Territory alignment is a very under-utilised, yet powerful sales productivity tool. It is also crucial when developing a franchise, network, membership, or any other kind of business that uses a territorial infrastructure. 

Territory design is a process that requires thought, planning, analysis and on-going maintenance.  Periodic review of existing territories will ensure that your business is operating at its peak efficiency and that you are not wasting resources.

Tech4T can help you organise or restructure sales or franchise territories, and optimise to ensure maximum profitability and productivity.

Specifically, Tech4T's mapping and analysis team can:  

• Profile your customers, identifying areas of potential and optionally researching and sourcing prospect contact lists. We can also provide the SONAR profiling system (www.tech4t.co.uk/trac)

• Plot the location of your customers, prospects, 'influencers' (consultant, champions for your company's products and services, etc.), outlets...etc., on maps that can drill down to outlines of buildings, land plots, streets and give you almost any level of information you need - even colouring buildings by actual or potential value! Tech4T are an Ordnance Survey Solutions Partner

• Use your current territory (including any management hierarchy) allocation information to plot existing boundaries which we inspect for overlap and any inconsistency.  We also map your current sales force (or business member) home or work locations. Appropriate changes can then be applied and a revised Postcode (or Zip code) to Sales Territory allocation file created

• Taking a bottom-up approach (by analysing sales transactions rather than aggregated data), we can optionally determine profitability by customer, sales person, territory, product...  and develop an optimised call frequency for each customer, also taking account of any seasonal trends

• Make changes to your boundary alignment - ensuring all territories are correctly balanced using the right analytics and data that could then be used to define optimised and balanced territories

• Create optimised call plans and route schedules for each member of your sales team, based on customer call frequencies, location, demand, with options to vary the plans to take account of changes in customer availability

• Print maps of all or any portion of your sales territories, saving maps to graphic files that can be electronically distributed and viewed via email or web technology, and optionally creating laminated wall maps

• Export detailed data on territory definitions that you can use to drive other systems (commissions, lead assignment, tracking, analysis, etc.), and optionally migrate the territory maps into a searchable web-based system with drill-thru's to customer and other data

What is a territory?  

Territories (often referred to as Territory Districts, Territory Regions or Territory Areas) are geographically defined areas used for sales, service, franchise, business member, distributor or dealer management.  They are in effect a form of geographic segmentation used to divide up areas of responsibility. 

Correctly allocated territories…  

• Provide management with specific sales units that can be used to plan and control field operations

• Help pinpoint and track field coverage, necessary for continued customer support, sales growth and business development

• Allow quick and efficient assignment of new customers and prospect enquiries (leads) to the appropriate sales person, ensuring a clear and fair way to assign sales opportunities

• Ensure a company looking to franchise its business allocates territories on an equal-opportunity basis  

What is a territory hierarchy?  

Most businesses organise their management operations into several levels. The resulting structure is called a 'hierarchy' which often consists of two or more levels. For example, your territories may be defined by groups of Postal Sectors.  The next level above group these territories together. At the top level, territory groups would be combined.

What can Tech4T do to help us understand customer value BEFORE assigning territories?

Tech4T specialise in providing clients with strategic and operational insights into their customer and product profitability. Typically most businesses understand and report net margin from a top down perspective i.e. In a company and division context. This top down view is useful for accounting and reporting purposes, but lacks the depth and visibility required to make informed management decisions.

Tech4T though take a bottom up approach, calculating net margin at the transactional level and identifying from where the profitability is being generated.  We can identify contribution by many measures including Customer; Customer Segment; Product; Product Group; Brand; Supplier; Sales Person; Sales Branch/Region, and give management the visibility required to make better strategic decisions.

Once management has a clear picture of where profit is being generated, a program of strategic initiatives can be developed and implemented to grow overall margin. Note. In most businesses 80% of net margin is generated by 20% of products and 20% of customers. Many initiatives are therefore aimed at focusing the business on the 20% of highly profitable products and customers, and this applies across almost every type of industry. 

The focus of the analysis can be customised to reveal where the majority of costs are consumed and where the majority of profit is generated.  Most businesses will see 3 – 10 times return on investment within 6-18 months with the ability to track the value derived from each initiative on a monthly or quarterly basis. The improved visibility combined with targeted actions guide the business along the path of continuous profit improvement and competitive growth, plus the intelligence can then feed into Tech4T's optimised territory design process.

What is sales force deployment?  

Sales force deployment is a strategy for positioning the sales force in the field in such a way as to maximise their calls to customers or prospects. A sales force deployment plan should address several key issues:  

1. Placement of sales personnel  

Typically, it is important to minimise travel time by locating sales personnel near major access routes and near the areas where their work will be concentrated. If you have existing sales personnel, you may want us to build territories around them. If you are starting from scratch or want to know the ideal locations for your sales team, we can evaluate your existing territories and sales team locations, and recommend ideal placement based on the distribution of your customer, prospect or other data.  

2. Market coverage and sales potential  

Completeness of coverage should be considered. Unassigned areas can result in loss of sales. However, some remote geographic areas may be difficult to service. You must decide if you want to have total coverage of all geography in your sales area. In some cases, it is more efficient to service less dense areas with telemarketing, direct mail, email, or other indirect sales channels.  

3. Balancing sales workload and potential

Unbalanced territories contribute to poor employee performance because areas with too much work are inadequately penetrated, while areas with too little work result in a waste of sales resources. As a rule of thumb, we would try to balance workload (or other critical measure) for your sales territories within a range of +/- 10%.  

