1. Sales Management Sales Management Marketing 3345 Marketing 3345 Territory Design & Management

2. Territory Design Process 1 Select geographic control units 1 Select geographic control units 2 Decide on allocation criteria 2 Decide on allocation criteria 3 Choose starting points 3 Choose starting points 4 Combine control units adjacent to starting points 4 Combine control units adjacent to starting points 5 Compare territories on allocation criteria 5 Compare territories on allocation criteria 6 Assign salespeople to new territories 6 Assign salespeople to new territories Events triggering sales territory adjustments Events triggering sales territory adjustments Mergers Division consolidation Division split Sales force turnover Plant relocations Product line changes Mergers Division consolidation Division split Sales force turnover Plant relocations Product line changes Revise territory boundaries to balance workload and potential Revise territory boundaries to balance workload and potential

3. Territory Design Procedures What are triggering events? What are triggering events? The Buildup Method -- Six steps The Buildup Method -- Six steps 1. Select control units Census tracts -- good for dividing cities Census tracts -- good for dividing cities Counties - convenient and data readily available Counties - convenient and data readily available 2. Determine Allocation Criteria Territory balance -- effect on morale Territory balance -- effect on morale Customer balance - distribute commission Customer balance - distribute commission Potential balance - share business growth Potential balance - share business growth Size balance - reduce transportation costs Size balance - reduce transportation costs

4. Geographic Control Units Used in Territory Design CountriesCities States or provincesZip codes CountiesCensus tracts Metropolitan areasCustomers

5. Territory Design Procedures 3. Choose starting points Salesperson’s home Salesperson’s home Large customer - cut transportation cost Large customer - cut transportation cost Big city - convenient for services Big city - convenient for services 4. Combine Adjacent Control Units 5. Compare Sales Territories Mountains, roads, population center locations? Mountains, roads, population center locations? 6. Assign people to Sales Territories

6. The numbers in each county are population figures and are a measure of potential. Kentucky Counties, Major Cities, and Population Centers TENNESSEE VIRGINIA WEST VIRGINIA INDIANA ILLINOIS OHIO Kentucky Counties, Major Cities, and Population Centers

7. The numbers in ach county are population figures and are a measure of potential. Three Kentucky Sales Territories TENNESSEE VIRGINIA WEST VIRGINIA INDIANA ILLINOIS OHIO Major super highways Territory borders Three Kentucky Sales Territories

8. Comparing Three Kentucky Sales Territories Potential as Measured by Territory PopulationNumber of Counties 1 1,124,897 47 2 1,129,290 27 3 1,131,137 43

9. Figure 11-4: Dividing a Large Territory

10. Territory Design Procedures Talley’s Workload Approach Talley’s Workload Approach No starting points No starting points Equates work to be done Equates work to be done May lead to imbalance on size May lead to imbalance on size Often raises travel costs Often raises travel costs Good when reps are on salary Good when reps are on salary Key: optimal call frequency for particular classes of customers Key: optimal call frequency for particular classes of customers

11. Workload Method Classify all customers into sales volume categories 1. Determine the frequency with which each type of account should be called upon and the desired length of each sell 2. Calculate workload involved in covering entire market 3. Determine time available per salesperson 4. Apportion the salesperson’s time by task performed 5. Calculate the number of salespeople 6.

12. Experiences of a Consumer Durable Goods Manufacturer with Territory Design * Each territory is made up of several trading areas. % The percentage of salesperson time spent in the trading area (100% = 1 salesperson). Recommended Effort (%) Present Effort (%) Trading Area* Deployment Analysis for Two Territories Andy1 10 4 2 6020 3 15 7 4 5 2 5 10 3 Total10036

13. Experiences of a Consumer Durable Goods Manufacturer with Territory Design * Each territory is made up of several trading areas. % The percentage of salesperson time spent in the trading area (100% = 1 salesperson). Thus, the deployment analysis suggests that Andy’s territory requires only 0.36 salespeople, which Sally’s territory needs 2.36 salespeople for proper coverage. Recommended Effort (%) Present Effort (%) Trading Area* Deployment Analysis for Two Territories Sally1 18 81 2 7 21 3 5 11 4 35 35 5 5 11 6 30 77 Total100236

14. CALLPLAN Approach What sales level will result from each current customer and prospect if: 1. Probabilities that prospects will be converted into customers given the different call frequencies 2. no. calls that are made one half the present calls are made present level of calls is continued 50 percent more calls are made a saturation level of calls are made Salesperson Input

15. CALLPLAN Approach CALLPLAN Output Expected sales for all feasible call frequencies 1. Optimal number of calls for each client and prospect 2. Length of call for each client and prospect 3.

16. Computer Based Territory Designs Computers save time Computers save time Need location & number of customers & starting points Need location & number of customers & starting points Program options Program options minimize moment of inertia minimize moment of inertia Graph data & draw boundaries -- not optimal Graph data & draw boundaries -- not optimal design optimal territories -- expensive design optimal territories -- expensive Applications -- pharmaceutical reps Applications -- pharmaceutical reps

17. VendorPackageDescription Price GeoQuery Corp.GeoQueryInteractive maps for travel planning $295 and territory analysis. Direct links to contact management program. TTG,Inc.STARmanagerTerritory mapping system that $995 integrates sales and marketing data for interactive territory analysis, realignment, and monitory. SammamishGeoSightGeographic information systems $1,850 Data SystemsProfessionalfor sales territory creation and management. Includes address matching. Metron, Inc.TerrAlignOptimal sales territory alignment $20,000+ and analysis. Exclusive OptAlign technology automatically balances territories and decreases driving time. Sales Territory Mapping Programs

18. Figure 1 Before Realignment SOURCE: Prabha Sinha and Andris Zoltners, “Matching Manpower and Markets,” Business Marketing, September 2008, p. 95. No. of territories Percent deviation from average

19. Figure 2 After Realignment SOURCE: Prabha Sinha and Andris Zoltners, “Matching Manpower and Markets,” Business Marketing, September 2008, p. 96. No. of territories Percent deviation from average

20. Figure 3 * * * * * * * * * Sales territory centers Sales territory boundaries Major highways Sales territories before realignment Sales territories after realignment SOURCE: Prabha Sinha and Andris Zoltners, “Matching Manpower and Markets,” Business Marketing, September 1998, p. 95.

21. Some Reported Company Experiences Regarding the Consequences of Re-deploying Sales Forces Across Geographic Areas or Accounts Type of ProductRedeployment BasisConsequence Medical x-ray film Advertising Appliances Airline travel and cargo Consumer products Grocery products Redeployment of salespeople across sales districts $131,000 increase in gross profits Redeployment of selling effort and reassignment of salespeople to accounts 17-21% profit increase Redeployment of selling effort across trading areas $830,000 sales increase Redeployment of selling effort to accounts $8.1% sales increase Reduction in sales force size and redeployment of selling effort to accounts Maintain current sales levels with nearly 50% reduction in selling effort Redeployment of selling effort to accounts 8-30% sales improvement Redeployment of salespeople across regions and distribution channels 7% sales increase Transportation services Reduction in sales force size and redeployment of selling effort Maintain current sales levels with 10-20% sales force reduction Adapted from Raymond W. La Forge, David W. Cravens, and Clifford E. Young, “Using Contingency Analysis to Select Selling Effort Allocation Methods,” Journal of Personal Selling and Sales Management, 6 (August 1986), p. 23. The original table also lists the sources in which each of the experiences were reported. SOURCE: