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Productivity Measurement Plan For the Sales Department
As the manager of the sales department of a trading company in Cyprus, it is important to ensure that the sales department achieves its target goals and objectives to facilitate the attainment of the missions of the company. To achieve the departmental goals and objectives, all salespersons must be committed to high performance. The levels of performance and productivity of salespersons in the sales department can only be ascertained through a detailed examination and evaluation. This would involve the use of a productivity measurement plan.
The measurement of productivity of the ten salespersons will focus on the results such as the number of new customers attracted by salespersons, the total amount of sales revenue generated by them, number of orders made by customers and rate of retention of existing customers. The measurement of sales productivity would also involve a detailed analysis of trends of performance of different products offered by the company in different market segments. This would help in identifying new market opportunities that may exist within the target market, which the organization can exploit further. It is presumed that this productivity measurement plan would help the organisation in understanding some of the causes of changes in sales volumes and what the organisation should do to rectify the situation. It is also supposed that findings or results obtained during the productivity measurement would help the manager of the sale department to lift the performance of the sales team by developing new approaches for improving the entire sales process. The productivity measurement plan will also help in identifying the weak areas or points in the sales process, hence show the sales manager and sales team how they can fix the problems, for example, the appropriate timing of activities would be improved, and the productivity would rise.
Critical Success Factors for the Sales Department
Howell (2009) defines a critical success factor (CSF) as an element that is necessary for an organisation to achieve its mission. A critical success factor refers to a feature or activity that is required by the organisation to enable it to succeed; for example, the critical success factor in an information technology project in a high-tech computing company would be the involvement of users during the development of an information system.
About the company, the major critical success factors for the sales department include the effective distribution of products to supermarkets and minimarkets all over Cyprus, the ability of ten salespersons in different regions to take the largest number of orders from customers and deliver the goods ordered by customers at the most appropriate time and receive payments within the stipulated time. All these activities should aim at increasing the sales volume for the company. The number of unit sales made by the salespersons will act as a major determinant of the success of the sales department.
Key Performance Indicators
Parmenter (2007) defines a key performance indicator (KPI) is a measurement used for evaluating the success of an organisation. Key performance indicators can also be used to measure the success of major activities or operations. According to Parmenter (2007), key performance indicators show the progress of the organisation towards achieving the predetermined goals and objectives. The major key performance indicators (KPIs) for the sales department would include quota fulfilment, customer attraction and retention, as well as product demonstrations.
First and foremost, a sales quota would be set to encourage the salesperson to work harder towards attaining the goals and objectives of the sales department. The fulfilment of the sales quota would directly reflect the success of the performance and success of ten salespersons. It will also serve the purpose of providing salespersons with a tangible and achievable goal. Parmenter (2007) also asserts that the ability of salespersons to consistently meet and exceed a sales quota is often a sign of motivation. Some of the main factors that would be considered when establishing a sales quota include the overall revenue goals of the company, the historical revenue generation of each of the four sales territories, namely Nicosia, Limassol, Larnaca/Famagusta and Paphos, the ability of the company to increase the sales staff and the past performance of each member of the sales team.
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Secondly, the rate of attracting new customers and retaining the existing ones would also indicate the performance and success of salespersons. Pride and Ferrell (2010) define the customer attraction and retention as the ability of an organisation or marketer to attract new customers and retain the current ones. Salespersons in the four target markets must be able to get new initial sales as well as to make appropriate follow-ups after the sale to facilitate the retention of customers. The ability of salespersons to attract new customers would be measured using the number of new customers gained from target markets. In this sense, keeping the track of customer retention, which would be measured by determining the number of customers, who purchase more than once, would be a key performance indicator of how well salespersons can serve and meet the needs of customers and make efforts of keeping hold of customers. Customers can be retained through keeping in touch with them on a regular basis.
Thirdly, product demonstrations would be used to display different types of products available to customers in stores. It is presumed that increased products demonstrations would contribute to the sales volumes for the company. Other key performance indicators would include the sales revenue results, such as two thousand dollars per month generated from sales from each of the four target markets generated by salespersons, and profitability of customers from geographical market segments.
Productivity Indices for the Sales Department
The main productivity index for the sales department will be the ratio of sales to labour hours. This will involve determining the volume of sales attained by the salespersons. Sales volume refers to the number of units sold by salespersons. On the other hand, labour hours refer to the number of working hours each salesperson dedicates to marketing of products of the company. This involves the provision of services such as promotion, advertising, personal selling and physical distribution of products among customers.
The main types of data that would be collected include the number of units sold and working hours of each salesperson. The unit sales would be weighed against the total labour hours to determine the ratio of sales to labour hours for each salesperson. Similarly, a comparison of sales data for the same store for consecutive years, for example, the sales data of this year would be compared with the sales data of last year to determine the performance and success of salespersons. Horizontal comparisons, which would comprise of comparing the performance of salespersons in different target markets, would also be conducted to establish the performance of salespersons in different markets. The data on sales volume and working hours for each salesperson would be collected on a quarterly basis, that is, after every three months.
The main process that would be put in place to inform the management of the firm on the level of performance of salespersons is conducting inter-departmental meetings regularly to facilitate the sharing of information between various departments of the company such as the finance department, business planning and development department, as well as sales and marketing department. Regular inter-departmental meetings would also facilitate the development of appropriate approaches that would enable the company to attain its goals and objectives effectively.