Sales Management 7
Sales Territories
Sales Territories
Customers
Current and Potential
Assigned to a salesperson– Or branch, dealer, distributor
Territory Design Issues
Equity– Salespeople need fair chance to make a living
Coverage– Design to reach all customers– Need tougher “sales” as well as easy customers
Evaluation and control– A way to track effort/success/costs/profits– Can modify plan if not getting desired results
First: Determine # Salespeople
Before you establish territories, decide how many salespeople you need to have.
Then you can divide the market into territories, and assign a territory to each salesperson.
What size sales force?
Need sufficient number of salespeople to cover customers
Salespeople are expensive Balance: Optimal number of salespeople Three methods to establish size:
– Breakdown – Work Load– Incremental
Breakdown Method
It's alright if you love me, ♩♬♪♫It's alright if you don'tI'm not afraid of you runnin' away honey, I’ve got this feeling you won't Say there ain't no use in pretending, ♩♬♪♫Your eyes give you away Something inside you is feeling like I do, We said all there is to say Breakdown, go ahead and give it to me ♩♬♪♫Breakdown, take me through the nightBreakdown, go ahead give it to me, ♩♬♪♫
Breakdown, it's alright, It's alright, it's alright
http://www.youtube.com/watch?v=qNxfPAF1frM
Breakdown Method (the real one)
Divide sales forecast by average salesperson productivity
N = S ÷ P
– N = Number of salespeople needed– S = Total sales volume forecasted– P = Estimated productivity of one salesperson
Work Load Method
Classify customers by category: ABC
Frequency x Length of sales calls/category
Work load to cover entire market
Time available/salesperson
Figure available selling time (1/6 x 2000 Hrs)
Calculate # of salespeople needed
# Sales Calls on Account
Sales/Account
Point of Diminishing Returns
Annoying the Customer
More Calls = More Sales
Incremental Method
Cost/Benefit of adding salespeople
Calculate incremental revenue increase Calculate additional profits Less additional costs
If additional profits > additional costs: hire
Designing Sales Territories
Select Basic Control Unit Estimate potential in each unit Combine units into tentative territories Perform work load analysis Adjust tentative territories
– geography, potential
Assign territories
Select aBasic Control Unit
State Trading area County Metropolitan Statistical Area/Consolidated MSA Zip Code
State
City
New York City
Frostbite Falls, MN
http://www.youtube.com/watch?v=pl7Ww5w2-BI
MSA
Estimate Potential of Territories
Total number of actual and potential customers
Purchase volume/frequency
Remember: potential ≠ forecast– Not everyone who can buy does buy
Form Tentative Territories
Group basic control units into logical territories. Try to group geographically, preferably
contiguously.– Ohio/Pennsylvania: Good– Ohio/Hawaii: Fagedaboudid!
Try to make the territories roughly equal in terms of market potential.
This is a first attempt.
Perform Work Load Analysis
Determine the sales potential for each customer/prospect in the territory.
Determine sales call length & frequency. Add non-selling and travel time. Determine if one salesperson can adequately
service each territory.– Too much work?– Too much time?
Adjust Tentative Territories
If a territory is too large or too small for a salesperson, make adjustments.
Need to balance potential and workload.
Need realistic, and equitable territories to maintain salespeople’s motivation.
Assign Salespeople to Territories
Now look at salespeople’s different abilities. Match abilities to territories. Try to match salesperson with customers and
prospects.– Explorer to uncharted territory– Industry experience
(speaks the language)
Goals– Maximize company revenues and profits– Satisfied salespeople
Good Bye
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