Territory Design & Management

Sales Management Marketing 3345

Events triggering sales territory adjustments Mergers Division consolidation Division split Sales force turnover Plant relocations Product line changes

1 Select geographic control units 2 Decide on allocation criteria 3 Choose starting points Revise territory boundaries to balance workload and potential

4 Combine control units adjacent to starting points 5 Compare territories on allocation criteria

6 Assign salespeople to new territories

Territory Design Process

Territory Design Procedures

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

2. Determine Allocation Criteria

Territory balance -- effect on morale Customer balance - distribute commission Potential balance - share business growth Size balance - reduce transportation costs

Geographic Control Units Used in Territory Design

Countries States or provinces Counties Metropolitan areas

Cities Zip codes Census tracts Customers

Territory Design Procedures

3. Choose starting points
Salespersons home Large customer - cut transportation cost Big city - convenient for services

4. Combine Adjacent Control Units

5. Compare Sales Territories

Mountains, roads, population center locations?

6. Assign people to Sales Territories

Kentucky Counties, Major Cities, and Population Centers

The numbers in each county are population figures and are a measure of potential.

OHIO

INDIANA WEST VIRGINIA

ILLINOIS

VIRGINIA

TENNESSEE Kentucky Counties, Major Cities, and Population Centers

Three Kentucky Sales Territories

The numbers in ach county are population figures and are a measure of Major super highways potential. Territory borders INDIANA

OHIO

WEST VIRGINIA

ILLINOIS

VIRGINIA

TENNESSEE Three Kentucky Sales Territories

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

Figure 11-4: Dividing a Large Territory

Territory Design Procedures

Talleys Workload Approach

No starting points
Equates work to be done May lead to imbalance on size

Often raises travel costs

Good when reps are on salary Key: optimal call frequency for particular classes of customers

Workload Method 1. 2. Classify all customers into sales volume categories Determine the frequency with which each type of account should be called upon and the desired length of each sell Calculate workload involved in covering entire market

3. 4. 5. 6.

Determine time available per salesperson

Apportion the salespersons time by task performed

Calculate the number of salespeople

Experiences of a Consumer Durable Goods Manufacturer with Territory Design

Deployment Analysis for Two Territories
Trading Area* Present Effort (%) Recommended Effort (%)

Andy

1 2 3

10 60 15

4 20 7

4
5 Total

5
10 100

2
3 36

* Each territory is made up of several trading areas. % The percentage of salesperson time spent in the trading area (100% = 1 salesperson).

Experiences of a Consumer Durable Goods Manufacturer with Territory Design

Deployment Analysis for Two Territories
Trading Area* Present Effort (%) Recommended Effort (%)

Sally

1 2
3

18 7
5

81 21
11

4
5 6

35
5 30

35
11 77

Total
* Each territory is made up of several trading areas.

100

236

% The percentage of salesperson time spent in the trading area (100% = 1 salesperson). Thus, the deployment analysis suggests that Andys territory requires only 0.36 salespeople, which Sallys territory needs 2.36 salespeople for proper coverage.

CALLPLAN Approach

Salesperson Input
1. What sales level will result from each current

customer and prospect if: no. calls that are made one half the present calls are made present level of calls is continued 50 percent more calls are made a saturation level of calls are made
2. Probabilities that prospects will be converted into

customers given the different call frequencies

CALLPLAN Approach

CALLPLAN Output

1. Expected sales for all feasible call frequencies 2. Optimal number of calls for each client and prospect 3. Length of call for each client and prospect

Computer Based Territory Designs

Computers save time

Need location & number of customers & starting points

Program options

minimize moment of inertia Graph data & draw boundaries -- not optimal

design optimal territories -- expensive

Applications -- pharmaceutical reps

Sales Territory Mapping Programs

Vendor Package Description Interactive maps for travel planning and territory analysis. Direct links to contact management program. Territory mapping system that integrates sales and marketing data for interactive territory analysis, realignment, and monitory. Price $295

GeoQuery Corp. GeoQuery

TTG,Inc.

STARmanager

$995

Sammamish Data Systems

GeoSight Professional

Geographic information systems $1,850 for sales territory creation and management. Includes address matching. Optimal sales territory alignment $20,000+ and analysis. Exclusive OptAlign technology automatically balances territories and decreases driving time.

Metron, Inc.

TerrAlign

Figure 1 Before Realignment

50 40
No. of territories

30 20 10 0
-40 -30 -20 -10 0 10 20 30 40

Percent deviation from average

SOURCE:
Prabha Sinha and Andris Zoltners, Matching Manpower and Markets, Business Marketing, September 2008, p. 95.

Figure 2 After Realignment

50 40
No. of territories

30 20 10 0
-40 -30 -20 -10 0 10 20 30 40

Percent deviation from average

SOURCE:
Prabha Sinha and Andris Zoltners, Matching Manpower and Markets, Business Marketing, September 2008, p. 96.