Essay on Sales Controlling

Published: 2021/11/18
Number of words: 4279

Abstract

Even though previous literature has identified sales controlling as an efficient tool for facilitating salespeople commitment, uncertain classification of the pivotal variables makes current findings perplexing. The paper’s objective is to provide a clearer understanding of the concept and function of sales controlling in sales organisations. Besides, the research develops a self-image for sales control and provides recommendations on how the sales manager can tick to attain the best possible results. Importance interfaces of sales controlling have been discussed like marketing/sales and controlling, especially framework and task conditions in which corresponding activities occur. Moreover, an outline is provided regarding fundamental procedures utilised in performing different tasks, which prepares particular controlling areas for the distribution tools. Since previous research failed to categorise the salesforce control systems clearly, this paper aims to enrich the reader with comprehensive knowledge about salesforce controls and the general idea of sales controlling and provide insights into the essential contextual role of sales controlling in attaining organisational sales objectives.

1. Introduction

Among the essential responsibilities of sales managers are to ensure control over sales. A sales manager should track the performance of selling activities. Sales controlling ensure the productivity of the sales department, and techniques vary from entity to entity. Sales control also keeps the sales force active, creative and dependable in their actions. The activity of controlling sales should be conducted periodically and continuously. The function assists sales managers in determining the sales level that has been attained, why variations occur, and necessary remedies to attain targeted results (Kühnapfel, 2017, pp.5-7). Normally, the sales personnel act as intermediaries between customers and the organisation. They significantly contribute to organisational growth and sustainability by generating sales and establishing long-term relationships with companies and customers. For industrial companies, this is true since the sales team is a unique organisational unit committed to producing output sales. Salespeople turnover typically leads to economic loss as a result of customer defection, hence harming the firms’ sustainable competitive advantage. To minimise costs from salespeople turnover, companies can improve salespeople’s commitment to the firm, which is perceived as the requirement for reducing opportunism, enhancing end-performance, improving work outcomes, and endorsing organisation citizen behaviour (Miao and Evans, 2013, p.85). As a result, sales controlling is an appropriate technique for ensuring organisational commitment.

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1.1. Problem Statement

The control process is not intended for establishing other people’s faults. Sales controlling is required to keep the sales department on the right path and help them uplift themselves. The sales manager is responsible for keeping an eye on the sales team action, inhibiting them from making careless mistakes, and educating them on taking corrective actions whenever necessary. To achieve these goals, the sales controlling process requires systems that would ensure the sales team conforms to set standards (Zang et al., 2020, p.288). However, such control systems might be too strict or too liberal, thereby harming the performance of the sales team. Therefore, the sales controlling system requires a suitable mechanism that would analyse the sales team nature, nature of work, level of cooperation, and other pertinent variables.

1.2. Research Question and Objective

Sales controlling can be comprehensively defined as analysing and measuring the sales force performance and benchmarking it with standard performance, determining and pointing variances and their causes, then undertaking corrective actions to resolve various situations. In the contemporary business world, sales control is essential and requires to be executed by sales managers through supervision. The sales controlling yearly goals can only be attained after all activities are executed according to the set plan. Therefore, this paper will address the research question; how does sales control influence organisational sales goals? Besides, the paper’s objective is to determine different mechanisms of sales control and how the salesforce can be controlled to attain predetermined organisational sales objectives.

2. The Concept of Sales Controlling and Its Significance

2.1. Steps in Sales Control

Generally, sales control is among the sales management functions that ensure the company’s sales attainment and profit goals by efficiently and effectively coordinating various sales functions. Various steps are involved in sales control to ensure set goals are achieved.

Establishing sales team standards: a standard is described as a target against which the sales force performance can be evaluated. The set standard is utilised for comparison, and normally supervisors prefer following the standards. Set standards should be achievable and realistic since extremely high standards are useless and unattainable and only demotivates the workforce. Standards should be developed by considering organisational resources, and it is essential to set standards in measurable or numerical value. For instance, one cent standard sales per year, six euros standard profit per year, or a minimum of 5% cost reduction. Other times, it is challenging to set standards in measurable terms. For example, the quality standards for managerial tasks or quality standards for tasks are imperative to establish a time limit for achieving standards, and such standards must be kept for less period. For instance, if an organisation set standard sales of €1,200,000 each year, then sales of €100,000 should be the monthly sales standard. The benefits of setting short-term target are that problems and issues can be spotted in the early stages and resolved accordingly (Husain, 2018, pp.56-58). Besides, standards can be changed periodically according to situations, like some companies can make more sales during the Christmas season than others.

