Management of Sales

Territories
A sales territory consists of existing and
potential customer assigned to a sales
person.
 The territory may or may not have territory
boundaries
 Generally, a salesperson is assigned to a
geographic area consisting of present and
potential customers
 Reasons for setting up or
reviewing up Sales Territories
1.Increase Market or Customer coverage
 a well designed sales territory allows
salespeople to spend sufficient time ith
present and potential customers, which
improves market coverage.
 This way the company doesn't lose any
business to its competitors. In fact better
coverage of market result in gaining
competitors customers
 Reasons for setting up or
reviewing up Sales Territories
 Sales territories should be large enough to
ensure reasonable workloads to sales force
but small enough to see that all existing
customers and prospects are visited
adequately as needed by customers.
 The field sales managers can control the
activities of the salespeople, if the sales
territory are set up properly.
 Reasons for setting up or
reviewing up Sales Territories
2. Control selling expenses
 By setting up well designed sales terittory
sales people spend less time on the road,
fewer night away from home, resulting in less
cost of travelling and less expenses on
lodging and food.
 Sales volume go up as salespeople as
salespeople spend more time with customers
 Reasons for setting up or
reviewing up Sales Territories
3. Better evaluation of sales force performance
 The sales manager can evaluate the
performance of each salesperson in better
way, when the salesperson is assigned to a
specific sales territory.
 Each sales territory business potential can be
estimated. Sales quota for each sales person
can be decided based on the company`s share
of market potential of the territories
 The sales performance can be measured and
can be compared with the respective sales
goal of the salesperson
 Reasons for setting up or
reviewing up Sales Territories
4. Improve customer relations
 When the salesperson spends adequate time with present and
potential customers, to understand their problem and to find
solutions, their relationship improves.
5.Increase salesforce effectiveness
 When a sales territory is properly designed, the salesperson
workload is reasonable and the conflict are minimum as
specific customer are assigned to them. A salesperson is
clearly responsible to maintain good relationship with specific
customers.
 All these positive factors contribute to improve the
salespersons performance and effectiveness in terms of
consistently achieving and exceeding the goals and quotas
 Procedure for designing sales
territories
Use build up
method

Select a Find location Decide

Use breakdown
method

g
Procedure for designing sales
territories
 The first step in territory design is to select a
geographical territorial base, called control unit
that will be used in the territory analysis.
 Commonly used control units are states,
metros, city district town. So that control unit
market potential and company sales potential
should be possible to calculate and adjustment
can be possible when tentative boundary is
defined.
Procedure for designing sales
territories
2. Find location and potential of customer
 Information of present customers should be
available from the company`s sales analysis
 The information of prospective customer can be
obtained not only form the company salespeople,
but also form telephone directories, and market
research studies.
 After the present and potential customer are
identified, the company should estimate the total
sales potential for all the customer in each
geographical control unit
Procedure for designing sales
territories
3. Decide Basic Territories
 The third step in designing sales territories is to decide
basic or fundamental territories. This can be done by
either using build-up method, or breakdown method.
 Buildup method equalizes the workload of salespeople
and is commonly used manufactures of industrial
products and services or by the companies that want
selective distribution strategy
 Breakdown method equalized the sales potential of
territory, and is popularly used by manufacturers of
consumers products and services or the firms that want
to adopt intensive distribution strategy
Procedure for designing sales
territories
Build-up Method
 The basic territories are set up by building up from
the control units. The objective to be achieved is to
equalize the workload of salespeople
1. Decide call frequencies
 It means how many times a customer should be
visited by company`s salesperson per year.
 The factor that influence call requency are the
customers sales/ profit potential, cost of visiting the
customers, buying behavior of the customer, and
the nature of the product or service offered.
Procedure for designing sales
territories
District-X District-Y
Call No. of No. of
No. Of
frequenc No. of call call
customer
Custome y per customer per per
s
r type month s year year
A 4 3 144 4 192
B 2 7 168 8 192
c 1 20 240 28 336
Total 30 552 40 720
 Procedure for designing sales
territories
2.Calculate the total no. of calls in each control unit.
 Total no. of sales call needed in districts x and y are 552 and
720 respectively
3. Estimating workload capacity of a salesperson
 A salesperson`s normal workload capacity is estimated by
multiplying average no. of calls a salesperson can make in a
working day by the no. of working day in a year
 E.g. the average no. of calls a salesperson make in a day work
out to be 5 based of average travel time of 30 minute per call,
the average length of one hour of each call, and 8 hours per
day working. If the no. of working day in a year is 250 then
estimated workload capacity for the salesperson per year work
out to be 1250 calls( 250X 5)
 Procedure for designing sales
territories
4.Make tentative territories
 In this step, the company should group adjing
control units until yearly no. of call needed in
those control units equal th total no. of calls a
salesperson can make e.g. district x and y
together need 552 + 720= 1272 visits per years
which is almost equal to 1250 calls of normal
workload of a salesperson
 Procedure for designing sales
territories
Break down method

Estimate Forecast Estimate