Developing and Managing Sales Territories
Lesson 11
Objectives
After completing this lesson you should be able to:
1. Define the two key elements in the definition of a sales territory.
2. Discuss when a sales territory needs to be developed.
3. Describe the six primary benefits of well designed sales territories.
4. Define the “fundamental objective” managers try to achieve when designing sales
territories.
5. Illustrate the six step procedure for designing sales territories and describe the tasks
associated required to implement each step.
6. Describe the main strengths and weaknesses of the build-up and breakdown methods
for determining the size of sales territories.
7. Illustrate and describe the six steps involved in the build-up method of territorial
design and the tasks required to implement each stage.
8. Illustrate and describe the 5 steps involved in the breakdown method of territorial
design and the tasks required to implement each stage.
(This does not apply to real estate agents and financial planners)
Lesson Notes
1. A sales territory includes current and potential customers, located within
a geographical area.
2. A territory is made up of people or companies, not places.
3. You should first think of a sales territory as a market with customers and,
second as a geographical area.
4. How do sales people spend their time?
 Internal meetings - 5%
 Travel - 20%
 Face-to-face meetings - 33%
 Service coordination - 16%
 Administration - 10%
 Telephone meetings - 16%
1
5. Benefits of Territory Design
 Enhances customer coverage.
 Reduces travel time and selling costs.
 Provides more equitable financial rewards
 Aids in sales force evaluation.
 Increases sales.
 Increase sales rep morale
 Increase customer satisfaction
Benefits of territory design
1. Ensure that the customers were properly serviced
2. Ensure the sales rep earned satisfactory income
6. Steps in developing a Sales Territory
Ideas
- think about how you can achieve them without going on the road as frequently
- Hire an assistant to the reps in the Northern territory
- Demo product via internet
- Set your customers up with a web cam
- Have the customers come to you – Trade show
2
7.
3
8.
9.
4
10.
11. Breakdown Method
1. Determine company sales potential
2. Determine sales potential in each control unit
3. Determine sales volume expected from each sales person
4. Set tentative territorial boundary lines by combining control units until
total sales potential = expected sales volume.
5. Modify tentative territories as needed
12. Problem with the Breakdown Method
- we are not considering the class of the customer
- what is the cost of servicing those customers
5
- the sales rep still needs to make a living as well
________________________________________________________________
13. Assign salespeople to territories
Territory size may be modified based on skill level and experience of sales reps.
New reps often start with a smaller territory because they haven’t developed
efficient workload management procedures
14. Set up territorial coverage plans
Territorial coverage plans are a time management tool that outlines the most
effective route and schedule for working a territory
________________________________________________________________.
15. Fixed Routes versus Non-fixed Routes
1. Benefits of Fixed Routes
Customers can planyou’re your visit
May facilitate better time management
May help new reps learn the territory
May be easier to get reps to call on small accounts
2. Disadvantages of Fixed Routes
Decreases flexibility
May not meet customer needs
May decrease sales rep morale
Difficult to use with reps who are being paid on 100% commission
6