Evaluating actual sales performance: after the entity sets standards for the sales force to follow, performance is evaluated based on work done. Measuring performance in numbers is quite easy; however, measuring both quantitative and qualitative performances is crucial. Normally, it is perceived as ethical to attain quantitative standards by disregarding qualitative standards. It is thus essential to fix particular quality standards to ensure easy performance measurement after the quantity of rejections sales returns rises. A manager’s performance is evaluated based on overall departmental performance. To acquire a more accurate estimation, the performance should be measured in short periods (Zang et al., 2020, pp.290-291).

Comparing standards with actual performance:  to evaluate and analyse sales force performance, it is essential to establish a comparison between standard and actual performance. When both performances match, sales controlling terminates there. In case of variations, the sales manager puts efforts to establish the causes of the variation (Pufahl, 2019, p.26). Insignificant performance variations can be disregarded. Nevertheless, with major variations, strict measures should be undertaken.

Correcting variations and taking follow-up measures: the reasons for variations must be resolved by taking corrective measures. To ensure such measures are adhered to, the top management can develop follow-up actions (Pufahl, 2019, p.33). Thus, such steps are essential in sales controlling to ensure sales objectives are attained.

2.2. Controlling the Sales Force

Controlling the sale force entails measuring the performance of the sales personnel, comparing with set standards, determining variations and reasons, and taking corrective actions if required to ensure performance occurs as planned. The efficiency of sales team management depends on the company’s controlling mechanisms. Salesforce control ensures the team is creative, active, alert, and consistent in their efforts. Appropriate control systems are critical for the salespeople and the firm. Salesforce control entails validating the performance of the sales team and undertaking corrective actions if required. In most cases, to exercise control over the sales team, activities, discipline, expenses, time, and sales volume are utilised as bases for performance measurement and comparison (Hünerberg, 2017, pp.335-336). Different methods exist for controlling the sales force; however, not all the methods are suitable for all scenarios and organisations. The applicability of such methods relies on areas, criteria, and various aspects utilised for measurement and comparison. Some of the most recognised methods of controlling sales force include the following.

Establishing sales territories: the sales manager or the organisation is responsible for establishing sales territories for the sales force team members. By developing the territory, the sales force cannot compete against one another and would focus wholly on generating more sales lead to improve revenues. Besides, a well-defined sales territory minimises the potentiality of missing out on possible customers, and it becomes easier for salespeople to develop relationships with customers for future deals (Hünerberg, 2017, p.349).

Sales quota allocation: most entities driven by sales, determine sales quota to the personnel before one financial period. Such a sales quota gives the salespeople a goal to work on and helps the firm keep the approximation of revenue generation by the end of the financial period. Salespeople performance can be evaluated based on the sales made. However, the sales quota differs for each salesperson based on the allotted area and products sold (Blessington, 2016, p.44).

Keeping contact with a salesperson: it is always essential to ensure continuous contact with the sales team in order to keep them motivated. It also helps them in resolving the issues they face when doing sales deals. The sales personnel can be contacted through face-to-face meetings or phone calls.

Defining rights and authorities of salespeople and salesman’s reporting: the salespeople should be made aware of their respective duties and rights to enable them to perform their jobs effectively and better. Also, reporting is among the most recognised methods of keeping track of salesperson performance. Guidelines and policies should be established on when and how the sales team should report to their supervisors (Miao and Evans, 2013, pp.88-89).

Complaints and opposition notes: the organisation should maintain notes from salespeople oppositions and complaints and those from customers. Responding to oppositions and complaints helps in enhancing services and work offered by the sales force.

Analysing sales expenses: limited expenses are usually allocated to the sales personnel daily to reach potential customers without challenges. However, other sales team members may take advantage of the firm. Thus, the organisation or sales manager should properly analyse the expenses before approval (Kehr and Gummersbach, 2020, p.116).

Field trips and visits:  usually, the management keeps in touch with the sales team through emails and phone calls. However, the manager should also plan field trips with the sales force probably after every three months to make observations of what happens in the field.

Providing adequate sales tools: the sales personnel require sufficient sales tools to makes sales effectively. Examples of sales tools include literature and material such as small video clips, visiting cards, order forms, sales literature, and sales manual. Usually, sales controlling can be highly ineffective without controlling the sales force. The process is not aimed at keeping an eye on the sales team but limiting the potentiality for mistakes. Salesforce controlling process targets to answer different questions like, is the sales team motivated? How can we develop a successful salesforce? Are the sellers well-trained? How can we reward the salesforce? As a result, companies require the above control methods to ensure they tolerate heightened competitive pressure, and the management leads the firm in the right direction (Kehr and Gummersbach, 2020, pp.118-119).

