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Dividing the sales effort

Sales territories
Swati Bhatnagar Module - IV

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Nature and Meaning

A sales territory comprises a number of present and potential customers located within a geographical area and assigned to a salesperson, branch or intermediary.

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Benefits of a good territory design

Enhances customer coverage Reduces travel time and selling costs Provides more equitable rewards Aides evaluation of sales force Increases systematic sales for an organisation Enhances morale

The territory design process

Select a control unit

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Determine location and potential of customers

Determine basic territories

Assign salespeople to territories

Set up territorial coverage plan

Evaluate effectiveness of design

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Determine the basic control unit

Select a basic control unit : - State - country - city Further, it may comprise of individual units: - Zip-code area - Metropolitan statistical area

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Determine Basic Territories

Either of two methods can be used to determine the territories: - Buildup method - Breakdown method

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Buildup Method
Management must determine: -desirable call patterns - Call frequency/account/year -Total calls needed in each control group -Workload capacity- total calls possible/rep/year=no. of
daily calls*days selling

- tentatively set territorial boundary lines by combining control units until total calls needed = total calls possible

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Example of Buildup Method

Metropolitan Area X Metropolitan Area Y Customer class Call frequency No. of accounts No. of calls/year No. of accounts No. of calls/year

2/month

10

240

120

1/month

25

300

15

180

1 every 2 months

15

90

60

360

Total

50

630

80

660

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Factors in Buildup method

Territorial design basically depends on the companys sales potential and the salesforce workload. Following factors must be considered:
Nature of the Job Nature of the product Stage of market development Intensity of market coverage Ethnic factors

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Breakdown method
This method is often used by firms that want exclusive distribution or that sell some type of industrial products. The steps in for this this procedure are:
Determine sales potential Determine sales potential in each control unit Determine sales volume expected from each salesperson Draw territorial boundaries Modify tentative territories as needed.

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Assigning salespeople to territories

The reps may differ in their selling effectiveness, experience, age, physical condition, education and creativity etc. Their, individual attributes must be kept in mind while assigning these salespeople to their respective territories. Many companies intentionally design sales territories which are unequal in size as per reps workload or territory design potential. This serves two purposes: - flexibility in managing salesforce - differences are accomodated.

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Revising Sales Territories

As internal and external conditions change, territorial structures may become outdated and need revision. Following may be the danger signals which point towards realigning the territorization efforts: Sales potential may outgrow a territory Selling task may have changed The geographic boundaries may be too small or too big Claim jumping is practiced.

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Territorial coverage 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. It may be indicated on a map or list. Often reps are asked to prepare their own route schedules as a part of their job.

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Reasons for Routing

Reduction in travel expenses Effective coverage of the territory Better time management Claim jumping can be avoided

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Objections to routing
Sales people may feel straitjacketed and devoid of creativity. Since a sales rep is in the actual market, which may be very fluid in nature, it would be a mistake not to allow him/her the freedom to make changes in the specific routing plan.

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Factors conducive to routing

Before deciding to rout the salesforce, management should consider: - Nature of product/job. - Call frequencies - Individual attributes. Some commonly used patterns like straight, circular,and hopscotch may be used.