Sales territory

A sales territory is the customer group or geographical area for which an individual salesperson
or a sales team holds responsibility. Territories can be defined on the basis of
geography, sales potential, history, or a combination of factors.

A sales territory refers to a geographical area assigned to a salesman for the purpose of
marketing the products of his concern.

Sales territory is a designated geographical area (or any other parameter based grouping) which
is assigned to a sales group. This sales territory is responsibility of that particular sales team. The
sales team ensures that the sales in that area increase and meets sales targets every year. Any
company creates a territory based on geographic area, population demographics, sales potential
etc. This territory is assigned to sales persons as their operating territory. They cannot go beyond
this territory in ideal scenario.

Importance of Sales Territory

Dividing the territory has a specific purpose. The sales territories are identified based on any one
of the factors stated above. The division is made to balance the workload among the sales
persons. Otherwise someone may end up doing more sales and less customer service and
someone may do less sales and more customer service. In both of these cases the company ends
up losing. In the former case the customers may switch to other brand due to less customer
service and hence there will be loss in terms of SKUs sold in the long run. In the latter case the
company may spend too much on a few customers and hence the per-unit cost to the company
will increase.
Thus each sales representative will have his own target based on the sales territory and it leads to
improved efficiency and competition among the sales reps which adds to the profit of the
company.

Sales territory
1. WHAT IS SALES TERRITORY? A sales territory consists of existing and potential
customers, assigned to a salesperson.  Most companies allot salespeople to geographic
territories, consisting of current & prospective customers.
2. REASON FOR SETTING OR REVIEWING SALES TERRITORIES  Increase market
or customer coverage.  Control selling expenses  Better evaluation of sales force
performance  Improve customer relations  Increase sales force effectiveness  Improve
co-ordination  Benefit salespeople and company
3. REASON FOR NOT SETTING-UP SALES TERRITORIES Small company with one
or few salesperson(s).  Personal contacts or relationships is the basis of making the
sales.  Sales persons get demotivated due to restrictions of sales territory. 
Management of the company may not be aware.
4. Select a control unit Find location and potential customer Decide basic territories Use
build method Use breakdown method
5. PROCEDURE FOR DESIGNING SALES TERRITORIES OR CONTROL UNIT 
States  Metros  Cities  Districts  Towns  Pin Code Areas  Industrial Estates 
Major Customers Why sales manager should select smallest control unit? The control
units’ market potential and the company sales potential should be possible to calculate.
Addition and deletion of control units should be possible when tentative territory
boundaries are modified to make final territories.
6. FIND LOCATION AND POTENTIAL CUSTOMER  Identification of the buyers as
precisely as possible.  Present & potential buyers indicate Market Potential. 
Determination of Sales Potential i.e. unit’s market potential that the company has an
opportunity to obtain.  Market potential is converted to sales potential by analyzing the
historical market share , adjusting for changes in company & competitor selling
strategies.
7. DECIDE BASIC TERRITORIES  Build-up Method – The objective is to equalise the
work load of sales person.  Breakdown Method – The objective is to equalise sales
potential of territories.
8.  Procedures followed in Build-up Method:  Procedures followed in Breakdown
Method: Decide call frequencies Calculate total number of calls in each control unit
Estimate workload capacity of a Salesperson Make tentative territories Develop final
territories Step 1 Step 2 Step 3 Step 4 Step 5 Step 1 Step 2 Step 3 Step 4 Step 5 Estimate
company sales potential for total market Forecast sales potential for each control unit
Estimate sales volume expected from each salesperson Make tentative sales territories
Develop final territories
9. ASSIGNING SALESPEOPLE TO TERRITORIES The sales manager should consider
two criteria: (A)Relative ability of salespeople  Based on key evaluation factors: (1)
Product knowledge (4) communication (2) market knowledge (5) selling skills (3) past
sales performance (B) Salesperson’s Effectiveness in a Territory  Decided by comparing
social, cultural, and physical characteristics of the salesperson with those of the territory.
10. MANAGING TERRITORY COVERAGE  It means “How salesperson should cover the
assigned sales territory”.  It includes three tasks for a sales manager: • Planning efficient
routes for salespeople.(Routing) • Scheduling salespeople’s time.(Scheduling) • Using
time-management tools.(Time Management)
11. ROUTING  Routing is a travel plan or pattern used by a salesperson for making
customer calls in a territory.  The main advantage of routing are: a) Reduction in travel
time and cost b) Improvement in territory coverage
 Procedures for setting up a routing plan:  Identify current and prospective customers on a
territory map  Classify each customer into high, medium, or low sales potential  Decide
 call frequency for each class of customers  Build route plan around locations of high
potential customers  Computerized mathematical models are developed as follows:
12. 14.  Commonly used routing patterns are: Base (B) C5 C1 C4 C3 C2 Straight line /
Hopscotch B Circular Basec c c c c c c c c c cc cc cc cc c c cc c Cloverleaf Pattern Each
Leaf Out and Back Same Day
13. 15.  Application and Importance of Routing: The degree of importance to the
application of routing depends on two factors: a) Nature of the product b) The type of job
of salespeople
14. 16. SCHEDULING  Scheduling is planning a salesperson’s specific time of visits to
customers. It deals with time allocation problem.  How to allocate salesperson’s time? •
Sales manager communicates to salesperson major activities and time allocation for each
activity • Salesperson records actual time spent on various activities for 2 weeks • Sales
manager and salesperson discuss and decide how to increase time.
15. 17. TIME MANAGEMENT TOOLS  It help salespeople to manage their time more
efficiently and productively.  Tools available are:  High-tech Equipment  Inside
Salespeople a) Sales assistance to provide clerical support for the outside salespersons. b)
Technical support people to give technical information and answers to customer’s
questions. c) Telemarketing to find new leads or prospects, qualify them and refer them
to outside sales persons for high and medium sales potential prospects or sell for low
potential customers.