2.3. Significance of Sales Controlling

The activities of the salespeople are controlled through supervision by authority exercised by the manager. Sales controlling is essential in any entity as it does not matter whether the salesperson works for long distances away from the supervisor or works independently. In such situations, coordination issues might ensue with either the salesperson or the supervisor. In such situations, sales controlling is imperative. It is essential to ensure transparency of all salespeople actions with the supervisor to evaluate negative variations and correct them accordingly. Sales controlling ensures the salespeople efforts are directed to maximise profitability and ensure maximum utilisation of human capital and materials. In most business, customers are deemed valuable assets. It is thus crucial to address the complaints and problems facing customers. Through this way, the company can build a good reputation in the market. The sales manager is accountable for directing sales personnel to prioritise customers as well as keeping them satisfied and happy. Sales controlling can also help sales managers improve sales profitability by controlling the sales force, installing stages for enhancing the sales force productivity, reviewing strategies followed and sales policy, and enhancing the quality for establishing target budget functions and sales plans (Kühnapfel, 2017, pp.1-3).

The needs for sales controlling in organisations are plenty. Sales controlling enhances efficiency in selling, and the process requires sales personnel to report their sales performance constantly. Whenever variances are tracked, corrective measures are undertaken to improve the sales method. Continuous watch of the sales force performance ensures the team is motivated to accomplish organisational goals. A well-motivated team is likely to work actively in selling activities, and the overall effectiveness of the sales team increases. Salesforce control exceedingly fundamental in precisely understanding the selling activities performance. Consequently, the efficacy of individual sales personnel is assessed, and the remuneration plan fixed accordingly. Sales control, therefore, supports the firm in providing incentives to effective salespeople. Such an evaluation develops both a punishment and reward system within the firm. Sales managers can coordinate the sales force efforts through controlling (Miao and Evans, 2014, pp.1236-1237). Individuals from various regions with diverse temperaments and tastes join sales companies. As a result, suitable supervision and coordination are required to inspire and direct the salesforce towards established organisational goals. Through sales control, coordination and supervision of selling activities are facilitated in the company. Categorically, sales controlling guides the sales force. Through continuous supervision and guidance, the sales team can work collaboratively to attain predetermined organisational objectives. Appropriate guidance is fundamental at regular intervals to ensure the sales team efforts are highly productive (Miao and Evans, 2014, p.1241). Conclusively, sales controlling aims to drive change in the sales team by continuously appraising their performance, identifying mistakes, and taking relevant measures.

3. Sales Controlling Mechanisms

3.1. Sales Audit

The primary goals of sales controlling include control revenue, maximise profits and optimise sales numbers. The process of sales control can be accomplished through cost aspects such as sales function administration and performance expenses or through behavioural aspects such as allocating selling time or sale efforts. The most commonly applied sales control tools are sale programmes and sales budget. However, the sales budget and sales analysis are other available mechanisms. A sales audit entails an unbiased and unsystematic appraisal of the organisation’s selling function’s fundamental policy and objective. The objective of a sales audit involves enhancing the sales department effectiveness. Usually, the audit function examines different aspect like sales personnel, procedures, sales methods, organisational structure, internal policies, and the company’s objective. Audits emphasise the design and execution of selling policies and strategies and also determining the organisation’s strengths and weaknesses. Besides, sales audit aim to minimise the organisation’s weaknesses whereas maximising opportunities (Bingham and Quigley, 2015, pp.442-444).

The sale audit process comprises different steps. First, the company evaluates the sales road map or process. The procedure from obtaining leads, following up a customer and then selling to the customer is evaluated for efficiency. Also, the current process is assessed for any gaps. Existing assets and tools enable the sales team to facilitate the selling process. CRM is a critical tool that allows the team to view data and analytics, track progress, and manage lead information. Existing sales resources and contents are audited for effectiveness in generating customers. Resources like product demonstrations, webinars, and case studies educate potential customers and aid them in decision making. Assessment of the current leads determines whether leads qualify for sales. Besides, the current reporting is appraised since the more data the sales force works with, the more successful and accurate their efforts become Dietzel, 2020, pp.191-192). Sales audit determine whether the organisation possesses the required tools to provide the team with needed information. Finally, the sales team synergy is evaluated to assess whether they have close working relationships with account managers, marketing, and management. Sales audit, therefore, is a powerful tool for evaluating the sales force work and determining how things can be improved to attain revenue goals.

