CHAPTER 6

DESIGN AND SIZE OF SALES TERRITORIES

Copyright 2001 by Harcourt, Inc. All rights reserved.

WHAT IS A SALES TERRITORY?

A sales territory is composed of a group of customers or a geographic area assigned to a salesperson.

Copyright 2001 by Harcourt, Inc. All rights reserved.

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.

Copyright 2001 by Harcourt, Inc. All rights reserved.

WHY ESTABLISH SALES TERRITORIES?

To obtain thorough coverage of the market.
To establish a salespersons responsibility. To evaluate performance.

To improve customer relations.

To reduce sales expense. To allow better matching of salesperson to customer. To benefit salespeople and the company.
Copyright 2001 by Harcourt, Inc. All rights reserved.

FACTORS TO CONSIDER WHEN DESIGNING SALES TERRITORIES

Sales force objectives may be based on factors such as

Profits,
Return on investment, sales/cost ratios, market share
Copyright 2001 by Harcourt, Inc. All rights reserved.

FIGURE 6.1 FACTORS TO CONSIDER WHEN DESIGNING TERRITORIES

SetBi e c ac l s CtoU o rl n n i t

Al z n ye a W la ok d r o

D ie a er n s t m Bc e i Tioe e trs r i r

E a,R e vue ei at v l s i Nd f ee e d

Ctm uo e s r Ct c Pn oa l nt a

Ag t si n o s Trt re e ioi s r

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SELECT BASIC CONTROL UNITS

States
Counties Cities and zip-code areas Metropolitan statistical areas Trading areas

Major accounts
A combination of two or more factors
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ANALYZE SALESPEOPLES WORKLOADS

Workload is the quantity of work expected from sales personnel. Three of the main influences on workload involve the nature of the job, intensity of market coverage, and type of products sold.

Copyright 2001 by Harcourt, Inc. All rights reserved.

Intensity of Market Coverage

Distribution methods: Intensive distribution Selective distribution Exclusive distribution

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DETERMINE BASIC TERRITORIES

The breakdown approach uses factors such as sales, population, or number of customers.
Forecasted Sales Sales Force Size = Average Sales per Salesperson

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TABLE 6.1 SIX STEPS TO CONSIDER WHEN DETERMINING A FIRMS BASIC TERRITORIES

1. Forecast sales and determine sales potentials. 2. Determine the sales volume needed for each territory.

4. Tentatively establish territories.

5. Determine the number of accounts for each territory.

3. Determine the number of territories. 6. Finalize the territories, and draw the boundary lines.

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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.

Nonselling time.
Copyright 2001 by Harcourt, Inc. All rights reserved.

ASSIGN TO TERRITORIES
Some salespeople can handle large territories and the travel associated with them; some cant. 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.

Copyright 2001 by Harcourt, Inc. All rights reserved.

CUSTOMER CONTACT PLAN

The customer contact plan involves scheduling sales calls and routing a salespersons movement around the territory.

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Scheduling refers to establishing a fixed time when the salesperson will be at a customers place of business.
In theory, strict formal route designs enable the salesperson to:

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.
Copyright 2001 by Harcourt, Inc. All rights reserved.

FIGURE 6.2 THREE BASIC ROUTING PATTERNS

Straight-Line Pattern Base c c c
Major-City Pattern
c c Base c c c c c c Each Leaf Out and Back Same Day c c c c c c

First Call c c Work Back

Cloverleaf Pattern c

2
c c c

3 1

c c

1 - Downtown

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Using the Telephone for Territorial Coverage

1. Sales generating
Selling regular orders to smaller accounts.

Selling specials, such as offering price discounts on an individual product. Developing leads and qualifying prospects.
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Using the Telephone for Territorial Coverage continued

2. Order processing Ordering through the warehouse.

Gathering credit information.

Checking if shipments have been made.

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Using the Telephone for Territorial Coverage continued

3. Customer service Handling complaints. Answering questions.

Copyright 2001 by Harcourt, Inc. All rights reserved.

Most people can benefit from adopting the following practices:

Satisfying part of the service needs of accounts by telephone.

Assigning smaller accounts to telephone selling.

Doing prospecting, market data gathering, and call scheduling by telephone. Carefully scheduling visits to distant accounts, replacing some with telephone calls.
Copyright 2001 by Harcourt, Inc. All rights reserved.

EVALUATION AND REVISION OF SALES

TERRITORIES

Territorial control is the establishment of standards of performance for the individual territory in the form of qualitative and quantitative quotas or goals.

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OPEN SALES TERRITORIES

Open sales territories are those left vacant until new salespeople are assigned to them. Vacant territories experience the following: Lost sales due to the vacancy. Lost sales due to the time needed for the new salesperson to build sales productivity.

Copyright 2001 by Harcourt, Inc. All rights reserved.