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Managing SalesTerritories & Quotas:

Session 5

Sanjeev Varshney

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Why do we need to have

territories ?

To serve the market better

Motivate the sales force-assigning them

direct responsibilities and authority

For effective control

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Territory Mapping Process

Top-down

Estimate Sales potential

of the complete market Prepare sales forecast

for the company

Break it down into

regions

Regions into areas Areas into territory

keeping forecast and

coverage in mind

Bottom up

Estimate sales potential for

each administrative

territory Club them into areas and

areas into region

Club regions into country

Determine sales forecasts

for each region/area Determine territories

keeping sales forecasts and

coverage in mind

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Factors to be considered while

determining territory potential

Current Demographics

Current Market Share

Competition

Characteristics of Distribution Channel Future Growth

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Steps to Determine sales force

size (industrial product)

Classify customers into categories

Determine frequency and length of

calls for accounts in each category

Calculate work load to cover entiremarket

Determine time available for sales

person

Apportion salespersons time by

task performed

Calculate the number of sales

people needed

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Methods for deciding sales

territories

Break-down method Based on sales forecast

Geographic territory allocation

Workload basis of territory allocation

Number of accounts Sales call frequency needed

Sales call time

Distance covered

Market conditions

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Steps involved in territory Design

& allocation

Select Basic Control Unit

Estimate Market Potential

Form Tentative Territories

Perform Work Load analysis

Adjust Tentative Territories

Assign sales people to Territories

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Territory Design

Select basic Control unit (depending upon control

and monitor) Consumer account

District

state

Estimate market potential Form tentative territories:

Combine contiguous areas

Avoid overlaps and criss-cross

Make equal territories

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Contd.

Perform workload analysis: (estimate the total effort needed to

cover the territory) Consider number of accounts and classify them

No of calls to be made to each category

Call duration

Estimated time of non-selling and traveling time Adjust tentative territories (regression based or judgement based

methods)

Assign sales people to territories based on their potential

Relative ability of salespeople

Sales persons effectiveness in a Territory

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Issues Involved with territory

design

Low coverage

Less time to motivate the channel members Less time to handle customer complaints

Less time to carry out training and development exercises

Difficulty in meeting targets

Excess coverage Over control

Low targets-so underutilization of resources andcapabilities

General grievance

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Territory allocation & PLC

Introductory phase:Geographic method

Growth Phase: Break Down Method

Maturity Phase: Work load basis

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Managing Territorial Coverage

Routing

Daily routes to be designed taking number and kind ofclients on such routes into account

Scheduling Days and frequency for covering these routes/customers

Productivity Effective coverage

Time Management Coverage as well as

effectiveness

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Territory Re-engineering

Assess the performance Sales man wise

Customer wise

Product wise

Channel wise etc.

Identify the gaps Sales man capability analysis

Time-motion study Carry out re-engineering only if no other person can cover it

Redesign boundaries

Combine the territories

Divide the territories (channel-wise, product wise, customer category wise)

Do short term review

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Sales Quotas

Sales volume Quotas

Financial Quotas

Activity Quotas

When to use what ?