As a company expands its reach and scope of operations in different geographical locations and industrial sectors, it becomes difficult to manage its sales staff. Lack of proper planning can result in the following consequences:

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Many salespeople will be contacting the same clients;

Important clients may not get enough attention from salespeople; and

Some regions will produce better sales results than others.

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It is here that sales territory management comes in handy. Sales territory management makes sure that sales activities are organized by dividing markets into territories and allocating clients to each representative.

What Is Sales Territory Management?

Sales territory management refers to the act of segmenting geographical regions, customer accounts, or markets and then assigning them to people or groups in sales.

A sales territory can be segmented in different ways including geographical location, industry, size of customers, category of products or revenue opportunity. A business that operates in all of South Africa will have to segment their sales into Johannesburg, Cape Town, Durban and many other territories.

These territories will then be assigned to particular salespersons who will be charged with building relationships with the customers and generating sales.

Territory management will ensure that companies have clear sales responsibility as well as offering customers consistency.

Sales Territory Hierarchy Definition

Sales territory hierarchy is a concept which helps describe how companies classify their sales territories using a hierarchy system.

There is an existing relationship between large sales territories and small sales territories.

The sales territory hierarchy system consists of the following elements:

• Parent Territory – This is the larger territory, either geographically or organizationally such as country or regions.
• Sub-Territories -These are the smaller territories that exist within the parent territory, for example states or cities.
• Individual Sales Territory – This is the individual sales territory given to each individual sales personnel.

For example, the parent territory of a company could be South Africa while the sub-territories include Johannesburg, Cape Town, Durban and others.

How Are Accounts Allocated?

Account allocation consists of allocating customers to appropriate sales territories and account representatives. In other words, each customer receives the attention from appropriate sales force.

The firm will always have some guidelines that it uses in allocating accounts:

• Geographic Location: Customers are allocated on the basis of the geographic location of the firm.
• Industry Segment: Accounts could be segmented according to various industries including manufacturing, healthcare, retail, and finance sectors.
• Size of the Customer: Large enterprises might be allocated individual account managers while small customers could be assigned to regional sales forces.
• Revenue Generating Potential of the Accounts: The high value accounts will receive additional sales coverage due to their revenue potential.
• Expertise of the Sales Representative: Accounts could be allocated to the sales representative based on his/her expertise in the product and industry.

Proper allocation of accounts prevents duplication of efforts from the sales force members.

What is Territory Balancing?

Territory balancing means balancing the sales opportunity and workload across different territories. All the territories do not have the same number of accounts, revenue potential and demand from the market.

One salesman might have 200 customer accounts, whereas another salesman may have 50 enterprise customer accounts. Comparing the number of accounts will not be a good measure of their workload.

A good territory balancing approach takes into account:

• The number of current customer accounts.
• Potential revenue and market opportunities.
• Customer needs and behavior.
• Requirement for traveling.
• Geographical coverage.
• Salesman capability.

Balanced territories ensure that the organizations do not overburden certain salesmen and also don’t miss out on any good market opportunities.

Enhancing Sales Coverage Within Territory

Sales coverage means how well the firm is able to cover and serve its potential and current clients within its allocated territories.

Efficient sales coverage enables firms to discover new market opportunities, build good relations with the clients, and enhance sales.

Some of the ways through which firms can enhance sales coverage within their territories include:

• Identification of key customer segments and prospective accounts.
• Assigning responsibilities to each sales representative.
• Regular scheduling of client meetings and follow-ups.
• Sales activities monitoring and pipeline identification.
• Evaluation of the territories with little customer involvement.
• Sales information used to determine weak sales areas.

Sales coverage enables the sales team to focus on profitable opportunities rather than focusing on only their known clients.

Territory Redistricting: When and Why Should It Be Done?

Redistricting of territories involves reevaluating and reshaping the current state of affairs in regard to territories due to changes in business or the market.

Territory that was successfully used 2 years ago might not be suitable for the current needs of the business. New clients, new employees, company growth and market requirements can make this change necessary.

Common circumstances of territorial redistricting include:

• Entering a new geographic market.
• Changes in the client base or account specifications.
• Unequal workload of sales representatives across the territories.
• Sales force changes.

Before making any territorial changes, it is advisable to look at the history of sales, client relations, prospects of the region, and impact on current accounts.

SAP Role in Territory and Quota Management

The administration of the territory structure, account assignments, and sales quotas via different spreadsheet files can be rather complicated. SAP sales management functionality is able to assist companies in better understanding customer accounts, sales operations, and territories.

Companies can take advantage of appropriate SAP products in order to plan territories, track sales opportunities, assign accounts, and analyze sales performance.

If people want to acquire practical skills in the matter, they can enroll in SAP Quota Management Training and other SAP Territory and Quota Management courses at Prompt Edify.

Conclusion

Management of the sales territories makes sure that the organization is able to establish a suitable sales environment with the help of establishing sales territories, customer accounts allocation, balancing work load, and covering market areas. By continuously reviewing and modifying sales territories, it will be useful in making sure that the sales process remains effective according to the needs of the business.

Proper planning and SAP sales management can help in making the sales process more effective for the organization.

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