What is Sales Territories? Purpose, Management

  • Post last modified:5 May 2023
  • Reading time:9 mins read
  • Post category:Human Resource
Coursera 7-Day Trail offer

What is Sales Territories?

A sales territory represents a group of customers or markets or geographical areas. Sales territories are geographical areas that can be covered conveniently and canonically by a sales person.

Territories can be formed on the basis of geographical locations, industry, and product use method of buying and channel of distribution. By terrorization, organizations can achieve better coverage of potential markets because it permits better planning, proper coverage of potential markets, efficient call patterns and better customer service. Some services like Insurance and Mutual Fund are sold on personal contacts rather than by developing territories.

House Accounts useable are handled by the Co. itself. Big customers prefer to deal directly with the Co. This may lower the morale of the salesman as a significant share of the Co’s business is done directly by the Co. and the salesman is deprived of the commission.

Territory Management

Territory management is the planning, implementation, and control of sales person’s activities with the goal of realizing the sales and profit potential of their assigned territory.

  • Sales territories Match sales effort with sales opportunities.

  • Territorial assignment tells direction to the planning and control of the sales force.

  • By forming territories management learns the strengths and weaknesses of the company in serving different markets.

  • Realistic planning can be done as territories are more homogeneous than the entire market.

  • By dividing the market into small groups specific objectives can be made and more control can be exercised.

  • Performance approval of the sales person becomes critical according to directions can be given.

Purpose of Sales Territories

Sales territories are formed to achieve specific goals:

  1. Proper Market Coverage
  2. Market Coverage and Salesman’s of Territories
  3. Controlling, Selling Expenses
  4. Assists in Evaluation of Personnel
  5. Contributing to Sales Force morale
  6. Aiding in Coordinating of Person selling & Advertising
  7. Effective Deployment of Sales Force
  8. Efficient Customer Service
  9. Objective Evaluation of the Sales Force.

Proper Market Coverage

By territorisation we can comb the territories more effectively as specific areas are assigned to sales people which become their territory and intensive coverage becomes possible.

Market Coverage and Salesman’s of Territories

If Sales efforts are not matched with sales opportunities Co. loses Business. If territories are set up intelligently and proper assignments to Sales Person are made proper Market coverage can be obtained. The design of territory must permit salesman to cover them conveniently & economically.

The territories should be such that more time is spent with customer and less on Road. The S.P. should be able to call upon different Class of customers (A, B, C) and with needed frequencies. Regular call lead to Repeat Sales and persistence by salesman turns prospects into regular customers.

Controlling, Selling Expenses

Good territorial design leads to a number of benefits – high sales volume, low selling expenses, fewer nights away from home, low expenses on travelling and stay in lodges. Proper planning should be done. If the travel is unplanned and unnecessary more travelling and more travelling and more expenses. Well-designed territories give more contact time rather than travelling time. The idea is not to reduce expenses but to see that expenses give greater output.

Assists in Evaluation of Personnel

When total Market is divided strengths & weaknesses of the Co. can be gauged and appropriate arrangements can be made. It can gauge the performance of personnel. It can pinpoint sales & cost responsibility to individual S.P. It helps in setting Quotas & Evaluating performance against.

Contributing to Sales Force morale

Well-designed territories are convenient for sales force to cover. They give reasonable workloads to S.P. which they can achieve thereby boosting their Morale. Good territory design as well as intelligent & competent S.P. Boost the Co. Sales. Morale is also high because of No “conflicting claims” for the S.P. on the same a/c when sales territories are not assigned conflicting claim poses a problem to the management. By well-designed territories better planning enables the S.P. to spend minimum time on the Road.

Aiding in Coordinating of Person selling & Advertising

Management may revise territories to aid in coordination of personal selling & advertising. By blending Personal Selling & Advertising synergistic effect can be achieved. Sales personnel before launching a new product find the objectives of dealers, provide them with displays & other promotional material & make adequate supplies to them.

Effective Deployment of Sales Force

Proper knowledge of the demands of the territory helps the managers to put the right person in the right area. When jobs become specific and the responsibilities are clearly defined, work load can also be distributed equally. When there is equal distribution of load there is lesser or no conflict because one does not encroach on other’s territory.

Efficient Customer Service

Well-designed territories improve buyer-seller contacts and better managing by the sales person. It ensures regularity of customer calls as well as provision of better customer service.

Objective Evaluation of the Sales Force

Sales persons can be evaluated on their performance more effectively and more objectively. Territory by territory evaluation also leads to spot changes in market fluctuations. The strategies can accordingly be changed to suit the changing conditions.

Go On, Share & Help your Friend

Did we miss something in Sales Management or You want something More? Come on! Tell us what you think about our post on What is Sales Territories? in the comments section and Share this post with your friends.

Human Resources Tutorial

(Click on Topic to Read)

Human Resource Management

Leave a Reply