Sales Territories

Management

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Sales Territories Management
At the end of this module, the learning outcomes are:
• Importance of designing sales territories.
• Understand how territories are designed.
• To understand coverage, scheduling and routing of territories.
• Concept and relevance of sales quotas.

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Sales Territories Management
Suggested Readings:
• Sales and Distribution Management by Havaldar and Cavale, 2nd
edition, Chapter 4.

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Sales Territories Management
A sales territory
• Consists of existing and potential customers assigned to a saleperson.

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Sales Territories Management
Benefits of sales territories
• Better market / customer coverage
• Better control of sales expense.
• Helps in better evaluation of salesforce performance
• Improve customer relationships
• Increase salesforce effectiveness
• Improve sales and profit performance

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Sales Territories Management
Steps in designing a sales territories.
• Select a control unit.
• Decide basic territories.

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Sales Territories Management
Select a control unit*
• Find location and potential of present and prospective customers within
control units**
• Decide basic territories by using
• Build-up method,
Or
• Break-down method
*A control unit is a geographical territorial base
**Unnecessary & expensive for consumer products

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Delhi versus Rajasthan
• 1.5 lacs monthly
• Delhi NCR = 20% of total sales = 30000
• 4 sales people.
• 30000/4 = 7500
• Target = 7500
• 2.75 Cr = Delhi/NCR population

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• Delhi NCR
• Diameter : 100 Kms
• 22/7 x 50x 50 =8000 sq kn.

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• Rajasthan
• Sriganga Nagar = 800 x 800 x 0.5 = 320000 sq km
• 5 % = 7500
• 4 sales people
• 7500/4 = 1875 cars pm = Target
• 100% incentive same

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Sales Territories Management
Decide basic territories
• Build-up method
• Breakdown method

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Sales Territories Management
Build-up method
• Equalizes the workload of sales personnel.
• Decide customer call frequencies
• Calculate total customer calls in each control unit
• Estimate workload capacity of a salesperson
• Make tentative territories
• Develop final territories
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Sales Territories Management
Breakdown method
• Equalizes the sales potential of sales territories.
• Estimate company sales potential for total market
• Forecast sales potential for each control unit
• Estimate sales volume expected from each salesperson
• Make tentative territories
• Develop final territories
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Sales Territories Management
Allocating sales territories to sales personnel.
Two factors
• Relative ability of salespeople
• Salesperson’s effectiveness in a territory

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Sales Territories Management
Relative ability of salespeople
• Product knowledge
• Market knowledge
• Past sales performance
• Selling skills
• communication

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Sales Territories Management
Salesperson’s Effectiveness in a Territory
comparing
• social
• Cultural
• Physical
characteristics of the salesperson with those of the territory.

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• Calculate the Perimeter of Bihar?
• 2 minutes
• D =600 KmX 22/7= 1700 Km

• 700 x 400 x 2= 2200

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Sales Territories Management
Coverage of sales territories
How to maximize coverage
Three steps
• Routing
• Scheduling
• Time management

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Sales Territories Management
Routing
• is a travel plan used by a salesperson for making customer calls in a
territory.
• Benefits of routing.
• Reduction in travel time and cost
• Improvement in territory coverage

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Sales Territories Management
Routing
Depends on
• Nature of the product.
• Job of the sales personnel

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 Procedure 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
• Computerised mathematical models are developed
• Commonly used routing patterns are:

Base C
(B) 1 B
B
C C C C
5 4 3 2

Straight line / Hopscotch Clover Leaf

Circular
Sales Territories Management
Scheduling
• Planning a salesperson’s visit time to customers.
• 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 1 to 2 weeks
• Focus on how to increase time spent on major activities

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Sales Territories Management
Scheduling
• specify call norms for current customers, based on sales and profit
potentials, and also for prospective customers
• Call norms vary from customer to customer.

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• Category No of calls
•A 20 80 at least 1 call per week
•B 30 15 at least 1 call a month
•C 50 5 at least 1 call every 6 months

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Sales Territories Management
Time Management for salespeople.
To help outside salespeople to manage their time efficiently and
productively, the tools available are:
• High-tech equipment like laptop computers and cellular phones
• Inside salespeople to provide clerical support, technical support, and
for prospecting, and qualifying, as they remain within the company
• Outside salespeople can then spend more time getting more orders &
building relationships with major customers

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Sales Territories Management
Sales Quotas
Concept
• are sales goals or targets set by a company for its marketing / sales
units for a time period
• sales budget is broken down to sales quotas for various marketing
units
• These marketing/units can be branch, area, sales person.

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Sales Territories Management
Purpose of Sales quota
• Set performance standards
• Monitor performance.
• Motivate sale people to achieve quotas.
• Take corrective steps to achieve sales.

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Sales Territories Management
Type of Quotas
• Sales volume
• Financial
• Activity
• Combination of the above.

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Sales Territories Management
Methods for setting quotas
Based on
• Territory potential
• Past sales experience
• Total market estimates
• Salespeople’s estimates
• Executive judgement
• Compensation plan.

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