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Sales Territories

Compiled by:
Prof. Deepa Agnihotri
Author: Futrell

WHAT IS A SALES TERRITORY?


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

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.

WHY ESTABLISH SALES TERRITORIES?


To obtain thorough coverage of the market.
To establish a salespersons 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.

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.

FACTORS TO CONSIDER WHEN DESIGNING


TERRITORIES

S
electB
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sic
C
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it

A
nalyze
W
ork
load

D
e
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ic
T
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ie
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if N
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C
u
stom
er
C
on
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A
ssignto
T
erritories

SELECT BASIC CONTROL UNITS


States
Counties
Cities and pin-code areas
Trading areas
Major accounts

A combination of two or more factors

ANALYZE SALESPEOPLES 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.

Intensity of Market Coverage


Distribution methods:
Intensive distribution
Selective distribution
Exclusive distribution

DETERMINE BASIC TERRITORIES


The breakdown approach uses factors
such as sales, population, or number of
customers.
Forecasted Sales
Sales Force Size = Average Sales per Salesperson

Equalized Workload
This method uses the number, location, and size of
customers and prospects to determine the
frequency of sales calls and amount of time a call
takes by using such data as:
Time required for each sales call.
Frequency of sales calls per given customer.
Time intervals between sales calls.

Travel time around territories.


Nonselling time.

ASSIGN TO TERRITORIES
Some salespeople can handle large territories
and the travel associated with them; some cant.
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.

CUSTOMER CONTACT PLAN


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

Scheduling refers to establishing a fixed


time when the salesperson will be at a
customers place of business.
In theory, strict formal route designs enable the
salesperson to:

1. Improve territorial coverage.


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

THREE BASIC ROUTING PATTERNS


Straight-Line Pattern

First Call
c

Base
c

Cloverleaf Pattern

Major-City Pattern

c
c

Each Leaf Out and


Back Same Day

3
1

Base
c

c Work Back

c
c

c
c

1 - Downtown

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.

OPEN SALES TERRITORIES


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.

Account Segmentation Based on


Yearly Sales

Develop Account Objectives and


Sales Quotas

Sales volume quotas


Profit quotas
Expense quotas
Activity quotas
Customer satisfaction scores

Territory-Time Allocation

Seven basic factors to consider:


1.
2.
3.
4.
5.
6.
7.

Number of accounts in the territory


Number of sales calls made on customers
Time required for each sales call
Frequency of customer sales calls
Travel time around the territory
Non-selling time
Return on time invested

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
salespersons calls.

Account Time Allocation by


Salesperson

* every 3 months

Daily Customer Plan

Location of Accounts and Sequence


of Calls

Daily Customer Plan (cont)

Location of Accounts and Sequence


of Calls (cont)

Daily Customer Plan (cont)

Location of Accounts and Sequence


of Calls (cont)

= small accounts

Daily Customer Plan (cont)

Location of Accounts and Sequence


of Calls (cont)

= extra large accounts

= small accounts

Daily Customer Plan (cont)

Location of Accounts and Sequence


of Calls (cont)

= extra large accounts


= large accounts

= small accounts

Daily Customer Plan (cont)

Location of Accounts and Sequence


of Calls (cont)

= extra large accounts


= large accounts

= small accounts
= best prospects

Daily Customer Plan (cont)

Location of Accounts and Sequence


of Calls (cont)

= extra large accounts


= large accounts
= medium accounts
= small accounts
= best prospects

Daily Customer Plan (cont)

Location of Accounts and Sequence


of Calls (cont)

= extra large accounts


= large accounts
= medium accounts
= small accounts
= best prospects

A Weekly Route Report

Three Basic Routing Patterns

Straight-Line Pattern

First call

Work back

Cloverleaf Pattern
Each leaf out and
back the same day

Major-City Pattern

(1 = Downtown)

Elements of Time and Territory


Management for the Salesperson, cont
Salespersons territorys
sales quota

Account analysis

Set account objectives


and sales quotas

Territory-time allocation

Territory and customer


evaluation

Scheduling and routing

Customer sales planning

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.

Carefully schedule
personal calls to
distant accounts.

Territory and Customer Evaluation


Did the salesperson meet sales quotas?

Sales volume
Profit
Expense
Activity
Customer satisfaction

Net Sales by Customer and Call


Frequency: May 1, 2014

Elements of Time and Territory


Management for the Salesperson, cont
Salespersons territorys
sales quota

Account analysis

Set account objectives


and sales quotas

Territory-time allocation

Territory and customer


evaluation

Scheduling and routing

Customer sales planning