Sales Management 7

Sales Territories

Sales Territories

 Customers  Current and Potential  Assigned to a salesperson – Or branch, dealer, distributor

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

First: Determine # Salespeople

 Before you establish territories, decide how many salespeople you need to have.

 Then you can divide the market into territories, and assign a territory to each salesperson.

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: – Breakdown – – Work Load Incremental

http://www.youtube.com/watch?v=qNxfPAF1frM

Breakdown Method

It's alright if you love me, ♩♬♪♫ It's alright if you don't I'm not afraid of you runnin' away honey, I’ve got this feeling you won't Say there ain't no use in pretending, ♩♬♪♫ Your eyes give you away Something inside you is feeling like I do, We said all there is to say Breakdown, go ahead and give it to me ♩♬♪♫ Breakdown, take me through the night Breakdown, go ahead give it to me, ♩♬♪♫ Breakdown, it's alright, It's alright, it's alright

Breakdown Method (the real one)

 Divide sales forecast by average salesperson productivity  N = S ÷ P – – – N = Number of salespeople needed S = Total sales volume forecasted P = Estimated productivity of one salesperson

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

Sales/Account

More Calls = More Sales Point of Diminishing Returns Annoying the Customer

# Sales Calls on Account

Incremental Method

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

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

Select a Basic Control Unit

 State  Trading area  County  Metropolitan Statistical Area/Consolidated MSA  Zip Code

State

City

New York City

http://www.youtube.com/watch?v=pl7Ww5w2-BI Frostbite Falls, MN

MSA

Estimate Potential of Territories

 Total number of actual and potential customers  Purchase volume/frequency  Remember: potential ≠ forecast – Not everyone who can buy does buy

Form Tentative Territories

 Group basic control units into logical territories.

 Try to group geographically, preferably contiguously.

– –

Ohio/Pennsylvania

:

Good

Ohio/Hawaii

:

Fagedaboudid!

 Try to make the territories roughly equal in terms of market potential.

 This is a first attempt.

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?

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.

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

Good Bye