Sales Territories

Sales Territory
A sales territory is a grouping of customers and
prospects assigned to an individual salesperson
Matching sales efforts with opportunities
Breaking total market into smaller units
Makes control of sales operations more effective
Assigning responsibility for achieving specific
objectives
Basis:
Geographical Basis
Customer Accounts Basis
House Account Concept
Marketing Channel Basis
Reasons for Establishment of Sales
Territories
Providing Proper Market Coverage
Controlling Selling Expenses
Assisting in Evaluating Sales Personnel
Contributing to Sales Force Morale
Aiding in Coordination of Personal Selling &
Advertising

Setting Up of Sales Territories
Selecting a Basic Geographical Control Unit:
Districts/States/ Cities
Determining Sales Potential Present in Each
Control Unit
Combining Control Units into Tentative
Territories
Adjusting for differences in Coverage Difficulty
& Redistricting Tentative Territories
Setting Up of Sales Territories


1. Selecting a Basic Geographical Control Unit:
Starting point in establishment of territories
Cities/District/States as the basis
Trading Areas as the basis
A trading area consist of the geographical
region surrounding a city that serves as the
dominant retail or whole sale center or both
Vary from product to product



Setting Up of Sales Territories
2. Determining Sales Potential present in each control
unit:
Identification of the buyers as precisely as possible
Present & potential buyers indicate Market Potential
Determination of Sales Potential I.e units market
potential that the company has an opportunity to
obtain
Market potential is converted to sales potential by
analyzing the historical market share , adjusting for
changes in company & competitor selling strategies
Setting Up of Sales Territories
3. Combining control units into Tentative Territories:
Combine units into Tentative territories
First approximation of sales territories by combining
contiguous control units into tentative territories
Percentage of total sales potential average sales person
should realize
Estimation of sales productivity per sales personnel unit &
divides it into total estimated sales potential
Decision upon number of sales personnel units &
territories required
Setting Up of Sales Territories
Adjusting for differences in Coverage Difficulty &
Redistricting Tentative Territories:
Determine, number,location & size of customers & prospects
in each tentative territory
Estimate time required for each sales call
Determine length of time b/w calls
Decide call frequencies
Calculate number of calls possible within a given period
Adjust the number of calls possible during a given period by
desired call frequencies for different classes of customers &
prospects
Check out the adjusted territories with sales personnel
Dividing the Sales Force
Divide by geography when:
customer needs are similar
product line is narrow or easy to understand
selling tasks require similar skills
Divide by customer type when:
customer needs are diverse
product line is narrow or easy to understand
selling tasks require diverse skills
Divide by task or product when:
customer needs are similar
product line is broad or complex
selling tasks require diverse skills
Setting Up of Sales Territories
Assignment of Sales Personnel to Territories:
Sales Potential, Coverage Difficulty & different
abilities
Different sales potential but equal abilities
Routing & Scheduling Sales:
Improve sales coverage
Number & location of customers, the means and
methods of transportation & desired call frequency
rates

SALES QUOTAS
QUOTAS
Quantitative objectives assigned to sales
organizational units
Standards for appraising selling effectiveness
Devices for directing & controlling sales
operations
Quotas based upon information derived from
sales forecasts, studies of Market & Sales
Potential & Cost estimates
Objectives in using Quotas
To provide Quantitative Performance Standards:
Determining which outlets, units, Territory or sales
Person is doing average or above average or below
average job
Identification of strong & weak points & hence,
corrective action
To obtain tighter sales & Expense Control:
Sales expenses reimbursements up to a certain
percentage of sales
Increasing Profitability as the focus
Objectives in using Quotas
To motivate desired performance:
Inspirational Purposes
To use in connection with sales contests:
Performance against quotas
Common denominator factor is built into a contest

Types of Quotas
Sales Volume Quotas :
How much for that period
Geographical areas, product lines, or Marketing
Channels
Dollar / Rupees sales volume quotas:
Broad product lines set in Value Terms
Relate easily to other performance data such as
selling expenses
No set prices of the products
Point Sales Volume Quotas



Procedure for setting sales volume quotas
Sales volume quotas derived from territorial sales
potential
Sales volume quotas derived from total market
estimates
Sales volume quotas based upon past sales
experiences alone
Based upon executive judgment alone
Related only to compensation plan
Letting sales personnel set their own sales quotas
BUDGET QUOTAS
Expense quotas
Gross Margin or Net Profit quotas
ACTIVITY QUOTAS
Allocation of Time & efforts
Defining the Important activities sales
personnel perform & setting performance
frequencies
Total Sales calls, Calls on particular class of
customers; number of new accounts; product
demonstrations; displays; collections
COMBINATION QUOTAS
Administering the Quota System
Accurate, Fair & Attainable Quotas
Securing & Maintaining Sales Personnels
acceptance of Quotas:
Participation by sales personnel in quota setting
Keeping sales personnel informed
Need for continuous managerial control