Sales Territories Design &

Management

1
 Go to Market strategy

What are the go to market decisions to take?

Example:
Launching a new cleaning appliance
• with wet and dry accessories
• cleaning floor/window/Sofa/Any surface
 Go to Market strategy
Decision/Strategic element Details or basis Alignment to Objective

User Profile. Individual/ HH/ What is value/benefit to the user?

Life time value?
Enterprise How urgent is the need?
Whom to sell: customer segments Primary/secondary Need satisfied
Influencer/buyer What is the cost of the product?
One time/recurring?
How is the business decision taken How compelling is the Value
proposition

Define Addressable market size,

Capacity to produce/distribute for competition and market share. Product to Customer Fit
creating resources and capabilities Define customer segments and Reach objective
Geographical markets

Design of Territories and Outlet

Market planning: Market coverage and servicing plan
mapping

 What is the business model and

How to Sell: Channel Channel Type/character value prop

 Who is my channel partner Profile of channel partner. Who would be a good fit?
 Go to Market strategy

Decision/strategic element Details or basis Alignment to Objective

Outlet profile/ prioritisation.
Match competition or
Where To Sell: Outlet profile Create a benchmark such as differentiate?
'Stock in outlets where a defined How??
competing brand is stocked'.
Who will Sell: Channel Vs Company SE  
How much to spend: Sales Budget  
How to reward: The compensation /incentive  
Display benchmarking Merchandising Unit Stock near counter

Many of the decisions are interlinked and taken jointly. And even where
each element is contemplated independently when the strategy is put
together need to align to be in Sync.
 Territory Management basics
• Determine the tasks to be done by a typical
salesperson to meet the sales target
( WORKLOAD)
• Determine the outlets and their importance
( A,B,C type)
• Draw up the territory
 Sales activities – Type of tasks
• Planning
• Selling
• Administration
• Gather Market intelligence
 Planning roles
• Planning sales strategy and tactic to reach
target
• Scheduling appointments
• Preparing the presentations
 Selling
• Prospecting
• Making cold calls
• Making presentation
• Analyzing customer needs
• Negotiations
• Closing sales
• Follow-up
• Merchandising, promotions
 Administration
• Expense claim forms
• Customer call lists
• Order forms
• Credit notes
• Invoicing
 Market intelligence
• Competition launches, New pricing strategy,
New SKUs, distributor & consumer
promotions

• Customers- Change in contacts(KAM),

promotional activity, Buying plans
 Understanding Workload

Time to service/ in
Numbe hrs per month Total Workload Total no of sales
  r Time to Convert in hrs per month persons
Existing
customers 60 4 240  
New Customers 140 6 840  
1080 5.625 ( roundup to 6)

8 Hr workday
6 day work week
4 weeks per month
192 Hrs Per Sales
person
 Sales potential

Usual number of
  Number computers required Sales potential

Government College 30 50 1500000

Private Engineeting
college 12 75 2250000

University 8 120 3600000

 Deciding on sales force size

Numbe
Likely number r of
Numbe of computers Sales Number of calls Total Calls to Hours Total sales
  r ordered potential needed convert per call Hours people
Government College 30 50 1500000 15 450 5 2250  
Private Engineeting
college 12 75 2250000 8 96 5 480  
University 8 120 3600000 20 160 6 960  
              3690 19.21
 Some approaches to allocate work
load
• ABC classification of outlets by sales potential
• 80/20 rule to classify accounts and then assign
outlets to each SE
• Rule of thumb -- such as each SE has to
service 10 old accounts and must add 6 new
clients every year ( mix of old and new)
 Territory wise workload
Level of Sales person Workload in each terrotiry
1.6

1.4 (-13%)
Sales person workload

1.2
Zone of tolerance
1

0.8 (-13%)
0.6

0.4

0.2

0
0 10 20 30 40 50 60 70

Territories
Designing a Territory
What is a sales territory?
• ST’s are geographic territories.
• ST consists of existing and potential customers.
• ST is assigned to a salesperson/Sales executive.

What are the Benefits of Sales Territories?

• Increase market / customer coverage
• Control selling expenses and time
• Enable better evaluation of salesforce performance
• Improve customer relationships
• Increase Salesforce effectiveness
• Improve sales and profit performance
 Steps to design sales territories
1. Select the geographical base ( city, state, area, taluk)

2. Find location and sales potential of present and

prospective customers within each control unit.

