Controlling Selling Expenses

Good territorial design combined with careful salesperson assignment results in low selling expenses and high sales Controlling Selling Expenses Good territorial design combined with careful salesperson assignment results in low selling expenses and high sales

These savings, plus the higher sales volumes from increased productive selling time, reduce the ratio of selling expenses to sales. In fact, even if dollar selling expenses remain unchanged, the sales increase produced through proper market coverage reduces the selling expense percentage.

Reduced selling expense ratios do not, however, follow automatically. If territorial planning is unsound or is not combined with appropriate assignments of sales personnel, selling expense ratios increase If the planner, for instance, ignores normal travel routes and geographical barriers, sales personnel spend time traveling when they could be calling on customers; this results in higher selling expenses and lower sales volumes.

Nor should management overlook the possibility that dollar selling expenses may have to go up to obtain a lower selling expense ratio. To secure larger sales volumes, sales personnel may have to incur additional expenses. Securing larger orders may require more frequent sales calls, which increases selling expenses. Well-designed sales territories and appropriate assignments of sales personnel increase the total time available for contact with customers and prospects, thus preparing the ground for improved sales volumes.

Sales management’s problem in controlling selling expenses is not to minimize them but to obtain the best relation between dollar selling expenses and dollar sales volumes. Short-term reductions in the selling expense ratio are not always desirable; the long-term result is important, Rises in selling expenses may not be followed immediately by increased sales volumes and higher sales volumes in the future. The intelligent setting up or revising of sales territories is one step management takes to see that selling expense dollars are spent to the best advantage.