Sales Management Marketing 3345

1. Sales Management • Marketing 3345 Territory Design & Management

2. Events triggering sales territory adjustments 1 Select geographic control units Territory Design Process Mergers Division consolidation Division split Sales force turnover Plant relocations Product line changes 2 Decide on allocation criteria 3 Choose starting points Revise territory boundaries to balance workload and potential 4 Combine control units adjacent to starting points 5 Compare territories on allocation criteria 6 Assign salespeople to new territories

3. Territory Design Procedures • What are triggering events? • The Buildup Method -- Six steps 1. Select control units • Census tracts -- good for dividing cities • Counties - convenient and data readily available 2. Determine Allocation Criteria • Territory balance -- effect on morale • Customer balance - distribute commission • Potential balance - share business growth • Size balance - reduce transportation costs

4. Geographic Control Units Used in Territory Design Countries Cities States or provinces Zip codes Counties Census tracts Metropolitan areas Customers

5. Territory Design Procedures 3. Choose starting points • Salesperson’s home • Large customer - cut transportation cost • Big city - convenient for services 4. Combine Adjacent Control Units 5. Compare Sales Territories • Mountains, roads, population center locations? 6. Assign people to Sales Territories

6. Kentucky Counties, Major Cities, and Population Centers The numbers in each county are population figures and are a measure of potential. OHIO INDIANA WEST VIRGINIA ILLINOIS VIRGINIA TENNESSEE Kentucky Counties, Major Cities, and Population Centers

7. OHIO INDIANA WEST VIRGINIA ILLINOIS VIRGINIA TENNESSEE Three Kentucky Sales Territories Three Kentucky Sales Territories The numbers in ach county are population figures and are a measure of potential. Major super highways Territory borders

8. Comparing Three Kentucky Sales Territories Potential as Measured by Territory Population Number of Counties 1 1,124,897 47 2 1,129,290 27 3 1,131,137 43

9. Figure 11-4: Dividing a Large Territory

10. Territory Design Procedures • Talley’s Workload Approach • No starting points • Equates work to be done • May lead to imbalance on size • Often raises travel costs • Good when reps are on salary • Key: optimal call frequency for particular classes of customers

11. Workload Method 1. Classify all customers into sales volume categories 2. Determine the frequency with which each type of account should be called upon and the desired length of each sell 3. Calculate workload involved in covering entire market 4. Determine time available per salesperson 5. Apportion the salesperson’s time by task performed 6. Calculate the number of salespeople

12. Experiences of a Consumer Durable Goods Manufacturer with Territory Design Deployment Analysis for Two Territories Present Effort (%) Recommended Effort (%) Trading Area* Andy 1 10 4 2 60 20 3 15 7 4 5 2 5 10 3 Total 100 36 * Each territory is made up of several trading areas. % The percentage of salesperson time spent in the trading area (100% = 1 salesperson).

13. Experiences of a Consumer Durable Goods Manufacturer with Territory Design Deployment Analysis for Two Territories Present Effort (%) Recommended Effort (%) Trading Area* Sally 1 18 81 2 7 21 3 5 11 4 35 35 5 5 11 6 30 77 Total 100 236 * Each territory is made up of several trading areas. % The percentage of salesperson time spent in the trading area (100% = 1 salesperson). Thus, the deployment analysis suggests that Andy’s territory requires only 0.36 salespeople, which Sally’s territory needs 2.36 salespeople for proper coverage.

14. 1. What sales level will result from each current customer and prospect if: 2. Probabilities that prospects will be converted into customers given the different call frequencies CALLPLAN Approach Salesperson Input • no. calls that are made • one half the present calls are made • present level of calls is continued • 50 percent more calls are made • a saturation level of calls are made

15. 1. Expected sales for all feasible call frequencies 2. Optimal number of calls for each client and prospect 3. Length of call for each client and prospect CALLPLAN Approach CALLPLAN Output

16. Computer Based Territory Designs • Computers save time • Need location & number of customers & starting points • Program options • minimize moment of inertia • Graph data & draw boundaries -- not optimal • design optimal territories -- expensive • Applications -- pharmaceutical reps

17. Sales Territory Mapping Programs Vendor Package Description Price GeoQuery Corp. GeoQuery Interactive maps for travel planning $295 and territory analysis. Direct links to contact management program. TTG,Inc. STARmanager Territory mapping system that $995 integrates sales and marketing data for interactive territory analysis, realignment, and monitory. Sammamish GeoSight Geographic information systems $1,850 Data Systems Professional for salesterritory creation and management. Includes address matching. Metron, Inc. TerrAlign Optimal sales territory alignment $20,000+ andanalysis. Exclusive OptAlign technology automatically balances territories and decreases driving time.

18. Figure 1 Before Realignment No. of territories Percent deviation from average SOURCE: Prabha Sinha and Andris Zoltners, “Matching Manpower and Markets,” Business Marketing, September 2008, p. 95.

19. Figure 2 After Realignment No. of territories Percent deviation from average SOURCE: Prabha Sinha and Andris Zoltners, “Matching Manpower and Markets,” Business Marketing, September 2008, p. 96.