When sales personnel are grouped as per the geographical boundaries. A sales territory is defined as the group of customers in a particular territory for which a sales team hold responsibility. Time and territory control is first-class described as “getting the most out of your sales day by planning the most efficient use of scarce resources.”
The advantages of powerful time and territory control are many, including much low pressure and worry, decreased expenses, a healthier pipeline, account growth, extra sales, better earnings, and extra time to spend together along with your family. Simply put, whilst you grasp time and territory control you are happier, healthier, and you are making extra money.
Table of Content
- 1 Importance of Territory Management to the Salesperson
- 2 Reasons for Establishing Sales Territories
- 3 Criteria for Territory Design
- 4 Approaches for Designing Sales Territories
A sales territory accommodates a set of clients or a geographical location assigned to sales unit. The territory might also additionally or won’t have geographic boundaries. As ales territory represents a set of consumer accounts, an industry, a marketplace or a selected geographical location.
Territory control consists of the marketplace potential, variety of consumer accounts, the companies revel in and marketplace proportion withinside the territory, the functionality of the shop clerk assigned and the frequency of sales calls made.
Importance of Territory Management to the Salesperson
Sales territory control increases your profit of crew morale, boom sales, offer a bigger purchaser base and encourage crew cohesion. Territory control is a purchaser organisation or geographic location over which both a person salesclerk or a sales group has responsibility. These territories are generally described primarily based totally on geography, profit potential, its records or an aggregate of those factors. The closing purpose of this department of regions is to maximise sales and profits, and to allocate assets efficiently.
It could be very vital to create sales territories, which are balanced. When a sales territory is out of balance, there are matters, which could happen. If a territory is being under-serviced, the sales group or salesclerk is unfolded too thinly and it ends in sub-finest ranges of activity.
Those answerable for the territories will be trying to find out too few leads, discover too little potentialities and spend too little time with clients due to the fact they may be overworked. This ends in clients going to competition and you dropping sales.
Activities of Territory Management
The following outlines the activities of territory management:
- Number of sales presentations made
- Number of service calls made
- Number of calls made for recovery
- Number of dealers visited
- Number of new accounts opened
Reasons for Setting Sales Territories
A company can develop and use sales territories for various reasons. Some of the reasons are as follows:
- To obtain entire coverage of the market
- To establish a salesperson’s responsibility
- To evaluate performance
- To improve customer relations
- To reduce sales expenses
- To allow better matching of salesperson to customer
- To benefit salesperson and the company
Procedure for Setting up Sales Territories
In setting up or designing sales territories, these four steps must be followed:
- Selecting a basic geographical control unit
- Determining sales potentials in control unit
- Combining control units into tentative territories
- Adjusting for coverage difficulty and reallocating tentative territories
Reasons for Establishing Sales Territories
The main motive of establishing sales territories is to simplify the planning and controlling of the selling function. Following are some reasons for establishing sales territories:
To Obtain Thorough Coverage of the Market
According to the department of sales territory, the play is assigned to salesclerk. This allows marketplace coverage, in preference to the sales clerk promoting the product in line with his ambition. It allows the sales supervisor to display and take updates hence from special sales managers.
To Establish the Salesperson’s Job and Responsibilities
It is very vital to set up jobs and duties for salespersons. Sales territories assist in doing so due to the fact the challenge is assigned to the salesclerk and he’s accountable and chargeable for the same.
Once the challenge is assigned, common exams are executed to reveal the calls; it allows to decide the work of every salesclerk. If the sales supervisor unearths the workload for a selected individual is more, the work is split and reassigned equally. This creates motivation and interest to work.
To Evaluate Sales Performance
In an organisation, the sales territory is as compared from the preceding years to contemporary to discover the distinction, i.e., the boom or lower in sales volumes. It allows working at the distinction.
This is finished with the assist of sales territory because the play is assigned in a right way and collecting of records and assessment turns into easy.
To Improve Customer Relations
As we know, salespersons should spend maximum in their time on avenue to promote the good show even if the sales territory is designed in a right way, the sales personnel on shops can spend extra time with the clients (gift and potential).
This enables in constructing rapport and expertise the desires better. Sales of a business can boom whilst a customer gets ordinary calls and the salesperson has to go to the clients on the idea of calls.
The salesperson and the customer get time to apprehend every difference and remedy their problems concerning the call for and supply. This additionally enables in growing the brand price of the business enterprise.
To Reduce Sales Expenses
Once the geographical areas are decided, the agency receives a right image as to the areas that may be assigned to the salespersons. He/she desires to cowl that region in order that there may be no duplication of labor through sending salespersons withinside the equal region.
The selling fee of the agency receives decreases and ends in growth in profits. There is likewise a bonus to the salesclerk for few travels and in a single day trips.
Criteria for Territory Design
The main criteria for territory design are:
Procedure for Designing
At the time of designing the territory, the supervisor has to preserve in thoughts the scale of the territory this is going to be assigned to the salesclerk. It must be neither too small nor too huge. If the territory is geographically too small, the salesclerk might preserve calling the equal clients repeatedly.
In contrast, in a too huge geographical area, the salesclerk will now no longer have the ability to attain the scattered clients as most of his time might be applied in travelling.
Hence the territory must now no longer be too huge or too small; it must be such that each capacity client may be visited as consistent with the requirement. The system of designing sales territories is equal for all companies, whether or not putting the territories for the primary time or revising the present territories.
Select Control Point
As the call suggests, the control has to pick out a geographical manipulate point. The manipulated factors may be categorised on the idea of district, pin codes, areas, states and cities. At the time of choosing the manipulate tool, the control has to intention to pick out as small a manipulate unit as possible.
Approaches for Designing Sales Territories
The two basic approaches commonly used for designing sales territories are discussed below:
Market Build-up Approach
In this approach, an estimation of the existing and capability products/offerings call for is made with the aid of using searching at how the marketplace is constructed up, who’re its present/capability customers, how most do they devour and at what frequency.
In this approach, statistics from alternate directories, kingdom publications, etc. is consolidated after which aggregated to apprehend an all India marketplace capability for the product. Consider an organisation promoting solography machines or diagnostic device like CAT Scanners.
In this approach, we will estimate the existing customers and capability customers of our product. We shall additionally estimate their intake capacity. Aggregating we get the entire marketplace capability.
We shall then determine how most percentage of this overall marketplace our organisation wants to have. That offers us the sales capability. Sales capability of the complete marketplace is then damaged down territory wise. It is then given the essential advertising again up.
The Workload Approach
This approach is designed by WJ Talley on the basis of the workload performed by salespersons. The following steps should be considered important when using the above approach:
- Customers are grouped into class size according to the sales volume.
- Optimum call frequencies for each class of customers are estimated.
- Present and potential customers are then located geographically and arranged volume wise and value-wise.
- The number of present and potential customers in each volume/ value group is then multiplied by the desired call frequency to get the total number of planned calls required for each geographical control unit.