Time, Territory, and Self- Management: Keys to Success Chapter 14 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

14-2 Main Topics  The Tree of Business Life: Time  Customers Form Sales Territories  Elements of Time and Territory Management 14 Chapter

14-3 The Tree of Business Life: Time The Golden Rule Guided by The Golden Rule:  View your territory as a business  Treat customers differently depending on their needs  Value the customer’s time  Realize that how you spend your time determines your life  Use your life to serve others and enjoy a wonderful, fulfilling life  Seek, knock, ask, serve, and see that ethical service build true relationships I T C Ethical Service Builds T r u e Relationships T TT TTTT TTTT

14-4 Customers Form Sales Territories

Sales Territory Comprises a group of customers or a geographical area assigned to a salesperson + potential customers

Customers Form Sales Territories  Why establish sales territories?  To obtain thorough coverage of the market  To establish each salesperson’s responsibilities  To evaluate performance  To improve customer relations  To reduce sales expense  To allow better matching of salesperson to customer’s needs  To benefit both salespeople and the company – reach company’s sales objectives

14-7 Why Sales Territories May Not Be Developed  Salespeople may be more motivated if not restricted by a particular territory.  The company may be too small to be concerned with segmenting the market into sales areas.  Not enough time or knowledge

14-8 Exhibit 14-2: Elements of Time and Territory Management for the Salesperson Salesperson’s territory’s sales quota Salesperson’s territory’s sales quota

14-9 Salesperson’s Sales Quota  The salesperson’s manager typically establishes the total sales quota.  Proper territory management by the salesperson is an important factor in reaching the sales quota.

14-10 Salesperson’s territory’s sales quota Salesperson’s territory’s sales quota Account analysis Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-11 Account Analysis  The undifferentiated selling approach (Exhibit 14-3)(Exhibit 14-3)  The account segmentation approach (Exhibit 14-6)(Exhibit 14-6)  ELMS system  80/20 principle  Multiple selling strategies  Multivariable account segmentation (Exhibit 14-7)(Exhibit 14-7)

14-12 Account Segmentation 1. Key Account a. Buys over $200,000 annually b. Loss would substantially affect profitability 2. Unprofitable Account a. Buys less than $1,000 annually b. Little potential to increase purchases 3. Regular Account a. All other customers

14-13 Exhibit 14-3: Undifferentiated Selling Approach Slide 15-11

14-14 Exhibit 14-4: Account Segmentation Based on Yearly Sales

14-15 Exhibit 14-5: Basic Segmentation of Accounts

14-16 Exhibit 14-6: Account Segmentation Approach Slide 15-11

14-17 Exhibit 14-7: Multivariable Account Segmentation Slide 15-11

14-18 Salesperson’s territory’s sales quota Salesperson’s territory’s sales quota Account analysis Set account objectives and sales quotas Set account objectives and sales quotas Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-19 Develop Account Objectives and Sales Quotas  Sales volume quotas  Profit quotas  Expense quotas  Activity quotas  Customer satisfaction scores

14-20 Salesperson’s territory’s sales quota Salesperson’s territory’s sales quota Account analysis Set account objectives and sales quotas Set account objectives and sales quotas Territory-time allocation Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-21 Territory-Time Allocation  Seven basic factors to consider: 1.Number of accounts in the territory 2.Number of sales calls made on customers 3.Time required for each sales call 4.Frequency of customer sales calls 5.Travel time around the territory 6.Non-selling time 7.Return on time invested

14-22 Territory-time allocation, cont...  Sales response function:  The salesperson invests sales time in direct proportion to the actual or potential sales that the account represents.  The most productive number of calls is reached at the point at which additional calls do not increase sales.  The relationship of sales volume to sales calls is the sales response function of the customer to the salesperson’s calls.

