SELLING AND SALES MANGEMENT Chapter Three Territory 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 REASONSBENEFITS Customer – Related Provide intensive market coverage Provide excellent customer service Produce higher sales Produce higher satisfaction Salesperson – Related Foster enthusiasm Facilitate performance evaluation Lead to less turnover Offer rewards related to efforts Managerial Enhance control Coordinate promotion Reduce expenses Give more returns

Table 2. Territory management problems and remedies Territory management problems and Remedies PROBLEMSREMEDIES 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 is taken 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 timeClassification Time spent in: Customer contact Planning Support Productive Time spent in: Travel Waiting Unproductive

Important Questions 1.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)