sales territory mapping free - Global Knowledge Corner

Introduction

A sales territory, as defined by operations, is a collection of clients and prospects assigned to a single salesperson.

Sales territories are sometimes referred to as geographical areas by sales professionals.

No sales manager can afford to overlook territory coverage planning and organisation.

Although much has been done to increase individual salesperson productivity, territory management still has a lot of space for improvement.

Some sales organisations still feel that planning and organising sales territory is too complicated to accomplish, and that it is sufficient if salespeople simply go out and make calls.

The reasonable thing to do, on the other hand, is to properly supervise, control, and arrange the salesman’s field operations so that the sales targets are met.

Without a question, establishing and maintaining sales territory takes a significant amount of time and effort.

But, sales managers who have paid attention to its organisation and planning have reaped significant benefits in the form of lower selling costs and improved sales.

They have also aided individual salespeople in achieving more revenues for themselves and higher profits for the corporation in this way.

A sales territory is a group of clients or a geographical region that a salesman is responsible for. Geographic borders may or may not exist inside the area.

A salesman is usually allocated to a geographical region that includes both current and future consumers.

The sales manager can establish a better match between sales efforts and sales possibilities by assigning sales territory.

Because most organisations’ overall market is too broad to handle effectively, territories are created to aid the sales manager’s duty of guiding, assessing, and supervising the sales force.

The focus of the sales territory idea is on customers and prospects, not only the region where a single salesman works.

Customers and prospects are grouped together so that the salesperson servicing these accounts may contact them as quickly and cost-effectively as feasible.

However, geographical factors are overlooked in certain firms, particularly in those where the technical selling approach is prominent, and sales staff are given entire classes of clients regardless of their geography.

When salespeople sell primarily to personal friends, as they do when selling real estate, insurance, and investment securities, there is no logical basis for segmenting the market geographically.

Small businesses and businesses launching new products that necessitate the use of multiple marketing channels rarely use geographically defined territories, or if they do, they use arbitrary divisions such as entire states or census regions.

There is no reason to assign territories in these cases because existing sales coverage capabilities are insufficient in comparison to sales potential.

Reasons for Establishing Territories

The main rationale for establishing sales territory is to make the selling function’s planning and management easier.

However, well-designed sales territory may raise sales team motivation, morale, and interest, resulting in improved overall sales performance.

Sales managers, on the other hand, usually have more particular reasons for creating territory.

(i) To acquire comprehensive market coverage: Proper market coverage is aided by sales territories. A salesperson’s calling time is scheduled as efficiently as possible to ensure that all current and potential customers are covered.

When each salesperson is allocated to a properly established sales zone rather than being permitted to sell anywhere, coverage is more likely to be extensive.

The corporation may more nearly attain the sales potential of its markets if the territories are properly covered.

(ii) To Define the Job and Obligations of Salespeople: Sales territories assist in defining the tasks and responsibilities of the sales force.

For their regions, salespeople must behave as company managers. They are in charge of maintaining and increasing sales volume in their respective territory.

Once all call frequencies have been computed and assigned, determining the entire workload and then breaking it down into equal assignments among salesmen becomes much easier.

Better outcomes are gained when an equal workload is given based on call frequencies. An equal task distribution increases salesmen’s interest and passion.

(iii) To assess sales performance: Sales territories aid in the assessment of a company’s sales performance.

Actual performance data may be gathered, evaluated, and compared to performance targets.

Even current sales numbers may be compared to previous sales figures to assess performance over time.

Individual territory performance may be compared to district performance, district performance to regional performance, and regional performance to the whole sales force performance.

(iv) To Improve Customer Relations: Sales territories that are well-designed allow salespeople to spend more time with current and future customers while spending less time on the road.

When clients receive regular calls, they are more likely to be satisfied and buy more.

Because the salesman’s visits are determined by a call frequency plan software, he maintains a consistent schedule with his consumers.

Regular encounters allow both the salesperson and the client to better understand each other and address problems related to the supply and demand for goods, as well as improve the overall reputation of the organisation that the salesman represents.

(v) To Lower Sales Costs: Sales territories are created to eliminate duplication of effort by ensuring that two or more salespeople do not travel in the same geographic region.

This lowers the selling price and boosts the company’s earnings. Sales territory also provide other advantages, such as less travel miles and overnight flights.

(vi) To increase sales force control: When client call frequencies, routes, and timetables are established, salesmen’s performance may be monitored.

It becomes difficult for a salesperson to ignore a “tough” region and focus just on the easiest-to-sell clients.

