D099 Module 11

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70 terms meghanmager Preview WGU Sales Management D099 Pre-...70 terms gflem22Preview d099 m Teacher Mik Explain the purpose of budgeting and briefly describe how forecasting is used to determine a financial plan.The sales budget provides a detailed accounting of the expected revenue over a given period, commonly a year or a quarter and will be used by other department managers to develop the production budgets and the cash flow budgets and to support critical work activities for individual departments.· To plan and control the use of scarce resources.· To reveal the company's objectives and how management intends to acquire and use resources to attain those objectives.· To provide a comparison of actual results to the plan for achieving those objective.Forecasting uses historical data to predict or estimate a company's future sales potential based on past results. The sales forecast can be used to monitor current sales progress, and if there is a change in circumstance, to adjust both the production and inventory levels.How does an accurate budget benefit sales managers? - Show management's operating plans for the coming periods.

• Formalize management's plans in quantitative terms by defining sales goals.
• Inform the structure of the sales organization that would most effectively

achieve the defined sales goals.

• Force all levels of management to think ahead, anticipate results, and take action

to remedy possible poor results.

• Motivate salespeople to strive to achieve quotas or sales goals.
• Define salespeople's quotas and track their progress toward meeting these

goals.

• Check accountability during an employee evaluation.
• Set limits when formulating incentive and bonus programs.

Describe the three-step process for sales forecasting. Survey the current economic and business conditions, including government policies, the health of the economy, demographics, and technology trends.Develop an industry-specific sales forecast after looking at competitors' past, present, and future activity.Forecast the company's share of the market while considering the current business, marketing, and sales planning activities.Explain the differences between budgeting and forecasting.The key difference between a budget and a forecast is that a budget lays out the plan for what a business wants to achieve, while a forecast states its actual expectations for results, usually in a much more summarized format.Explain how a CRM software can be used in the sales forecasting process.Can provide the necessary data to keep the forecasts current and can track the progress of each sales opportunity through the sales funnel/at the individual customer level to better understand each customer touchpoint along the path to sales conversion. Can track the total sales value of each step in the sales funnel and the probability of moving to the next stage to develop an accurate forecast based on opportunity.Describe the two key outputs of the sales budget. The sales budget shows the expected revenue generated by sales, and the sales expense budget shows the expenses necessary to reach the projected revenue.Describe the relationship between the sales and production budgets.Since the product needs to be available when the customer wants to buy it, an important relationship exists between the sales budgets and the production budgets. Managers develop the production budget in units and then in dollars.The principal objective of the production budget is to coordinate the production and sale of goods in terms of time and quantity.Describe the components of direct and indirect costs. Direct costs such as direct materials and direct labor can be directly traced to a product, service, customer, project, or function.Indirect costs are those costs that are not directly traced to the production of the robots. May include administrative salaries, human resources personnel salaries and benefits, security costs, field supervision, personnel training, market research, and new product development.Distinguish between fixed costs and variable costs and give examples of each.Fixed overhead costs are costs that must be paid no matter how much is produced or sold. Rent, payroll, and depreciation are all examples of fixed costs.The salaries of salespeople are fixed overhead costs.Variable costs change with the level of production or the level of sales. Variable overhead costs are affected by business activity and may include shipping, legal expenses, materials, office supplies, equipment maintenance, advertising, consulting services, and commissions.Describe the selling and administrative budget and [provide examples of the types of costs included.Selling expenses are costs incurred to obtain customer orders and get the finished product into the customers' possession. Advertising, market research, sales salaries and commissions, and delivery and storage of finished goods are selling costs.Administrative expenses are nonmanufacturing costs that include the costs of top administrative functions and various staff departments such as accounting, data processing, personnel, executive salaries, and legal costs are administrative costs.

Explain the contribution margin and how it is calculated. The contribution margin tells what money is left to cover the fixed expenses and to produce a profit after variable costs are deducted & allows a sales manager to determine how much the organization needs to increase sales/decrease expenses to break even. Can be challenging to determine which costs are variable and which are fixed when calculating a contribution margin.Contribution Margin = sales - manufacturing variable costs - variable costs attributed to the department Describe the four ways that sales departments can be organized.Sales departments can be structured by tasks, such as selling centers, geography, or by accounts.Describe the effects of an economic downturn on the company sales and income.An economic downturn can increase the cost of both materials and labor, leading to a decrease in sales. Both increases have the same negative effect on net income.Discuss the options for outsourcing parts of the sales cycle.Companies have outsourced various functions. Payroll functions such as recording hours, managing benefits and wage rates, and issuing paychecks have been handled for years by third-party providers. Historically, companies have

outsourced for two main reasons: cost reduction and labor needs.

