Analysis of Sales Volume

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					                                           Analysis of Sales Volume
                                                  Lesson 10

Objectives     After completing Lesson 10 you should be able to:

     1. To discuss how planning, implementation and evaluation are related.
     2. To present four methods of using “sales volume” as a measure of sales performance.

Lesson Notes

                                     The Interrelationship of Planning,
                                      Implementation and Evaluation

                                                       • Set goals
                                            • Determine strategies and tactics
                                                    (What should be done)

                                Evaluation                                  Implementation
                           • Compare goals and results
                                                                      • Organize, Staff and Operate
                               • Explain deviations

                                (What was done)

2. Without effective evaluation, management cannot tell…

1. Whether the plan has worked,
2. To what degree the plan has been successful,
3. What are the plans reasons for success or failure

Sales rep performance cannot be evaluated independently of the marketing plan.

2. Sales alone are poor measure of effectiveness…

        What management wants to know is how effective has our strategies and tactics have
         been at achieving our marketing objectives

        Assessing performance based on total company sales is insufficient for giving a true
         picture of the effectiveness of an organizations planning and implementation activities.

3. Sales Management Audit
A sales management audit evaluates a firm’s sales objectives, strategies, and tactics
The evaluation process includes an analysis of:

Rule of thumb: We cannot decide why something happened until you thoroughly
understand what happened

4. The evaluation of sales force performance evaluation includes:
       - An analysis of sales volume,
       - An analysis of costs and profitability
       - An analysis of the salesperson’s performance.


                 20% of                 20% of                  20% of
                 your                   your                    your
                 customers              products                territory

What type of performance should be assessed?

6. Sales Volume (trend analysis)
   - Total Sales Volume – combined sales in all territories for all customers.
   - Sales volume trends are most important:
                              (i) Trends over a number of years
                              (ii) Trend of the company’s market share

7. Sales By Territories
- By analyzing sales territories managers can better identify which territories are weak and then
why they are weak.
- 80/20 Rule applies.

Step 1: Select a market index that indicates what percentage of total sales should be obtained
         from each territory.
    If 15% of the nations sales come out of B.C.
      Then the company will use the national figures as benchmark (providing the
       company is national)

Step 2: Determine the company’s actual total sales (national) in dollars or units during the period
being studied.

Step 3: Multiply the territorial index by the total sales figure (for all of Canada) to determine the
goal or target in each district.

Step 4: Compare actual regional sales with the regional goals to see how much variance has

Sales by Products

   •   80/20 Rule applies
   •   80% of your profits come from 20% of your products.
   •    You can calculate the 80/20 value based on:


Sales by Customer Classification
   • 80/20 Rule applies.
   • Different target markets buy different types and volume of products.
   • Household markets and sub markets and organizational markets.

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