The decisive moment in any business is the sales numbers. The sales numbers contain every possible reason of low/high sales. It means that after going through the sales reports one can guess reasons for sales drop or increase for the business at that point of time. A drop in sales volumes can be attributed to reasons like out of stock condition, more number of holidays in the month or loss of a key distributor for the company. Similarly, increase in volumes can also be assigned an appropriate reason.
i.Importance of Sales Reporting
Sales reporting mechanism is used to capture the sales data accurately, timely, and in detail and, which is critical to assess if the organization strategies are giving desired results and required mid course corrections. Sales reporting can be done at various parameters some of them could be:
i.Importance of Sales Reporting
Sales reporting mechanism is used to capture the sales data accurately, timely, and in detail and, which is critical to assess if the organization strategies are giving desired results and required mid course corrections. Sales reporting can be done at various parameters some of them could be:
- territory level details i.e. region wise, zone wise
- product wise weekly, monthly sales figures
- sales representative wise weekly, monthly sales figures
- Distribution channel wise weekly, monthly sales figures
- Competitors sales figures on monthly basis
It is important to collect information in as much detail as possible. This data can be collected from sales team, or centrally from warehouse/dispatch center or from distribution channel. Once the data is collected, it is used in various analyses to derive reports and conclusions.Sales reporting mechanism helps in building common objective amongst the sales team to move faster to achieve targets for the accomplishment of the overall organizational goal. The two important benefits of sales reporting are:
a. Faster Growth - Target Achievement
A sales report provides direction to sales/marketing team to reach the desired goal. It also provides the area of growth and concern on which a company can work. An accurate and timely sales report helps grow the business. These reports can be used to ensure that all the clients, and the entire territory is adequately covered. For example, a company has set itself a target of Rs.50 lakhs of sales in financial year 2006-2007. At the end of the first quarter, the company finds that it has achieved only Rs. 8 lakhs, a shortfall of Rs. 4.5 lakhs (assuming that it should have achieved 25% of estimated yearly sales in first quarter). To analyze the reasons for low sales, the company can use sales report across various parameters like - zones, product lines, distributors, sales man, months etc. to pin point the find the actual cause. With this analysis, company can take appropriate corrective measures to achieve its final targets.
b. Focus in Employees
Sales reports are actively used by sales force as well as the support functions to know about the organisation's overall goals. It helps them to plan their efforts. For example, based on the analysis of sales report, the sales team could do the following activities:
a. Faster Growth - Target Achievement
A sales report provides direction to sales/marketing team to reach the desired goal. It also provides the area of growth and concern on which a company can work. An accurate and timely sales report helps grow the business. These reports can be used to ensure that all the clients, and the entire territory is adequately covered. For example, a company has set itself a target of Rs.50 lakhs of sales in financial year 2006-2007. At the end of the first quarter, the company finds that it has achieved only Rs. 8 lakhs, a shortfall of Rs. 4.5 lakhs (assuming that it should have achieved 25% of estimated yearly sales in first quarter). To analyze the reasons for low sales, the company can use sales report across various parameters like - zones, product lines, distributors, sales man, months etc. to pin point the find the actual cause. With this analysis, company can take appropriate corrective measures to achieve its final targets.
b. Focus in Employees
Sales reports are actively used by sales force as well as the support functions to know about the organisation's overall goals. It helps them to plan their efforts. For example, based on the analysis of sales report, the sales team could do the following activities:
- Plan new promotion activities to push sales in a particular market
- Plan their sales calls as per market requirement
- Sales manager could motivate the team which has done well and set their performance as benchmark for others to follow
ii. Sales Reports
We have just discussed the criticality of sales reporting in any business organization.Some of the critical aspects of sales reporting plan are as follows:
a. Target Setting
Sales report should measure achievement against the set target. Sales target are derived from annual sales forecast, which in turn is derived from management's decision on desired market share and their assessment of external environment.
The sales forecast becomes the starting point for planning production, finance and workforce size etc. The sales forecast is further broken up into sales forecast of different products and different territories. Such plans are further divided into sales for each area and each sales representative.
In an ongoing business, the sales target should be at least equal to sales achievement of last year and plus some growth. For example, last year in territory A for product Z, a sales person achieved 100 units. Then for the next year he should at least target 100 units plus a reasonable growth of 15% to finalise his sales target. In this case it would be 115.
The growth is a function of sales representative's assessment of market, his willingness to accept higher target, spend budget and any significant change in external environment.
