Sales TerritoriesSales Territories

Sales TerritorySales Territory A sales territory is a grouping of customers and

prospects assigned to an individual salesperson Matching sales efforts with opportunities Breaking total market into smaller units Makes control of sales operations more effective Assigning responsibility for achieving specific

objectives Basis:

– Geographical Basis – Customer Accounts Basis – House Account Concept – Marketing Channel Basis

Reasons for Establishment of Sales Reasons for Establishment of Sales TerritoriesTerritories

Providing Proper Market Coverage Controlling Selling Expenses Assisting in Evaluating Sales Personnel Contributing to Sales Force Morale Aiding in Coordination of Personal Selling &

Advertising

Setting Up of Sales TerritoriesSetting Up of Sales Territories

Selecting a Basic Geographical Control Unit:– Districts/States/ Cities

Determining Sales Potential Present in Each Control Unit

Combining Control Units into Tentative Territories

Adjusting for differences in Coverage Difficulty & Redistricting Tentative Territories

Setting Up of Sales TerritoriesSetting Up of Sales Territories

1. Selecting a Basic Geographical Control Unit:

• Starting point in establishment of territories

• Cities/District/States as the basis

• Trading Areas as the basis

• A trading area consist of the geographical region surrounding a city that serves as the dominant retail or whole sale center or both

• Vary from product to product

Setting Up of Sales TerritoriesSetting Up of Sales Territories2. Determining Sales Potential present in each control

unit:Identification of the buyers as precisely as possible Present & potential buyers indicate Market Potential Determination of Sales Potential I.e unit’s market

potential that the company has an opportunity to obtain

Market potential is converted to sales potential by analyzing the historical market share , adjusting for changes in company & competitor selling strategies

Setting Up of Sales TerritoriesSetting Up of Sales Territories3. Combining control units into Tentative Territories: Combine units into Tentative territories First approximation of sales territories by combining

contiguous control units into tentative territories Percentage of total sales potential average sales person

should realize Estimation of sales productivity per sales personnel unit &

divides it into total estimated sales potential Decision upon number of sales personnel units &

territories required

Setting Up of Sales TerritoriesSetting Up of Sales Territories Adjusting for differences in Coverage Difficulty &

Redistricting Tentative Territories:– Determine, number,location & size of customers & prospects

in each tentative territory – Estimate time required for each sales call – Determine length of time b/w calls – Decide call frequencies – Calculate number of calls possible within a given period – Adjust the number of calls possible during a given period by

desired call frequencies for different classes of customers & prospects

– Check out the adjusted territories with sales personnel

Dividing the Sales ForceDividing the Sales Force Divide by geography when:

– customer needs are similar– product line is narrow or easy to understand– selling tasks require similar skills

Divide by customer type when:– customer needs are diverse– product line is narrow or easy to understand– selling tasks require diverse skills

Divide by task or product when:– customer needs are similar– product line is broad or complex– selling tasks require diverse skills

Setting Up of Sales TerritoriesSetting Up of Sales Territories

Assignment of Sales Personnel to Territories:– Sales Potential, Coverage Difficulty & different

abilities – Different sales potential but equal abilities

Routing & Scheduling Sales:– Improve sales coverage – Number & location of customers, the means and

methods of transportation & desired call frequency rates

SALES QUOTASSALES QUOTAS

QUOTASQUOTAS

Quantitative objectives assigned to sales organizational units

Standards for appraising selling effectivenessDevices for directing & controlling sales

operations Quotas based upon information derived from

sales forecasts, studies of Market & Sales Potential & Cost estimates

Objectives in using QuotasObjectives in using Quotas

To provide Quantitative Performance Standards:– Determining which outlets, units, Territory or sales

Person is doing average or above average or below average job

– Identification of strong & weak points & hence, corrective action

To obtain tighter sales & Expense Control:– Sales expenses reimbursements up to a certain

percentage of sales – Increasing Profitability as the focus

Objectives in using QuotasObjectives in using Quotas

To motivate desired performance:– Inspirational Purposes

To use in connection with sales contests:– Performance against quotas – Common denominator factor is built into a contest

Types of QuotasTypes of Quotas

Sales Volume Quotas :– How much for that period – Geographical areas, product lines, or Marketing

Channels Dollar / Rupees sales volume quotas:

– Broad product lines set in Value Terms – Relate easily to other performance data such as

selling expenses– No set prices of the products

Point Sales Volume Quotas

Procedure for setting sales volume quotasProcedure for setting sales volume quotas

Sales volume quotas derived from territorial sales potential

Sales volume quotas derived from total market estimates

Sales volume quotas based upon past sales experiences alone

Based upon executive judgment alone Related only to compensation plan Letting sales personnel set their own sales quotas

BUDGET QUOTASBUDGET QUOTAS

Expense quotas Gross Margin or Net Profit quotas

ACTIVITY QUOTAS ACTIVITY QUOTAS

Allocation of Time & efforts Defining the Important activities sales

personnel perform & setting performance frequencies

Total Sales calls, Calls on particular class of customers; number of new accounts; product demonstrations; displays; collections

COMBINATION QUOTAS

Administering the Quota SystemAdministering the Quota System

Accurate, Fair & Attainable Quotas Securing & Maintaining Sales Personnel’s

acceptance of Quotas:– Participation by sales personnel in quota setting – Keeping sales personnel informed – Need for continuous managerial control