Sales territory

Definition
 A group of present and potential
customers assigned to a sales
person, a group of sales person, a
branch, a dealer, a distributor or a
marketing organization at a given
period 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.
 Territory Management

Managing Personal
Generating
Existing Time
New Accounts
Accounts Management
 WHY ESTABLISH SALES
TERRITORIES?
 To obtain thorough coverage of the market.
 To establish each salesperson's responsibilities.
 To evaluate performance.
 To improve customer relations.
 To reduce sales expense.
 To allow better matching of salesperson to
customer’s needs.
 To benefit both salespeople and the company.
Why sales territories may not be developed:

• Salespeople may be more motivated if they

are not restricted.
• The company may be too small.
• Management may not want to take the time,
or have the know-how.
• Personal friendship may be the basis for
attracting customers.
STEPS IN DESIGNING SALES TERRITORIES

S elect B a s ic A n a ly z e D eter m in e B a sic

C o n tr o l U n it W o r k lo a d T er r ito r ies

E v a lu a te, R ev ise C u sto m er A ss ign to

if N eed ed C o n ta ct P la n T er rito ries
1. SELECT BASIC CONTROL UNITS

• States
• Countries
• Cities and zip-code areas
• Metropolitan statistical areas
• Trading areas
• Major accounts
• A combination of two or more factors
2. ANALYZE SALESPEOPLE’S
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.
3. 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
SIX STEPS TO CONSIDER WHEN DETERMINING A FIRM’S BASIC
TERRITORIES

1. Forecast sales and determine 4. Tentatively establish territories.

sales potentials.

2. Determine the sales volume 5. Determine the number of

needed for each territory. accounts for each territory.

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

territories. the boundary lines.
4. 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.
5. CUSTOMER CONTACT PLAN

The customer contact plan involves

scheduling sales calls and routing a
salesperson’s movement around the
territory.
Scheduling refers to establishing a fixed
time when the salesperson will be at a
customer’s place of business.

In theory, strict formal route designs enable the

salesperson to:
1. Improve territorial coverage.
2. Minimize wastage of time.
3. Establish communication between
management and the sales force in terms of
the location and activities of individual
salespeople.
 Three Basic Routing Patterns

1.Straight-Line
Pattern

First call
c

c c c
Work back
 Three Basic Routing Patterns

2.Cloverleaf Pattern c c

c c

c c
c c c c
c c
Base
c c c c
c c
c c
Each leaf out and
c c back the same day
c c
 Three Basic Routing Patterns

3.Major-City Pattern

2 3
1 1 = Downtown

4 5
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.
Using the Telephone for Territorial
Coverage continued

2. Order processing
• Ordering through the warehouse.
• Gathering credit information.
• Checking if shipments have been
made.
Using the Telephone for Territorial
Coverage continued

3. Customer service
• Handling complaints.
• Answering questions.
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.
6.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.
SOME CONCEPTS:

OPEN SALES TERRITORY: 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.
Sales leakage refers to the lost sales due to both the vacancy
and the time required for the new salesperson to produce at
average.
Territory Management
 A Portfolio Model
Competitive Position
Strong Weak
Core Growth
Account Opportunity

Core Growth
Accounts
Accounts Accounts
Accounts
High Accounts
Accountsare
arevery Accounts
very Accountsareare
attractive.
attractive. Potentially attractive.
Potentially attractive.
Invest
Investheavily
heavilyin May
in Maywant
wanttotoinvest
invest
Selling resources. .
Selling resources in heavily
in heavily

Drag
Drag Problem
Problem
Low Accounts
Accounts Accounts
Accounts
Accounts Accounts
Accountsarearevery
Accountsare
are very
moderately attractive. unattractive.
unattractive.
moderately attractive.
Invest Minimal
Minimalinvestment
Investto
tomaintain
maintain investment
current position.
current position. of resources. .
of sellingresources
selling
 Competitive
Competitive Position
Position
Strong
O
P Segment 1- Core Accounts
P Attractiveness: Accounts are very attractive
O because they offer high opportunity and sales
R organization has strong competitive position.
T Selling Effort Strategy: Accounts should
U High receive a heavy investment of sales resources to
N take advantage of opportunity and
I maintain/improve competitive position.
T
Y
 Competitive
Competitive Position
Position
Weak
O
P Segment 2 – Growth Accounts
P Attractiveness: Accounts are potentially
O attractive due to high opportunity, but sales
organization currently has weak competitive
R
position.
T High
Selling Effort Strategy: Additional analysis
U should be performed to identify account where sales
N organization’s competitive position can be
I strengthened. These accounts should receive heavy
investment of sales resources, while other accounts
T receive minimal investment.
Y
 Competitive
Competitive Position
Position
Strong
O
P Segment 3 – Drag Accounts
P Attractiveness: Accounts are moderately
O attractive due to sales organization’s strong
competitive position. However, future
R
opportunity is limited.
T Low
U Selling Effort Strategy: Accounts should
receive a sales resource investment sufficient to
N maintain current competitive position.
I
T
Y
 Competitive
Competitive Position
Position
Weak
O
P Segment 4 – Problem Accounts
P Attractiveness: Accounts are very
O unattractive: they offer low opportunity and
sales organization has weak competitive
R
position.
T Low
U Selling Effort Strategy: Accounts should receive
minimal investments of sales resources. Less costly
N forms of marketing (for example, telephone sales
I calls, direct mail) should replace personal selling
T efforts on a selective basis, or the account coverage
should be eliminated entirely.
Y