Chapter 7
Time and Territory Management
PowerPoint presentation prepared byDr. Rajiv Mehta
New Jersey Institute of Technology
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Chapter Outline
• Improving Sales Productivity
• Establishing Sales Territories
• Setting Up Sales Territories
• Revising Sales Territories
• Self-Management
• Time Management and Routing
Source: Flying Colours Ltd.
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Learning Objectives
After reading this chapter, you should be able to do the following:
1. Describe the basic reasons for establishing sales territories.
2. Apply procedures for setting up sales territories.3. Evaluate when and why to revise sales territories.4. Apply the concepts of self-management to sales and
sales management.5. Use the techniques of scheduling and routing for sales
success.
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Improve Sales Productivity by Establishing Sales Territories
• A sales territory is usually a specific geographic area that contains present and potential customers and is assigned to a particular salesperson.
• Time and territory management strategies help determine these things:– which accounts are called on– when accounts are called on– how often accounts are called on
• Time and territory management strategies help improve productivity.
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Reasons for Sales Territories
6. Coordinate selling with
other marketing functions
6. Coordinate selling with
other marketing functions
5.Better evaluate sales
5.Better evaluate sales
4.Build a more effective
sales force
4.Build a more effective
sales force
3.Strengthen customer
relations
3.Strengthen customer
relations
2. Minimize selling costs
2. Minimize selling costs
1. Enhance market
coverage
1. Enhance market
coverage
Reasons for sales territories
Reasons for sales territories
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Procedure for Setting Up Sales Territories
5.Assign salespeople
to territories
5.Assign salespeople
to territories
4.Combine geographic control
units into territories
4.Combine geographic control
units into territories
3.Develop a salesperson
workload analysis
3.Develop a salesperson
workload analysis
2. Conduct an
account analysis
2. Conduct an
account analysis
1. Select a geographic
control unit
1. Select a geographic
control unit
Procedure for setting up sales territories
Procedure for setting up sales territories
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Selecting a Geographic Control Unit
4.Trading areas
4.Trading areas
3.Cities and
metropolitan areas
3.Cities and
metropolitan areas
2. Counties and
zip codes
2. Counties and
zip codes
1. States
1. States
Selecting a geographic control unit
Selecting a geographic control unit
Control units should be as small as possible, for two reasons:(1) pinpoint the geographic location of sales potential(2) make adjusting territories much easier
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Conducting an Account Analysis
• Conducting an account analysis helps identify customers and prospects and determine the sales potential of each account.
• To identify accounts by name, Yellow Pages (www.yellowpages.com), which contains a database of over six million U.S. businesses, can be used.
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Developing a Salesperson Workload Analysis
• A salesperson workload analysis is an estimate of the following:– number of accounts to be called on– frequency of the calls– length of each call– travel time needed– non-selling time required
• The workload analysis can help develop the following:– a sales call pattern for each territory– a sales call strategy—see account
analysis (next slide)
Source: Digital Vision
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Account Analysis
Attractiveness:
Accounts are very attractive, offer high opportunity, and sales organization has strong position.
Attractiveness:
Accounts are potentially attractive based on high opportunity, but sales organization has weak position.
Attractiveness:
Accounts are somewhat attractive since sales organization has strong position, but future opportunity is limited.
Attractiveness:Accounts are very unattractive since they offer low opportunity and sales organization has weak position.
StrongStrongStrongStrong WeakWeakWeakWeak
Strength of PositionStrength of PositionStrength of PositionStrength of PositionL
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Sales call strategy? Sales call strategy?
Sales call strategy?Sales call strategy?
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Account Analysis
Attractiveness:
Accounts are very attractive, offer high opportunity, and sales organization has strong position.
Attractiveness:
Accounts are potentially attractive based on high opportunity, but sales organization has weak position.
Attractiveness:
Accounts are somewhat attractive since sales organization has strong position, but future opportunity is limited.
Attractiveness:Accounts are very unattractive since they offer low opportunity and sales organization has weak position.
