Explain the term 'sales territory'. Discuss the steps involved in territory planning?

by Michael Carter | Aug 27, 2012 | Sales Management Workshop Podcast, Sales Planning, Sales Process | 0 comments

Podcast: Play in new window | Download (Duration: 30:41 — 28.2MB)

Territory planning, the design of your territories, and how those sales territories are managed is crucial to sales management success.  In this podcast the goal is to give you a chance to look at the territory planning process.

What is Territory Planning, Territory Design, and Territory Management?

We’re talking about the alignment of your customers and potential customers in an orderly manor to enhance your selling activity.

If your sales process requires accountability for a geographic area or vertical market, sales territories aren’t just important.  There’re essential.  Sales territories:

• Allow you to reduce your sales cost.
• Give your sales force defined areas of accountability and responsibility.
• Give you a data point to evaluate sales performance.
• Provide you with a structure to maximize sales coverage.
• Can improve the customer experience by providing relationship consistency.

Your sales territories also have tremendous have an impact on:

• Your ability to target key customers and prospects.
• The results of your sale efforts.
• The wellbeing and success of each of your sales people.
• The future of your company.

So How Do You Design Your Territories?

Start the territory design process by looking at your entire market.  If your market is the state of Ohio.  Ohio represents the whole market.  Your entire territory.  If you have five salespeople that cover it for you.  Then you would have a minimum of five territories within your market.  When you do your territory planning, look to the future.  If you’re thinking of adding two salespeople.   Add those sales territories now while you are going through this territory planning process?  The two new territories can be worked by the existing salespeople until the new salespeople are hired.

Start By Looking At Your Base

To get this territory planning, done right, Start with your existing customer base.  I like to get a picture of where my entire customers base is located.  If your organization has market segments, this is a good time to look at each of those segments individually.

Look At Revenue By Account

The second step in territory planing is to look at the revenue for each of your clients.  Then take a look at their future sales potential.

Are Prospects Or Market Potential Evenly Distributed?

Let’s say your ideal prospect is a company in the construction industry.  Construction companies that do interiors for the commercial office buildings.  How many of them are there in your market?  Where are they located?

Territory Planning Means Territory Alignment

Make sure your sales territories are properly alignment.  You are looking for an equal distribution of existing clients and market potential.  In an ideal world, this should be in place before a sales call is made.  If you are selling presently, its a good idea to get this in place now.

The Impact Of Territory Planning On Salespeople, Your Company, And Your Customers.

In territory planning, keep in mind the tremendous effect your territory design can have.

• Does the design provide an equal work load for each member of the sales team?
• Does the territory design provide for adequate income opportunities?
• Does the territory design provide a good distribution of existing accounts?
• Does the territory design allow easy travel time management?

Your goal is to provide your sales people with an energetic and motivating environment.  If your territory designed doesn’t provide balance.  You can destroy any motivation and good will you have built.

Territory Planning

This is a topic that deserves an entire episode of it’s own and we will do that in the future.  Today I want to introduce you the topic and give you some food for thought on the subject.

Territory Planning has two parts:

• Territory Intelligence
• Territory Action Plan

The key is to have a territory design in place before you start developing your territory planning.  The words territory planner and sales action plan, in most cases can mean the same thing.  The idea is to learn as much about your market as possible.  Then, come up with the strategy and tactics to attack it.

A sales territory is the customer group or geographical area for which an individual salesperson or a sales team holds responsibility. Territories can be defined on the basis of geography, sales potential, history, or a combination of factors. Companies strive to balance their territories because this can reduce costs and increase sales. Regarding planning of the same everything has been well explained by the other specialists.

These 5 steps will help you create a territory management plan that will lead you to success:

devised a territory management plan to increase their efficiency.

1. Segment your customers. Place your clients into different categories for easier organization and divide the territories accordingly. Each territory should have good potential, be of reasonable size, and have minimal obstacles. A good way to segment clients is by buyer personas- group clients have the same product and similar needs all together. Some people also segment according the size of the retailer. Once categorized, you can use Mobile CRM software to sort and filter clients by territory, making it easier to draw territory lines and redistribute field rep assignments as needed.

   Matt’s Snacks segmented their customers by geography because his clients were in dispersed locations. Matt figured this would make it easier to divide up a large territory this way.

1. Develop a plan. By looking at your retail execution strategy, you can devise a plan based around your core objectives, but you should also define your objectives by client as well. By breaking down your objectives by customer, you can construct a more detailed plan of how much time you should allocate to each client. It will be helpful if you include your field reps in this process- if they helped to develop the plan, then they will be more likely to follow it. While creating a strategy, you should be keeping three things in mind- you want to maintain current clients, reach out to potential clients, and obtain new clients from your competitors. Your plan should help you accomplish each of these three things.