3. Determine basic territories

4. Assign salespeople to territories.

5. Manage territorial coverage

6. Evaluate and revise sales territories

 Estimate Market Potential in each Unit

Subjective Methods
• Sales force composite
• Jury of executive opinion
• Market dipstick-Consumer
survey Objective Methods
• Past trend
• Market Potential
Value=Population/HH *
Income index * Social index
Two approaches to determine basic
Build-Up method Break down
1. Decide customer call 1. Estimate company sales
frequencies. potential for total market.
2. Calculate total customer
2. Forecast sales potential for each
calls in each control unit.
control unit.
3. Estimate workload
capacity of a salesperson. 3. Estimate sales volume expected
4. Make tentative territories. from each salesperson.
5. Develop final territories, 4. Make tentative sales territories.
after discussing with 5. Develop final territories after
salespeople. discussing with salespeople.
 Assigning sales people
• Relative ability of sales people – Product
knowledge, market knowledge ( including
language), Ability to sell.
• Effectiveness of sales person- will the sales
person fit culturally?
Coverage Planning within a market

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Examples of TERRITORY DESIGN-Zone

Category: Pepsi
Control Unit – Mumbai

Example – based on the

geography the market is
demarcated –
 Zone1: Mumbai North West
 Zone 2: Mumbai Central
 Zone 3: Mumbai South
 Zone 4: Greater Mumbai
(Thane/Navi Mumbai etc)
Example of TERRITORY DESIGN – SUB ZONE

 Each Zone is further categorized into

Sub-Zones
Z1-1  Sub-Zones can be categorized on the
basis of market potential and ease of
coverage / channel presence.
Z1-2
Locality Market No. of
Outlets
Z1-1-Borivale (W) Class A 245
Z1-1- Borivale (E) Class C 140
Z1-3 Z1-2-Goregaon (W) Class B 195
Z1-2-Goregaon (E) Class E 180
Z1-3- Santacruz (W & E) Class D 359
Z1-3- Vile Parle (W & E) Class D 375
Z1-3- Andheri (E) Class D 230
Z1-3- Andheri (W) Class A 285
 Define coverage norm based on retail outlets category – Sales
Potential and Outlet type can be factors for categorization

Self service department store Sales > 10 cartons and Sales < 10 cartons per
and sales > 25 cartons < 25 cartons/mth month Category – C
Category – A Category – B

Institution/commercial Modern Trade Outlets

establishment
 TERRITORY MANAGEMENT
Beat Plan for particular distributor which a CSE should have.

Post defining the coverage norms, a grid of the following nature can be
designed by the Sales Manager -
Beat Details

Break-up
Day Unit 1 Number of by Outlet Start and Sales
outlets End outlet executive
Category name

Mon Shivaji Park 40

Tue Dadar E 45

Wed Dadar W 52

Thurs Worli 38
Fri Bandra E 46

Sat Bandra W 47
 Sales Hierarchy In Pepsico
Company Market
Territory
DSE development Zonal Manager City Head
Manager
executive

• Outlet order servicing • Open new outlets • Enroll key outlets for Distributor • Overall planning &
Pepsi preferred outlet management management role
• Market credit and • Enroll restaurants and program
stock control college canteens for • Develop fountain Plan and direct all BTL
including brand in stores promotion operation • Also manage top 10
menu card and • Responsible for outlets
stocking/selling training DSE and CMDE
Cross promotion
(outsourced agency-
directly accountable to
Territory manager) Build alliances with
• Organised Retail other category
products

 Reporting hierarchy
+
Can we define the roles / unique for each level in the sales hierarchy to meet the
enterprise objective
TERRITORY PLANNING EXERCISE - 1
 You are Sales Manager of Company – What
information do you require to do Territory planning..

• A Company (in Karnataka) that sells confectionery

through retail channel.

• A company that sells software to different types of

customers.

• A company that sells AC compressors

Confectionery in
KARNATAKA

Variables to be considered
• Districts
• Towns in Districts
• Population
• Retail Outlets
• Actual Sales/ Market-
potential
• Primary Role
• Additional Role
• Competition index
• Market potential index
 You are Sales Manager of Company – What
information do you require to do Territory planning..

• A company that sells software to different types of

customers.
Accounting Software
in KARNATAKA Channels

Variables
• Trading/Commercial
Areas
• Number of
Companies
• IT Dealers
• Lead Generation
• No. & Profile of end
customers
• Repeat & New
Customer
• Market potential
index
 You are Sales Manager of Company – What
information do you require to do Territory planning..

• A company that sells AC compressors

 AC Compressor
Channels
Variables
• OEMs- Big brands
• Smaller brands
• Commercial
establishment for
centralized AC
• Warehouses
• Dealers
• Existing and New
Channels

Sales and Service

 * Hyderabad
AC Compressor–
Service contiguous markets

Variables
• OEMs- Big brands
• Smaller brands
• Commercial
establishment for
centralized AC
• Warehouses
• Dealers
• Existing and New
Channels
* Hosur
Sales and Service
* Calicut
Territory Planning exercise- 2
Territory design by district

5 6
1 4
10

2 11

8 12
3

7 9
Territory design by contiguity-equal sales potential

Dist T SF TF
1 T1 250,000  
2 T1 700,000 1,300,000
3 T1 350,000  
4 T2 150,000  
5 T2 200,000 2,350,000
6 T2 2,000,000  
7 T3 750,000  
8 T3 500,000 2,250,000
9 T3 1,000,000  
10 T4 500,000  
11 T4 1,750,000 3,000,000
12 T4 750,000  
 Additional data-Assumptions

• All districts have same potential

• Equi work load to all Salesmen.

• All salesmen have equal capability.

