7 Territories - Bob McDonald
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Transcript 7 Territories - Bob McDonald
Sales Management 7
Sales Territories
Sales Territories
Customers
Current and Potential
Assigned to a salesperson
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Or branch, dealer, distributor
Territory Design Issues
Equity
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Coverage
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Salespeople need fair chance to make a living
Design to reach all customers
Need tougher “sales” as well as easy customers
Evaluation and control
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A way to track effort/success/costs/profits
Can modify plan if not getting desired results
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:
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_________
_________
_________
Breakdown Method
Divide sales forecast by average salesperson
productivity
N=S÷P
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N = Number of _________ needed
S = Total sales _________ forecasted
P = Estimated _________ 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
Point of Diminishing
Returns
Sales/Account
More Calls =
More Sales
# Sales Calls on Account
Annoying the
Customer
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
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geography, potential
Assign territories
Select a
Basic Control Unit
State
Trading area
County
Metropolitan Statistical Area/Consolidated MSA
Zip Code
Estimate Potential of Territories
Total number of actual and potential customers
Purchase volume/frequency
Remember: potential ≠ forecast
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Not everyone who can buy does buy
Form Tentative Territories
Group basic control units into logical territories.
Try to group geographically, preferably
contiguously.
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Ohio/Pennsylvania: Good
Ohio/Hawaii: Fagedabowdid!
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.
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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.
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Explorer to uncharted territory
Industry experience
(speaks the language)
Goals
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Maximize company revenues and profits
Satisfied salespeople