   Matt had growing demand from small to medium retailers, so his objective was to be able handle all of the demand and have his field reps visit each client regularly to avoid out of stock instances and maintain client relationships. He then looked at how to achieve these objectives. He found that some customers were of more importance than others, and created a plan to ensure that they were given more time than other less important retailers.

Create an effective territory plan with this complimentary Territory Management Template Toolkit >>

1. Schedule your visits and plan your route. Once you’ve decided how much time you want to spend on each client visit, schedule your visits so that you can plan the most effective route from one client to another based on proximity.

   Matt then called each retailer and created a schedule so that he could begin planning the routes for each field rep to take.

1. Delegate. Assign each field rep a territory to cover. By making this very clear, you can avoid territory overlap. Take into consideration the specific capabilities of the reps you have and try and match them to the territory you believe would be most suitable. For instance, if one rep is able to visit more clients in a day than most of your other reps, then you can assign this rep a territory that has more clients. Be sure to consider your reps’ personal connections and strengths as well. If they have built strong relationships with one client, then you should keep them in that client’s territory.

   After scheduling all of the visits, Matt called together this team of field reps and began to delegate territories to each one. For example, he gave Phil, his top performer, the territory with the most clients because he knew that Phil would be able to handle it. He gave Jack the territory with mostly rural areas because he knew Jack was skilled at covering long distances quickly.

Manage your team with a GPS location and time tracking software. Click here to learn more >>

1. Implement and evaluate. Once you put your plan into action, you will begin to see the little things you may have missed. See what issues come up, evaluate how to best overcome them, and address them accordingly. For example, if you think that travel time is still too high, you can use Mobile CRM software to track your reps’ mileage and location, allowing you to plan the most time-efficient route. Don’t be afraid to experiment a little- try different things and evaluate the results of each change. You may find that an idea that seems a little bizarre at first may actually be the most effective one.

   After implementing his plan, Matt began to see that there were territories that had not yet been fully expanded into. He gave Jamie the task of opening new outlets- since Jamie was already in the territory that had the fewest clients, Jamie could then locate and target retailers that could potentially carry Matt’s Snacks products.

Through a well-thought out territory management plan, you can ensure that you are maximizing the efficiency of your field reps’ client visits. Good territory management practices will not only save you time, but it should improve your field reps’ coverage, build deeper relationships between clients and field reps, and add revenue. It can also give you a leg up on the competition if you are more efficient than they are. By decreasing travel time and other transportation expenses, each visit will cost you less. Your field reps will ultimately be happier- they can now be at their most productive, especially with an even distribution of clients in each territory.

full agree with mr. wasi on his answer

Conduct an overall review. The first step in the sales territory plan is that of reviewing. In other words, before even making the plan, the sales representative needs to analyze his territory and review the current situation before projecting future goals. An overall review should include an evaluation of business from the previous year, an analysis of customers who are currently the strongest and which the weakest, a consideration of the best-selling products, a review of successful sales techniques and a list of top prospects for future clients.

Identify customers to target. Any sales representative who is even marginally familiar with her territory knows where to begin looking for new customers. In considering customers to target, the representative should also make a list of specific methods for approaching each customer. What works for one customer will not necessarily work for another, and while some customers prefer to be “wined and dined” for their business, others prefer frank discussions about the products. Making notes of each of these items will be of use for the sales representative.

Create growth goals and strategies. Preparing growth goals and strategies is a big-picture effort. The growth strategies should reflect the sales representative’s broader goals for the territory. For instance, the representative’s goal might be to add a specific number of new clients to the territory or expanding sales of a product by a certain amount. To accomplish these goals, the representative should prepare manageable strategies. Sales territory goals and strategies can be like New Year’s resolutions: too many, and they’re overwhelming and unrealistic. But those who set a couple of attainable resolutions–such as “lose 10 pounds with diet and exercise” and “learn ballroom dancing in weekly classes”–are much more likely to achieve their goals.

Set income objectives. Income objectives are essential, but they do not usually come solely from the sales representative. Most companies provide the representative with sales targets for a specified period of time--quarterly, twice a year, yearly,. At the same time, the sales representative can still create his own strategies for achieving these objectives. If the representative has annual sales targets, he can plan for so much each quarter; in the case of quarterly targets, he can plan monthly targets. Setting these smaller income objectives will enable the representative to keep a closer eye on meeting the larger objectives.

Conduct an ongoing review. A strong sales territory plan undergoes frequent review. The representative should not create the plan and then forget about it. She should refer back to it weekly, monthly or quarterly to make sure the plan is on target. It is easy to forget goals unless they are close at hand, so the sales plan should be a constant reminder of territory objectives.

Mr. Wasi Rahman has described the issue in details. Thank you .

Agree with the expert answers

Apologized for the answer,  I leave the answer for the professionals.

Thank You for the invitation... I would agree with answers that really contain variety of correct info and opinions... Nothing to add !

Thanks for invitation

I amagreeing with my colleague’s answer