understaffed, or staffed with incompetents personnel, there is little likelihood of achieving ambitious objectives or ensuring proper control.
- Methods. Individual strategies for carrying out policies must be appropriate. For example, it is futile to attempt upgrading quality and price if the company has already established a strong consumer image for low quality and price.
- Procedures. The steps in implementing individual strategies should be logical, well designed, and chosen to fit the situation. The procedures should allocate responsibility for implementation to particular individuals and explain how the goals are to be achieved.
- Personnel. All executives playing key roles in planning sales operations and strategy, as well as those responsible for implementation of sales programs, are evaluated as to their effectiveness relative to stated objectives, policies, and other aspects of sales operations. Too often an executive is evaluated in terms of ability to increase sales or profit rather than success in reaching prede- terminded objectives, such as increased market share.
In making a sales audit, too, a company examines both its markets and its products. Fundamentally, in examining markets, the sales audit seeks answers to four questions:
- Who is buying what, and how?
- Who is selling what, and how?
- How is the competition doing?
- How are we doing?
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.