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Sales Management 7. Sales Territories. Sales Territories. Customers Current and Potential Assigned to a salesperson Or branch, dealer, distributor. Territory Design Issues. Equity Salespeople need fair chance to make a living Coverage Design to reach all customers

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Sales management 7

Sales Management 7

Sales Territories

Sales territories
Sales Territories

  • Customers

  • Current and Potential

  • Assigned to a salesperson

    • Or branch, dealer, distributor

Territory design issues
Territory Design Issues

  • Equity

    • Salespeople need fair chance to make a living

  • Coverage

    • Design to reach all customers

    • Need tougher “sales” as well as easy customers

  • Evaluation and control

    • A way to track effort/success/costs/profits

    • Can modify plan if not getting desired results

First determine salespeople
First: Determine # Salespeople

  • Before you establish territories, decide how many salespeople you need to have.

  • Then you can divide the market into territories, and assign a territory to each salesperson.

What size sales force
What size sales force?

  • Need sufficient number of salespeople to cover customers

  • Salespeople are expensive

  • Balance: Optimal number of salespeople

  • Three methods to establish size:

    • Breakdown

    • Work Load

    • Incremental

Breakdown method

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
Breakdown Method (the real one)

  • Divide sales forecast by average salesperson productivity

  • N = S ÷ P

    • N = Number of salespeople needed

    • S = Total sales volume forecasted

    • P = Estimated productivity of one salesperson

Work load method
Work Load Method

  • Classify customers by category: ABC

  • Frequency x Length of sales calls/category

  • Work load to cover entire market

  • Time available/salesperson

  • Figure available selling time (1/6 x 2000 Hrs)

  • Calculate # of salespeople needed

Point of Diminishing Returns


Annoying the Customer

More Calls = More Sales

# Sales Calls on Account

Incremental method
Incremental Method

  • Cost/Benefit of adding salespeople

  • Calculate incremental revenue increase

  • Calculate additional profits

  • Less additional costs

  • If additional profits > additional costs: hire

Designing sales territories
Designing Sales Territories

  • Select Basic Control Unit

  • Estimate potential in each unit

  • Combine units into tentative territories

  • Perform work load analysis

  • Adjust tentative territories

    • geography, potential

  • Assign territories

Select a basic control unit
Select aBasic Control Unit

  • State

  • Trading area

  • County

  • Metropolitan Statistical Area/Consolidated MSA

  • Zip Code

Estimate potential of territories
Estimate Potential of Territories

  • Total number of actual and potential customers

  • Purchase volume/frequency

  • Remember: potential ≠ forecast

    • Not everyone who can buy does buy

Form tentative territories
Form Tentative Territories

  • Group basic control units into logical territories.

  • Try to group geographically, preferably contiguously.

    • 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
Perform Work Load Analysis

  • 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.

    • Too much work?

    • Too much time?

Adjust tentative territories
Adjust Tentative Territories

  • 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
Assign Salespeople to Territories

  • Now look at salespeople’s different abilities.

  • Match abilities to territories.

  • Try to match salesperson with customers and prospects.

    • Explorer to uncharted territory

    • Industry experience

      • (speaks the language)

  • Goals

    • Maximize company revenues and profits

    • Satisfied salespeople