Sales Management 7
Sales Territories
Sales Territories
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Customers
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Current and Potential
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Assigned to a salesperson
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Or branch, dealer, distributor
Territory Design Issues
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Equity
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Coverage
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Salespeople need fair chance to make a living
Design to reach all customers
Need tougher “sales” as well as easy customers
Evaluation and control
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A way to track effort/success/costs/profits
Can modify plan if not getting desired results
First: Determine # Salespeople
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Before you establish territories, decide how
many salespeople you need to have.
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Then you can divide the market into territories,
and assign a territory to each salesperson.
What size sales force?
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Need sufficient number of salespeople to cover
customers
Salespeople are expensive
Balance: Optimal number of salespeople
Three methods to establish size:
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Breakdown
Work Load
Incremental
http://www.youtube.com/watch?v=qNxfPAF1frM
Breakdown Method
It's alright if you love me, ♩♬♪♫
It's alright if you don't
I'm not afraid of you runnin' away honey,
I’ve got this feeling you won't
Say there ain't no use in pretending, ♩♬♪♫
Your eyes give you away
Something inside you is feeling like I do,
We said all there is to say
Breakdown, go ahead and give it to me ♩♬♪♫
Breakdown, take me through the night
Breakdown, go ahead give it to me, ♩♬♪♫
Breakdown, it's alright, It's alright, it's alright
Breakdown Method (the real one)
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Divide sales forecast by average salesperson
productivity
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N=S÷P
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N = Number of salespeople needed
S = Total sales volume forecasted
P = Estimated productivity of one salesperson
Work Load Method
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Classify customers by category: ABC
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Frequency x Length of sales calls/category
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Work load to cover entire market
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Time available/salesperson
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Figure available selling time (1/6 x 2000 Hrs)
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Calculate # of salespeople needed
Point of Diminishing
Returns
Sales/Account
More Calls =
More Sales
# Sales Calls on Account
Annoying the
Customer
Incremental Method
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Cost/Benefit of adding salespeople
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Calculate incremental revenue increase
Calculate additional profits
Less additional costs
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If additional profits > additional costs: hire
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Designing Sales Territories
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Select Basic Control Unit
Estimate potential in each unit
Combine units into tentative territories
Perform work load analysis
Adjust tentative territories
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geography, potential
Assign territories
Select a
Basic Control Unit
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State
Trading area
County
Metropolitan Statistical Area/Consolidated MSA
Zip Code
State
City
New York City
http://www.youtube.com/watch?v=pl7Ww5w2-BI
Frostbite Falls, MN
MSA
Estimate Potential of Territories
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Total number of actual and potential customers
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Purchase volume/frequency
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Remember: potential ≠ forecast
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Not everyone who can buy does buy
Form Tentative Territories
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Group basic control units into logical territories.
Try to group geographically, preferably
contiguously.
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Ohio/Pennsylvania: Good
Ohio/Hawaii: Fagedaboudid!
Try to make the territories roughly equal in
terms of market potential.
This is a first attempt.
Perform Work Load Analysis
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Determine the sales potential for each
customer/prospect in the territory.
Determine sales call length & frequency.
Add non-selling and travel time.
Determine if one salesperson can adequately
service each territory.
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Too much work?
Too much time?
Adjust Tentative Territories
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If a territory is too large or too small for a
salesperson, make adjustments.
Need to balance potential and workload.
Need realistic, and equitable territories to
maintain salespeople’s motivation.
Assign Salespeople to Territories
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Now look at salespeople’s different abilities.
Match abilities to territories.
Try to match salesperson with customers and
prospects.
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Explorer to uncharted territory
Industry experience
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(speaks the language)
Goals
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Maximize company revenues and profits
Satisfied salespeople
Good Bye