Posted in Marketing and Strategy Terms, Total Reads: 1997
Definition: Sales Territory
Any company creates a territory based on geography, population, sales potential and sometimes a combination of these factors. This territory is assigned to sales persons as their operating territory. They cannot go beyond this territory to achieve their target and they are responsible for getting the sale within their territory.
Dividing the territory has a specific purpose. The territories are identified based on any one of the factors like geography, population, demographics, sales potential etc. The division is made to balance the workload among the sales persons. Otherwise someone may end up doing more sales and less customer service and someone may do less sales and more customer service. In both of these cases the company ends up losing. In the former case the customers may switch to other brand due to less customer service and hence there will be loss in terms of SKUs sold in the long run. In the latter case the company may spend too much on a few customers and hence the per-unit cost to the company will increase.
While determining a sales territory there are many other factors which are also taken into account. Like the quality of roads, estimated travel time, traffic conditions, distance between major market areas etc.
Thus each sales representative will have his own target based on the sales territory and it leads to improved efficiencies and competition among the sales reps which adds to the profit of the company.