Sales Territories

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
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
Procedure for Designing Sales Territories

Select a Determine Location Determine

Control Unit and Potential of Basic
Customers Territories

Assign Set Up Evaluate

Salespeople to Territorial Effectiveness
Territories Coverage of Design
Plans
 Territorial Control Units
• States
• Districts
• Cities / Towns
• Zip-code areas
 Buildup Method of Territorial Design

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 Size and Workload Factors
Workload Factor Territory
Size

Nature of Job:
Increase/Decrease
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:
Breakdown Method of Territorial Design

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

 TM 13-10

Territory Design: Break-Down Method Worksheet

Company sales potential = $200,000,000

Targeted volume rep = $ 10,000,000

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

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

Company sales potential $200,000,000

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

Combine adjacent control units until each sales potential of $10,000,000
 Managing Territorial Coverage
• Planning of efficient ‘routes’
for salespeople
• Scheduling Sales-peoples’
time
• Using Time Management
tools
 TM 13-13

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.
• Best for routine sales
jobs with regular call
frequencies.
 Routing - Advantages
• Reduction in travel time & cost by
excluding backtracking & criss-crossing;

• Improvement in territory coverage due to

above;

• Improvement in communications between

salesperson & manager
 Area C

Area B

Area A

Area B: Typically the “problem” area.

 Scheduling Salesperson’s time
• Allocation of time for customer visits
• Listing other major responsibility areas of
salespeople
• Prioritizing
• Allocating time schedules for other tasks
 Time Management Tools
• Using Computers and other
technical equipment

• Using sales-support people