Sales and Distribution

Management
Sessions 6, 7
Chapter 4.

Management of Sales Territories

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 Objectives

Define a sales territory

Why is Time & Territory Management needed

What are the benefits of time and territory

management (TTM)

TTM process

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 Define a sales territory

Sales territory- comprises

 a group of customers or a

 geographic area assigned to a salesperson

(Source: Futrell)

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Why establish a Sales Territory?

1) To obtain thorough coverage of the market

2) To establish a salesperson’s responsibility

3) To evaluate performance

4) To improve customer relations

5) To reduce sales expense

6) To allow better matching of salesperson to customer

7) To benefit salespeople and the company

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 Benefits of Time and territory
Management

n Territory should be more efficiently and effectively

covered

n Optimum time should be spent with each class of

prospects

n Most important customers should receive the bulk

of the service

n Sales costs should be reduced due to better time

allocation

n Benchmarks will form 7

 How to Design New Territories
What is needed:

n Potential (large enough for a salesperson to make a

living covering it)

n Salesperson should be able to work the territory

efficiently and economically

n Salesperson should be able to maintain his standard of

living

n Overnight travel should be held to a minimum

n The territory should have sufficient transportation

facilities (reachable)
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n Company can make an adequate return on investment
 How to Design New Territories

Steps

1) Analyze the territory with the objectives of determining the

basic unit potentials and/or the number and types of potential
customers within each basic unit

2) make a customer analysis within the territory

3) Make a salesperson work load analysis

4) Determine the number of salespeople needed

5) Design the sales territories, including the actual routes

6) Evaluation and revision of sales territories

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 Analyzing the territory

Some form of sales forecast has been made and analyzed

during this stage

n Unit potentials

n Number and types of potential customers within each basic

unit

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 Analyzing the territory

Consumer Products

n BPI- buying power index

wNet effective buy income

wRetail sales

wPopulation
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 Analyzing the territory
CMIE, CMIE Reports

Business to Business Products

Standard Industrial Classification

n 1st and 2nd digit = Economic sector

n 3rd = Economic sub sector
n 4th = Industry group
n 5th = Industry (2nd of the two)
n 6th = industry

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 The customer analysis
possible outlets

n Consumer products- retails and wholesalers

n Business products- OEMs or industrial
wholesalers
some customers are more profitable then others (80/20 rule)

w80 percent of your profits are from 20

percent of your customers
w20 percent of your profits are from 80
percent of your customers
Segmenting and targeting

n Groups (for example group A, B, C, and D)

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 The customer analysis

For example

Group A- potential of over $50,000

Group B- potential is between $15,000 and $50,000

Group C- less than $15,000

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 The customer analysis

Expected Value Analysis

Company Current Purchases Prob of business Expected Value Class

A $500,000 50% $250,000 A

B $250,000 10% $25,000 B

C $200,000 75% $150,000 A

D $600,000 1% $6,000 C

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 The salesperson work load analysis

Workload- the quantity of work expected from sales

personnel. Three main influences:

n Nature of the job

n Intensity of market coverage

n Type of product sold

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 The salesperson work load analysis

Nature of the job

n Plain Field Sales personal

n National Account Managers- highly skilled salespersons who call on key

customers’ headquarters sites, develop strategic plans for the accounts,
make formal presentations to top-level executives, and assist with all the
product decisions at that level

n Missionary Salespeople- they do not seek to obtain a direct order from their
customers, their primary goal is to persuade customers to place orders with
distributors or wholesalers

n Support Salespeople- help the order-oriented salespeople-but they don’t try

to get orders themselves
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 The salesperson work load analysis

Intensity of market coverage

n Intensive distribution- all the possible intermediaries at the

particular level of the channel are used

n Selective distribution- smaller number of intermediaries are

used

n Exclusive distribution- only one intermediary used at the

particular level of the channel to cover a defined territory

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 The salesperson work load analysis

Type of product sold (Goods vs. Services)

Product- the need-satisfying offering of a firm

n Products may be a physical good or a service or a blend of

both

Good- is a tangible item

Service- is a deed performed by one party for another

n Intangible
n Often sold first and then produced
n Can not be stored
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 The salesperson work load analysis

