Sales Management 7

1. Sales Management 7 Sales Territories

2. Sales Territories • Customers • Current and Potential • Assigned to a salesperson • Or branch, dealer, distributor

3. Territory Design Issues • Equity • Salespeople need fair chance to make a living • Coverage • Design to reach all customers • Need tougher “sales” as well as easy customers • Evaluation and control • A way to track effort/success/costs/profits • Can modify plan if not getting desired results

4. First: Determine # Salespeople • Before you establish territories, decide how many salespeople you need to have. • Then you can divide the market into territories, and assign a territory to each salesperson.

5. What size sales force? • Need sufficient number of salespeople to cover customers • Salespeople are expensive • Balance: Optimal number of salespeople • Three methods to establish size: • Breakdown • Work Load • Incremental

6. http://www.youtube.com/watch?v=qNxfPAF1frM Breakdown Method It's alright if you love me, ♩♬♪♫ It's alright if you don't I'm not afraid of you runnin' away honey, I’ve got this feeling you won't Say there ain't no use in pretending, ♩♬♪♫ Your eyes give you away Something inside you is feeling like I do, We said all there is to say Breakdown, go ahead and give it to me ♩♬♪♫ Breakdown, take me through the night Breakdown, go ahead give it to me, ♩♬♪♫ Breakdown, it's alright, It's alright, it's alright

7. Breakdown Method (the real one) • Divide sales forecast by average salesperson productivity • N = S ÷ P • N = Number of salespeople needed • S = Total sales volume forecasted • P = Estimated productivity of one salesperson

8. Work Load Method • Classify customers by category: ABC • Frequency x Length of sales calls/category • Work load to cover entire market • Time available/salesperson • Figure available selling time (1/6 x 2000 Hrs) • Calculate # of salespeople needed

9. Point of Diminishing Returns Sales/Account Annoying the Customer More Calls = More Sales # Sales Calls on Account

10. Incremental Method • Cost/Benefit of adding salespeople • Calculate incremental revenue increase • Calculate additional profits • Less additional costs • If additional profits > additional costs: hire

11. Designing Sales Territories • Select Basic Control Unit • Estimate potential in each unit • Combine units into tentative territories • Perform work load analysis • Adjust tentative territories • geography, potential • Assign territories

12. Select aBasic Control Unit • State • Trading area • County • Metropolitan Statistical Area/Consolidated MSA • Zip Code

13. State

16. City

17. New York City

18. http://www.youtube.com/watch?v=pl7Ww5w2-BI Frostbite Falls, MN

19. MSA

21. Estimate Potential of Territories • Total number of actual and potential customers • Purchase volume/frequency • Remember: potential ≠ forecast • Not everyone who can buy does buy

22. Form Tentative Territories • Group basic control units into logical territories. • Try to group geographically, preferably contiguously. • Ohio/Pennsylvania: Good • Ohio/Hawaii: Fagedaboudid! • Try to make the territories roughly equal in terms of market potential. • This is a first attempt.

23. Perform Work Load Analysis • Determine the sales potential for each customer/prospect in the territory. • Determine sales call length & frequency. • Add non-selling and travel time. • Determine if one salesperson can adequately service each territory. • Too much work? • Too much time?

24. Adjust Tentative Territories • If a territory is too large or too small for a salesperson, make adjustments. • Need to balance potential and workload. • Need realistic, and equitable territories to maintain salespeople’s motivation.

26. Assign Salespeople to Territories • Now look at salespeople’s different abilities. • Match abilities to territories. • Try to match salesperson with customers and prospects. • Explorer to uncharted territory • Industry experience • (speaks the language) • Goals • Maximize company revenues and profits • Satisfied salespeople

27. Good Bye