4. Achieving the correct mix of existing business opportunities and new prospects  

A territory with too little existing business may not be able to adequately support a sales person, while a territory with too much existing business is a disincentive to prospecting. We can make sure that your territories have an acceptable mix of business or you could consider adjusting your employee remuneration plan accordingly.   Note. Where external influencers can help promote or sell your product or service, then an appropriate call plan to these people needs to be incorporated.

5. Travel-efficient territory design  

Compact, contiguous territories are easier to serve than fragmented, poorly designed or overlapping territories.
In addition, territories that consider travel networks (roads) will be more efficient to service than territories that do not consider travel time.  

What is sales territory alignment?  

Territory alignment is the process of assigning an "area" of selling responsibility to a salesperson, distributor or other entity. Sometimes this alignment involves assigning an actual list of accounts or prospects. Often, however, it is a geographical problem of defining boundaries by grouping small map units, such as Postcodes or Zip codes together into sales areas.  

Territory alignment is not an exact science and there are no right or wrong alignments. An alignment that may be perfect for one business may be wrong for another, even if they sell the same products.  Typically, a territory alignment is a balancing act both in concept and in procedure.

A set of territories that have the absolute minimum travel time may not be practical because the market potential is so wildly skewed. Similarly, a territory alignment containing territories that are all balanced with respect to sales (+/- 2%) may be unworkable due to the huge variation in drive times from territory to territory.

As a result, the best alignments are carefully tailored to suit the needs and objectives of a particular business, and will almost always be a compromise of several factors. In an alignment, there is typically a set of alignment criteria or objectives that are considered in the process.  One of the most common objectives is the balancing of workload and equalising of sales potential. Balancing of workload or potential is important for two reasons.

1. A sales territory with too many customers or prospects means that sales opportunities are missed
   because there is too much work to do.

2. A territory with too few customers or prospects means that a salesperson's time is being wasted and potential is not being tapped. The combination of wasted selling time and missed sales opportunities limits revenue growth and increases selling costs.  

Minimising travel and reducing or eliminating territory overlap are frequently considered as additional objectives in territory alignment. Poorly defined territories result in increased travel and reduced sales time. Proper sales team placement, good travel access and minimal territory overlap are achieved in an efficient territory alignment.  Because the objectives of sales force redeployment differ from case to case, it is always a good idea to determine your specific objectives before the alignment process begins.  

Territory balancing objectives  

Usually a territory alignment (or realignment) should take into account both the sales representatives' objectives (for example, increasing their recompense), business objectives (for example, increasing profits by X percent) and sales management objectives (for example, balancing earning opportunity for all territories within ten percent).   Since a territory alignment (or realignment) is typically event driven, there is usually a single objective behind the need for change. For example, there may be a need to increase or decrease the number of field sales staff, a merger may necessitate the combining of two or more sales organisations, or new a product may require that a specialist sales force be spun off from the main sales force. In most cases, there are goals and objectives associated with these events.  

Questions that you may want to ask prior to embarking on a territory optimisation or alignment project include:  

• How many field sales territories?

• If there is a need for a hierarchical structure, how many tiers

• Are there components to an existing sales hierarchy that cannot change?

• What data variables need to be considered in the alignment?

• What are the primary and secondary  variables to be used for balancing territories, and how should others be weighted?

• What percent deviation from this goal is acceptable?

• What is the expected workload - call availability per day, days per month on the road, holidays, etc.

• What should the territory call plan look like?

• What mapping cartography should be used in the territory design?

• Do existing field sales person locations need to be considered?   

Choosing the sales territory alignment layer  

In cases where territories are to be geographically defined, one thing to consider is the level of geography to use as the building blocks for the design. For example, for the UK we use Postcode Area or Postcode District, but in the main Postcode Sector.

Postcode PO16 7DZ is made up of:

One way to help decide which alignment data to use is to review how territories have been organised in the past, taking account of whether the set up was effective and whether it provided the necessary flexibility in building territories and in managing the sale resource.  

Please note. For geographic alignments, the level of geography or postal unit used to define your territories will determine the number of building blocks that are available for territory manipulation and fine-tuning.  

Hierarchical territory alignment

There are two ways to develop a sales hierarchy: bottom-up and top-down. A bottom-up approach begins with the creation of the territories. When the territories are complete, they are grouped together to create the next level in the hierarchy. The process is then repeated until the top level is reached. Top-down is simply the reverse of this. Both approaches offer advantages and disadvantages, but your sales infrastructure and way of working will determine the approach we take.

Sales call planning - See also our route planning solution - click here

During the territory development process, call frequency is usually one of the main inputs used within the balancing formula. Once territories have been created and to adapt a call planning model, each territory needs to be further divided.

The process to divide the territories and create the call pan is usually complex, especially where there are some customers requiring a weekly visit and others needing an alternate visit strategy - fortnightly, monthly, bi-monthly, quarterly, etc.

If weekly visits are needed, then territories will need to be divided by five. If monthly, territories need to be divided by four, then sub-divided by five.

To develop an effective call plan, sales visits need to be grouped by day of the week and drive times. Additionally, the amount of time spent with each customer needs to be taken into account. In most instances though, a sales person will be assessed on the average calls per day they make - or the average of the sales team as a whole - which typically varies from two to eight per day.

At a minimum, we would usually produce call plans as a set of maps and data sheets to break down the assignments, but an alternate delivery mechanism would be using a set of drill-down web pages. These would be segmented by day, by week, etc., and show all customers (and optionally prospects) allocated for that plan.

Each customer location can then be set to drill down to a separate data sheet, or linked by customer ID to an intranet record in a CRM system. This then enables the sales person to query customer data direct from the maps.

Please call +44 (0)1733 890790 to discuss your territory needs and how we can help.