14-23 Exhibit 14-8: Account Time Allocation by Salesperson * every 3 months

Return on Time Invested  Time is a scarce resource  Break-even analysis to analyze costs:  Breakeven Point ($) = Salesperson’s fixed costs / Percentage of gross profit

Return on Time Invested  The management of time  Plan by the day, week, and month  Qualify the prospect  Use waiting time  Have a productive lunchtime  Records and reports

Return on Time Invested cont…  Scheduling and routing  Strict formal route designs enable the company to:  improve territory coverage  minimize wasted time  Establish communication between management and the sales force in terms of location and activities of individual salespeople  Carefully plan your route

14-27 Salesperson’s territory’s sales quota Salesperson’s territory’s sales quota Account analysis Set account objectives and sales quotas Set account objectives and sales quotas Customer sales planning Territory-time allocation Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-28 Customer Sales Planning  A sales-call objective  A customer profile  A customer benefit program  Selling strategies must be developed for individual customers and affect:  FABs  Marketing plans  Business propositions  Suggested orders  Sales presentations

14-29 Salesperson’s territory’s sales quota Salesperson’s territory’s sales quota Account analysis Set account objectives and sales quotas Set account objectives and sales quotas Scheduling and routing Customer sales planning Territory-time allocation Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-30 Scheduling and Routing  Some organizations determine strict formal route designs for their sales people to:  Improve territory coverage  Minimize wasted time  Establish communication between management and the sales force in terms of location and activities of individual salespeople  Careful planning of route:  A route can be planned using a road map and map pins that indicate account size by pin color

14-31 Exhibit 14-10: Daily Customer Plan

14-32 Exhibit 14-11: Location of Accounts and Sequence of Calls

14-33 Exhibit 14-10: Daily Customer Plan (cont…)

14-34 Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…)

14-35 Exhibit 14-10: Daily Customer Plan (cont…)

14-36 Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…) = small accounts

14-37 Exhibit 14-10: Daily Customer Plan (cont…)

14-38 Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…) = small accounts = extra large accounts

14-39 Exhibit 14-10: Daily Customer Plan (cont…)

14-40 Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…) = extra large accounts = small accounts = large accounts

14-41 Exhibit 14-10: Daily Customer Plan (cont…)

14-42 Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…) = extra large accounts = small accounts = best prospects = large accounts

14-43 Exhibit 14-10: Daily Customer Plan (cont…)

14-44 Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…) = extra large accounts = medium accounts = small accounts = best prospects = large accounts

14-45 Exhibit 14-10: Daily Customer Plan (cont…)

14-46 Exhibit 14-11: Location of Accounts and Sequence of Calls (cont…) = extra large accounts = large accounts = medium accounts = small accounts = best prospects

14-47 Exhibit 14-12: A Weekly Route Report

14-48 Exhibit 14-13: Three Basic Routing Patterns  Cloverleaf Pattern  Straight-Line Pattern  Major-City Pattern First call Work back Each leaf out and back the same day Huntsville Conroe Kingwood Houston Baytown Galveston (1 = Downtown)

14-49 Salesperson’s territory’s sales quota Salesperson’s territory’s sales quota Account analysis Set account objectives and sales quotas Set account objectives and sales quotas Territory and customer evaluation Scheduling and routing Customer sales planning Territory-time allocation Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-50 Using the Telephone for Territorial Coverage  Satisfy part of the service needs of accounts by telephone.  Assign smaller accounts that contribute less than 5 percent of business to mostly telephone selling.  Do prospecting, marketing data gathering, and call scheduling by telephone.  Carefully schedule personal calls to distant accounts.

14-51 Territory and Customer Evaluation  Did the salesperson meet sales quotas?  Sales volume  Profit  Expense  Activity  Customer satisfaction

14-52 Exhibit 14-15: Net Sales by Customer and Call Frequency: May 1, 2005

14-53 Salesperson’s territory’s sales quota Salesperson’s territory’s sales quota Account analysis Set account objectives and sales quotas Set account objectives and sales quotas Territory and customer evaluation Scheduling and routing Customer sales planning Territory-time allocation Exhibit 14-2: Elements of Time and Territory Management for the Salesperson, cont…

14-54 Summary of Major Selling Issues  How salespeople invest their sales time is a critical factor that influences territory sales.  Proper time and territory management is an effective method for the salesperson to maximize territorial sales and profits.  A sales territory comprises a group of customers or a geographical area assigned to a salesperson.

14-55 Summary of Major Selling Issues, cont…  Companies develop and use sales territories for a number of reasons.  Performance can be monitored when territories are established.  There are also disadvantages to developing sales territories.  Time and territory management is continuous for a salesperson – it involves seven key elements.

End of Chapter 14 Chapter 14 McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved.