MANAGEMENT OF SALES

TERRITORIES AND QUOTAS

RAVIMOHAN
 DEFINING SALES TERRITORY

• A sales territory consists of existing and potential customers

assigned to a salesperson. The territory may or may not have
geographic boundaries. However, generally a salesperson is
assigned to a geographic area consisting of present and
potential customers.

• The basic concept of a sales territory is that a territory or a

market is made up of present and potential customers, rather
than a geographical area. Hence, in defining a sales territory
the keyword is customers, instead of a geographical area.
Similarly, small companies do not use geographical divisions.
Such examples of not using geographical area are very few. In
most organisations, it is beneficial to allot salespeople to
geographic territories, consisting of present and potential
customers.
 REASONS FOR SETTING UP OR
REVIEWING SALES TERRITORIES
• The reasons of advantages for setting up and subsequently
reviewing or revising sales territories are many. Some of the
major reasons for companies to establish territories are

(i) Increased market (or customer) coverage,

(ii) Control selling expenses,
(iii) Better evaluation of salesforce performance ,
(iv) Improve customer relations.
(v) Increase salesforce effectiveness,
(vi) Improve coordination, and
(vii)Benefit salespeople and the company.
 INCREASE MARKET OR CUSTOMER
COVERAGE
• A well-designed sales territory allows salespeople to spend sufficient
time with present and potential customers, which improves the
market coverage. The way the company does not lose any business
to its competitors. In fact, better coverage of market, results in
gaining competitors customers. Proper market or customer coverage
is possible if the company sets up the territories intelligently and
assigns its salespeople carefully. Sales territories should be large
enough to ensure reasonable workloads to salesforce but small
enough to see all existing customers and prospects are visited
adequately as needed by the customers. Well designed sales
territories allow sales-people to cover existing and potential
customers economically and adequately.
CONTROL SELLING EXPENSES
• By setting-up well designed salespeople spend less time on the road,
fewer nights away from home, resulting in less cost of travelling and
less expenses on lodging and food. Not only the selling expenses
 CONTROLLING SELLING EXPENSES CONTD
on lodging and food. Not only the selling expenses are controlled,
but the sales volumes go up and salespeople spend more time
with the customers. The result is reduction of selling expenses as
a percentage of sales revenue. With no geographic sales
territories, the salespeople would have to travel to their customers
from the sales office , as and when needed, spending more time
and money in travelling. With proper sales territories , there is
better control on the selling expenses of salespeople.
BETTER EVALUATION OF SALES PERFORMANCE
The sales manager can evaluate the performance of each
salesperson in a better way, when the salesperson can be
decided is assigned to a specific territory. The actual sales
performance can be measured on weekly, monthly, quarterly and
yearly basis, and the same is compared with the respective sales,
 BETTER EVALUATION OF SALES PERFORMANCE
CONTD
• but also in terms of selling expenses, customer satisfaction levels, as
the salesperson’s responsibilities can be clearly defined .
IMPROVE CUSTOMER RELATIONS
When the salesperson spends adequate time with present and potential
customers, to understand their problems(or needs) and to find solutions(
or satisfy the needs), their relationship improve. The customer relation-
ships are developed over a long period of interactions between the sal-
esperson and the buyers. These interactions and regular visits are poss-
ible because each salesperson is assigned to a group of customers.
Some salespeople develop over a long period of interactions between
the salesperson is assigned a group of customers. Some salespeople
develop collaborative or partnering
 IMPROVE CUSTOMER RELATIONS CONTD
• relationships with a few high profit potential customers, for
mutual benefits of buying and selling firms.
INCREASE SALESFORCE EFFECTIVENESS
When the salesperson spends adequate time with present and
potential customers, to understand their problems (or needs) and
to find solutions(or satisfy the needs), their relationships are
developed over a long period of interactions between the
salesperson and buyers.