The business owner has to be cautious while setting targets. Setting very high targets may de-motivate the sales team and at the same time, setting very low target may lead to under utilization of sales team potential and complacency in the sales force.
b. Report Analysis
Any sales report contains lots of insights about the market and the sales team.These insights have to be derived from the data and require human intelligence.To keep the sales team motivated, it is important that sales manager or the business owner analyzes the data and gives a regular feedback to the sales team.Over a period, certain analysis can be standardized. A typical sales report for a dairy unit would look like:
We have just discussed the criticality of sales reporting in any business organization.Some of the critical aspects of sales reporting plan are as follows:
a. Target Setting
Sales report should measure achievement against the set target. Sales target are derived from annual sales forecast, which in turn is derived from management's decision on desired market share and their assessment of external environment.
The sales forecast becomes the starting point for planning production, finance and workforce size etc. The sales forecast is further broken up into sales forecast of different products and different territories. Such plans are further divided into sales for each area and each sales representative.
In an ongoing business, the sales target should be at least equal to sales achievement of last year and plus some growth. For example, last year in territory A for product Z, a sales person achieved 100 units. Then for the next year he should at least target 100 units plus a reasonable growth of 15% to finalise his sales target. In this case it would be 115.
The growth is a function of sales representative's assessment of market, his willingness to accept higher target, spend budget and any significant change in external environment.
The business owner has to be cautious while setting targets. Setting very high targets may de-motivate the sales team and at the same time, setting very low target may lead to under utilization of sales team potential and complacency in the sales force.
b. Report Analysis
Any sales report contains lots of insights about the market and the sales team.These insights have to be derived from the data and require human intelligence.To keep the sales team motivated, it is important that sales manager or the business owner analyzes the data and gives a regular feedback to the sales team.Over a period, certain analysis can be standardized. A typical sales report for a dairy unit would look like:
Sales manager or the business owner can analyze the above report as follows:
Sales Growth: Sales of Ice-cream is declining while sales of Liquid Milk is growing. This data can be compared with similar data from other regions. In case the trend is showing faster growth figures month over month in other regions, then the company needs to further probe into communication strategy, product features,pricing etc. to understand why sales growth is lower in case of this territory. Sales team needs to be asked reasons for the slower growth.No of Sales Calls: This measures number of customers (dealers/distributors)visited. In this case, the number is almost stagnant. Sales manager should give feedback to sales team on expected number of sales call and plan to achieve it.
No of Active Dealers: This measures number of dealers who are selling our product. In this case, this data is also stagnant. The sales manager needs to compare it with other regions and also against the given target. Another insight that can be derived from the report is that the region is loosing dealers. This is derived by deducting number of new dealers added from total number of active dealers.Such reports can be combined with other information to analyze various aspects of business.
c. Objectivity in Rewards
The reward system should be based on transparent assessment of results. In addition to annual rewards, you can have a reward system for sales contests. The annual award or an incentive scheme is announced at the beginning to incentivise the sales team to exceed the set targets. The reward system should contain a combination of growth in pay package, promotion, recognition of efforts by you and prizes for contests. These incentive schemes could be:
a. The best salesman for the year", for the person who sells the maximum
Sales Growth: Sales of Ice-cream is declining while sales of Liquid Milk is growing. This data can be compared with similar data from other regions. In case the trend is showing faster growth figures month over month in other regions, then the company needs to further probe into communication strategy, product features,pricing etc. to understand why sales growth is lower in case of this territory. Sales team needs to be asked reasons for the slower growth.No of Sales Calls: This measures number of customers (dealers/distributors)visited. In this case, the number is almost stagnant. Sales manager should give feedback to sales team on expected number of sales call and plan to achieve it.
No of Active Dealers: This measures number of dealers who are selling our product. In this case, this data is also stagnant. The sales manager needs to compare it with other regions and also against the given target. Another insight that can be derived from the report is that the region is loosing dealers. This is derived by deducting number of new dealers added from total number of active dealers.Such reports can be combined with other information to analyze various aspects of business.
c. Objectivity in Rewards
The reward system should be based on transparent assessment of results. In addition to annual rewards, you can have a reward system for sales contests. The annual award or an incentive scheme is announced at the beginning to incentivise the sales team to exceed the set targets. The reward system should contain a combination of growth in pay package, promotion, recognition of efforts by you and prizes for contests. These incentive schemes could be:
a. The best salesman for the year", for the person who sells the maximum
b. Distributor King for the year, for the person who appoints the maximum number of new distributors
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.