territorisation

Amity Business School

Dividing the sales effortSales territories

Swati Bhatnagar

Module - IV


Nature and Meaning

• A sales territory comprises a number of present and potential customers located within a geographical area and assigned to a salesperson, branch or intermediary.


Benefits of a good territory design

• Enhances customer coverage

• Reduces travel time and selling costs

• Provides more equitable rewards

• Aides evaluation of sales force

• Increases systematic sales for an organisation

• Enhances morale

Amity Business SchoolThe territory design process

Select a control unit

Determine location and potential of customers

Determine basic territories

Assign salespeople to territories

Set up territorial coverage plan

Evaluate effectiveness of design


Determine the basic control unit

• Select a basic control unit :

- State

- country

- city

• Further, it may comprise of individual units:

- Zip-code area

- Metropolitan statistical area


Determine Basic Territories• Either of two methods can be used to

determine the territories:

- Buildup method

- Breakdown method


Buildup Method• Management must determine:

-desirable call patterns - Call frequency/account/year

-Total calls needed in each control group

-Workload capacity- total calls possible/rep/year=no. of daily calls*days selling

- tentatively set territorial boundary lines by combining control units until total calls needed = total calls possible


Example of Buildup MethodMetropolitan Area X Metropolitan Area Y

Customer class Call frequency No. of accounts No. of calls/year No. of accounts No. of calls/year

A 2/month 10 240 5 120

B 1/month 25 300 15 180

C 1 every 2 months 15 90 60 360

Total 50 630 80 660


Factors in Buildup method

• Territorial design basically depends on the company’s sales potential and the salesforce workload. Following factors must be considered:

• Nature of the Job

• Nature of the product

• Stage of market development

• Intensity of market coverage

• Ethnic factors


Breakdown method• This method is often used by firms that want

exclusive distribution or that sell some type of industrial products. The steps in for this this procedure are:

• Determine sales potential

• Determine sales potential in each control unit

• Determine sales volume expected from each salesperson

• Draw territorial boundaries

• Modify tentative territories as needed.


Assigning salespeople to territories

• The reps may differ in their selling effectiveness, experience, age, physical condition, education and creativity etc. Their, individual attributes must be kept in mind while assigning these salespeople to their respective territories.

• Many companies intentionally design sales territories which are unequal in size as per rep’s workload or territory design potential. This serves two purposes:

- flexibility in managing salesforce- differences are accomodated.


Revising Sales Territories• As internal and external conditions change, territorial

structures may become outdated and need revision. Following may be the danger signals which point towards realigning the territorization efforts:

• Sales potential may outgrow a territory• Selling task may have changed• The geographic boundaries may be too small or too

big• Claim jumping is practiced.


Territorial coverage – Routing the sales force

• Routing is the managerial activity that establishes a formal pattern for sales reps to follow as they go through their territories.

• It may be indicated on a map or list.

• Often reps are asked to prepare their own route schedules as a part of their job.


Reasons for Routing• Reduction in travel expenses

• Effective coverage of the territory

• Better time management

• Claim jumping can be avoided


Objections to routing

• Sales people may feel straitjacketed and devoid of creativity. Since a sales rep is in the actual market, which may be very fluid in nature, it would be a mistake not to allow him/her the freedom to make changes in the specific routing plan.


Factors conducive to routing• Before deciding to rout the salesforce,

management should consider:

- Nature of product/job.

- Call frequencies

- Individual attributes.

• Some commonly used patterns like straight, circular,and hopscotch may be used.

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