Territory Management
Territory Management
•
A sales territory comprises a group of customers or a geographical area assigned to a sales unit.
The territory may or may not have geographic boundaries.
A sales territory represents a group of customer accounts, an industry, a market or a specific geographical area.
Territory management includes the market potential, number of customer accounts, the firms experience and market share in the territory, the capability of the salesperson assigned and the frequency of sales calls made.
The following diagram outlines the activities of Territory Management:
Trade Relations/Dealer Relations
Potential Business
Coverage
Reports
Territory Size
Portfolio of Accounts
Selling Techniques
Customer Satisfaction
Selling Abilities
Factors to be Considered when designing territories
The two basic approaches commonly used for designing sales territories are discussed below:
1.
Market Build-up Approach
• In this approach, an estimation of the present and potential products/services demand by looking at how the market is built up, who are its present/potential users, how much do they consumer and at what frequency.
• In this approach, information from trade directories, state publications, etc. is consolidated and then aggregated to understand an all India market potential for the product. For example, if the market potential for a new deluxe car in Maharashtra is 1,00,000, Gujarat is 60,000 and
Rajasthan is 50,000, I t shows the total market potential of 2,10,000 cars in the country. This leads to an estimation of total sales called required per area, and number of salespersons required.
Sales territories are then formed in such a manner that the sales potential and work load is distributed among areas.
Factors to be Considered when designing territories (Cont’d.)
2.
The Workload Approach
• This approach is designed by WJ Talley on the basis of the workload performed by salespersons. The following steps should be considered important when using the above approach:
1.
Customers are grouped into class size according to the sales volume.
2.
Optimum call frequencies for each class of customers are estimated.
3.
Present and potential customers are then located geographically and arranged volume-wise and value-wise.
4.
The number of present and potential customers in each volume/value group is then multiplied by the desired call frequency to get the total number of planned calls required for each geographical control unit.
Factors to be Considered when designing territories (Cont’d.)
3.
Assign to Territories
• Some salespeople can handle large territories and the travel associated with them; some territories require experienced sales people and some are best suited to new people.
There are a few factors a manager needs to consider what assigning both new and experienced people to territories.
• In today’s complex selling situation, the presence of a well-thought-out daily and weekly route plan is required for effective management.
The following may be considered basic route patterns of a territory.
Base
Straight Line Pattern
First Call
C
C
C
C
C
Clover Leaf Pattern
Base
C
C
C
C
C
C
Major City Pattern
2
5
1
3
4
