time, territory, and self- management: keys to success chapter 14 mcgraw-hill/irwin copyright ©...

Time, Territory, and Self-Time, Territory, and Self-Management: Keys to SuccessManagement: Keys to Success

Time, Territory, and Self-Time, Territory, and Self-Management: Keys to SuccessManagement: Keys to Success

Chapter

Chapter

14

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

14-2

Main TopicsMain TopicsMain TopicsMain Topics

The Tree of Business Life: Time Customers Form Sales Territories Elements of Time and Territory Management

14C

hapterC

hapter

14-3

The Tree of Business Life: Time

Guided by The Golden The Golden RuleRule: View your territory as a business Treat customers differently

depending on their needs Value the customer’s time Realize that how you spend your

time determines your life Use your life to serve others and

enjoy a wonderful, fulfilling life Seek, knock, ask, serve, and see

that ethical service build true relationships

IT C

Ethi

cal Service

Builds

T r

u e

Relationships

TT T

T T T TT T T T

14-4

Customers Form Sales Territories

Customers Form Sales Territories

Sales Territory

Comprises a group of customers or a geographical area assigned to a salesperson + potential customers

Customers Form Sales Territories Why establish sales territories?

To obtain thorough coverage of the market To establish each salesperson’s responsibilities To evaluate performance To improve customer relations To reduce sales expense To allow better matching of salesperson to customer’s needs To benefit both salespeople and the company – reach company’s sales objectives

14-7

Why Sales Territories May Not Be Developed

Salespeople may be more motivated if not restricted by a particular territory.

The company may be too small to be concerned with segmenting the market into sales areas.

Not enough time or knowledge

14-8

Exhibit 14-2: Elements of Time and Territory Management for the Salesperson

Salesperson’s territory’ssales quota

Salesperson’s territory’ssales quota

14-9

Salesperson’s Sales Quota The salesperson’s manager typically

establishes the total sales quota. Proper territory management by the

salesperson is an important factor in reaching the sales quota.

14-10

Salesperson’s territory’ssales quota

Salesperson’s territory’ssales quota Account analysisAccount analysis

Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-11

Account Analysis The undifferentiated selling approach

(Exhibit 14-3) The account segmentation approach

(Exhibit 14-6)ELMS system80/20 principle

Multiple selling strategies Multivariable account segmentation

(Exhibit 14-7)

14-12

Account Segmentation

1. Key Accounta. Buys over $200,000 annually

b. Loss would substantially affect profitability

2. Unprofitable Accounta. Buys less than $1,000 annually

b. Little potential to increase purchases

3. Regular Accounta. All other customers

14-13

Exhibit 14-3: Undifferentiated Selling Approach

Slide 15-11

14-14

Exhibit 14-4: Account Segmentation Based on Yearly Sales

14-15

Exhibit 14-5: Basic Segmentation of Accounts

14-16

Exhibit 14-6: Account Segmentation Approach

Slide 15-11

14-17

Exhibit 14-7: Multivariable Account Segmentation

Slide 15-11

14-18

Salesperson’s territory’ssales quota

Salesperson’s territory’ssales quota Account analysisAccount analysis Set account objectives

and sales quotas

Set account objectivesand sales quotas

Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-19

Develop Account Objectives and Sales Quotas

Sales volume quotas Profit quotas Expense quotas Activity quotas Customer satisfaction scores

14-20

Salesperson’s territory’ssales quota

Salesperson’s territory’ssales quota Account analysisAccount analysis Set account objectives

and sales quotas

Set account objectivesand sales quotas

Territory-time allocationTerritory-time allocation

Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-21

Territory-Time Allocation Seven basic factors to consider:

1. Number of accounts in the territory

2. Number of sales calls made on customers

3. Time required for each sales call

4. Frequency of customer sales calls

5. Travel time around the territory

6. Non-selling time

7. Return on time invested

14-22

Territory-time allocation, cont... Sales response function:

The salesperson invests sales time in direct proportion to the actual or potential sales that the account represents.

The most productive number of calls is reached at the point at which additional calls do not increase sales.

The relationship of sales volume to sales calls is the sales response function of the customer to the salesperson’s calls.

