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Developing and Managing Sales Territories

Lesson 11
Objectives After completing this lesson you should be able to:
1. Define the two key elements in the definition of a sales territory.

2. Discuss when a sales territory needs to be developed.

3. Describe the six primary benefits of well designed sales territories.

. Define the !fundamental ob"ective# managers try to achieve when designing sales

$. %llustrate the six step procedure for designing sales territories and describe the tasks
associated re&uired to implement each step.

'. Describe the main strengths and weaknesses of the build(up and breakdown methods
for determining the si)e of sales territories.

*. %llustrate and describe the six steps involved in the build(up method of territorial
design and the tasks re&uired to implement each stage.

+. %llustrate and describe the $ steps involved in the breakdown method of territorial
design and the tasks re&uired to implement each stage.
,-his does not apply to real estate agents and financial planners.
Lesson Notes
1. A sales territory includes current and potential customers/ located within
a geographical area.
2. A territory is made up of people or companies/ not places.
3. 0ou should first think of a sales territory as a market with customers and/
second as a geographical area.
. 1ow do sales people spend their time2
%nternal meetings ( $3
-ravel ( 243
5ace(to(face meetings ( 333
6ervice coordination ( 1'3
Administration ( 143
-elephone meetings ( 1'3
$. 7enefits of -erritory Design
8nhances customer coverage.
9educes travel time and selling costs.
:rovides more e&uitable financial rewards
Aids in sales force evaluation.
%ncreases sales.
%ncrease sales rep morale
%ncrease customer satisfaction
7enefits of territory design
1. 8nsure that the customers were properly serviced
2. 8nsure the sales rep earned satisfactory income
'. 6teps in developing a 6ales -erritory
( think about how you can achieve them without going on the road as fre&uently
( 1ire an assistant to the reps in the ;orthern territory
( Demo product via internet
( 6et your customers up with a web cam
( 1ave the customers come to you < -rade show

11. Breakdown Method
1. Determine company sales potential
2. Determine sales potential in each control unit
3. Determine sales volume expected from each sales person
. 6et tentative territorial boundary lines by combining control units until
total sales potential > expected sales volume.
$. ?odify tentative territories as needed
1. !roble" with the Breakdown Method
( we are not considering the class of the customer
( what is the cost of servicing those customers
( the sales rep still needs to make a living as well
1#. $ssign salespeople to territories
-erritory si)e may be modified based on skill level and experience of sales reps.
;ew reps often start with a smaller territory because they havenAt developed
efficient workload management procedures
1%. Set &p territorial coverage plans
-erritorial coverage plans are a time management tool that outlines the most
effective route and schedule for working a territory
1'. (i)ed *o&tes vers&s Non+,i)ed *o&tes
1. 7enefits of 5ixed 9outes
Bustomers can planyouAre your visit
?ay facilitate better time management
?ay help new reps learn the territory
?ay be easier to get reps to call on small accounts
2. Disadvantages of 5ixed 9outes
Decreases flexibility
?ay not meet customer needs
?ay decrease sales rep morale
Difficult to use with reps who are being paid on 1443 commission