N5 Sales Management


1. Benefits derived from establishing specific territories The importance of sales territories


Establishing or revising sales territories and providing for their effective and efficient coverage is a key part of sales management’s strategic planning task. This enables them to bring other aspects of planning, such as sales forecasting (Module 3) and budgeting down to specific territories (Western Cape, Gauteng, KwaZulu-Natal, etc.).


Once the territories have been established, management can then set up a system that covers each territory. This involves determining the route that each salesperson will follow in covering his territory as economically and effectively as possible (see Module 14: Routing).


DEFINITION


A sales territory comprises a number of present and potential customers, located within a given geographical area assigned to a specific salesperson for a given period of time.


Here are some of the benefits obtained by establishing sales territories. 1.1 Ensure proper market coverage


The establishment of specific sales territories will ensure that the market is covered comprehensively. This will prevent salespeople from visiting certain clients only and sales management can ensure that no customers are overlooked – less profitable customers and prospects as well as the profitable accounts will be looked after. A sales territory should not be so large that the salesperson either spends an extreme amount of time travelling or has time to call on only a few of the best customers. A sales territory should also not be too small that a salesperson is calling on customers too often.


1.2 Workload equalisation


The workload of the individual salespeople is equalised through specific designed territories. This contributes to greater efficiency and a better balance in utilising resources, for example money used for travel/petrol expenses and overnight costs.


1.3 Increases salespeople’s morale


Sales territories lead to equitable spread of accounts/customers among the sales force; this will improve morale since the fairness of management will be appreciated. A well-designed sales territory can stimulate and motivate sales personnel, improve morale, increase interest and build a more effective sales force. Salespeople are managers of their territory and tend to take pride in their accomplishments because they realise that they alone are responsible for the results in their territories.


1.4 Better evaluation and control over sales force


If the territories are equal with regards to workload, salespeople’s performance can be easily compared. Because the intensity of competition frequently varies from territory to territory, for example Cape Town and Beaufort West, this provides useful comparison. Also, management can measure a salesperson’s actual performance against territorial potential (the demand in different territories, as well as the buying power of people in different areas, may differ), or the quota. By examining sales performance territory by territory, management can spot changing market conditions in the different territories and make necessary adjustments in sales tactics.


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