3.2. Sales Analysis

The systematic process aims to answer various questions, such as what is sold? Where is it sold? By whom it is sold? Who are the buyers? When there is a need, analysis is conducted to resolve a problem. Sales analysis has different uses, including market position evaluation, inventory control, production planning, keeping suitable product mixes, developing a sales forecast system, strategizing salesforce activities, and assessing sales team performance (Ingram et al., 2015, p.265). Performing regular sales analysis enables the company to understand which products customers purchase and dissect why such purchases behave that way. Analysis can also help to establish patterns in lead conversions as well as drop-offs. With Close, an intelligent sales CRM, actionable reports can be generated to track vital sales key performance indicators. Constant sales analysis, therefore, assists in restating sales strategies to ensure sustainable business growth.

Sales analysis studies the sales volume operations in order to establish a profit and sales trend. The analysis is essential in attaining better performance in sales. Sales analysis demonstrates products, types of customers, and sales territories. Besides, the analysis identifies customer accounts that are satisfied or unsatisfied, low volume and high-volume products, and weak or strong territories. The analysis thus provides information and data that allows the organisation to effectively distribute sales efforts and optimally allocate resources. Sales analysis ignores the ‘why’ of the problem since with data, explanation, and evaluation; the management can determine causes and apply corrections. Different problems that require sales analysis include sales profit shortfall, unmet sales quotas, decreased profits from specified sales volume, and increasing sales with decreasing profits. The analysis also determines the organisational strengths and weaknesses in various areas like salespersons, sales territories, product price, quality, and line-range, expenses and overheads distributions, and a class of accounts (Ingram et al., 2015, pp.267-268). The sales control process uses the analysis to resolve different problems arising from such areas.

3.3. Marketing Cost Analysis

Sales quotas and sales budgets classify different sales activities and approximate their individual costs. The accomplishment of sales operations relies on the accurate execution of such plans. Salesforce must implement their assigned tasks within the cost frame and time frame predicted therein. The management by exceptions is the principle adhered to ensure corrective actions are introduced promptly (Blessington, 2016, pp.47-48). Market cost analysis demonstrates the operations by developing solutions to various questions associated with consumer accounts, contribution, territory, and product. Data collected is essential in undertaking corrective actions to enhance profitability. The techniques employed involve categorisation of expenses as either direct, like salesforce commissions or salaries or indirect expenses, and classifying the activity heading. Overheads allocation is conducted logically on the basis of consumer accounts, salesperson, sales territory, and not on products. Besides, the contribution is calculated as profit plus unallocated overheads. Generally, sales controlling involves the allocation of expenses and costs, which is done through market cost analysis to attain sales volume and their validation. Cost analysis, therefore, develops answers for various questions such as what products yield maximum profits? What is the contribution of other products? What is the profit contribution level by various salespeople? Which territories are more profitable? The answers to such questions enable the sales manager to perform effective sales control and hence maximise profits from the salesforce (Homburg, 2017, p.1206).

Control is a critical function of sales managers that evaluates system performance and helps managers take corrective actions where there is a deviation between formulated plans and system performance. In the contemporary marketplace, sales managers have been forced to shift their attention to costs related to the implementation of sales effort rather than sales volume only. Sales controlling intends to ensure the sales efforts of the organisation to align with the sales plan by applying corrective actions when variations arise. Moreover, sales controlling evaluates the salesforce performance and ascertains opportunities and threats the organisation is vulnerable to. With market cost analysis, sales managers can spread natural costs, distribute such costs to functional units, examine each unit’s profitability, and execute suitable actions based on analysis findings. The sales audit evaluates the organisation’s entire sales operations; however, marketing cost analysis improves the efficiency of the company’s marketing operations by scrutinising its marketing practices, policies, and strategies. Further, profitability analysis is essential to sales managers since it associates marketing costs with sales revenues (Homburg, 2017, pp.1223-1224). Sales managers can undertake the required measures to achieve higher profitability from the organisation’s sales transactions. Various principles like cross-classification, 80/20 principle, and the iceberg principle direct sales managers in carrying out an efficient cost and sales analysis to attain sales control goals.

4. Summary

The present literature has considered the sales controlling function fundamental in accomplishing organisational sales goals. Published literature on sales controlling demonstrates different steps of sales controlling, salesforce controlling methods, mechanisms of sales controlling, and its significance. Generally, sales controlling involves determining attainable sales level, reasons deviations arise, and what remedies should be undertaken to accomplish targeted results. Organisations require viable sales control mechanisms that support sales control’s overall goals, which include optimising sales numbers, maximising profits, and controlling revenue. The literature on sales controlling has facilitated contemporary research in answering the research question accurately. Sales control has a huge impact on an organisation’s sales goals, and various mechanisms employed in sales controlling support sales managers in attaining sales objectives (Pufahl, 2019, pp.210-212).

