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1. Territory Management
Lecture 1

2. Key Learning Objectives
1. Understand the nature and scope of territory management.
2. Identify the reasons for establishing and revising territories.
3. Describe the objectives, criteria and basis for territory formation.
4. Outline a model of territory management.
5. List and discuss routing pattern and scheduling issues.
6. Explain the concept of time management and how it relates to sales
territories.
7. Explain the concept of Workload Management.

3. Nature of Territory Management
Definition of Territory Management
Present customer
Potential customer
Universe
A universe is a geographic area
which includes covered and
uncovered land area. This includes
present & potential customers.
NOTE: For academic purpose we
assume that we are covering the
entire universe.

4. Nature of Territory Management
Definition of Territory Management
Present customer
Potential customer
Territories
A Sales Territory: Configuration of
potential and present customers for which
responsibility has been assigned to a
particular sales rep.
Territory Management: Planning,
implementation and control of
a sales person’s activities with the goal of
realizing the sales & profit potential of their
assigned territories.
Sales Rep

5. Nature of Territory Management
Definition of Territory Management: Exceptions
Present customer
Potential customer
Key Accounts
Key Accounts: Major Accounts whose significance to the company’s
business requires special attention and experience.
Key Account Rep

6. Nature of Territory Management
Present customer
Potential customer
Key Accounts
Direct Accounts: Large accounts involving special arrangements in
terms of pricing, credit or product design.
Direct Accounts
Head Quarters
Definition of Territory Management: Exceptions

7. Nature of Territory Management
Rigid
Geographic
Boundaries
No
Geographic
Boundaries
Milk,
Tobacco,
FMCG
Perishables
High
Technology
Firms
• Exemption to geographic territories are Key Accounts and Direct
Accounts. This may create resentment with the local sales reps.
• Territories are group of customers not geographic areas.
• Territory management’s main goal is to establish managerial FOCUS!
Definition of Territory Management: Basic Concepts

8. Nature of Territory Management
Definition of Territory Management: Advantages
• More emotional ownership over “their part” of the business.
• Divide and conquer, rather than running over each others’ toes.
• Get back most of the enormous amount of energy sales reps spend solely
to claim and hold ownership over inactive leads and accounts
• More clarity & productivity. Less choice = easier decisions & action.
• Sales reps have to focus on growing the whole pie; more scalable team
growth.
• Less head-to-head conflict & a lot more cooperation. For example, sales
reps will actively refer each other business, trusting others will do the
same.
Source: Why your sales people need territories, http://predictablerevenue.com/blog/territories

9. Nature of Territory Management
Definition of Territory Management: Disadvantages
• They will never be perfectly fair.
• Territories can be a huge pain to design fairly and can be contentious.
• Once they’re up, they can be a LOT of work (with more contention) to
manage and change, and it gets exponentially harder as you get bigger.
• It’s harder for sales reps to benefit from any close relationships outside
their territory.
• When you get into enterprise companies that are spread out all over the
map and across multiple territories, the “rules of engagement” on who
owns what can get very confusing, and require lots of one-off exception
handling by managers.
Source: Why your sales people need territories, http://predictablerevenue.com/blog/territories

10. Nature of Territory Management
The Scope of Territory Management
Sales Rep may be
viewed as a scaled
down Sales Manager.
BUT, they do not have
any one reporting into
them.
1
2
3
4
5
6
7
Maintain
Personal
development
Present
Service
Schedule
for best
use of the
time
Coordinate
with HQ
Analyze a
territory
Prepare
Checklist for Territory Management, Table 6-1,
Recommended Text

11. Sales Territory Design
Reasons for Establishing Territories
Kaam ki baat: Companies form sales territories mainly to maximize sales and profits.
CUSTOMER
RELATED
SALESPERSON
RELATED
MANAGERIAL
Provide:
Intensive market coverage
Excellent service
Produce:
Higher sales
Greater satisfaction
Foster Enthusiasm
Facilitate Evaluation
Less turnover
Rewards related to effort
Enhance Control
Coordinate promotion
Reduce Expenses
Give more value!
REASONS BENEFITS

12. Sales Territory Design
Reasons for Revising Territories
Kaam ki baat: Companies form sales territories mainly to maximize sales and profits.
CUSTOMER
RELATED
SALESPERSON
RELATED
MANAGERIAL
Shifts in a customer’s
business: Geographic,
Service
Physical and Psychological
challenges
Inadequate Challenges
Over estimation.
Under estimation
New product lines.
Maturation od Product Lines
More aggressive domestic
and international competition

13. Sales Territory Design
Reasons for Not Establishing Territories
Small Company Networked Clients Specialized selling:
Technology

14. Procedures for Developing Territories
Objectives and Criteria for Territory Management
To determine the optimum NUMBER of territories & their configuration
Too many territories Account Fragmentation
Too few territories Unrealized sales potential
Equalization of territory potentials
Adequate coverage
Sales Representative Workload Nature of Job Type of Product
Competition Market Maturity Channels of Distribution Coverage Intensity
CONSIDERATIONS

15. Procedures for Developing Territories
Bases for Territories
Geography Potential Servicing
Requirements
Workload
Adopts existing
territories such as
states, division,
province, town, cities
etc
Data is usually readily
available
May become
arbitrary
Splitting up a firm’s
customer base
according to sales
potential
Provides equal
opportunities to every
sales rep
Disregards
topography,
customer density,
competition
Requirements for
servicing current +
potential accounts
Segmentation is
employed for better
planning
Considers servicing
requirement +
external challenges:
geographic, location,
competition
Standard Average
Calls per Day

16. Procedures for Developing Territories
Methods for Designing Territories
From 0 – 15% of Business , 20 min service
From 15 – 70% of Business, 40 min service
70% Above of Business , 90 min service
17
11
7
1
2
3
340
880
1890
3110
A Sales Rep works for 5.5 Hours a day for 5 Days
Build Up Method
Incremental Method
Breakdown Method
Count Freq. Total Time

17. Sales Territory Design
Dealing with territory management problems
Inadequate
coverage
Split Territories

18. Sales Territory Design
Dealing with territory management problems
Inadequate
Size
Enlarge
Territories

19. Sales Territory Design
Dealing with territory management problems
Revision Prepare Salespeople
Shifting Accounts Revise Territories
Direct Accounts Clarify at Hiring
Selling Cost Variations Review Cost Figures