SALES TERRITORY DESIGN OF FMCG

REASONS FOR ESTABLISHING SALES TERRITORIES

better coverage - salespeople cannot cherry pick; territory assignments constrain salespeople to work with less profitable customers or prospects as well as the most desireable accounts

reduced selling costs - assigning responsibility to a single salesperson ensures that there is no overlap in coverage; customers and prospects are called upon by only one salesperson

improved customer service - assigning responsibility to a single salesperson helps to ensure that all customers and prospects receive adequate servicing

more accurate evaluation of performance - if territories are relatively equal with regard to workload and potential, then salesperson performance can be compared on an equal basis; if territories are unequal in a known way, then adjustments can be made in evaluation of unequal performance.

WHEN NOT TO ESTABLISH SALES TERRITORIES

sales coverage is far below sales potential - e.g., a new company wants to cherry pick for the most profitable prospects first

the sales force is highly specialized - e.g., when the salesforce is organized along the lines of product specialty rather than along the lines of customer location

sales are made on the basis of personal contacts and by referrals

SOME GUIDELINES FOR DESIGNING TERRITORIES

sufficient potential - with insufficient potential, a salaried salesperson will not be used effectively, and commissioned salespeople will leave the company for greener pastures

reasonable size - is a salesperson's time being spent traveling or making face to face sales calls?

adequate coverage - is the salesperson able to service all accounts and able to meet new prospects?

minimum impediments - try to set territories such that rivers, mountains, railroads, etc. set the borders of territories rather than run through the middle.

DESIGNING TERRITORIES

Determine appropriate focal points and boundary areas

o o o o

political boundaries - state, city, county, etc. MSAs trading areas natural boundaries - mountains, rivers, railroads, etc.

Determine territory shape for efficient use of time and routing

o

wedge - slices of a pie; use when salespeople work out of a common office

circle (or square) - use when salespeople work out of a home office

ROUTING GUIDELINES Following these guidelines will help in ensuring that tours are as short as possible:

tours should be circular tours should not cross the same route should not be used to go to and from a customer customers in neighboring areas should be visited in sequence