Sales ManagementSales Management Marketing 3345Marketing 3345

Territory Design & Territory Design & ManagementManagement

Territory Design ProcessTerritory Design Process

1Select geographic

control units

1Select geographic

control units

2Decide on

allocation criteria

2Decide on

allocation criteria

3Choose

starting points

3Choose

starting points

4Combine control units

adjacent to starting points

4Combine control units

adjacent to starting points

5Compare territories on

allocation criteria

5Compare territories on

allocation criteria

6Assign salespeople to

new territories

6Assign salespeople to

new territories

Events triggering salesterritory adjustments

Events triggering salesterritory adjustments

MergersDivision consolidationDivision splitSales force turnoverPlant relocationsProduct line changes

MergersDivision consolidationDivision splitSales force turnoverPlant relocationsProduct line changes

Revise territoryboundaries tobalance workloadand potential

Revise territoryboundaries tobalance workloadand potential

Territory Design ProceduresTerritory Design Procedures

What are triggering events?What are triggering events? The Buildup Method -- Six steps The Buildup Method -- Six steps

1. Select control units1. Select control units Census tracts -- good for dividing citiesCensus tracts -- good for dividing cities Counties - convenient and data readily Counties - convenient and data readily

availableavailable

2. Determine Allocation Criteria2. Determine Allocation Criteria Territory balance -- effect on moraleTerritory balance -- effect on morale Customer balance - distribute commissionCustomer balance - distribute commission Potential balance - share business growthPotential balance - share business growth Size balance - reduce transportation costsSize balance - reduce transportation costs

Geographic Control Units Used in Territory DesignGeographic Control Units Used in Territory Design

Countries CitiesStates or provinces Zip codesCounties Census tractsMetropolitan areas Customers

Territory Design ProceduresTerritory Design Procedures

3. 3. Choose starting pointsChoose starting points Salesperson’s home Salesperson’s home Large customer - cut transportation Large customer - cut transportation

costcost Big city - convenient for services Big city - convenient for services

4. 4. Combine Adjacent Control UnitsCombine Adjacent Control Units

5. Compare Sales Territories5. Compare Sales Territories Mountains, roads, population center Mountains, roads, population center

locations?locations?

6. 6. Assign people to Sales TerritoriesAssign people to Sales Territories

The numbers in each county arepopulation figures and area measure of potential.

Kentucky Counties, Major Cities, and Population Centers

TENNESSEE

VIRGINIA

WESTVIRGINIA

INDIANA

ILLINOIS

OHIO

Kentucky Counties, Major Cities, and Population Centers

The numbers in ach county arepopulation figures and area measure of potential.

Three Kentucky Sales Territories

TENNESSEE

VIRGINIA

WESTVIRGINIA

INDIANA

ILLINOIS

OHIOMajor super highways

Territory borders

Three Kentucky Sales Territories

Comparing Three Kentucky Sales Comparing Three Kentucky Sales TerritoriesTerritories

Potential as Measured by

Territory Population Number of Counties 1 1,124,897 47 2 1,129,290 27 3 1,131,137 43

Figure 11-4: Dividing a Large Territory

Territory Design ProceduresTerritory Design Procedures

Talley’s Workload ApproachTalley’s Workload Approach No starting pointsNo starting points Equates work to be doneEquates work to be done May lead to imbalance on sizeMay lead to imbalance on size Often raises travel costsOften raises travel costs Good when reps are on salaryGood when reps are on salary Key: optimal call frequency for Key: optimal call frequency for

particular classes of customersparticular classes of customers

Workload Method

Classify all customers into sales volume categories1.

Determine the frequency with which each type of account should be called upon and the desired length of each sell

2.

Calculate workload involved in covering entire market3.

Determine time available per salesperson4.

Apportion the salesperson’s time by task performed5.

Calculate the number of salespeople6.

Experiences of a Consumer Durable Goods Manufacturer with Territory Design

* Each territory is made up of several trading areas.

% The percentage of salesperson time spent in the trading area (100% = 1 salesperson).

Recommended Effort (%)

Present Effort (%)

Trading Area*

Deployment Analysis for Two Territories

Andy 1 10 42 60 20

3 15 7

4 5 2

5 10 3

Total 100 36

Experiences of a Consumer Durable Goods Manufacturer with Territory Design

* Each territory is made up of several trading areas.

% The percentage of salesperson time spent in the trading area (100% = 1 salesperson). Thus, the deployment analysis suggests that Andy’s territory requires only 0.36 salespeople, which Sally’s territory needs 2.36 salespeople for proper coverage.

Recommended Effort (%)

Present Effort (%)

Trading Area*

Deployment Analysis for Two Territories

Sally 1 18 812 7 21

3 5 11

4 35 35

5 5 11

6 30 77

Total 100 236

CALLPLAN Approach

What sales level will result from each current customer and prospect if:

1.

Probabilities that prospects will be converted into customers given the different call frequencies

2.

•no. calls that are made

•one half the present calls are made

•present level of calls is continued

•50 percent more calls are made

•a saturation level of calls are made

Salesperson Input

CALLPLAN Approach

CALLPLAN Output

Expected sales for all feasible call frequencies1.

Optimal number of calls for each client and prospect2.

Length of call for each client and prospect3.

Computer Based Territory DesignsComputer Based Territory Designs

Computers save timeComputers save time Need location & number of customers & Need location & number of customers &

starting pointsstarting points Program optionsProgram options

minimize moment of inertiaminimize moment of inertia Graph data & draw boundaries -- not Graph data & draw boundaries -- not

optimaloptimal design optimal territories -- expensivedesign optimal territories -- expensive

Applications -- pharmaceutical repsApplications -- pharmaceutical reps

Vendor Package Description Price

GeoQuery Corp. GeoQuery Interactive maps for travel planning $295and territory analysis. Direct links tocontact management program.

TTG,Inc. STARmanager Territory mapping system that $995integrates sales and marketing data for interactive territory analysis, realignment, and monitory.

Sammamish GeoSight Geographic information systems $1,850Data Systems Professional for sales territory creation and

management. Includes address matching.

Metron, Inc. TerrAlign Optimal sales territory alignment $20,000+ and analysis. Exclusive OptAlign technology automatically balances territories and decreases driving time.

Sales Territory Mapping Programs

Figure 1

Before Realignment

SOURCE: Prabha Sinha and Andris Zoltners, “Matching Manpower and Markets,” Business Marketing, September 2008, p. 95.

0

10

20

30

40

50

-40 -30 -20 -10 0 10 20 30 40

No. of territories

Percent deviation from average

Figure 2

After Realignment

SOURCE: Prabha Sinha and Andris Zoltners, “Matching Manpower and Markets,” Business Marketing, September 2008, p. 96.

0

10

20

30

40

50

-40 -30 -20 -10 0 10 20 30 40

No. of territories

Percent deviation from average