Design and Size of Sales Territories... Learning Objectives The definition of a sales territory. ...
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Transcript of Design and Size of Sales Territories... Learning Objectives The definition of a sales territory. ...
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 groupof present and potential customersassigned to an individual salesperson, 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?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
Assign to Territories
Customer Contact Plan Evaluate,
Revise if Needed
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
I. Forecast sales and determine sales potentials.
II. Determine the sales volume needed for each territory. III Determine the number of territories Breakdown Approach Equalized workloadIV. 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 WorkloadAccount 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
200 36 %
D < 1200 50 10 %
Equalized WorkloadDetermination 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 2400
C 1* 4 200 800
D* 1 per
quarter
Nil Nil 50 0
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.
• The customer contact plan involves scheduling sales calls and routing a salesperson’s movement around the territory.
CUSTOMER CONTACT PLAN
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
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Straigh t- L in e P atternF irst C all
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C lo v erleaf P attern
E ach L eaf O ut an d B ack Sam e D ay
M ajo r- C ity P attern
1 - D o w n to w n
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5 4
Scheduling
1. Improve territorial coverage.
2. Minimize wasted time.
3. Establish communication between management and the sales force in terms of the location and activities of individual salespeople.