Territory Management
1. Territory Management Some Basic Terminology: TERRITORY: The geographic
area in which you sell. ACCOUNT: A business customer. LEAD: A business within
the territory, that may or may not be a qualified prospect. PROSPECT: A potential
customer account or person with whom you are not doing business today, but might.
BROKER: A business owner or manager. Typically the decision-maker. CONTACT: A
person within an account.
2. 5. Territory Management It’s An APPLe  Applied Productivity and Performance
Levers, or APPLes,” are the competencies and skills required for success as a Sales Rep.
 Territory Management is one of the eight major APPLes.Technology  Territory
Management is a systematic, logical process that allows a sales rep to achieve optimal
results from the potential customers in a given geographic area.
3. 6. Territory Management It is Accomplished By: Identifying leads and qualifying
prospects Allocating appropriate time and resources for prospecting, servicing, and
developing accounts Mapping routes efficiently Prioritizing prospects and accounts to
ensure that the energy, budget and time spent on them is in direct proportion to their
value to the company, and to maximize the revenue and profit potential of the territory
Primary Objective
4. 7. Territory Management It is Important Because: It ensures the proper and efficient
geographic coverage of the territory It is a vehicle for balancing work load It is a
means of containing costs, such as travel expenses It ensures proper market penetration
and account development Maximizing your territory translates into more loans, and
higher commissions
5. 8. Territory Management Factors to Consider: Lead sources Target account profile
Number and potential value of prospects Number and value of accounts Size and shape
 of the territory, including distance between key points The layout of roadway systems,
which determines the time between key points Duration and frequency of presentations
or visits
6. Territory Management Phase I –Prospecting Plan (Geographic) North  Find leads
(from Marketing, personal experience, observation, state banking commission,
associations, Yellow Pages, other advertising and/or networking.) Base  Map leads
using Base + NEWS method (geographic prospecting West East plan - divide territory
into 5 parts, with the center being your home base and the others being North, East, West,
South).  Qualify prospects when possible (phone and other research). South  Set
appointments when possible.  Visit prospects on appointments when possible or cold
call as needed.  Rotate the areas/accounts you visit based on day.  Start at the farthest-
most office and work your way back home.  See 8-12 prospects per day - run sales
meetings and presentations.  Do Account Selection… retire prospects and acquire
accounts, as appropriate.  Balance your efforts over time based on overall account
potential compared to revenue realization.
7. 11. Territory Management Finding Leads You may receive some leads from Marketing.
To do that… You must also: Contact your Territory VP and follow  Research state
banking commission Websites their instructions.  Search the Yellow Pages  Search
online sources such as www.411.comKnow that… and www.smartpages.com They may
automatically send a list  Review other advertisement sources of prospects within your
territory for  Join and get member lists from you to review… associations You may
need to request it.  Network within your market and community There may not be
many or any  Ask for referrals from prospects and accounts good leads in our database
These leads are customers that have worked with us at some point, or that we know
about. That’s why…
8. 12. Territory Management Pre-Qualifying Prospects Call leads by telephone to confirm
they’re in business, meet our pre-qualifications, and are not already working with us. (Set
an appointment if possible.) Cold-call those prospects who won’t talk on the phone,
when you are in their geographic area. (Get and give business cards; set an
appointment). Talk to others inside the prospective account… receptionists or others.
Ask questions of referral sources and our employees; gather information from all viable
sources. Be creative. Look for large Yellow Page or other ads. If it’s a known account
