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Territory Design
Territory Design Procedures
• What are triggering events?
• The Buildup Method -- Six steps (11-1)
1. Select control units
• Census tracts -- good for dividing cities
• Counties - convenient and data readily available

2. Choose starting points
• Salesperson’s home
• Large customer - cut transportation cost
• Big city - convenient for services (11-2)

Territory Design
Computer Based Territory Designs
• Computers save time
• Need location & number of customers & starting
points
• Program options
– minimize moment of inertia
– Graph data & draw boundaries -- not optimal

– design optimal territories -- expensive

• Applications -- pharmaceutical reps

Territory Design
In-Class Exercises 11-1
1. Why do companies redesign territories?
2. In this role play, what were the reasons
for redesigning territories?
3. What problems are likely to arise when
territories are redesigned?
4. Which salespeople are most likely to be
resistant to change?

Territory Design
In-Class Exercises 11-1
5. What mistakes were made in territory
realignment?
6. What options are available?
7. Should the company give in to Hughes and not

change his territory?
8. What if seven other people in the district come
to you asking for the same deal as Hughes?
What do you tell them?

Territory Design
Territory Design Procedures
3. Determine Allocation Criteria
•
•
•
•

Territory balance -- effect on morale
Customer balance - distribute commission
Potential balance - share business growth
Size balance - reduce transportation costs

4. Combine Adjacent Control Unit (11-3)
5. Compare Sales Territories

• Mountains, roads, population center locations?

6. Assign people to Sales Territories

Events triggering sales
terrirtory adjustments
Mergers
Division consolidation
Division split
Sales force turnover
Plant relocations
Product line changes

1
Select geographic
control units
2
Decide on
allocation criteria
3

Choose
starting points
4
Combine control units
adjacent to starting points
5
Compare territories on
allocation criteria
6
Assign salespeople to
new territories

Figure 11-1: Territory Design Process

Revise territory
boundadries to
balance workload
and potential

The numbers in ach

county are
population figures
and are
Major
super highways
a measure
of
potential.
Territory
borders

OHIO

INDIANA
WEST
VIRGINIA

ILLINOIS

VIRGINIA

TENNESSEE
Three Kentucky Sales Territories

The numbers in ach
county are
population figures
and are
Major
super highways
a measure
of
potential.
Territory
borders

OHIO

INDIANA
WEST

VIRGINIA

ILLINOIS

VIRGINIA

TENNESSEE
Three Kentucky Sales Territories

Figure 11-4: Dividing a Large Territory

Table 11-2 Geographic Control Units Used in Territory Design
Countries
States or provinces
Counties
Metropolitan areas

Cities
Zip codes
Census tracts

Customers

Table 11-2

Comparing Three Kentucky Sales Territories

Territory

Potential as
Measured by
Population

Number of Counties

1
2
3

1,124,897
1,129,290

1,131,137

47
27
43

Sales Territory Mapping Programs
Vendor

Package

Description

Price

GeoQuery Corp.

GeoQuery

Interactive maps for travel planning

and territory analysis. Direct links to
contact management program.

$295

TTG,Inc.

STARmanager

Territory mapping system that integrates
sales and marketing data for interactive
territory analysis, realignment, and
monitory.

$995

Sammamish
Data Systems

GeoSight

Professional

Geographic informaitno systems for sales
territory creation and management.
Includes address matching.

$1,850

Metron, Inc.

TerrAlignOptimal sales territory alignment and
$20,000+
analysis. Exclusive OptAlign technology
automatically balances territories and
decreases driving time.

Territory Design
Territory Design Procedures
• Talley’s Workload Approach
– No starting points
– Equates work to be done
– May lead to imbalance on size (11-4)
– Often raises travel costs
– Good when reps are on salary
– Key: optimal call frequency for particular
classes of customers