Sales territorySales territory

DefinitionDefinition A group of present and potential A group of present and potential

customers assigned to a sales customers assigned to a sales person, a group of sales person, person, a group of sales person, a branch, a dealer, a distributor a branch, a dealer, a distributor or a marketing organization at a or a marketing organization at a given period of time.given period of time.

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.

Territory Management

GeneratingNew Accounts

ManagingExistingAccounts

PersonalTime

Management

WHY ESTABLISH SALES WHY ESTABLISH SALES TERRITORIES?TERRITORIES?

To obtain thorough coverage of the market.To obtain thorough coverage of the market. To establish each salesperson's responsibilities.To establish each salesperson's responsibilities. To evaluate performance.To evaluate performance. To improve customer relations.To improve customer relations. To reduce sales expense.To reduce sales expense. To allow better matching of salesperson to To allow better matching of salesperson to

customer’s needs.customer’s needs. To benefit both salespeople and the company.To benefit both salespeople and the company.

Why sales territories may not be developed:

• Salespeople may be more motivated if they are not restricted.

• 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.

STEPS IN DESIGNING SALES TERRITORIES

S elect B a sic C on tr ol U n i t

A n a lyz e W ork loa d

D eterm in e B a sic T er r i tor ies

A ssign to T er ri tories

C u stom er C on ta ct P la n

E va lu a te, R evise i f N eeded

1. SELECT BASIC CONTROL UNITS

• States• Countries• Cities and zip-code areas• Metropolitan statistical areas• Trading areas• Major accounts• A combination of two or more factors

2. 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.

3. DETERMINE BASIC TERRITORIES

The breakdown approach uses factors such as sales, population, or number of customers.

Forecasted SalesAverage Sales per SalespersonSales Force Size =

1. Forecast sales and 1. Forecast sales and determine sales determine sales potentials.potentials.

4. Tentatively establish 4. Tentatively establish territories.territories.

2. Determine the sales volume 2. Determine the sales volume needed for each territory.needed for each territory.

5. Determine the number of 5. Determine the number of accounts for each territory.accounts for each territory.

3. Determine the number of 3. Determine the number of territories.territories.

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

SIX STEPS TO CONSIDER WHEN DETERMINING A FIRM’S BASIC TERRITORIES

4. ASSIGN TO 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.

5. CUSTOMER CONTACT PLAN

The customer contact plan involves scheduling sales calls and routing a salesperson’s movement around the territory.

Scheduling refers to establishing a fixed time when the salesperson will be at a customer’s place of business.

In theory, strict formal route designs enable the salesperson to:

1. Improve territorial coverage.

2. Minimize wastage of time.

3. Establish communication between management and the sales force in terms of the location and activities of individual salespeople.

Three Basic Routing Three Basic Routing PatternsPatterns

First call

Work backc c c

c

1.Straight-Line Pattern

Three Basic Routing Three Basic Routing PatternsPatterns

c

c c

c c

ccc

c c

cc

c

cc

cc

cc c

cc

c c

Base

2.Cloverleaf Pattern

Each leaf out andback the same day

Three Basic Routing Three Basic Routing PatternsPatterns

1

54

32

1 = Downtown

3.Major-City Pattern

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 continued

2. Order processing

• Ordering through the warehouse.

• Gathering credit information.

• Checking if shipments have been made.

Using the Telephone for Territorial Coverage continued

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:

6.EVALUATION AND REVISION OF SALES TERRITORIES

Territorial control is the establishment of standards of performance for the individual territory in the form of qualitative and quantitative quotas or goals.

SOME CONCEPTS:

OPEN SALES TERRITORY: Open sales territories are those left vacant until new salespeople are assigned to them. Vacant territories experience the following:

• Lost sales due to the vacancy.

• Lost sales due to the time needed for the new salesperson to build sales

productivity.Sales leakage refers to the lost sales due to both the vacancy and the time required for the new salesperson to produce at average.

Territory ManagementTerritory Management

A Portfolio ModelA Portfolio Model

Core Accounts

Accounts are veryattractive.

Invest heavily in Selling resources.

Drag Accounts

Accounts are moderately attractive.

Invest to maintaincurrent position.

GrowthAccounts

Accounts are Potentially attractive.

May want to investin heavily

Competitive Position Strong Weak

Acc

ount

Opp

ortu

nity

High

Low

ProblemAccounts

Accounts are veryunattractive.

Minimal investmentof selling resources.

Competitive PositionCompetitive Position

Segment 1- Core Accounts

Attractiveness: Accounts are very attractive because they offer high opportunity and sales organization has strong competitive position.

Selling Effort Strategy: Accounts should receive a heavy investment of sales resources to take advantage of opportunity and maintain/improve competitive position.

Strong

High

OPPORTUNITY

Competitive PositionCompetitive Position

Segment 2 – Growth Accounts

Attractiveness: Accounts are potentially attractive due to high opportunity, but sales organization currently has weak competitive position.

Selling Effort Strategy: Additional analysis should be performed to identify account where sales organization’s competitive position can be strengthened. These accounts should receive heavy investment of sales resources, while other accounts receive minimal investment.

Weak

High

OPPORTUNITY

Competitive PositionCompetitive Position

Segment 3 – Drag Accounts

Attractiveness: Accounts are moderately attractive due to sales organization’s strong competitive position. However, future opportunity is limited.

Selling Effort Strategy: Accounts should receive a sales resource investment sufficient to maintain current competitive position.

Strong

Low

OPPORTUNITY

Competitive PositionCompetitive Position

Segment 4 – Problem Accounts

Attractiveness: Accounts are very unattractive: they offer low opportunity and sales organization has weak competitive position.

Selling Effort Strategy: Accounts should receive minimal investments of sales resources. Less costly forms of marketing (for example, telephone sales calls, direct mail) should replace personal selling efforts on a selective basis, or the account coverage should be eliminated entirely.

Weak

Low

OPPORTUNITY