Sales call strategy?
frequent sales calls
Sales call strategy?frequent sales calls to strengthen position
Sales call strategy?minimal sales calls and migrate personal sales calls to telephone or Internet
Sales call strategy?moderate frequency to maintain current position
StrongStrongStrongStrong WeakWeakWeakWeak
Strength of PositionStrength of PositionStrength of PositionStrength of PositionL
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Combining Geographic Control Units into Sales Territories
• After setting up sales territories either by state, county, or metropolitan statistical area (MSA), identify territories that have a higher sales potential than others. z
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Assigning Salespeople to Territories
• In assigning sales personnel to territories, managers should rank them using these criteria:– relative ability – product and industry knowledge– energy level– persuasiveness– verbal ability
• Before assigning salespeople to a territory look for congruity in terms of the following:– the salesperson’s physical,
social, and cultural characteristics
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Signs Indicating the Need for Territorial Revisions
1. As a company grows, it needs a larger sales force.
2. If territorial sales potential is inaccurate, sales performance may be misleading.
3. Morale problems will emerge if there are wide variations in territory potential.
4. Salesperson jumping necessitates territory revisions:• often leads to higher costs• selling inefficiencies• low morale in the sales force
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Self-Management:How Salespeople Spend Their Time
5.CRM/database
5.CRM/database
4.Team support
4.Team support
3.Developing customer
relationships
3.Developing customer
relationships
2. Communication
2. Communication
1. Sales
1. Sales
How salespeople spend their time
How salespeople spend their time
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Account Analysis
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How Salespeople Spend Their Time
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Dollar Cost of an Hour of a Salesperson’s Selling Time
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Self-Management:Achieving Effectiveness and Efficiency
• Effectiveness. Salesperson is results oriented and focuses on achieving sales goals.
• Efficiency. Salesperson is cost oriented and focuses on making the best possible use of the salesperson’s time and efforts.
• Together, the two equal selling success:
S1 (Selling Success) = E1 (Effectiveness) + E2 (Efficiency)
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Sales Effectiveness
• To see a video on the impact of CRM technology on sales effectiveness and productivity, visit– http://www.sellingpower.com/video/index.asp?
date=12/5/2006
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Self-Management:Measuring Return on Time Invested
• Return on time invested (ROTI) is a financial concept that helps salespeople spend their time more profitably with prospects and customers.
– ROTI = designated return/hours spent
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Self-Management:Setting Priorities
• Top-performing salespeople always set priorities in their work, based on the following:
• Parkinson’s Law: – Work tends to expand to fill the time allotted
for its completion.
• Concentration Principle: – Often called the “80-20 rule,” it states that
most of a salesperson’s sales, costs, and profits come from a relatively small proportion of customers and products.
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Ranking Customers According to the Concentration Principle
55%
25%
20%
7%
23%
70%
Percent of Accounts Sales Volume Percent
55%
25%
20%
7%
23%
70%
Percent of Accounts Sales Volume Percent
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Examples of the 80-20 Principle
20 percent of customers
20 percent of time
20 percent of products
20 percent of sales force
80 percent of sales
80 percent of selling
80 percent of profits
80 percent of revenues
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Time Allocation Problems
• Here are some examples of salesperson time allocation problems:– deciding which accounts to
call on– dividing time between selling
and paperwork– allocating time between present
customers, prospective customers, and service calls
– allocating time to spend with demanding customers or new prospects
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Managing Salesperson Time
• To maximize their productive time, salespeople can take these steps: – Avoid time traps.– Allocate time.– Set weekly and daily goals.– Manage time during sales calls.– Evaluate (monitor) time usage
over time.
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Newly Appointed Sales Manager Coaching Salespeople to Effectively Manage Time
• To see a video on how sales managers can coach salespersons to manage time, go to– http://www.sellingpower.com/video/index.asp?
date=5/29/2007
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Salesperson calls on unqualified or unprofitable prospects.
Salesperson fails to prioritize work.
Salesperson insufficiently plans each day’s activities.
Salesperson procrastinates on major projects, resulting in redundant preparation and paperwork.