5. Conclusion

Present-day literature on sales controlling has demonstrated different characteristics of sales control and mechanisms used by sales managers to achieve overall sales goals. Sales control is a tool used by managers to accomplish sales and profits goals by efficiently directing different sales functions. Many organisations require the function of sales controlling since it enhances selling efficiency, understanding sales team performance, providing incentives to sales personnel, and coordinating salesforce efforts. Sales managers can also supervise and coordinate selling activities and guide the salesforce toward attaining sales goals. Information retrieved from different research materials reveals that sales controlling emphasises salesforce performance and aims to track any variations in selling activities and take corrective measures. To maximise profits and control revenues, sales managers should perform sales audit, sales analysis, and marketing cost analysis to achieve overall controlling aims (Katsikeas et al., 2018, pp.48-50).

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5.1. Outlook

  • Sales controlling is an instrument used by sales managers to ascertain which sales level to achieve and whether there are deviations that require corrective actions.
  • The benefits of sales control include improving efficacy in selling practices, coordinating salesforce efforts, boosting sales team performance, maximising profits, and controlling revenues.
  • Sales controlling function can create systems that can be too strict and too liberal, which hurts the salesforce’s performance.
  • However, the current research supports the role of sales controlling and gives insights on how different control mechanisms can assist organisations in meeting their sales goals.

5.2. Recommendation for Further Research

The current literature has established steps and mechanisms for sales controlling to identify various issues impacting salesforce performance and then developing solutions to such problems. The research work can be helpful to scholars for further research on sales controlling to accomplish their individual objectives. This paper provides researchers with exceptional information to conduct additional researcher on sales controlling and elaborate more on its significance.

6. References

Bingham, F.G. and Quigley, C.J., 2015. Sales control systems: An exploratory study. In Proceedings of the 1994 Academy of Marketing Science (AMS) Annual Conference (pp. 442-445). Springer, Cham.

Blessington, M., 2016. Sales quota accuracy and forecasting. Foresight: The International Journal of Applied Forecasting40, pp.44-49.

Dietzel, A., 2020. Optimiertes Vertriebscontrolling. In Vertriebscontrolling optimieren (pp. 191-192). Springer Gabler, Wiesbaden.

Homburg, C., 2017. Marketing-und Vertriebscontrolling. In Marketingmanagement (pp. 1203-1237). Springer Gabler, Wiesbaden.

Hünerberg, R., 2017. Vertriebscontrolling. In Handbuch Marketing-Controlling (pp. 333-356). Springer Gabler, Berlin, Heidelberg.

Husain, R.V., 2018. Sales control and performance: Moderating effects of salesperson and supervisor characteristics. The Marketing Review18(1), pp.55-69.

Ingram, T.N., LaForge, R.W., Schwepker, C.H. and Williams, M.R., 2015. Sales management: Analysis and decision making, pp.264-276.

Katsikeas, C.S., Auh, S., Spyropoulou, S. and Menguc, B., 2018. Unpacking the relationship between sales control and salesperson performance: a regulatory fit perspective. Journal of Marketing82(3), pp.45-69.

Kehr, H. and Gummersbach, J.M., 2020. Vertriebssteuerung und Vertriebscontrolling im Firmenkundengeschäft im Ausland. In Internationales Firmenkundengeschäft von Banken (pp. 115-120). Springer Gabler, Wiesbaden.

Kühnapfel, J.B., 2017. Was ist Vertriebscontrolling? In Vertriebscontrolling (pp. 5-24). Springer Gabler, Wiesbaden.

Kühnapfel, J.B., 2017. Wozu ein Buch über Vertriebscontrolling? In Vertriebscontrolling (pp. 1-3). Springer Gabler, Wiesbaden.

Miao, C.F. and Evans, K.R., 2013. The interactive effects of sales control systems on salesperson performance: a job demands–resources perspective. Journal of the Academy of Marketing Science41(1), pp.73-90.

Miao, C.F. and Evans, K.R., 2014. Motivating industrial salesforce with sales control systems: An interactive perspective. Journal of Business Research67(6), pp.1233-1242.

Pufahl, M., 2019. Strategisches Vertriebscontrolling. In Vertriebscontrolling (pp. 23-132). Springer Gabler, Wiesbaden.

Pufahl, M., 2019. Trends im Vertriebscontrolling. In Vertriebscontrolling (pp. 209-213). Springer Gabler, Wiesbaden.

Zang, Z., Liu, D., Zheng, Y. and Chen, C., 2020. How do the combinations of sales control systems influence sales performance? The mediating roles of distinct customer-oriented behaviors. Industrial Marketing Management84, pp.287-297.

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