Sales Territory Design

Sales Territory

Configuration of current and potential accounts for which responsibility has been assigned to a particular sales representative.

A sales territory is composed of a group of customers or a geographic area assigned to a salesperson.

Territory Management

Planning, implementation, and control of salesperson’s activities with the goal of realizing the sales and profit potentials of their assigned territories.

Establishing objectives, estimating resources and designing strategiesto achieve stated objectives

WHO IS RESPONSIBLE FOR TERRITORIAL DEVELOPMENT

Development of sales territories is usually the responsibility of the sales manager overseeing the larger sales units within the organization.

He/She must possess variety of skills.

Sales territory design

Breaking down a firm’s customer base so that accounts can be well serviced by individual salespersons

Several territories are usually combined into district, several districts to a region, several regions to a zone, and a number of zones into the national market place.

Reasons for establishing Territories

• To obtain thorough coverage of the market.• To establish a salesperson’s responsibility.• To evaluate performance.• To improve customer relations.• To reduce sales expense.• To allow better matching of salesperson to

customer.• To benefit salespeople and the company.

Customer related benefits

Provide excellent service: Greater satisfaction

Provide intensive market coverage

Salesperson benefits

Foster enthusiasm Facilitate performance evaluation Rewards

Managerial benefits

Enhances control Reduces expenses

Reasons for not developing Territories

• The company may be too small.• Management may not want to take the time,

or have the know-how.• Personal friendship may be the basis for

attracting customers.• High technology selling

Objectives and criterion for Territory formation Determine optimum number of territories to be

formed and their configurations.

(There should not be lack of coverage/ don’t make account base fragmented)

Territories should differing potentials Coverage should be effective and efficient Analyze workload and nature of job Type of product

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SELECT BASIC CONTROL UNITS

Area• States• Counties• Cities and zip-code areas• Metropolitan statistical areas• Trading areas

Sales Potential

Split customer base according to sales potential Estimate sales potential What sales potential will be appropriate for the

average salesperson. This average sales potential is divided into the

organization’s overall sales potential to arrive at the number of territories needed.

Servicing Requirements

Servicing requirements of current and prospective future accounts.

A B C category and establish sales frequencies.

ANALYZE SALESPEOPLE’S WORKLOADS

Workload is the quantity of work expected from sales personnel. Three of the main influences on workload involve the nature of the job, intensity of market coverage, and type of products sold.

It considers individual account potentials and servicing requirements in creating territories

Methods of Designing territories

Build up method Breakdown method Determining the number of territories by dividing

projected average sales per salesperson into an overall sales forecast.

Incremental method Establishing additional territories as long as the

marginal profit generated by the territories exceeds the cost of servicing them.

STEPS TO CONSIDER WHEN DETERMINING A FIRM’S BASIC TERRITORIES

1. Forecast sales and determine sales potentials.

4. Tentatively establish territories.

2. Determine the sales volume needed for each territory.

5. Determine the number of accounts for each territory.

3. Determine the number of territories.

6. Finalize the territories, and draw the boundary lines.

ASSIGNING TERRITORIES

Some salespeople can handle large territories and the travel associated with them; some can’t. Some territories require experienced salespeople; some are best for new people. Some people want to live in metropolitan areas; others prefer territories with smaller cities.

Assign each salesperson to that territory where the person’s relative contribution to the company’s profits will be highest.

Territory Management cycleAnalysis

•Account load•Account potential

•Servicing requirement

Objectives•Sales

•Profit targets•New business targets

Strategies•Call frequencies•Product offering

•pricing

Tactics•Territory coverage

•Routing•scheduling

Control •Quotas

•Reporting procedures•Review and Revision

Implementation•Calling on prospects•Servicing accounts

•reporting

Account load: number of actual and potential customers assigned to a given sales person

Account potential: share of an account’s business that the firm can expect to attract.

Routing: Establishing the sequence of locations a salesperson will visit.

Scheduling: Sequence of appointments or unannounced visits for maximum contact time

Routing

After establishing sales territories sales personnel must be routed.

Length of visits to customer Frequency Objective should be minimize travel time

and maximize frequency.

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Scheduling

It refers to the task of allocating the salesperson’s time.

Customer contact time Waiting Travel time Build buffer time Planned use of time of time will save on cost.

Using the Telephone for Territorial Coverage

1. Sales generating

• Selling regular orders to smaller accounts.

• Selling specials, such as offering price discounts on an individual product.

• Developing leads and qualifying prospects.

Using the Telephone for Territorial Coverage

2. Order processing

• Ordering through the warehouse.

• Gathering credit information.

• Checking if shipments have been made.

Using the Telephone for Territorial Coverage

3. Customer service

• Handling complaints.

• Answering questions.

• Satisfying part of the service needs ofaccounts by telephone.

• Assigning smaller accounts to telephone selling.

• Doing prospecting, market data gathering, and call scheduling by telephone.

• Carefully scheduling visits to distant accounts, replacing some with telephone calls.

Most people can benefit from adopting the following practices: