A sales territory is defined as a group of present and potential customers assigned to an individual salesperson, a group of salesperson, a branch, a dealer, a distributor, or a marketing organization at a given period of time.
Territories are defined on the basis of geographical boundaries in many organizations. Though the geographic market may have a heterogeneous mix of both existing and potential customers, a decision on the basis of geographic coverage has distinctive advantages.
The idea behind the creation of sales territories is to match the sales opportunities with the selling effort. A salesman is given a group of similar customers and prospects for servicing. This assignment by itself facilitates the planning and control of the sales operations.
Each territory has its own strong and weak points and management can use these strategically. Sales planning are with respect to the territories created. In a heterogeneous market, a territory is comparatively more homogenous. A territorial division also brings out an element of effectiveness in the sales operations. It also helps the appraisal of the sales effort.
According to:
B. R. Canfield, “A sales territory is a geographical area containing present and potential customers who can be effectively and economically served by a single salesman, branch dealer or distributor.”
Stiff and Cundiff, “A sales territory is a grouping of customers and prospects assigned to an individual salesperson.”
Cranfield (1987), a sales territory is a geographical area containing the present and potential customers who can be effectively and economically served by a single salesperson, branch, dealer, or distributor.
Mynard and Davis, “Sales territory is the basic unit of sales planning and sales control.”
Stanton and Buskrik, “A sales territory is a number of present and potential customers located within a geographical area, and assigned to a sales person, branch or middlemen (retailers or wholesaler).”
Determinants of Sales Territory
Nature of the product – The nature of the product, viz. industrial consumer or consumer durables, or perishable, may influence the size of territories. The territories for industrial and consumer durables may be larger in sizes.
Demand for the product – When the demands are larger, the size of the territory may be small.
Transport and communication facilities – Where the transportations to the territory are much faster, cheap and efficient, the size of the territories may be larger.
Density of population – Where the density of population is thick, the size of the territory may be smaller.
State of competition – Where the state of competition is acute, there is a need to contact the customers regularly. In that case, the size of the territory may be small.
Abilities of salesmen – If the salesmen are experienced, efficient and well trained, the size of territory may be larger in comparison to new and untrained salesmen.
Allocation of sales territories to a salesman is one of the important duties of the sales manager. The allocation of sales territories must be given serious thought by the sales manager as it is one of the important tools of control. It does not pose a problem for the small-organization because their market is limited.
However, for big organizations having nation-wide coverage, it poses a big challenge to the sales management.
Objectives of Allocation of Sales Territory:
hold the salesman responsible for sales and services.
Supervise and control over the sales force.
To meet competition easily.
To save time and expenses.
The allocation of sales territories has certain advantages, directly and indirectly to the company, its salesmen and customers.
The company may have the advantages of effective distribution of responsibility to each salesman. The company will be able to evaluate the functions and responsibilities of the salesman so as to determine their remuneration structure, motivation system, etc. It is an effective step to face the competitors’ activities in the territory can be studied.
The salesmen have many advantages. They have enough freedom in dealing with their respective territories. Their efforts are very much countable and hard work put by a salesman is suitably rewarded.
The customers also have various kinds of advantages such as; efficient and immediate after-sales services, quick disposal of complaints, individual satisfaction by visiting the salesmen regularly and their suggestions in respect of the purchasing decisions by the customers, etc.
Sales territories are set up and subsequently revised according to prevailing market conditions so as to facilitate the planning and control of sales operations. Territorial assignments make every dealer the responsibility of some salesperson, and proper routing ensures that sales personnel contact all dealers at proper times relative to the breaking of the consumer advertising campaign. In situations where sales personnel do work related to the advertising efforts, the results are more satisfactory if the work is delegated on a territory-by-territory basis rather than for the entire market.
There are countless ways to oversee sales territory alignment, but these are the four most common: Geographically, Company Size, Industry, and Alphabetical.
As companies grow, they need to divide up accounts in a manageable way. Sales territories provide clear-cut boundaries, so there’s no confusion about which sales rep works with which client. This is crucial for several reasons:
To prevent under-servicing. When a salesperson is stretched too thin, client relations suffer. Orders slip through the cracks, there may not be time to follow up on leads, and calls go unreturned. Under-servicing can have a snowball effect, and the more reps make mistakes, the further behind they fall.
To prevent over-servicing. While clients don’t like being ignored, they don’t like being pestered either. A sales rep that relies on just a few accounts may have to be very aggressive just to make a liveable commission.
To keep talented salespeople happy. It’s an awful feeling to fall short of your sales goals. Even worse is when that happens because you weren’t given the opportunity to succeed. Balanced sales territories give everyone a chance to maximize their compensation.
To motivate and boost morale. Giving a sales rep their own territory establishes ownership; they’re in charge of their piece of the pie. It’s their responsibility to make sales happen. They have a quota to meet and lead to generate and nurture. They know they’ll have to explain their progress to the higher-ups, and that’s invigorating.
In the traditional sense, sales territory management is an assigned geographic area on which sales reps work. This past rigid structure has since broken down and become a relic of the industry of the past. With radical interconnectivity afforded by the internet, business is much less likely to be confined — and in many cases defined — by the geographic areas from which they originated.