14-23

Exhibit 14-8: Account Time Allocation by Salesperson

* every 3 months

Return on Time Invested

Time is a scarce resource

Break-even analysis to analyze costs: Breakeven Point ($) = Salesperson’s fixed costs / Percentage of

gross profit

Return on Time Invested

The management of timePlan by the day, week, and monthQualify the prospectUse waiting timeHave a productive lunchtimeRecords and reports

Return on Time Invested cont…

Scheduling and routingStrict formal route designs enable the company

to: improve territory coverage minimize wasted time Establish communication between management and

the sales force in terms of location and activities of individual salespeople

Carefully plan your route

14-27

Salesperson’s territory’ssales quota

Salesperson’s territory’ssales quota Account analysisAccount analysis Set account objectives

and sales quotas

Set account objectivesand sales quotas

Customer sales planningCustomer sales planning

Territory-time allocationTerritory-time allocation

Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-28

Customer Sales Planning A sales-call objective A customer profile A customer benefit program Selling strategies must be developed for

individual customers and affect:FABsMarketing plansBusiness propositionsSuggested ordersSales presentations

14-29

Salesperson’s territory’ssales quota

Salesperson’s territory’ssales quota Account analysisAccount analysis Set account objectives

and sales quotas

Set account objectivesand sales quotas

Scheduling and routingScheduling and routing Customer sales planningCustomer sales planning

Territory-time allocationTerritory-time allocation

Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-30

Scheduling and Routing Some organizations determine strict formal

route designs for their sales people to: Improve territory coverageMinimize wasted timeEstablish communication between management

and the sales force in terms of location and activities of individual salespeople

Careful planning of route:A route can be planned using a road map and

map pins that indicate account size by pin color

14-31

Exhibit 14-10: Daily Customer Plan

14-32

Exhibit 14-11: Location of Accounts and Sequence of Calls

14-33

Exhibit 14-10: Daily Customer Plan (cont…)

14-34

Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…)

14-35

Exhibit 14-10: Daily Customer Plan (cont…)

14-36

Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…)

= small accounts

14-37

Exhibit 14-10: Daily Customer Plan (cont…)

14-38

Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…)

= small accounts

= extra large accounts

14-39

Exhibit 14-10: Daily Customer Plan (cont…)

14-40

Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…)

= extra large accounts

= small accounts

= large accounts

14-41

Exhibit 14-10: Daily Customer Plan (cont…)

14-42

Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…)

= extra large accounts

= small accounts

= best prospects

= large accounts

14-43

Exhibit 14-10: Daily Customer Plan (cont…)

14-44

Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…)

= extra large accounts

= medium accounts

= small accounts

= best prospects

= large accounts

14-45

Exhibit 14-10: Daily Customer Plan (cont…)

14-46

Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…)

= extra large accounts

= large accounts

= medium accounts

= small accounts

= best prospects

14-47

Exhibit 14-12: A Weekly Route Report

14-48

Exhibit 14-13: Three Basic Routing Patterns

Cloverleaf Pattern

Straight-Line Pattern

Major-City Pattern

First callWork back

Each leaf out and back the same day

Huntsville

Conroe

Kingwood

Houston

Baytown

Galvesto

n

(1 = Downtown)

14-49

Salesperson’s territory’ssales quota

Salesperson’s territory’ssales quota Account analysisAccount analysis Set account objectives

and sales quotas

Set account objectivesand sales quotas

Territory and customerevaluation

Territory and customerevaluation Scheduling and routingScheduling and routing Customer sales planningCustomer sales planning

Territory-time allocationTerritory-time allocation

Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-50

Using the Telephone for Territorial Coverage

Satisfy part of the service needs of accounts by telephone.

Assign smaller accounts that contribute less than 5 percent of business to mostly telephone selling.

Do prospecting, marketing data gathering, and call scheduling by telephone.

Carefully schedule personal calls to distant accounts.

14-51

Territory and Customer Evaluation

Did the salesperson meet sales quotas?Sales volumeProfitExpenseActivityCustomer satisfaction

14-52

Exhibit 14-15: Net Sales by Customer and Call Frequency: May 1, 2005

14-53

Salesperson’s territory’ssales quota

Salesperson’s territory’ssales quota Account analysisAccount analysis Set account objectives

and sales quotas

Set account objectivesand sales quotas

Territory and customerevaluation

Territory and customerevaluation Scheduling and routingScheduling and routing Customer sales planningCustomer sales planning

Territory-time allocationTerritory-time allocation

Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-54

Summary of Major Selling Issues How salespeople invest their sales time is a

critical factor that influences territory sales. Proper time and territory management is an

effective method for the salesperson to maximize territorial sales and profits.

A sales territory comprises a group of customers or a geographical area assigned to a salesperson.

14-55

Summary of Major Selling Issues, cont…

Companies develop and use sales territories for a number of reasons.

Performance can be monitored when territories are established.

There are also disadvantages to developing sales territories.

Time and territory management is continuous for a salesperson – it involves seven key elements.

End of Chapter 14End of Chapter 14End of Chapter 14End of Chapter 14

Chapter

Chapter

14

McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.