Sales Territory

A group of present and potential customers available in a particular

marketplace assigned to an individual sales person, a group of sales

person, a branch, a dealer, a distributor or a marketing firm at a given

period of time.

In other words, it is a division of total market on the basis of geographical

locations and/or nature of job performed (selling, delivery, after-sales-

services, etc.) , and /or types of prospects to be contacted or served

efficiently, effectively and economically by a single salesman.

OBJECTIVES

•To prevent duplication of efforts

•To provide proper and efficient routing of sales force
•To equalize the work load of sales forces to greater extent
•To enable sales mangers to make comparison of sales possibilities of each territory and
accomplishment of each salesman
•To enable sales mangers to manage and evaluate his sales force intelligently
•To meet the requirements of competition
•To have maximum coverage of market
•To control selling expenses and time
•To attend, meet and serve customers effectively
•To facilitate the training and selection of salesmen and their motivation
 Sales Territory
Advantages
 Ensures better market coverage
 Effective utilization of the sales force
 Efficient distribution of workload among sales people
 Convenient evaluation the performance of sales people
 Control over the direct and indirect costs of the sales function
 Optimum utilization of sales time by sales people
 Designing Sales Territories
STEP-1: Select the Basic Geographic Control Units
It refers to selection of basis geographical control unit which are generally small. The most
common control units are countries, pin code, cities, metro cities, statistical areas, trading
areas, etc.
STEP-2: Sales Potential Present in each Control Unit
To determine it in terms of
Market Potential,
Market share,
Industry growth rate, and
Market position of competitors vis-à-vis own
STEP-3: Combining Control Units into Tentative Territory
With the purpose to have proper
Market coverage,
Territory shape, and
Uniformity of sales potential

circle wedge Clover leaf

STEP-4: Adjusting for Differences in Coverage Difficulty and Restructuring of the
Tentative Territory
# Determine number, location, and size of consumers / prospects in each
territory
# Estimate time required for each sales call
# Determine length of time gap between calls
# Decide call frequency
# Calculate number of calls possible within a given period
# Determine number of calls required during a specified period
# Specify adjusted territories to be assigned to sales personnel

STEP-5: Decide Assignment of no. of Salesperson for the achievement of sales goals

STEP-6: Routing and Scheduling sales personnel

 Factors Influencing the Modifications of a Territory

# Territories Merger possibilities

# Market consolidation
# Split in division
# Sales force turnover
# Customer relocations
# Product life cycle change
# Product line change
 Strategic Planning Matrix
Opportunity
High The ST offers a good opportunity. It has
high potential and the sales organization
has a differential advantage in serving it.
Sales Territory’s Attractiveness
Strategy
Commit high levels of sales resources to
take advantage of the opportunity.
Opportunity
The ST offers stable opportunity since
the sale organization has differential
advantages to serving them.
Strategy
Allocate a moderate level of resources
to maintain current advantage.
Low
Strong
Relative Competitive Position
Opportunity
The ST may represent a good opportunity.
The sales organization needs to overcome its
competitive disadvantages and strengthen
its position to capitalize on the opportunity.
Strategy
Deploy a high level of sales resources to
improve the competitive position . If not,
shift resources to other accounts.
Opportunity
The ST offers little opportunity. Its
potential is small and the sales
organization is at a competitive
disadvantage in serving it.
Strategy
Either commit a minimal level of
resources to the ST or consider to
merge with other STSs.
Weak
 Management of Sales Quota
A sales quota is the sales goal (target) set for a product line, company
division, or sales representative. It is primarily a managerial device for
defining and stimulating the sales effort

Objectives
1.To establish a quantitative method of planning and controlling sales
2.To setup performance and efficiency standard for sales force
3.To motivate for desired performance level and for sales contracts
4.To provide a basis for remuneration of sales force

Types
1.Sales volume quota
2.Sales budget quota
3.Sales activity quota
4.Combination quota
Sales Quota Setting Methods
Quotas are based on…
•Sales forecasts and potential
•Past sales and experience
•Executive judgement
•Salesperson judgement
•Compensation

Problems in Sales Quota Setting

•There is a high level of individual difference in every organization
•A perfect quota is a combination of selling and non-selling activities
often sales people do not give proper attention to the non-selling
activities (e.g. searching for prospects, customer post-sales follow up,
and creating market for probable entry of new products)
 Principles of Quota Setting
• Setting of sales quotas is a challenge to the sales manager and should be
handled with precision and adequate skill
• Objectivity needs to be maintain while fixing quotas and should be based on
facts and figures drawn from the market
• It must be simple to understand both to the manager and the sales people
• Quotas must be realistic and achievable limit otherwise often result into
demotivation and a high turnover of sales force
• Flexible to the prevailing and emerging market conditions
• A participatory quota setting procedure followed jointly by the sales
manager and sales people together which serves as a tool of motivation and
leads to the realization of the organizational sales goals
 Template for Sales Quota Setting

Organization of the Sales Job

Defining Annual Objectives
Output Name
Year
Individual Goal Setting Form

1. Volume per month Your Territory

2. Expenses per month Results expected
Pessimistic Realistic Optimistic Results
3. Gross margin per month

4. Market share per month

5. Key account coverage
per month

Conferencing with each sales person