Types of product sold (Business-to-Business)

Raw materials- unprocessed products that become part of a company’s finished
goods
w Farm products, natural products

Supplies- used in support of business operations but are not part of the finished
product
w Maintenance, operating supplies, repair

Accessories- usually standardized pieces of equipment that support the overall

running of factories and businesses
w Small copy machines, portable drills, filing cabinets (more standardized than
installations)

Component parts and materials- products that are partly assembled or already
processed to be ready for assembly into the finished product
w Engines for lawn mowers, wire, textiles, or cement

Installations- major capital goods (usually are expensive, and purchased infrequently)
w Buildings, custom made machines, land rights
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 The salesperson work load analysis

Types of product sold (Consumer Products)

Convenience products- typically inexpensive items consumers purchase with
little effort, which are used on a frequent basis
w Soda, toothpaste, soap
Shopping products- more expensive than convenience products, so the decision
to purchase them is more important.
w Clothing, computers, furniture
Specialty products- are high-involvement consumer purchases, where the
product reflects the consumer’s personality or self-image
w Luxury items: Rolex watch, Jaguar
Unsought products- either unknown to the buyer or are known, but not actively
being sought at this point in time
w Insurance, medical services

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The salesperson work load analysis

How to determine the work loads for salespeople

n Total number of sales days per year

n The amount of traveling necessary

n Average length of a sales call

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The salesperson work load analysis

Total number of sales days per year

n Total days 365

w Less Saturdays and Sunday 104
Holidays 10
Vacation 10

n Total work days 241

w Less meetings, etc 15
w Illness 5

n Total sales days 221

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The salesperson work load analysis

The amount of traveling necessary

n Travel decreases the time a salesperson can spend in front

of prospects

w Example travel 10,000 miles per year at 40 miles per

hour the travel time will equal 31.25 or 32 days leaving
(221- 32 = 189) a189 days for selling

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The salesperson work load analysis

Average length of a sales cal

n How many sales calls can a person make each year

w Example

n Sales days = 189

n 2 hours per call

n Works 8 hours per day

n The salesperson can make 756 calls

per year
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The number of salespeople needed

Based on the number of sales calls per year the size of the sales force
can be determined

Total dollar sales desired per month $300,000

Average dollar sale $800
Sales to sales call ratio 1 to 5
Average length of sales call pus travel 2 hours
Average number of sales calls per day 4
Number of sales calls per month 4 * 20= 80

Number of salespeople needed

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The number of salespeople needed

Based on the number of sales calls per year the size of the sales force
can be determined

Total dollar sales desired per month $300,000

Average dollar sale $800
Number of sales needed 375
Sales to sales call ratio 1 to 5
Number of sales calls needed 1875
Average length of sales call pus travel 2 hours
Average number of sales calls per day 4
Number of sales calls per month 4 * 20= 80

Number of salespeople needed

23.43=24

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 Designing the sales territories

Route Analysis

n Plan the most efficient routes for each salesperson

w Map the salesperson’s territory

w Look for clusters

w Determine the route the salesperson will make

n Starting point (closest first)

w Consider time away from home

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Evaluation and revision of sales territories

Territorial control- the establishment of standards of

performance for the individual territory in the form of qualitative
and quantitative quotas or goals.
n Compare actual performance with goals or
benchmarks

If the territory is having problems consider revising it

(Source: Futrell)

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Scheduling refers to establishing a fixed time
when the salesperson will be at a customer’s
place of business.

Strict formal route designs

enable the salesperson to:

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.
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Routing and scheduling considerations

• Geographic size and shape of the territory

• Number and distribution of customers
• Sequence of customer calls
• Routes and distances traveled
• Minimizing salesperson’s travel and lodging costs

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 THREE BASIC ROUTING PATTERNS
Straight-Line Pattern
First Call
Base c
c c c c Work Back

Cloverleaf Pattern c
c c Major-City Pattern

c c
c c c c 2 3

c Base c
1
c c c c
c c c c
5 4

c c
c
Each Leaf Out and 1 - Downtown
Back Same Day

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