SALES TERRITORY MANAGEMENT

Introduction

Territory management is a tool by which you can assist your company in the achievement of its broad objectives. Territory means the land area in which you operate and which a sales executive/rep is responsible for.

Management means the activity of ensuring the performance of tasks in order to achieve defined objectives – planning, organizing, Leading & Control

The total market for most firms is simply too large to be managed efficiently without a territorial structure.

Territory Management & Planning

Planning is the process of determining what you want to accomplish (the end result or outcome) and how you wish to achieve it, using the most effective and efficient ways. The success of the outcome is largely determined by the planning.

Planning involves the following steps:

a. setting objectives

b. identifying resources and

c. devising strategies

Types of Planning

a. Planning can be short term or long term.

b. Planning can also be strategic or operational.

The aim of strategic planning (3-5 years) is to establish the long-term results desired by our company. The strategic plan has to cascade through to the functional parts of the company where it is converted into operational plans by the various organizations.

Operational planning is more short term, providing day-to-day details of how the strategic plan of our organization will be achieved.

What Is a Sales Territory?

The total market for most firms is simply too large to be managed efficiently without a territorial structure.

A sales territory comprises of a number of present and potential customers located within a given geographical area and assigned to a salesperson or an intermediary

Reasons for Establishing Sales Territories

a. Achievement of company’s sales and marketing objectives

b. Ensure better coverage - territory assignments constrain salespeople to work with less profitable customers or prospects as well as the most desirable accounts

c. Reduced selling costs - assigning responsibility to a single salesperson ensures that there is no overlap in coverage; customers and prospects are called upon by only one salesperson

d. Improved customer service - assigning responsibility to a single salesperson helps to ensure that all customers and prospects receive adequate servicing

e. More accurate evaluation of performance - if territories are relatively equal with regard to workload and potential, then salesperson performance can be compared on an equal basis; if territories are unequal in a known way, then adjustments can be made in evaluation of unequal performance

What Elements Determine A Territory?

a. Present and potential customers and consumer;

b. Geography;

c. Competitors’ activity;

d. Interest groups; and

e. General economic situation of the area.

Some Guidelines for Designing Territories

a. Area should have sufficient potential - with insufficient potential, a salaried salesperson will not be used effectively, and commissioned salespeople will leave the company for greener pastures

b. Area should be of reasonable size – To reduce a salesperson's travelling time.

c. Adequate coverage - is the salesperson able to service all accounts and able to meet new prospects?

d. Minimum impediments - try to set territories such that rivers, mountains, railroads, etc. set the borders of territories rather than run through the middle.

Benefits of Good Territory Design

a. Enhances customer coverage

b. Reduces travel time and selling costs

c. Provide more equitable rewards

d. Aids evaluation of sales force

e. Increases sales for the organisation

f. Increase morale

What Are the Elements of Territory Action Plans?

Territory planning is usually long-term planning. It helps you maximize your time and ensure you consistently build territory revenue by calling on a good mix of new prospects and existing customers. There are seven basic steps to preparing a territory action plan to effectively manage your territory.

a. Analyze your customers - classify them and keep the classification up-to-date

b. Define your objectives by customer - break down overall objectives by customers and decide how to allocate your time among them to reach these objectives.

c. Allocate territory time - Good time management is a skill

d. Plan your calls - What kind of information do you need to plan your calls?

e. Schedule your calls - To ensure you make the best use of your time, you will need to schedule your calls.

f. Plan your route - Effective routing is based upon two elements: scheduling and frequency

g. Evaluate your plan -Evaluation of a territory plan means to determine how effective it has been

Building Territory Strategies

The second half of your territory plan should include a clear strategy to accomplish three things:

a. Maintain existing accounts: First priority is to keep what we already have.

b. Grow existing accounts: Getting more business from an account already buying from you

c. Obtain new accounts from the competition: The most time-consuming strategy but potentially the most rewarding. Penetrating these accounts may take time, but these represent a potentially significant boost in revenue.

Characteristics of Today’s Customers

a. More sophistication

b. More price sensitive

c. Short of time

d. More aware of growing product parity

e. High quality/service expectations

f. Decreasing supplier loyalty

g. Better educated

h. Easy access to information (internet, TV, Radio, cable TV, Newspapers etc.)

What is Key Account Management

Key account management (KAM) is a strategy used by suppliers to target and serve high potential customers with complex needs by providing them with

KAM has three features: –

a. Special treatment of major customers – pricing, products, services, distribution and information sharing

b. It is associated with dedicated Key account managers

c. KAM requires a multifunctional approach. Account management is based on two concepts:

· Multi-level contact; and

· An account penetration plan

In simple terms, account penetration involves: understanding customers’ strategies and motivations, developing regular and strong personal relationships at all levels and developing and fostering co-operation and trust, providing advice and information in the process.

Why Account Management

With ever increasing selling costs, companies have realized that about 80% of sales volume is coming from only 20% of customers (Application of Pareto the Principle of 80/20). These 20% requires special attention to assure the company of increased pressure from customers to improve service, increased pressure by customers to reduce costs, greater pressure from customers to improve communication and a heightened desire to develop partnership.

Success Criterion for KAM

The success of the Key Account Management programme requires:

a. Integration of the key account programme into the company’s overall sales effort.

b. Senior management understanding of, and support for, the key account unit’s role.

c. Clear and practical lines of communication between key account unit and service units.

d. Establishment of key objectives and strategies.

e. Compatible working relationships between account manager/executive and customer.

f. Clear definition and identification of customers to be designated for key account status.

Advantages Of KAM

a. Close working relationship with the customer

b. Improved communication and coordination

c. Better follow up on sales and service

d. More in-depth penetration of Decision Making Units (DMUs)

e. Higher sales

f. Lower costs through joint agreement of optimum production and delivery schedules, and demand forecast

g. Provision of an opportunity for advancement for career salespeople

h. Cooperation on research and development for new products and joint promotions.