Territory design by contiguity-equal sales potential

Dist T SF TF
1 T1 250,000  
4 T1 700,000 1,300,000
5 T1 350,000  
6 T2 150,000  
10 T2 200,000 2,350,000
11 T2 2,000,000  
2 T3 750,000  
3 T3 500,000 2,250,000
7 T3 1,000,000  
8 T4 500,000  
9 T4 1,750,000 3,000,000
12 T4 750,000  
Territory design by district

5 6
1 4
10

2 11

8 12
3

7 9
 Additional data-Assumptions

• All districts have different sales potential

• Equi work load to all Salesmen.

• All salesmen have equal capability.

Territory design by district

5 6
1 4
10

2 11

8 12
3

7 9
Territory design by Unequal Sales potential

Dist T Sales Value ( Rs.)

1 T1 250,000
2 T1 700,000
3 T1 350,000 Territory with unequal
4 T2 150,000 potential ….
5 T2 200,000 How to re-organise
6 T2 2,000,000
7 T3 750,000
8 T3 500,000
9 T3 1,000,000
10 T4 500,000
11 T4 1,750,000
12 T4 750,000
 Territory design by potential

Territory
Dist T Sales Forecast Value
1 T1 250,000
2 T1 700,000
3 T1 350,000
 
4 T1 150,000 2,200,000 
12 T1 750,000  
5 T2 200,000 2,200,000
6 T2 2,000,000  
7 T3 750,000  
8 T3 500,000 2,250,000
9 T3 1,000,000  
10 T4 500,000  
11 T4 1,750,000 2,250,000
Total=8900000/4=2250000 for each territory
And how does that look

5 6
1 4
10

2 11

8 12
3

7 9

OOPS!!
 Now what to do? …..

Dist T SF TF
1 T1 250,000
2 T1 700,000
 
3 T1 350,000 2,200,000 
 
4 T1 150,000
7 T1 750,000
5 T2 200,000 2,200,000
6 T2 2,000,000  
12 T3 750,000  
8 T3 500,000 2,250,000
9 T3 1,000,000  
10 T4 500,000  
11 T4 1,750,000 2,250,000
And now how does that look

5 6
1 4
10

2 11

8 12
3

7 9
 Territory design by potential
Plus work-effort
Total
Dist T SF TF No of calls calls
1 T1 250,000   150
2 T1 700,000   800
3 T1 350,000 2,200,000 100 1600
4 T1 150,000   100
7 T1 750,000   450
5 T2 200,000   100
1100
6 T2 2,000,000 2,200,000 1000
12 T3 750,000   900
8 T3 500,000 2,250,000 250
9 T3 1,000,000   550 1700
10 T4 500,000   250
11 T4 1,750,000 2,250,000 450 700

Number of calls required in each territory based on number of outlets and desired service
Number of calls per SE per month=25*40=1000.
And what looked like

5 6
1 4
10

2 11

8 12
3

7 9
 Now looks like…

5 6
1 4
2 10

11

3 8

7 9
12

Red districts are very low on productivity and green is very high.
Minor imbalance in other districts can be adjusted within territory
 Now what to do? Optimisation…

 Re-evaluate the number of calls in low potential markets and

reduce the frequency of service
 Forget district level grouping and rework the territory with the
town as a basic unit
Re-emphasising - Basis or unit for defining territory

• District
Geographic • State
Areas • Country
Territory
--Current
Customer • Verticals
• OEMs/ Commercial/
and Types Residential
• User/ Intermediary
potential
customers/ • Large Corporate
channel •
intermediar Account Size •
SME
SOHO/ Prof/ HNI
ies • Individual
• Franchisee
Channel Type • Company Operated
• Large/Small

 Combination of above parameters

 The role/nature of work is an integral part of territory planning.
Designing Sales Territory-Criteria to be kept
in mind…
• Minimise Cost
Coverage Convenience • Minimise travel time

Design
territory • Service end customers
Maximise thru-put
optimally

Equitable Distribution of work • Process Focus

load • Optimise resource.
• Capacity utilization
• Promote equity
• Build Competency
• Mkt Knowledge/ Experience
Adjunct factors • Nature of effort- Develop or
Sustain
 Managing a Sales Territory

• Volume
Assess Potential • Value
for each level
Dimension
and provide • Terms of trade
Define service • Stock level
resources
levels • Service Frequency

Plan and execute sales • Merchandising

• Sampling
programs • Demo
• Road shows

Monitor and
evaluate
Routing and Scheduling
 Routing and Scheduling

Routing
• Permanent Journey Plan (PJP) for day-wise plan for a month-- Itinerary
• Beat Plan for convenient travel/call plan within a day
• Efficient travel plan to promote efficient time management and control cost

Scheduling
• What are your KPIs?
• Define and Prioritise important activities
• Systematic monitoring and control
• Reduce ad-hocism
TERRITORY DESIGN-- Summary

Territory design flows from

Work load analysis
Volume/Value of Business
Role of Channel and channel structure

Design based on the Category Lifecycle

• What is the nature and order of activity. Hyper Or sustenance
• For example in the phase of market entry– Pepsi had to seed
the market with Coolers, enlist outlets for semi-permanent in-
shop merchandising, extensive in shop demonstrations etc.
• In a second phase to promote consumption with other food,
they built alliances with restaurants
Thank You

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