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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