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Sales Management 7 Sales Territories.

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Presentation on theme: "Sales Management 7 Sales Territories."— Presentation transcript:

1 Sales Management 7 Sales Territories

2 Sales Territories Customers Current and Potential
Assigned to a salesperson Or branch, dealer, distributor

3 Territory Design Issues
Equity Salespeople need fair chance to make a living Coverage Design to reach all customers Need tougher “sales” as well as easy customers Evaluation and control A way to track effort/success/costs/profits Can modify plan if not getting desired results

4 What size sales force? Need sufficient number of salespeople to cover customers Salespeople are expensive Balance: Optimal number of salespeople Three methods to establish size: _________

5 Breakdown Method Divide sales forecast by average salesperson productivity N = S ÷ P N = Number of _________ needed S = Total sales _________ forecasted P = Estimated _________ of one salesperson

6 Work Load Method Classify customers by category: ABC
Frequency x Length of sales calls/category Work load to cover entire market Time available/salesperson Figure available selling time (1/6 x 2000 Hrs) Calculate # of salespeople needed

7 # Sales Calls on Account
Point of Diminishing Returns Sales/Account Annoying the Customer More Calls = More Sales # Sales Calls on Account

8 Incremental Method Cost/Benefit of adding salespeople
Calculate incremental revenue increase Calculate additional profits Less additional costs If additional profits > additional costs: hire

9 Designing Sales Territories
Select Basic Control Unit Estimate potential in each unit Combine units into tentative territories Perform work load analysis Adjust tentative territories geography, potential Assign territories

10 Select a Basic Control Unit
State Trading area County Metropolitan Statistical Area/Consolidated MSA Zip Code

11 Estimate Potential of Territories
Total number of actual and potential customers Purchase volume/frequency Remember: potential ≠ forecast Not everyone who can buy does buy

12 Form Tentative Territories
Group basic control units into logical territories. Try to group geographically, preferably contiguously. Ohio/Pennsylvania: Good Ohio/Hawaii: Fagedabowdid! Try to make the territories roughly equal in terms of market potential. This is a first attempt.

13 Perform Work Load Analysis
Determine the sales potential for each customer/prospect in the territory. Determine sales call length & frequency. Add non-selling and travel time. Determine if one salesperson can adequately service each territory. Too much work? Too much time?

14 Adjust Tentative Territories
If a territory is too large or too small for a salesperson, make adjustments. Need to balance potential and workload. Need realistic, and equitable territories to maintain salespeople’s motivation.

15 Assign Salespeople to Territories
Now look at salespeople’s different abilities. Match abilities to territories. Try to match salesperson with customers and prospects. Explorer to uncharted territory Industry experience (speaks the language) Goals Maximize company revenues and profits Satisfied salespeople


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