Furthermore, no salesperson can dedicate more time to one region and become “lost” in it when he is obliged to follow a pre-determined plan and route.

When all frequencies, routes, and timetables are defined, salesmen’s work habits improve in general, resulting in greater sales force control.

(vii) To coordinate sales with other marketing efforts, the following activities are performed: A well-planned sales region can help managers with other marketing tasks.

On a territorial level, sales and cost studies are easier to do than on a market-wide one.

Setting quotas and defining sales and spending budgets can be more successful using territory-based marketing research.

When salespeople are assisting customers with launching advertising campaigns, distributing point-of-purchase displays, or performing work related to sales promotions, the results are usually better when the work is assigned and managed on a territory-by-territory basis rather than for the entire market.

Bases for territory development

The basis utilised to create the territories are closely tied to the objectives and criteria for sales territory construction.

(a) Geography: The most common basis for the formation of territory is geographical factors.

This foundation is easy since it tends to use existing geographical borders like states, nations, and cities.

The geographic strategy has a key benefit in that secondary data from many sources is readily available.

(b) Potential and servicing requirements: The potential method divides a company’s client base into segments based on sales potential.

It appears to give equal opportunity, hence bringing out the best in salespeople.

The method is straightforward. First, management must evaluate the company’s total sales potential, and then split that potential evenly among salespeople.

Assume that a company’s overall sales potential for a particular year is $ 10 million.

The sales manager went on to say that each salesperson had a personal sales potential of $ 500,000.

This would result in the formation of twenty territories, each with the same sales potential of $ 500,000.

(c) Workload: Workload, the third sales territorial basis, takes it a step further. In constructing territories, it takes into account not only individual account potential and servicing requirements, but also variances in coverage difficulties caused by topographical factors, account locations, competitor activity, and so on.

Some businesses attempt to achieve equality by allocating a limited number of accounts and setting average call frequencies.

For example, a company may assign each territory manager two hundred customers to serve and set a daily average frequency of calls; this would indicate that each account would be visited once per month’s twenty working days.

Approaches of Designing Territories

The sales territories can be designed in one of three ways.

The building-up method of territory design entails integrating enough elements of a company’s total market to generate units that provide adequate sales problems.

Actual and potential consumers must be identified, and their individual sales quantities must be appraised, before this strategy can be used.

Account mixes can be constructed to meet the twin goals of acceptable customer coverage and call frequency after categorizing them according to desired call frequencies and assessing how many calls a salesperson can realistically be anticipated to make.

Many consumer products firms that want to reach a large audience use this strategy.

The breakdown strategy works the other way around. It begins with the company’s overall sales prediction, which is generated from a projection of total market potential and an assessment of the company’s expected portion of that market.

The approach then calculates an average sales figure per salesperson based on the number of territories to be developed and divides total market potential by this amount.

For industrial products producers that want optional distribution, this strategy may be sufficient.

The technique, on the other hand, has a serious conceptual flaw: Rather of seeing sales as a consequence of sales force activity and then estimating sales appropriately, the number of sales organisation members is decided by predicted overall sales. This has the potential to become a self-fulfilling prophesy.

The incremental approach is the most appealing from a conceptual standpoint. Additional territories are developed using this strategy as long as the marginal profit gained exceeds the cost of maintaining them.

Administrative challenges, on the other hand, limit the method’s usefulness because it necessitates a cost accounting system capable of calculating sales, expenses, and profits for varying levels of input.

If a corporation can get this information, earnings may be maximised by expanding the number of regions until negative returns are achieved.

Procedure for setting up sales territories

A sales region should not be so broad that the salesperson spends too much time travelling or only has enough time to visit on a few of the scattered consumers.

A sales region, on the other hand, should not be so tiny that a salesperson calls on consumers too frequently.

The sales zone should be large enough to represent a realistic task for the sales staff, but small enough to allow for frequent visits to all possible clients.

Whether a firm is creating its first sales territory or updating one that currently exists, the following steps must be followed:

(1) Determine a geographic control unit

(2) Conduct an account analysis

(3) Create a workload analysis for salespeople

(4) Create territories by combining geographic control units.

(5) Assign sales employees to territories.

1. Choosing a fundamental geographical control unit

The selection of a basic geographical control unit is the beginning point in territorial planning.

Districts, pin code numbers, trading regions, cities, and states are the most widely utilised control units.

Sales territories are formed by grouping together fundamental geographical control units.

Management should strive for a control unit that is as minimal as feasible. A compact control unit is preferred for two reasons.

One reason is to take advantage of a significant benefit of territories: accurate geographic identification of sales potential.

