Sales Management

March 2018
 Benefits of Good Territory Design
• 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
 What is a Sales Territory
• 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
 Procedure for Designing Sales Territories

Select a Determine Location Determine

Control Unit and Potential of Basic Territories
Customers

Assign Set Up Evaluate

Salespeople to Territorial Effectiveness of
Territories Coverage Plans Design
 Territorial Control Units
• States
• Counties
• Cities
• Postal-code areas; Ghatkopar East/ West
• Metropolitan Areas; South Mumbai
 Simple Methods
1. Select control units
• Census tracts -- good for dividing cities
• Counties - convenient and data readily available
2. Choose starting points
• Salesperson’s home
• Large customer - cut transportation cost
• Big city - convenient for services
 Buildup Method of Territorial Design

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

 Territory Build Up Method
• Calls per Sales Rep= 6 calls/day x 5 = 30 calls/week x 50 = 1,500 calls/year
Control Units
A B C
Customer Call Calls Calls Calls
class frequency Accounts per year Accounts per year Accounts per year

A 2 per month 10 240 7 168 5 120

B 1 per month 30 360 17 204 10 120
C 1 every 2 months 68 408 55 330 27 162
108 1,008 79 702 34 402

Distribution of one rep’s calls 1,008 + 491 or 402

Possible control combinations 100% A + 70% B or 100% A + 100% C
 Territory Size and Workload Thumb Rules
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 Increases
Market development stage: New market--fewer
accounts Increases Established market--more accounts Decreases

Market coverage Selective coverage

Increases Extensive coverage Decreases
Competition: Intensive
Decreases – unless
market is oversaturated
Limited Increases
Breakdown Method of Territorial Design
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

 Territory Design: Break-Down Method Worksheet

Company sales potential = Rs. 200,000,000

Targeted volume /rep = Rs. 10,000,000

Number of reps needed Company sales potential Rs.200,000,000 = 20
Targeted volume/rep Rs. 10,000,000

Territory volume as % of = Targeted volume/rep = Rs 10,000,000 =5%

Company sales potential company sales pot Rs. 200,000,000

Each territory should comprise 5% of sales potential or Rs.10,000,000

Combine adjacent control units until each sales potential of Rs.10,000,000
Class Exercise- Use maps to------

Divide…
•Your All India or whichever market
you want into optimal territories
 Computers in Territory Design
• 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
 Routing the Sales Force
• 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.
Straight Line Pattern

Last
Point

D C B A
Routing

Main
Base
• Thank You