SELLING AND SALES MANGEMENT
Chapter Three
Territory Development And Time Management
A Sales Territory is a configuration of current and potential accounts for which
responsibility has been assigned to a particular sales representative.
Although geographical considerations play a role in setting boundaries ,
sales territories are primarily based on customer groupings.
Sales representatives are not only responsible for individual customers
(account management), but they are also responsible for a group of
accounts ( territory management).
Territory management can be defined as the planning, implementation, and
control of salesperson’s activities with the goal of realizing the sales and
profit potentials of the assigned territories.
It is the responsibility of the salesperson to plan their activities in their
territories.
Territorial planning has been described as a predetermined course of
action that involves establishing objectives, estimating the resources
needed, and designing strategies which utilize these resources for the most
efficient accomplishment of the stated objective.
The Scope of Territory Management
Sales representatives may be viewed as scaled down sales managers since
they bear the ultimate burden of managing parts of the customer base.
In managing their sales territories sales representatives manage only
themselves and their time, not the activities of other people.
Sales Territory Design
Designing sales territories involves breaking down a firm’s customer base so that
accounts can be well served by individual sales persons.
This assignment of accounts ranks as one of the most important responsibilities of
sales management.
Poor design has severe repercussions, such as inadequate market coverage, unequal
workloads, lack of control over the sales force and depressed morale.
A company’s sales territories represent basic accountability units at the lowest level of
aggregation.
The factors that motivate n govern the formation of sales territories are numerous.
However, they can be usually classified into three categories:
customer – related;
salesperson – related;
and managerial.
Reasons for, and benefits of, Sales Territories
REASONS
BENEFITS
Customer – Related
Provide intensive market coverage
Provide excellent customer service
Produce higher sales
Produce higher satisfaction
Salesperson – Related
Foster enthusiasm
Facilitate performance evaluation
Lead to less turnover
Offer rewards related to efforts
Managerial
Enhance control
Coordinate promotion
Reduce expenses
Give more returns
Table 1. Reasons for, and benefits of, Sales Territories
Territory management problems and Remedies
PROBLEMS
REMEDIES
Inadequate coverage
Split Territories
Inadequate size
Enlarge Territories
Revision
Prepare Salespeople
Shifting Accounts
Revise Territories
Direct Accounts
Clarify at Hiring
Inadequate Support
Assist Salespersons
Territory Jumping
Eliminate practice
Overlapping Territories
Minimize crossovers
Selling Cost Variation
Review cost figures
High Turnover
Rectify causal factor
Table 2. Territory management problems and remedies
Procedure for developing territories: Drawing up territories ranks
among the most important responsibilities of sales managers. It
profoundly affects sales force’s morale n performance.
Equalization of territorial potential: The underlying principle when
drawing territories is workload and opportunity equalization –
all territories should possess equal challenges n opportunities to
salespeople.
Bases used in creating territories: Usually there are four basic alternatives
management bank upon while creating territories n they are:
 geography,
 potential,
 service requirement,
 workload.
 Geography: the establishment of geographic territories – the most frequently used
basis – is simple because it tends to adopt existing geopolitical boundaries such
as states, countries, nations, cities etc.
 Potential: refers to splitting up a firm’s customer base according to sales potential.
The procedure is simple, first, the management has to estimate the sales
potential for the entire company, next, it has to determine what sales potential
will be appropriate for the average salesperson.
 Servicing requirement: an approach wherein territories are formed on more
refined form – customer base constituting the equal potential in territories is
taken into account. Accounts are classified into A, B n C types.
 Workload: it not only considers individual sales potentials n servicing requirements
in creating territories, but also reflects differences in coverage difficulty caused
by topographical features, account locations, competitive activity n so forth.
Methods of designing territories: There are three basic methods of designing sales
territories and they are:

the buildup method


the breakdown method
the incremental method
ANALYSIS
Account load
Account potentials
Servicing requirements
CONTROL
OBJECTIVES
Quotas
Sales/ Share goals
Profit targets
New business targets
Reporting procedures
Review n Revisions
STRATEGIES
Call frequencies
Product offering
Pricing
IMPLEMENTATION
TACTICS
Territory coverage
Routing
Scheduling
Figure 1. Model of the Territory Management Cycle
Calling on prospects
Servicing accounts
Reporting
Some definitions…
• Account load: number of actual and potential customers assigned to a given
salesperson.
• Account potential: share of an account’s business that the firm can reasonably
expect to attract
• Routing: establishing the sequence of locations a salesperson will visit.
• Scheduling: sequencing of appointments or unannounced visits for maximum
contact time.
Time management: at the territorial level has as its objective the structuring of a
salesperson’s scarce time resources in such a way as to maximize productive
time n minimize unproductive time.
Three keys to managing time well are
 Planning,
 Organizing, and
 Discipline
Taxonomy of time utilization…
Uses of a salesperson’s time
Time spent in:
Customer contact
Planning
Support
Time spent in:
Travel
Waiting
Figure 2. Taxonomy of time uses
Classification
Productive
Unproductive
Important Questions
1.
2.
3.
What role a typical territory manager plays in a sales organization? List skills
that are essential for a territory manager.
What negative repercussions stem from poor territory design? List the three
categories that motivate n govern the formation of sales territories.
Mention, with suitable examples, reasons for and some benefits of good
territory design (hint: customer related; salesperson related n managerial)