Sales Territory Design

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Territory
Territory Design

chap #9

Wh Use Te
Why Use Territories
Territory is defined as customers located
in geographic area that are assigned to an
individual sales person.
Specialties include products, customers, or
functions
functions.

Moti
Motivation & Cost Saving
Cost Sa
Use to benefits people
Sales people responsible for whole area

Evaluation & Control Units
Cont Units
Performance of individual sales people can
be more easily controlled and evaluated
with sale territories.

Wh
Why Are Territories Unnecessary
Territories are not essential when sales
people contact customers directly.

Territory
Territory Design Procedures
What are triggering events?
What are triggering events?
The
The Buildup Method -- Six steps
1. Select control units
Select control units
Census
Census tracts -- good for dividing cities
Counties convenient and data readily
Counties - convenient and data readily
available
available

2. Determine Allocation Criteria
Territory
Territory balance -- effect on morale
Customer
Customer balance - distribute commission
Potential
Potential balance - share business growth
Size
Size balance - reduce transportation costs

Events triggering sales
territory adjustments

1
Select geographic
control units

Mergers
Division consolidation
Division split
Sales force turnover
Plant relocations
Product line changes

2
Decide on
allocation criteria
3
Choose
starting points

4
Combine control units
adjacent to starting points
to starting points
5
Compare territories on
allocation criteria
6
Assign salespeople to
salespeople to
new territories

Territory Design Process

Revise territory
boundaries to
balance workload
and potential

Geographic Control Units Used in Territory Design
Geographic Control Units Used in Territory Design

Countries
States or provinces
Counties
Metropolitan areas

Cities
Zip codes
Census tracts
tracts
Customers

Territory
Territory Design Procedures
3. Choose starting points
Choose starting points
Salesperson’s
Salesperson’s home
Large customer
Large customer - cut transportation cost
transportation cost
Big
Big city - convenient for services

4. Combine Adjacent Control Units
Combine Adjacent Control Units
5. Compare Sales Territories
Mountains roads population center
Mountains, roads, population center
locations?
locations?

6. Assign people to Sales Territories
6. Assign people to Sales Territories

Comparing
Comparing Three Kentucky Sales Territories

Potential as Measured by

Territory
1
2
3

Population
1,124,897
1,129,290
1,131,137

Number of Counties
47
27
43

Territory Design Procedures
Territory Design Procedures
Workload Approach
No
No starting points
Equates work to be done
May
May lead to imbalance on size
Often raises travel costs
Often raises travel costs
Good
Good when reps are on salary
Key: optimal call frequency for particular
Key: optimal call frequency for particular
classes
classes of customers

Workload Method
1.

Classify all customers into sales volume categories

2.

Determine the frequency with which each type of
account should be called upon and the desired length of
each sell

3.

Calculate workload involved in covering entire market

4.

Determine time available per salesperson

5.

Apportion the salesperson’s time by task performed

6.

Calculate the number of salespeople

Figure 11-4: Dividing a Large Territory
Common problem by sales mananger is how to divide a
territory.

Computer
Computer Based Territory Designs
Computers save time
Computers save time
Need
Need location & number of customers &
starting points
startin
Program
Program options
minimize
minimize moment of inertia
Graph data draw boundaries -Graph data & draw boundaries -- not optimal optimal
design
design optimal territories -- expensive
Applications -- pharmaceutical reps...
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