that has deactivated, research past production.
9. 13. Territory Management Hit the Road Now it’s time to put your Prospecting Plan into
action: Go the appointments Cold call as required Use your Partnership Selling and
Account Selection skills Work hard to establish accounts and get ready for Phase II of
Territory Management
10. 14. Territory Management Phase II – Basic Territory Management Basic Territory Mgt.
(Geographic) North  Continue the Base + NEWS system.  Visit 5 accounts per day and
 see 1-3 prospects per day (if prospects are limited, see more accounts). See at least 2 in
the West Base East morning and 3 in the afternoon. (Same accounts, same days, same
locations, and same times – throughout the month.)  Spend one hour at a office for every
sales you made there last month, South or expect to get this month.  Contact the right
people for the right action. Use your inside staff and Solutions Desk to get
product/underwriting/policy questions answered. Use your TVP to get obstacles
removed, or for help with special customers in the field.  Continue to work with
accounts geographically to further profile, confirm your Account Selection decision, and
develop production potential.
11. 15. Territory Management Phase III – Advanced Territory Management North Account
Deployment Preview  Evaluate and rank accounts based on Past and Current production,
and Future production potential (PCF).West Base East  Rework Territory Plan to spend
the most time (more than one visit per week) with top-ranked accounts with the most
value, and see remaining accounts once per week (or less) geographically (or by phone).
Effort spent on accounts should be in direct proportion to their South value.  Visit 6
accounts per day and see 1-2 prospects per day, as availability allows (if prospects are
limited, see more accounts).  Spend one hour at a office for every sales made last month,
or Highest Value expected this month.  Contact the right people for the right action. Use
your inside staff and Solutions Desk to get product/underwriting/policy questions
answered. Use your TVP to get obstacles removed, or for help with special customers in
the field.
12. 16. Territory Management Phase III – Advanced Territory Management Account
Valuation Preview Highest Value
13. 17. Territory Management Course Review Territory Management is a systematic,
logical process that allows you to achieve optimal results from the potential customers in
a given geographic area. The primary objective of Territory Management is to maximize
the revenue and profit potential of your territory. You do that by prioritizing prospects
and accounts to ensure that the energy, budget, and time spent on them is in direct
proportion to their value. Leads may come from internal sources and your own
research. Initially, calling prospects ensures they’re still in business and can save you
time. When you have an account base that you visit weekly, you can see other prospects
when you are in the area. For a new sales rep, Territory Management is a three-phase
process.
14. 18. Territory Management Course Review PHASE I: Prospecting Plan to PHASE II –
Basic Territory PHASE III – Advanced Territory Establish Accounts Management Plan
to Solidify Management (Account Core Account Base Deployment) Find leads. 
Continue to work with  Evaluate and rank account Map leads using Base + accounts
geographically to production and potential. NEWS method (geographic prospecting
plan). further profile, confirm  Rework Territory Plan to selection decision, and Qualify
 prospects, when possible. develop production. spend the most time (more than one visit
per week) with Set appointments, when possible.  Visit 5 accounts per day, and
accounts with the most Visit prospects on appointments see 1-3 prospects per day (if
value, and see remaining or cold call leads. prospects are limited, see accounts
geographically. See 8-12 prospects per day – run more accounts).  Visit 6 accounts per
day, and Broker Meetings and LO see 1-2 prospects per day (if Presentations. prospects
are limited, see more accounts). Select, retire and acquire accounts, as appropriate.
15. 19. Territory Management Course Review This concludes our course on Territory
Management Thanks for your attention and efforts Best of success on the Course
Assessment!

