Design and Size of Sales Territories . Design and Size of Sales Territories

Learning Objectives The definition of a sales territory. Who is responsible for territorial development. The factors to consider when designing sales territories.

WHAT IS A SALES TERRITORY? A sales territory is defined as group of present and potential customers assigned to an individual sales person, a branch , a stockiest , a distributor at a given point of time.

WHO IS RESPONSIBLE FOR TERRITORIAL DEVELOPMENT? Development of sales territories is usually the responsibility of the sales manager overseeing the larger sales units within the organization.

WHY ESTABLISH SALES TERRITORIES? To obtain thorough coverage of the market.

WHY ESTABLISH SALES TERRITORIES? To establish a salesperson’s responsibility.

WHY ESTABLISH SALES TERRITORIES? To evaluate performance.

WHY ESTABLISH SALES TERRITORIES? To improve customer relations.

WHY ESTABLISH SALES TERRITORIES? To reduce sales expense.

WHY ESTABLISH SALES TERRITORIES? To allow better matching of salesperson to customer.

WHY ESTABLISH SALES TERRITORIES? To benefit salespeople and the company

FACTORS TO CONSIDER WHEN DESIGNING TERRITORIES . Select Basic Control Unit Analyze Workload Determine Basic Territories Customer Contact Plan Evaluate, Revise if Needed Assign to Territories

SELECT BASIC CONTROL UNITS States Counties Cities and zip-code areas Metropolitan areas Trading areas Major accounts

Control Units Pharmacy company 27 offices in the country Western Maharashtra is one of it Pune Zip codes – Tahsils

ANALYZE SALESPEOPLE’S WORKLOADS Workload is the quantity of work expected from sales personnel. Three of the main influences on workload involve the a ) nature of the job, b ) intensity of market coverage, and c) type of products sold.

Nature of Job Order taker – Larger territory Missionary – Lesser territory

Intensity of Market Coverage Distribution methods: Intensive distribution Selective distribution Exclusive distribution

Types of products sold Convenience goods– Call many more accounts. Shopping foods - Specialty goods - Dell – Computer networks to top organizations.

DETERMINE BASIC TERRITORIES - SIX STEPS Forecast sales and determine sales potentials. Determine the sales volume needed for each territory. III Determine the number of territories Breakdown Approach Equalized workload IV. Tentatively establish territories. V. Determine the number of accounts VI. Finalize the territories, and draw the boundary lines.

DETERMINE THE NUMBER OF TERRITORIES The breakdown approach uses factors such as sales, population, or number of customers. Sales Force Size = Forecasted Sales Average Sales per Salesperson

Equalized Workload This method uses the number, location, and size of customers and prospects to determine the frequency of sales calls and amount of time a call takes by using such data as: Time required for each sales call. Frequency of sales calls per given customer. Time intervals between sales calls. Travel time around territories. Non selling time.

Equalized Workload Account Segmentation based on sales Customer Size Yearly Sales ( in units ) Number of Accounts % A >6000 100 18 % B 2400 to 6000 200 36 % C 1200 to 2400 D < 1200 50 10 %

Equalized Workload Determination of total number of calls Customer size Call frequency per month /per Quarter Total calls in a year Number of accounts Number of calls per year A 2 24 100 2400 B 1 12 200 C 1* 4 800 D * 1 per quarter Nil 50

Equalized Workload Total number of calls = 5600 ………………. Individual Customer calls* 150 = 37 Sales Territories Assumption : Working months 10 . Each month travels 15 days . Covers 15 points .

Step 4 –Tentatively establish territories Market Regions Districts Sales territories Example : if 18 sales people . Might use state as control unit .

. Step 5 Determine the number of accounts for each territory Step 6 Finalize the territories and draw boundary lines

ASSIGN TO TERRITORIES Some salespeople can handle large territories and the travel associated with them; some can’t. Some territories require experienced salespeople; some are best for new people. Some people want to live in metropolitan areas; others prefer territories with smaller cities.

CUSTOMER CONTACT PLAN The customer contact plan involves scheduling sales calls and routing a salesperson’s movement around the territory.

Weekly Route Report Date City Location / Dealer Jan 23 2012 Ahmednagar R K Distributors Jan 24 2012 Kopargaon Mahesh Enterprises Jan 25 2012 Shrirampur Raj Traders Jan 26 2012 Holiday Jan 27 2012 Satara Zummerwala & Sons Jan 28 2012 Pune ( H Q ) Travel / Home

THREE BASIC ROUTING PATTERNS

Scheduling Improve territorial coverage. Minimize wasted time. Establish communication between management and the sales force in terms of the location and activities of individual salespeople.