CHAPTER FIVE Territory Management TERRITORY u A territory

CHAPTER FIVE Territory Management

TERRITORY u. A territory ugeographically defined area uassigned to a sales person upresent customers upotential customers

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

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

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

MINIMUM ACCOUNT SIZE u Don’t pursue accounts that are unprofitable!!

COST PER CALL u Cost u per call is a function of unumber of calls per day unumber of days available to make calls udirect selling expenses Direct Selling Expenses # Calls per day X # Days to Sell

COST PER CALL u Example (see Table 5. 1; page 230) u Total Direct Expenses = $90, 250 u 205 days to sell; average 3 calls per day u Cost per call = $90, 250 / 205 x 3 = $146. 75

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

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

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

TERRITORY IMPLICATIONS u Perform a customer by customer analysis! u Assess selling strategy

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

SINGLE FACTOR MODELS u Easy to develop and use u Classify accounts into categories based on one factor, such as market potential u Assign all accounts in the same category the same number of sales calls u Decisions are made on the basis of one factor. Differences among

SINGLE FACTOR MODEL

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

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

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

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

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

PORTFOLIO MODEL SEGMENTS u Weak Competitive Position/Low Account Opportunity u “Problem Accounts” u Accounts very unattractive u 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

PORTFOLIO MODEL EXAMPLE

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

DECISION MODEL EXAMPLE

MANAGING TERRITORY PROFITABILITY u Allocation of Effort u Mix of Products Sold u Price Concessions

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

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

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

MANAGEMENT’S ROLE u Close Supervision u Hands-off Management u Management Recommendations

FROM THE INTERNET u The granddaddy of time management sites: u http: //www. relibrary. com/10 tm 1. htm

FROM THE INTERNET u See what a consultant says about improving sales force productivity at: http: //www. brickerinc. com/netgain. ht m

FROM YOUR TEXT u Read everything in chapter five except upages 238 to 240 (Sales Funnel Method) upages 242 to 245 (Largest Angle Method)