Sales targets had to be thought of along new axes: product, industry, and service to name but a few. Further, with more powerful tools for aggregating and analyzing data, sales departments have been able to approach clients and potential leads based on trends such as purchase history or referral sources.
Sales territory management is more important than many may realize. It can boost your sales team’s morale, increase sales, provide a larger customer base and inspire team cohesion. So what is it and what do you need to focus on for efficient management of sales territories?
Territory management is a customer group or geographic area over which either an individual salesperson or a sales team has responsibility. These territories are usually defined based on geography, sales potential, its history or a combination of these factors. The ultimate aim of this division of areas is to maximise sales and profits, and to allocate resources efficiently.
It is very important to create sales territories that are balanced. When a sales territory is out of balance, there are two things that can happen. If a territory is being under-serviced, the sales team or salesperson is spread too thinly and it leads to sub-optimal levels of activity. Those responsible for the territories will seek out too few leads, identify too little prospects and spend too little time with customers because they are overworked. This leads to customers going to competitors and you losing sales.
Over-servicing in a territory is where the sales team has too little work and too many team members to service a small area. This raises costs and prices overall which ultimately leads to reduced sales. Precious resources are also then not being utilized in more important areas. This can lead to under-servicing in other areas.
Unbalanced territories can cause many problems. Some of these include the unfair distribution of sales potential amongst the sales force, distorted compensation amongst sales reps and, reps leaving the company to seek out better balance and compensation elsewhere.
One of the things people can do to form good sales territories is sales potential forecasting. This helps to determine sales targets and identifies areas that are worthy to allocate sparse resources to. Forecasting determines the number of prospects in an area and their combined (and individual) buying power.
There are three main reasons why sales management usually employs territories. First, it can be customer-related which increases market coverage and provides good customer service. This makes for higher sales figures and greater customer satisfaction. Second reason can be related to the salespeople themselves. It increases enthusiasm and motivation in teams. It is great for effective performance evaluation and decreases employee turnover while providing reward potential for the amount of effort taken. Last reason can be related to management. Control is enhanced with territory allocation and is great for promotion coordination. It provides potential for staff incentives and better allocation of costs per territory.
Territory management can help spread out the workload for your sales team, allowing them to complete tasks more efficiently, build better customer relationships and increase the good-quality leads that they get. Just as important is the motivation it provides to your sales team if they feel like they are being productive and accomplishing a lot of the sales goals they set out to do.
A sales territory plan is a workable plan for targeting the right customers and implementing goals for income and consistent sales growth over time.
Traditionally, sales territories were created by geographical location. However, these days it’s been extended to include different industries, customer types, and other segments.
If you struggle with sales territory management or your current territories are unevenly serviced, follow this step-by-step guide to put together a better sales territory plan for your sales team: Analyze and Segment Your Existing Customer, Conduct SWOT Analysis, Set Goals and Establish Targets. Develop Strategies to Accomplish Your Goals, and Track Your Results and Optimize Territory Division.
A territory sales manager supervises sales representatives assigned to particular geographical places. They are responsible for meeting sales goals in their area, for coming come up with viable marketing strategies, and for recruiting and training sales employees.
Finding the right people to work with is the number one thing a territory sales manager has to get right. The managers who know their game do this continuously: they interview potential candidates on a regular basis and keep a pool of passive players that can be brought in on the team in case there is an opening.
Territory sales managers are great leaders who know how to motivate their team and invest time and effort into creating a bond between team members that goes beyond workplace companionship. They organize outings, team events, or dinners, as these occasions are essential to make a team function as an organic whole, and will largely pay off when it comes to the results of the next month or quarter.
There are certain skills that many territory sales managers have in order to accomplish their responsibilities. By taking a look through resumes, we were able to narrow down the most common skills for a person in this position. We discovered that a lot of resumes listed analytical skills, communication skills and customer-service skills.
When it comes to the most important skills required to be a territory sales manager, we found that a lot of resumes listed 11.9% of territory sales managers included customer service, while 10.7% of resumes included sales goals, and 9.9% of resumes included territory. Hard skills like these are helpful to have when it comes to performing essential job responsibilities.
When it comes to searching for a job, many search for a key term or phrase. Instead, it might be more helpful to search by industry, as you might be missing jobs that you never thought about in industries that you didn't even think offered positions related to the territory sales manager job title. But what industry to start with? Most territory sales managers actually find jobs in the manufacturing and retail industries.
If you're interested in becoming a territory sales manager, one of the first things to consider is how much education you need. We've determined that 64.5% of territory sales managers have a bachelor's degree. In terms of higher education levels, we found that 13.1% of territory sales managers have master's degrees. Even though most territory sales managers have a college degree, it's possible to become one with only a high school degree or GED.
Choosing the right major is always an important step when researching how to become a territory sales manager. When we researched the most common majors for a territory sales manager, we found that they most commonly earn bachelor's degree degrees or master's degree degrees. Other degrees that we often see on territory sales manager resumes include associate degree degrees or high school diploma degrees.
You may find that experience in other jobs will help you become a territory sales manager. In fact, many territory sales manager jobs require experience in a role such as sales representative. Meanwhile, many territory sales managers also have previous career experience in roles such as sales manager or account executive.
