10/12/2010

TM 13-3
TM 13-2

Sales Territory Benefits of Good Territory Design

Comprises a number of present and Enhances customer coverage
potential customers, located within a Reduces travel time and selling costs
given geographical area and
Provides more equitable rewards
assigned to a salesperson, branch,
or intermediary (retailer or Aids evaluation of sales force
wholesaling intermediary). Increases sales for the sales organization
Key word: customers Increases morale
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

Procedure for Designing Sales Territories TM 13-4 TM 13-5

(Fig. 13-1)
Territorial Control Units

Select a Determine Location Determine States

Control Unit and Potential of Basic
Customers Territories Counties

Cities

Zip-code areas
Assign Set Up Evaluate
Salespeople to Territorial Effectiveness MSAs (Metropolitan Statistical Areas)
Territories Coverage of Design
Plans
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

TM 13-6
Buildup Method of Territorial Design (Fig. 13-3)
Territory Design: Build-Up Method Worksheet TM 13-7

Management must determine: Control Units

Illinois Iowa Kentucky
Desirable call patterns:
Call frequency per account per year Customer Call Calls Calls Calls
class frequency Accounts per year Accounts per year Accounts per year

A 2 per month 10 240 7 168 5 120

Total calls needed
in each control group B 1 per month 30 360 17 204 10 120
C 1 every 2 months 68 408 55 330 27 162
Workload capacity: 108 1,008 79 702 34 402
Total calls possible per rep per year =
number of daily calls x days selling
Distribution of one rep’s calls 1,008 + 491 or 402
Tentatively set territorial boundary lines year (1,500)*
by combining control units until total Possible control combinations 100% 70% or 100%
calls needed = total calls possible Illinois Iowa Kentucky
Alternative territories 100% Illinois + 100% Kentucky
Modify territories as needed 100% Illinois + 70% Iowa
*6 calls/day x 5 = 30 calls/week x 50 = 1,500 calls/year
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

1
 10/12/2010

Breakdown Method of Territorial Design TM 13-9

Territory Size and Workload Factors TM 13-8
(Fig. 13-5)
Management must determine
Workload Factor Territory Size
Increase/Decrease Company sales potential
Nature of Job:
Lots of presale and post-sale activity Decreases
Nature of product: Sales potential in each control unit
A frequently purchased product Decreases
A limited repeat-sale Increases
Market development stage: Sales volume expected from
New market--fewer accounts Increases
Established market--more accounts Decreases
each sales person
Market coverage
Selective coverage Increases Tentatively set territorial
Extensive coverage Decreases boundary lines by combining
Competition: control units total sales potential
Intensive Decreases – unless = total sales volume expected
market is oversaturated
Limited Increases
Modify territories as needed
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

TM 13-11
TM 13-10
Sales Territories for Pharmaceutical Sales Reps
Territory Design: Break-Down Method Worksheet
Divide…
•The 48 states into 5-10 regions
Company sales potential = $200,000,000 •Each region into several districts
Targeted volume rep = $ 10,000,000 •Each district into 8-12 territories (typically 1 rep per territory)

Number of reps needed = Company sales potential = $200,000,000 = 20

Targeted volume/rep $ 10,000,000

Territory volume as = Targeted volume/rep = $ 10,000,000 = 5%

Company sales potential $200,000,000

Each territory should comprise 5% of sales potential or $10,000,000

Combine adjacent control units until each sales potential of $10,000,000

Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

TM 13-12 TM 13-13

Computers in Territory Design Routing the Sales Force

 Geographic Information System (GIS)  Routing is the managerial activity that establishes a
formal pattern for sales reps to follow as they go
 Combines multiple layers of information to
through their territories.
provide in-depth understanding of a sales
 Reduces travel expenses as it ensures a more
territory.
efficient territory coverage. Area C
 Elements of a complete GIS:  Some reps resent it. Area B
 Software  Best for routine sales Area A

 Hardware jobs with regular call x

 Data frequencies.
 Trained people
Area B: Typically the “problem” area.
Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.