5 steps to effective territory management

By: Dave Harman

The term “territory management” is somewhat of a misnomer. You cannot manage a territory.
You can, however, manage your salespeople’s activities within a territory and develop strategies
to direct selling efforts to maximize the ROI for your company.

Good territory management will ensure that salespeople are calling on the appropriate customers
for the appropriate reasons, and at the appropriate intervals. The ultimate objective is to identify
and direct salespeople’s efforts to increase the bottom line. Territory management should be a
systematic process with identifiable steps.

Following is a five-step process for effective territory management:

Step 1: Do the research

You can’t develop relevant and meaningful goals, strategies, plans and actions unless you
thoroughly understand the landscape. You must examine and consider:

 The makeup of and influences on the market in which you sell;

 The nature of the customers to whom you sell;
 The marketplace acceptance of the products/services you sell;
 The existing strategies driving the process by which you sell;
 The challenges you face and the opportunities available to you.
With that in hand, the salesperson can now develop a market profile that includes an analysis of
the customer relationships, market share, product demand, competitive positioning, market
direction and industry trends.

Step 2: Analyze the data

Once you have the data, you’ll need to analyze it in a manner that helps you better understand
your customers, your markets, the challenges you face and the opportunities available to you.
Performing a SWOT analysis — identifying strengths, weaknesses, opportunities and threats —
is a useful method.

Step 3: Identify goals

Proper analysis of the data collected will enable you to identify:

 Opportunities to increase your competitive advantage in areas that are important to the
market targets, whether they be new customers or existing customers;
 Product and service offerings that will emphasize your strengths;
 Challenges that threaten sales and profitability.
With that information, you can set goals for specific market sectors, revenue streams and
customer groups that will serve as guides for the allocation of department resources, territory
assignments and account targeting.

Step 4: Develop strategies

Having identified specific goals, you can begin to develop strategies to reach the goals. You will
have to consider the interconnected relationship of your market, your customers, your products,
your market share and your competition. These factors rarely operate in isolation.

Step 5: Develop action plans

After analyzing territory opportunities, identifying goals and developing specific territory
management strategies, it’s time to develop plans to put the strategies into action.

These action plans will typically fall under three categories:

 Market Level: Developed from a big picture view of your market.

 Segment Level: Focusing on a particular market segment or revenue stream.
 Account Level: Focusing on the most efficient and effective way to grow and service
clients.
Ultimately, the goal of territory management is to decide where and how to allocate resources in
such a manner as to generate the greatest ROI of those resources.

Dave Harman is an associate with Sandler Training. He has over 30 years’ experience in sales
and sales management with Fortune 500 companies as well as small, family-owned
organizations. He has held positions from sales to senior management with companies such as
Conoco/Vista, Amresco and Ohio Awning, and owns his own business. He earned his MBA with
a concentration in Marketing from Miami University, Oxford, Ohio. You can reach him
at Dave@BizTraining.com or (888) 448-2030.