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CHAPTER FIVE

CHAPTER FIVE. Territory Management. TERRITORY. A territory geographically defined area assigned to a sales person present customers potential customers. SALES FORCE PRODUCTIVITY. A crisis--

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CHAPTER FIVE

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  1. CHAPTER FIVE Territory Management

  2. TERRITORY • A territory • geographically defined area • assigned to a sales person • present customers • potential customers

  3. SALES FORCE PRODUCTIVITY • A crisis-- • In the last ten years, selling costs have risen almost twice as fast as average sales volume per salesperson

  4. HOW SALESPEOPLE SPEND THEIR TIME • Face-to-Face Selling = 30% • Telephone Selling = 21% • Waiting / Travelling = 20% • Administrative Duties = 17% • Service Activities = 12%

  5. SALES FORCE PRODUCTIVITY • How can we improve productivity? • Focus on high volume accounts • Focus on selling time

  6. MINIMUM ACCOUNT SIZE • Don’t pursue accounts that are unprofitable!!

  7. COST PER CALL • Cost per call is a function of • number of calls per day • number of days available to make calls • direct selling expenses • Direct Selling Expenses # Calls per day X # Days to Sell

  8. COST PER CALL • Example (see Table 5.1; page 230) • Total Direct Expenses = $90,250 • 205 days to sell; average 3 calls per day • Cost per call = $90,250 / 205 x 3 = $146.75

  9. BREAK EVEN SALES VOLUME • The sales volume necessary to cover direct selling expenses • Breakeven Volume is a function of: • Cost per call • Number of calls to close • Sales costs as a percentage of sales

  10. BREAK EVEN SALES VOLUME Cost Per call X # of Calls to Close Sales costs as a % of Sales

  11. BREAK EVEN SALES VOLUME See Table 5-2; page 231 Electronics Industry --Cost per call = $133.30 --Number of calls to close = 3.9 --Sales Costs as a % of sales = 12.0 Breakeven volume = $133.30 x 3.9 / .12 = $4,332.25

  12. TERRITORY IMPLICATIONS • Perform a customer by customer analysis! • Assess selling strategy

  13. ALLOCATION OF SELLING EFFORT • Consider the time we spend with customers! • Single Factor Models • Portfolio Models • Decision Models

  14. SINGLE FACTOR MODELS • Easy to develop and use • Classify accounts into categories based on one factor, such as market potential • Assign all accounts in the same category the same number of sales calls • Decisions are made on the basis of one factor. Differences among accounts are not taken into consideration

  15. SINGLE FACTOR MODEL

  16. PORTFOLIO MODELS • Accounts are classified into categories of similar attractiveness for receiving sales call investment. • Selling effort is allocated so that the more attractive accounts receive more selling effort.

  17. ACCOUNT ATTRACTIVENESS • Account Opportunity • The account’s need for and ability to purchase the product • High / Low • Competitive Position • The strength of the relationship between the firm and the account • Strong / Weak

  18. PORTFOLIO MODEL SEGMENTS • Strong Competitive Position/High Account Opportunity • “Core Accounts” • Accounts are very attractive due to strong competitive position • Accounts should receive a heavy investment of selling effort to maintain/improve competitive position

  19. PORTFOLIO MODEL SEGMENTS • Weak Competitive Position/High Account Opportunity • “Growth Accounts” • Accounts are potentially attractive due to high opportunity • Additional analysis required to identify accounts where competitive position can be improved. Target these accounts

  20. PORTFOLIO MODEL SEGMENTS • Strong Competitive Position/Low Account Opportunity • “Drag Accounts” • Accounts moderately attractive; future opportunities are limited • Accounts should receive an effort sufficient to maintain current position

  21. PORTFOLIO MODEL SEGMENTS • Weak Competitive Position/Low Account Opportunity • “Problem Accounts” • Accounts very unattractive • Accounts should receive a minimal of selling effort. Less costly forms of marketing might be considered (telemarketing, direct mail) and/or the elimination of account coverage

  22. PORTFOLIO MODEL EXAMPLE

  23. DECISION MODELS • Examine accounts on an individual basis • Allocate sales calls to accounts that promise the highest sales returns • The objective is to achieve the highest level of sales and to increase sales calls until marginal costs equal marginal returns

  24. DECISION MODEL EXAMPLE

  25. MANAGING TERRITORY PROFITABILITY • Allocation of Effort • Mix of Products Sold • Price Concessions

  26. ROUTE MANAGEMENT • Route should be circular • Route should never cross itself • Don’t use same route to go to and from a client • Customers in neighboring areas should be visited in sequence

  27. TIME MANAGEMENT • Telephone interruptions • Drop in visitors • Crises • Meetings • Lack of objectives • Indecision/procrastination • Poor communications

  28. TIME MANAGEMENT • Get control of your time! • Set goals and objectives • Set priorities • Develop a daily “to do” list • Focus on the most important tasks

  29. MANAGEMENT’S ROLE • Close Supervision • Hands-off Management • Management Recommendations

  30. FROM THE INTERNET • The granddaddy of time management sites: • http://www.relibrary.com/10tm1.htm

  31. FROM THE INTERNET • See what a consultant says about improving sales force productivity at: http://www.brickerinc.com/netgain.htm

  32. FROM YOUR TEXT • Read everything in chapter five except • pages 238 to 240 (Sales Funnel Method) • pages 242 to 245 (Largest Angle Method)

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