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Territory Development and Time Management
Chapter 6
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Nature of Territory Management
Salespeople are not only responsible for individual customers (account management) but also responsible for a group of accounts (territory management).
It is defined as planning, implementation, and control, of sales persons activities with the goal of realizing the sales and profits potentials of their assigned territories.
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Defining Territory Management
Although geographic considerations play a role in setting boundaries, sales territories are primarily based on customer grouping.
Should the sales executive assigned a territory on the basis of the geographically area or customer base? What if a customer has multiple plant location? Or the client shifts its business area?
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Major Accounts
Customers whose significance to the company’s business requires special attention and experience.
Major accounts are also termed as ‘key accounts’
They are usually called on either by special sales people “senior sales representative” or “key accounts manager”, or by regional or district sales managers.
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Direct Accounts
Large accounts involving special arrangements in terms of pricing, credit or product design. For e.g central buying offices of a multinational firm.
These are also called “House” or “National” accounts those served by home office personnel or executives.
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Sales Territory Design
Designing sales territory involves breaking down a firm’s customer base so that accounts can be well served by individual sales persons.
Poor territory design can lead to inadequate market coverage, unequal workload, lack of control over the workforce and depressed morale.
A company's sales territory represents basic accountability units to the lowest level of aggregation.
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Reasons for establishing sales territories
Companies form sales territories mainly to maximize sales and profits.
There are 3 pairs of guiding principles that cause sales management to employ territories in their operations:
(a) customer-related
(b) salesperson-related
(c) managerial
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Customer-Related
REASONS
Provide intensive market coverage
Provide excellent customer service
BENEFITS
Produce higher sales
Produce greater satisfaction
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Salesperson-Related
REASONS
Generates enthusiasm and motivation
Facilitate performance evaluation
BENEFITS
Lead to less turnover, employee satisfaction
Offer rewards related to effort, pay-for-performance
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Managerial-Related
REASONS
Enhance control
Coordinate promotion
BENEFITS
Tight handle on selling expenses / allocate cost by territory
Plan for staff incentives
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Reasons for Revising Territories
1. Major accounts open or close down facilities, move into or out of the area, or shift in customers business – geographically or technological in nature
2. Aggressive domestic or international competition (markets are dynamic and conditions change)
3. Changes in company’s buying policies or structure
4. Salespersons related revision due to physical, social, or psychological changes.
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5. A salesperson may display a reduced energy level, family problems of various kinds can effect territory performance significantly.
6. If a territory’s sales potential was underestimated or overestimated.
7. Managers can also find that they need to realign territories as new product lines are introduced into the company’s product mix and the presentation and servicing burdens become too large under old arrangement.
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Reasons for NOT establishing sales territories
When a company is small (few resources)
When friendship sales is important to maintain for long-term relationship
When high technology selling is involved. In high technology application there are often a very limited number of potential customers nationwide that require highly specialized advice.
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Developing Territories
Drawing up territories ranks among the most important responsibilities of sales managers.
It affects the sales force morale and performance.
Results can be measured by sales volume, relative market share or profit.
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Factors to consider in establishing ‘Territories’
Sales persons workload and nature of the job, for e.g. a prospecting salesperson can handle a larger territory assignment then a person who must provide full service for each account.
The type of product / product lines
The type of competition faced by the company in each territory.
The desired intensity of the market coverage / challenging territories
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Channels of distribution available and transportation system
Sales potential and servicing requirement. Limited potential territories can be used as a training grounds for new members of a sales force.
Salesperson can be assigned to more challenging territories in accordance with their performance.
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Model of Territory Management
Territory management can be defined broadly in terms of:
1. Planning (Analysis, Objectives, Strategies, Tactics)
2. Implementation (achievement of new business targets, reporting)
3. Control (compares intended and actual results with a view to taking corrosive action)
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1. Planning
Analysis:a) Account load – the number of actual and potential
customers assigned to a salesperson
b) Account potential – the share of an account’s business that the firm can reasonably expect to attract.
c) Servicing requirements – established and new accounts have servicing requirements that are based on both the past volume with the company and their unique needs and problems.
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Objectives: Concern here is the sales volume and market
share goals in the territory, which is derived in top-down manner, starting from corporate objectives.
Strategies: Have to work on various strategies like pricing,
promotional, delivery terms, payment and credit terms.
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Tactics: Routing and scheduling task, avoid repetitive
tasks, intensity of territory coverage and minimizing non-productive time.
Designing a sales person traveling plan or the sequence of location to be visited (known as ‘Routing’).
Proper scheduling or sequencing of appointments.
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2. Implementation
Establishing customer base; selling and servicing these accounts is the principal act of territory activity.
New business development should be a continuous undertaking.
Customer satisfaction and maintaining long term relationship are among the foremost concern of the territory manager.
Another important ingredient in implementation is ‘reporting’. Maintaining a steady flow of reports to the home office about sales results, problems or corrective actions.
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3. Control
A feedback process
A comparison take place between intended and actual results, with a view of taking corrective action where required.
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Time Management
For many sales managers, managing the time and that of their sales people is one of the most crucial tasks. Apart from the talent and skills, time is a sales professional most valuable resource.
“Structuring sales persons time resources so as to maximize productive time and minimize wasted time. To develop effective time management strategies, it is useful to classify alternative time uses with regard to their productivity.”
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Time Management Skills Require?
Planning – establish priorities for sales management activities, anticipate major tasks, establish deadlines, and make sure plans and schedules are flexible.
Discipline – be alert to unnecessary interruptions, avoid requests for unnecessary details.
Organizations – consolidate activities whenever possible, delegate tasks to subordinates, concentrate efforts on major tasks, identify key problems.
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TIME MANAGEMENT METHODS
SET PERSONAL GOALSSET PERSONAL GOALS
USE TO-DO LISTS
KEEP PLANNING CALENDARKEEP PLANNING CALENDAR
ORGANIZE SELLING TOOLSORGANIZE SELLING TOOLSORGANIZE SELLING TOOLSORGANIZE SELLING TOOLS
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Increasing Sales Volume
A salesperson can increase sales volume in two major ways. One is to improve selling effectiveness, and the other is to spend more time in face-to-face selling situations.
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SELF MANAGEMENT DIMENSIONS
TIMETIME
TERRITORY
RECORDSRECORDS
STRESSSTRESSSTRESSSTRESS
FOR SUCCESS…YOU MUST MANAGEFOR SUCCESS…YOU MUST MANAGE