If the control unit is too large, regions with low sales potential are concealed by combining them with areas with high sales potentials, and locations with high sales potentials are veiled by combining them with areas with low sales potentials.

The second reason is that these units are reasonably stable and consistent, allowing for easy redrawing of territorial borders by allocating control units across regions.

If a corporation wishes to expand Ram’s area while shrinking Sham’s, it’s easier to transfer city-sized control units rather than state-sized control units.

Geographic control units are now often utilised as political entities (state, district, or city).

They’re widely utilised since they’re the foundation for a lot of government census data and other market data.

Countries: The county is the most often utilised geographical control unit in the United States and the United Kingdom.

In these nations, the lowest unit for which official sources release statistical data is often the county. In India, districts might be utilised in a similar way.

Zip code regions are also utilised in the United States. The average Zip code is smaller than the average county. Pin code regions may be utilised on similar lines in India.

Cities are employed as the control unit when a company’s sales potential is situated fully or almost entirely in urbanised regions.

The city as a control unit is rarely totally satisfying; suburbs next to cities have sales potentials at least as high as those in the cities themselves, and they may frequently be covered by the same sales employees at no additional expense.

The trade area is another control unit that is used to construct sales territories.

Because it is based primarily on the natural flow of commodities and services rather than political or economic barriers, the trade area is possibly the most appropriate management unit.

The trading area is frequently used as a control unit by companies that sell through wholesalers or retailers.

The trade area is a geographical region made up of a city and its environs that serves as the region’s primary retail or wholesale hub.

Consumers in one trade area are unlikely to buy items from customers in another trading area, nor would a customer from another trading area enter the trading area to acquire a product.

As a geographic control unit, the trade area offers various advantages.

Trading zones are symbolic of client buying behaviours and trade patterns since they are based on economic reasons.

Trading zones also assist management in planning and supervision.

State borders have been utilised by several corporations to define territorial limits. When utilised by a corporation with a small sales team that covers the market selectively rather than intensely, a state may be an acceptable control unit.

For a corporation seeking countrywide distribution for the first time, using states as territory limits may be a good option.

In fact, salespeople may be allocated to territories that span many states in certain cases. This might be done on a trial basis until the market matures, at which point a smaller control unit could be used. State sales areas are straightforward, practical, and reasonably priced.

2. Making an Account Analysis

Following the selection of a geographic control unit, a corporation must undertake an audit of each geographic unit.

This audit’s goal is to discover clients and prospects, as well as assess how much sales potential each account has.

Accounts must first be recognised by name.

This information may be found in a variety of places.

The yellow pages, for example, have been automated and are now one of the most effective tools for instantly identifying clients.

Other sources include sales records from previous companies, trade directories, membership lists from professional associations, corporate directories, mailing list publishers, trade books and periodicals, chambers of commerce, federal, state, and local governments, and personal observation by the salesperson.

The next stage is to estimate the overall sales potential for all customers in each geographic control unit after potential accounts have been identified.

The sales manager calculates the overall market potential and how much of it the organisation may anticipate to get.

Estimating a company’s sales potential in a given market is sometimes a subjective decision.

It’s based on the firm’s current sales in that region, the amount of competition, any competitive advantages the company has, and the company’s existing customer connections.

The personal computer has evolved into an invaluable managerial tool for assessing a territory’s sales potential.

The computer can also calculate the anticipated sales potential based on pre-determined parameters much more quickly than the sales manager.

The PC may then categorise each account based on its yearly buying potential once the sales potential calculations have been produced.

An ABC classification is a frequent method of categorization.

All accounts with a sales potential larger than a predefined quantity are identified by the computer and classified as accounts.

The accounts that are thought to have average potential are then classified as C accounts. Finally, C accounts are defined as accounts with a potential of less than a particular quantity.

3. Developing a Salesperson Workload Analysis

An estimate of the time and effort necessary to cover each geographic control unit is a salesperson workload study.

This estimate is based on the number of accounts to be contacted, the frequency of the calls, the length of each call, the needed travel time, and the non-setting time.

The construction of a sales call pattern for each geographic control unit is the outcome of the workload analysis estimate.

The number of accounts that may be accessed in each geographic control unit is determined by a variety of criteria.

The amount of time it takes to call on each account is the most fundamental aspect.

The number of individuals to be seen during each call, the quantity of account maintenance required, and the duration of the wait time all impact this.

Examining corporate documents or speaking with salespeople might provide information on these aspects.

The transit time between accounts is one aspect that influences the number of accounts that may be called on.

Travel time will differ significantly from one place to the next, based on factors including available transportation, roadway conditions, and weather.