Salesperson makes poor territorial routing and travel plans.
Salesperson inefficiently handles paperwork and keeps disorganized records.
Salesperson takes long lunch hours and too many coffee breaks.
Salesperson fails to break up huge, long-range projects into small, currently manageable tasks.
Salesperson makes poor use of waiting time between appointments.
Salesperson ends workdays early, especially on Friday afternoons.
Salesperson spends too much time entertaining prospects and customers.
Salesperson fails to insulate self from interruptions or sales calls or while doing paperwork.
Salesperson does not use modern telecommunications equipment like a cell phone, pager, facsimile, and laptop computer.
Salesperson conducts unnecessary meetings, visits, and phone calls.
Salesperson does tasks that could be delegated to a staff person or to automated equipment.
Salesperson neglects customer service until a small problem becomes a large one that takes more time to resolve.
Common Time Traps
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Routing Patterns
• Territorial routing is devising a travel plan or pattern to use when making sales calls to efficiently cover a territory.
• A properly designed routing system has three primary advantages:– reduced travel time and selling
costs– improved territory coverage– improved communication (since
managers know where salespeople are)
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Routing Patterns
• Before developing a routing plan, the salesperson must determine the following:
• the number of calls to be made each day
• the call frequency on each class of customer
• the distance to each account• the method of transportation
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Routing Patterns
5.Outer-ringapproach
5.Outer-ringapproach
4.Hopscotch
pattern
4.Hopscotch
pattern
3.Cloverleaf
route
3.Cloverleaf
route
2. Circularpatterns
2. Circularpatterns
1. Straight-line
route
1. Straight-line
route
Territorialroutingpatterns
Territorialroutingpatterns
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Routing Patterns
Here are some types of routing patterns:
1. Straight-line route • Salesperson starts at the office and
makes calls in one direction until reaching the end of the territory.
2. Circular patterns • Salesperson starts at the office and
moves in a circle of stops until ending up back at the office.
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Routing Patterns
3. Cloverleaf route– A cloverleaf route is similar to a circular pattern.– But rather than covering an entire territory, the route
circles only part of a territory.– The next trip is an adjacent circle and the pattern
continues until the entire territory is covered.
Reprinted from PERSONAL SELLING, 2nd Edition, by Anderson/Dubinsky/Mehta © 2007 by Houghton Mifflin Company.
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Routing Patterns
4. Hopscotch pattern– The salesperson starts at the farthest point from the
office and hops back and forth calling on accounts on either side of a straight line back to the office.
Reprinted from PERSONAL SELLING, 2nd Edition, by Anderson/Dubinsky/Mehta © 2007 by Houghton Mifflin Company.
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Routing Patterns
5. Outer-ring approach – The salesperson first draws an outer ring around the
customers to be called upon.– Then, those customers inside the ring are connected
to the outer-ring route using angles that are as obtuse as possible.
Reprinted from PERSONAL SELLING, 2nd Edition, by Anderson/Dubinsky/Mehta © 2007 by Houghton Mifflin Company.
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Using Computer Programs in Routing
• Numerous computer-based interactive models have been successfully applied to sales force routing and territory management.
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Using Computer Programs in Routing
• To learn about optimization software programs that assist in designing sales territory routing paths, go to– www.alignstar.com – www.terralign.com/terralign4.htm– www.hallogram.com/mappro/businessmap.html – www.prior-analytics.com/solutions/sagecrm/
sagecrm.html
• To learn about enhancing territory management skills, see– www.crmondemand.com/training_support/
training_webseminars.jsp
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Ethical Situation: What Would You Do?
Discussion Question As the district sales manager for your company, you decide which salespeople to assign to which territories. Among your territories are two which have very low sales potential according to Sales & Marketing Management magazine’s latest annual estimates. You are thinking about assigning your two lowest performing salespeople to these two territories because you think this extra challenge will either motivate them or cause them to quit which would be okay since it would allow you to avoid the unpleasant task of possibly firing them later anyway. No matter what the outcome, it seems like a win-win from your perspective.