Sales territory design &

management
Sales Territory/ Territory coverage

• Territory refers to a land or a region.

• With respect to sales management, it refers to the area or region for
which a particular sales person or agent is responsible
• Territories provide for organized and systematic market coverage
because the responsibility of the sales person for each customer is
clearly assigned.
• The territory allocation tasks have a lot of bearing on the efficiency
of the Sales Department.
Factors To Consider When Planning Sales
Territories

• When segmenting territories among your reps, you want to

make sure they’re allocated fairly. To ensure this, ask yourself
the following questions:
• Is the workload equally divvied up between each member of the
team?
• Does the territory design provide equal compensation
opportunities?
• Is there a good mix of existing and new accounts per territory?
• Does the territory route allow easy travel time management?
Procedure for setting up sales
territories

• 1. Selecting a basic geographical control unit.

Commonly used units are postal code numbers, areas, towns or cities.

Sales territories are put together as consolidations of basic

geographical Control units.
 Procedure for setting up sales
territories

. Determining the sales potential present in each unit .

2

Sales potential : Maximum possible sales

opportunities open to a specific company selling a
good or service during a stated future period to
particular market segment.

Identify the present and prospective buyers

precisely in a unit and ascertain the unit’s total
market potential that the company has an
opportunity to obtain i.e. Sales Potential.
Procedure for setting up sales
territories

• 3. Combining control units into tentative territories.

Assumption : No significant differences exist in the physical
and other characteristics of the control
units.
Contiguous control units are combined into tentative territories
having approx. same sales potential.

Planner decides the number of territories.

Procedure for setting up sales
territories

• 4. Adjusting for differences in coverage difficulty.

Removal of unrealistic assumption that no differences in the

characteristics of geographical control units exist.
Certain large cities, for instance, have greater sales
potential than some states but time required to contact the customers
in city is less as compared to the state.
Procedure for setting up territories

• 4. Adjusting for differences in coverage difficulty.

• Differences in coverage difficulty represent

differences in work loads.
• When final adjustments for coverage
difficulties are made, sales territories have varying
sales potential and different sized work loads, but
none exceeds the maximum desirable work load
depending upon the capacity of the sales person.
 Assigning Salespeople to Territories
Sales Manager should consider two criteria:
(A) Relative ability of salespeople
• Based on key evaluation factors:
(1) Product knowledge, (2) market knowledge, (3) past
sales performance, (4) communication, (5) selling skills
(B) Salesperson’s Effectiveness in a Territory
• Decided by comparing social, cultural, and physical
characteristics of the salesperson with those of the
territory
• Objective is to match salesperson to the territory
 Territory
management

• It means: How salesperson should cover the assigned

sales territory
• It includes three tasks for a sales manager:
• Planning efficient routes for salespeople
• Scheduling salespeople’s time
• Using time-management tools
 Routing

• Routing is a travel plan used by a salesperson for making

customer calls in a territory
• Benefits of or Reasons for routing:
• Reduction in travel time and cost
• Improvement in territory coverage
• Importance of routing depends on the application:
• Nature of the product – Important for FMCG
• Type of jobs of salespeople – Important for driver-cum-
salesperson job, but creative selling job needs a flexible
route plan
 Procedure for Setting up a Routing Plan
• Identify current and prospective customers on a territory map
• Classify each customer into high, medium, or low sales
potential
• Decide call frequency for each class of customers
• Build route plan around locations of high potential customers
• Commonly used routing patterns are:

Base C1
(B)
B
B
C5 C4 C3 C2

Straight line / Hopscotch Clover Leaf

Circular