SELLING AND SALES MANGEMENT

Chapter ThreeTerritory Development And Time Management

A Sales Territory is a configuration of current and potential accounts for which responsibility has been assigned to a particular sales representative.

Although geographical considerations play a role in setting boundaries , sales territories are primarily based on customer groupings.

Sales representatives are not only responsible for individual customers (account management), but they are also responsible for a group of

accounts ( territory management).

Territory management can be defined as the planning, implementation, and control of salesperson’s activities with the goal of realizing the sales and profit potentials of the assigned territories.

It is the responsibility of the salesperson to plan their activities in their territories.

Territorial planning has been described as a predetermined course of action that involves establishing objectives, estimating the resources needed, and designing strategies which utilize these resources for the most efficient accomplishment of the stated objective.

The Scope of Territory Management

Sales representatives may be viewed as scaled down sales managers since they bear the ultimate burden of managing parts of the customer base.

In managing their sales territories sales representatives manage only themselves and their time, not the activities of other people.

Sales Territory Design

Designing sales territories involves breaking down a firm’s customer base so that accounts can be well served by individual sales persons.

This assignment of accounts ranks as one of the most important responsibilities of sales management.

Poor design has severe repercussions, such as inadequate market coverage, unequal workloads, lack of control over the sales force and depressed morale.

A company’s sales territories represent basic accountability units at the lowest level of aggregation.

The factors that motivate n govern the formation of sales territories are numerous. However, they can be usually classified into three categories:

customer – related; salesperson – related; and managerial.

Table 1. Reasons for, and benefits of, Sales Territories

Reasons for, and benefits of, Sales Territories

REASONS BENEFITS

Customer – Related

Provide intensive market coverageProvide excellent customer service

Produce higher salesProduce higher satisfaction

Salesperson – Related

Foster enthusiasmFacilitate performance evaluation

Lead to less turnoverOffer rewards related to efforts

Managerial

Enhance controlCoordinate promotion

Reduce expensesGive more returns

Table 2. Territory management problems and remedies

Territory management problems and RemediesPROBLEMS REMEDIES

Inadequate coverage

Inadequate size

Revision

Shifting Accounts

Direct Accounts

Inadequate Support

Territory Jumping

Overlapping Territories

Selling Cost Variation

High Turnover

Split Territories

Enlarge Territories

Prepare Salespeople

Revise Territories

Clarify at Hiring

Assist Salespersons

Eliminate practice

Minimize crossovers

Review cost figures

Rectify causal factor

Procedure for developing territories: Drawing up territories ranks among the most important responsibilities of sales managers. It profoundly affects sales force’s morale n performance.

Equalization of territorial potential: The underlying principle when drawing territories is workload and opportunity equalization – all territories should possess equal challenges n opportunities to salespeople.

Bases used in creating territories: Usually there are four basic alternatives management bank upon while creating territories n they are:

geography, potential, service requirement, workload.

Geography: the establishment of geographic territories – the most frequently used basis – is simple because it tends to adopt existing geopolitical boundaries such as states, countries, nations, cities etc.

Potential: refers to splitting up a firm’s customer base according to sales potential. The procedure is simple, first, the management has to estimate the sales

potential for the entire company, next, it has to determine what sales potential will be appropriate for the average salesperson.

Servicing requirement: an approach wherein territories are formed on more refined form – customer base constituting the equal potential in territories istaken into account. Accounts are classified into A, B n C types.

Workload: it not only considers individual sales potentials n servicing requirements in creating territories, but also reflects differences in coverage difficulty

caused by topographical features, account locations, competitive activity n so forth.

Methods of designing territories: There are three basic methods of designing sales territories and they are: the buildup method the breakdown method the incremental method

Figure 1. Model of the Territory Management Cycle

ANALYSIS

Account load

Account potentials

Servicing requirements

CONTROL

OBJECTIVES

Quotas

Sales/ Share goals Reporting procedures

Profit targets Review n Revisions

New business targets

STRATEGIES

Call frequencies

Product offering

Pricing

IMPLEMENTATION

Calling on prospects

TACTICS Servicing accounts

Territory coverage Reporting

Routing

Scheduling

Some definitions…

• Account load: number of actual and potential customers assigned to a given salesperson.

• Account potential: share of an account’s business that the firm can reasonably expect to attract

• Routing: establishing the sequence of locations a salesperson will visit.

• Scheduling: sequencing of appointments or unannounced visits for maximum contact time.

Time management: at the territorial level has as its objective the structuring of a salesperson’s scarce time resources in such a way as to maximize productive time n minimize unproductive time.

Three keys to managing time well are Planning, Organizing, and Discipline

Figure 2. Taxonomy of time uses

Taxonomy of time utilization…

Uses of a salesperson’s time Classification

Time spent in:Customer contactPlanningSupport

Productive

Time spent in:TravelWaiting

Unproductive

Important Questions1. What role a typical territory manager plays in a sales organization? List skills

that are essential for a territory manager.

2. What negative repercussions stem from poor territory design? List the three categories that motivate n govern the formation of sales territories.

3. Mention, with suitable examples, reasons for and some benefits of good territory design (hint: customer related; salesperson related n managerial)