Territory Management
16.3 Explain factors that contribute to improved territory management
Many marketing organizations have found it helpful to break down the total market into manageable units called “sales territories.” A sales territory is the geographic area where prospects and customers reside. Although some firms have developed territories solely on the basis of geographic considerations, a more common approach is to establish a territory on the basis of classes of customers. Territories are often classified according to sales potential. Some marketers assign sales representatives to key industries. The Ottawa Citizen newspaper divided the paper’s customer base into major business lines such as real estate and automotive.16 Regardless of how the sales territory is established, it is essentially a specific number of current and potential accounts that can be called on conveniently and economically. Although uncontrollable by the salesperson, it is acknowledged by managers and researchers as an important factor enabling salespeople to perform well.17
What Does Territory Management Involve?
To appreciate fully the many facets of territory management, it is helpful to examine a typical selling situation. Put yourself in the shoes of a salesperson who has just accepted a position with a firm that manufactures a line of high-quality tools. You are responsible for a territory that covers six counties. The territory includes 88 auto supply firms that carry your line of tools. It also includes 38 stores that do not carry your tools. On the basis of this limited information, how would you carry out your selling duties? To answer this question, it is necessary to follow these steps.
Step 1—Classify All Customers
Salespeople often divide their territory by area code, by industry, by product, or projected sales volume. Always divide your territory in a way that makes sense.18 If you classify customers according to potential sales volume, then you must answer two questions: What is the dollar amount of the firm’s current purchases? What amount of additional sales might be developed with greater selling effort? Business A may be purchasing $3,000 worth of tools each year, but potential sales for this firm amount to $5,000. Business B currently purchases $2,000 worth of tools a year, and potential sales amount to $2,500. In this example, business A clearly deserves more time than business B.
It is important to realize that a small number of accounts may provide a majority of the sales volume.19 Many companies get 75 to 80 percent of their sales volume from 20 to 25 percent of their total number of customers. The problem lies in accurately identifying which accounts and prospects fall into the top 20 to 25 percent category. Once this information is available, you can develop customer classification data that can be used to establish the frequency of calls and the level of resources to be allocated to these customers.20 Jennifer Kline, a pharmaceutical salesperson employed by Schering-Plough’s animal care division, gives a high priority to loyal customers.21
The typical sales territory is constantly changing, so the realignment of territories from time to time is necessary. A division of AT&T based in Albany, New York, uses MapInfo ProAlign software to realign its sales territories. Accounts are segmented based on industry, size, dollar volume, and complexity. The sales manager enters a variety of account information and then produces maps that show accounts in different configurations.22
Step 2—Develop a Routing and Scheduling Plan
Many salespeople have found that travel is one of their most time-consuming, nonselling activities. A great deal of time can also be wasted just waiting to see a customer. The primary objective of a sales routing and scheduling plan is to increase actual selling by reducing time spent traveling between accounts and time spent waiting to see customers.
With the aid of fax machines and computer-scanning equipment, salespeople can send and receive documents in seconds. Hard-copy documents are often needed to move the sales process to a suc-cessful outcome.
Source: Andrey Popov/Fotolia
If a salesperson called only on established accounts and spent the same amount of time with each customer, routing and scheduling would not be difficult. In most cases, however, you need to consider other variables. For example, you may be expected to develop new accounts on a regular basis. In this case, you must adjust your schedule to accommodate calls on prospects. Another variable involves customer service. Some salespeople devote considerable time to adjusting warranty claims, solving customer problems, and paying goodwill visits.
There are no precise rules to observe in establishing a sales routing and scheduling plan, but the following guiding principles apply to nearly all selling situations:
Obtain or create a map of your territory, and mark the location of current accounts with pins or a marking pen. Each account might be color-coded according to sales potential. This gives you a picture of the entire territory. Many companies are using mapping software to create a territory picture that can be viewed on the computer screen. With the aid of TerrAlign (www.terralign.com) mapping software, salespeople can align sales territories by account size or geography, analyze sales information, generate maps and reports, and produce territory recommendations.23
If your territory is quite large, consider organizing it into smaller zones. Zip code zones provide one option. You can then plan work in terms of several zones that make up the entire territory.
Develop a routing plan for a specific period of time. This might be a one- or two-week period. Once the plan is firm, notify customers by phone, letter, or e-mail of your anticipated arrival time.
Develop a schedule that accommodates your customers’ needs. Some customers appreciate getting calls on a certain day of the week or at a certain hour of the day. Try to schedule your calls in accordance with their wishes.
Think ahead, and establish one or more tentative calls in case you have some extra time. If your sales calls take less time than expected or if there is an unexpected cancellation, you need optional calls to fill in the void.
Decide how frequently to call on the basis of sales potential. Give the greatest attention to the most profitable customers. Many salespeople use the 80/20 rule. They spend 80 percent of their time calling on the most productive customers and 20 percent calling on smaller accounts and prospects.24