Territories can be defined on the basis of geography, sales potential, history, or a combination of factors.
This can cost a firm business because over-taxed salespeople engage in sub-optimal levels of activity in a number of areas.
"[1] "Over-servicing, by contrast, may raise costs and prices and therefore indirectly reduce sales.
"[1] "Achieving an appropriate balance among territories is an important factor in maintaining satisfaction among customers, salespeople, and the company as a whole.
In a survey of nearly 200 senior marketing managers, 62 percent responded that they found the "sales potential forecast" metric very useful.
"[1] The workload for a territory can be calculated as follows: Workload (#) = [Current accounts (#) * Average time to service an active account (#)] + [Prospects (#) * Time spent trying to convert a prospect into an active account (#)] The sales potential in a territory can be determined as follows: Sales potential ($) = Number of possible accounts (#) x Buying power ($) "Buying power is a dollar figure based on such factors as average income levels, number of businesses in a territory, average sales of those businesses, and population demographics.
[1] "In addition to workload and sales potential, a third key metric is needed to compare territories.
Estimating the size of a territory might involve simply calculating the geographic area that it covers.
Depending on the quality of roads, density of traffic, or distance between businesses, one may find that territories of equal area entail very different travel time requirements.
To perform it well, in addition to the metrics cited earlier, disruption of customer relationships and feelings of ownership among sales personnel must also be considered.