Often, to satisfy both requirements, companies outsource work to firms in foreign countries because of the lower labor costs in other countries or specialized knowledge that can be accessed.Discuss the benefits and drawbacks of outsourcing all or part of the sales cycle.

Benefits: gain access to more buyers, access to more markets, can be less

expensive, ccess to larger talent pool, ower labor costs, less money spent on benefits and training.

Drawbacks: loss of control, sellers can decide which products to sell,

communication issues, impact on company culture, problems with quality control.Identify the five steps involved in Activity-Based Costing (ABC). Explain how understanding these steps can help management plan for the future and control processes to meet the goals of the organization.

• Identify the activities that consume resources and assign costs to those

activities. Purchasing materials would be an activity, for example.

• Identify the cost drivers associated with each activity or a transaction that incurs

costs. Could be the number of orders placed or the number of items ordered.Each activity could have multiple cost drivers.

• Compute a cost rate per cost driver unit. The cost driver rate could be the cost

per purchase order, for example.

• Assign costs to products by multiplying the cost driver rate times the volume of

cost driver units consumed by the product.

• Make decisions based on the results of the analysis.

Please compare and contrast Full product Costing and Activity-Based Costing.Full product costing: a costing method in which the complete end-to-end costs of producing products and services are determined.Activity-Based Costing: a costing method that first assigns costs to activities, then assigns costs to products based on their consumption of activities.Explain the Return on Assets managed measurement. Measuring the return produced on inventory and accounts receivable is another valuable measure and is called returns on assets managed (ROAM). The ROAM calculation considers the contribution margin and the asset turnover and is

calculated as follows:

ROAM = Contribution as a percent of sales × Asset turnover rate.

Explain Customer Profitability Analysis including the purpose and the calculation. How does the Pareto Principle apply to Customer Profitability Analysis?Customer profitability analysis requires analyzing the revenues generated by a customer and the costs associated with providing the product or service.Revenue − Costs = Profitability The revenue generated from customers or customer groups may vary for many

reasons:

Differences in the price charged for a unit of product or service to different customers.Differences in volumes sold to different customers.Variations in product or service specification delivered to different customers.Differences in the uncharged products and services provided to customers Describe the Customer Classification Matrix including the four box matrix.Carriage trade— generate high revenue but could also be expensive to serve and can be profitable if the cost to serve them is lower than the revenue they generate.Bargain basement— don't require much service, but they also don't generate high profits; tend to be sensitive to price and relatively insensitive to service and quality.Passive customers— these customers can generate the highest revenues at the lowest costs and may need a specific product or be unwilling to switch to another provider due to the high cost of switching, or the cost of the product or service is insignificant in terms of their overall operations.Aggressive customers—not only demand the highest product quality and the best service but also want the lowest prices. These customers tend to be influential buyers who are accommodated by businesses for reasons other than profit.Describe the nine categories of sales operations. 1. Sales strategy—Design, planning, execution

• Measurement of results—Reporting, analytics, and sales data
• Compensation, sales quota, policies
• Technology and tools, including CRM
• Training and sales communication
• Sales territory design and optimization
• Contests and SPIFs and other sales motivation programs
• Lead generation and sales programs
• Customer segmentation

Describe the sales potential forecast.A sales potential forecast can be used to determine sales targets and to help identify territories worthy of allocation of limited resources. A forecast of the number of prospects and their buying power. It does not assess the likelihood of converting potential accounts.Explain the RACI Matrix.R (Responsible): those who do the work to achieve the task—This person (or persons) must complete the task or objective or make the critical decisions that will ultimately lead to completing the task.A (Accountable): the person or stakeholder who must approve the finished work— This person verifies that all responsibilities have been assigned and takes full reasonability for completing the task or objective.C (Consulted): active participants, commonly subject matter experts, whose input may be needed before the work can be completed—Two-way communication with consultants is required.

I (Informed): those who are made aware of progress or critical decisions using

one-way communication to provide updates—Informed people are not active participants in the process.