Chapter 13: Sales Territories

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Chapter
13
TM 13-1
Sales Territories
You have to recognize when the right place and
the right time fuse and take advantage of that
opportunity. There are plenty of opportunities
out there. Ellen Metcalf
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Sales Territory
TM 13-2

• Comprises a number of present and potential
  customers, located within a given geographical
  area and assigned to a salesperson, branch, or
  intermediary (retailer or wholesaling
  intermediary).
• Key word customers

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Benefits of Good Territory Design
TM 13-3

• Enhances customer coverage
• Reduces travel time and selling costs
• Provides more equitable rewards
• Aids evaluation of sales force
• Increases sales for the sales organization
• Increases morale

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Procedure for Designing Sales Territories
TM 13-4 (Fig. 13-1)
Determine Basic Territories
Select a Control Unit
Determine Location and Potential of Customers
Assign Salespeople to Territories
Set Up Territorial Coverage Plans
Evaluate Effectiveness of Design
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Territorial Control Units
TM 13-5

• States
• Counties
• Cities
• Zip-code areas
• MSAs (Metropolitan Statistical Areas)

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Buildup Method of Territorial Design
TM 13-6 (Fig. 13-3)
Management must determine
Desirable call patterns
Call frequency per account per year
Total calls needed
in each control group
Workload capacity
Total calls possible per rep per year number of
daily calls x days selling
Tentatively set territorial boundary lines by
combining control units until total calls needed
total calls possible
Modify territories as needed
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Territory Design Build-Up Method Worksheet
TM 13-7
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Territory Size and Workload
Factors
TM 13-8
Workload Factor Territory Size
Increase/Decrease
Nature of Job Lots of presale and
post-sale activity Decreases Nature of
product A frequently purchased
product Decreases A limited repeat-sale Increa
ses Market development stage New
market--fewer accounts Increases Established
market--more accounts Decreases Market
coverage Selective coverage Increases Ex
tensive coverage Decreases Competition
Intensive Decreases unless market is
oversaturated Limited Increases
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Breakdown Method of Territorial Design
TM 13-9 (Fig. 13-5)
Management must determine
Company sales potential
Sales potential in each control unit
Sales volume expected from each sales person
Tentatively set territorial boundary lines by
combining control units total sales potential
total sales volume expected
Modify territories as needed
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TM 13-10
Territory Design Break-Down Method Worksheet
Company sales potential 200,000,000
Targeted volume rep 10,000,000 Number of
reps needed Company sales potential
200,000,000 Targeted volume/rep
10,000,000 Territory volume as
Targeted volume/rep 10,000,000
Company sales potential
200,000,000

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5


Each territory should comprise 5 of sales
potential or 10,000,000 Combine adjacent control
units until each sales potential of 10,000,000
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TM 13-11
Sales Territories for Pharmaceutical Sales Reps

• Divide
• The 48 states into 5-10 regions
• Each region into several districts
• Each district into 8-12 territories (typically 1
  rep per territory)

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Computers in Territory Design
TM 13-12

• Geographic Information System (GIS)
• Combines multiple layers of information to
  provide in-depth understanding of a sales
  territory.
• Elements of a complete GIS
• Software
• Hardware
• Data
• Trained people

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Routing the Sales Force
TM 13-13

• Routing is the managerial activity that
  establishes a formal pattern for sales reps to
  follow as they go through their territories.
• Reduces travel expenses as it ensures a more
  efficient territory coverage.
• Some reps resent it.
• Best for routine sales jobs with regular call
  frequencies.

Area B Typically the problem area.
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Sales Territories

• Nature of a sales territory
• Definition of sales territory
• number of present and potential customers,
  located within a geographical area and assigned
  to a salesperson, branch, or intermediary
• Sales territories (or markets) are made up of
  customers rather than geography
• Benefits of designing good territories
• 1. Enhances customer coverage
• 2. Reduces travel time and selling costs
• 3. Provides more equitable rewards
• 4. Aids evaluation of sales force
• 5. Increases sales for sales organization
• 6. Increases morale

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Sales Territories

• Steps in designing sales territories
• 1. Select a control unit
• State
• County
• City
• Zip code area
• Metropolitan statistical area
• 2. Determine location and potential of customers
• Identify both present and potential customers
• Determine the amount of potential business from
  each account

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Sales Territories

• Steps in designing sales territories
• 3. Determine basic territories through
• A. Buildup method steps
• i. Determine optional call frequencies (per
  year)
• ii. Determine the total number of calls needed
  in each territory
• iii. Determine workload capacity
• Things that effect workloads (see box on page
  378)
• iv. Draw tentative territorial boundaries
• v. Modify tentative territories as needed
• B. Breakdown method steps
• i. Determine sales potential (entire market)
• ii. Determine sales potential in each control
  unit
• iii. Determine sales volume expected for each
  salesperson
• iv. Draw tentative territorial boundaries
• v. Modify tentative territories as needed

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Sales Territories

• Steps in designing sales territories
• C. Using Computers to build territories
• Geographic Information Systems (GIS) uses 4
  elements
• i. Software
• ii. Hardware
• iii. Data
• iv. Trained people

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Sales Territories

• Steps in designing sales territories
• 4. Assign salespeople to territories
• Need to consider differences in sales abilities
  and skills
• Why and how often should territories be revised
• Effect of revision of territories
• 5. Set up territorial coverage plans for sales
  force
• 1. Routing sales force
• 2. Scheduling reps time
• Time management and computer support systems
• 6. Evaluate effectiveness of the design