The sales manager looks for ways to reduce travel time and hence expand the number of clients that may be contacted.

A variety of factors determine the frequency of sales calls. Accounts are classified into numerous groups based on their sales potential.

Group A accounts are used the most, group B accounts are used less often, and group C accounts are used the least.

The type of the product and the amount of competition are two more elements that determine call frequency.

The time and effort necessary to cover a geographic control unit is influenced by the degree of non-selling activities.

4. Combining Geographical Control Units into Sales Territories

The sales manager has been working with the geographic control unit chosen in the first step of the method for establishing sales territories up to this point.

A state, county, city, or another geographical region might be the unit.

The sales manager is now prepared to divide nearby control units into sales territory with nearly equal potential.

Previously, the sales manager would manually combine nearby control units to create a list of potential territories.

However, this was a lengthy process that, in the majority of situations, resulted in split control units and regions with varying sales potential.

Computers can now complete this work in a fraction of the time.

Territories with different sales potential aren’t always negative. Salespeople differ in terms of talent, experience, and initiative, and some may be given larger responsibilities than others.

The top salespeople should be assigned to territory with great sales potential, while newer, less successful salespeople should be sent to second and third-rate regions.

Depending on the relative sales potential of a certain region and the sorts of selling or non-selling responsibilities allocated to sales representatives, some adjustments in sales quotas and commission amounts may be necessary.

Shape of the Territory

The form of the region is now taken into account by the planner. The form of a territory has an impact on both selling costs and sales coverage.

Furthermore, the design of a territory benefits to sales force morale if it allows a salesperson to spend less time on the road.

The wedge, circle, hopscotch, and cloverleaf are the most popular shapes.

The wedge works well in locations that include both urban and non-urban areas. It spreads out from the highly populated city centre.

Wedges, of course, come in a variety of sizes.

By balancing urban and non-urban calls, travel time between adjacent wedges may be equalised. When accounts and prospects are evenly dispersed around the area, the circle is acceptable. Starting in the office and moving in a circle of stops until the salesman returns to the office, this is known as circular territory.

The salesperson allocated to the circular M-shaped region is stationed towards the middle, resulting in more consistency in the frequency of calls to customers and prospects.

This also allows the salesman to go closer to more consumers than with a wedge-shaped desk.

When accounts are scattered over a region, the cloverleaf is preferable. Because call schedules are meticulously planned, each cloverleaf is equivalent to a week’s worth of labour, allowing the salesman to spend weekends at home.

The territory’s salesperson’s home base located in the heart of the city.

Cloverleaf territories are more frequent among industrial marketers than consumer marketers, especially among businesses that cultivate markets broadly rather than intensely.

In hopscotch territory, the salesman begins at the farthest location from the office and makes calls on his or her way back.

The salesman would usually drive nonstop to the farthest point in one direction and stop at a variety of locations on the way back. The salesperson will take the following journey in the other way.

5. Territories are assigned to salespeople.

The sales manager is ready to allocate salespeople to territories once an ideal territory alignment has been created.

Physical condition, ability, initiative, and effectiveness all differ across salespeople.

For one salesman, a realistic and appropriate task may overwhelm and frustrate another.

When it comes to allocating salespeople to territory, the sales manager must first rank them according to their relative abilities.

The sales manager should consider criteria such as product and industry expertise, persuasiveness, and linguistic skills when evaluating a salesperson’s relative competence.

To assess a salesperson’s performance inside a territory, the sales manager must compare the salesperson’s physical, social, and cultural attributes to those of the region.

For example, a salesman who was born and raised in a village is more likely to be productive with rural clients than with metropolitan consumers since they speak the same language and value the same things.

The sales manager’s purpose in this process of matching salespeople to territories is to optimise the territory’s sales potential by making the salesperson feel at ease in the territory and the customer feel at ease with the salesperson.

Why sales territories may not be developed ?

Despite the benefits highlighted, there are drawbacks to establishing sales territories:

• Salespeople may be more motivated if they are not bound by an area and have the freedom to cultivate consumers wherever and whenever they discover them.

In the case of industrial items. For example, because organizations/customers are dispersed geographically and not concentrated in one location, salespeople may be permitted to market to any possible customer.

• The business may be too tiny to be bothered with market segmentation into sales zones.

• Management may be unwilling or unable to devote the necessary time or expertise to territorial growth.

• Customer attraction may be based on personal friendship. Life insurance salespeople, for example, may sell policies to their family and friends first, then market to their connections.

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SALES TERRITORIES – Best Concept

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