Design and Size of Sales

Territories

Design and Size of Sales

Territories

..

Learning Objectives

The definition of a sales territory.Who is responsible for territorial

development. The factors to consider when

designing sales territories.

WHAT IS A SALES TERRITORY?

A sales territory is defined as groupof present and potential customersassigned to an individual salesperson, a branch , a stockiest , a distributor at a given point of time.

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.

WHY ESTABLISH SALES TERRITORIES?

• To establish a salesperson’s responsibility.

WHY ESTABLISH SALES TERRITORIES?

• To evaluate performance.

WHY ESTABLISH SALES TERRITORIES?

• To improve customer relations.

WHY ESTABLISH SALES TERRITORIES?

• To reduce sales expense.

WHY ESTABLISH SALES TERRITORIES?WHY ESTABLISH SALES TERRITORIES?

• To allow better matching of salesperson to customer.

WHY ESTABLISH SALES TERRITORIES?

• To benefit salespeople and the company

FACTORS TO CONSIDER WHEN DESIGNING TERRITORIES

• .

Select Basic Control Unit

Analyze Workload

Determine Basic Territories

Assign to Territories

Customer Contact Plan Evaluate,

Revise if Needed

SELECT BASIC CONTROL UNITS

• States• Counties• Cities and zip-code areas• Metropolitan areas• Trading areas• Major accounts

Control Units • Pharmacy company• 27 offices in the country • Western Maharashtra is one of it• Pune • Zip codes – Tahsils

ANALYZE SALESPEOPLE’S WORKLOADS

Workload is the quantity of work expected from sales personnel. Three of the main influences on workload involve the

a ) nature of the job,

b ) intensity of market coverage, and

c) type of products sold.

Nature of Job

• Order taker – Larger territory• Missionary – Lesser territory

Intensity of Market Coverage

Distribution methods:• Intensive distribution• Selective distribution• Exclusive distribution

Types of products sold

• Convenience goods– Call many more accounts.

• Shopping foods - • Specialty goods - Dell –

Computer networks to top organizations.

DETERMINE BASIC TERRITORIES - SIX STEPS

I. Forecast sales and determine sales potentials.

II. Determine the sales volume needed for each territory. III Determine the number of territories Breakdown Approach Equalized workloadIV. Tentatively establish territories.V. Determine the number of accounts VI. Finalize the territories, and draw the boundary lines.

DETERMINE THE NUMBER OF TERRITORIES

The breakdown approach uses factors such as sales, population, or number of customers.

Sales Force Size = Forecasted Sales 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.

• Non selling time.

Equalized WorkloadAccount Segmentation based on sales

Customer Size

Yearly Sales ( in units )

Number of

Accounts %

A >6000 100 18 %

B 2400 to 6000

200 36 %

C 1200 to 2400

200 36 %

D < 1200 50 10 %

Equalized WorkloadDetermination of total number of calls

Customer size

Call frequency

per month /per

Quarter

Total calls in a year

Number of accounts

Number of calls per

year

A 2 24 100 2400

B 1 12 200 2400

C 1* 4 200 800

D* 1 per

quarter

Nil Nil 50 0

Equalized Workload

• Total number of calls = 5600

……………….

Individual Customer calls* 150

= 37 Sales Territories Assumption : Working months 10 . Each

month travels 15 days . Covers 15 points .

Step 4 –Tentatively establish territories

• Market• Regions• Districts • Sales territories • Example : if 18 sales people . Might

use state as control unit .

.• Step 5• Determine the number of

accounts for each territory• Step 6 • Finalize the territories and draw

boundary lines

ASSIGN TO TERRITORIES

Some salespeople can handle large territories and the travel associated with them; some can’t.

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.

• The customer contact plan involves scheduling sales calls and routing a salesperson’s movement around the territory.

CUSTOMER CONTACT PLAN

Weekly Route Report

Date City Location / Dealer

Jan 23 2012 Ahmednagar R K Distributors

Jan 24 2012 Kopargaon Mahesh Enterprises

Jan 25 2012 Shrirampur Raj Traders Jan 26 2012 Holiday

Jan 27 2012 Satara Zummerwala & Sons

Jan 28 2012 Pune ( H Q ) Travel / Home

THREE BASIC ROUTING PATTERNS

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Scheduling

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.