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Sales Management --Unmask the Confusion of Territory Account Assignment
| Guest post by: Dr. Rick Johnson |
Article Overview: When I carried a bag, sales territories were defined geographically. Of course, that was in the old days. My daughter calls it the days of Black & White Television. In reality, color television came out when I was still only seven years old. But in the days when I was a field sales rep, the 70’s & 80’s, a sales person got a chunk of geography and you were told this is your patch of dirt. You go out and you farm the territory and you build the business. However, for the most part, if you are going to grow your territory it has to grow by taking market share from the competition. Territories today need to go from being geographically defined to being key account assignment defined. So, in other words, when you use the term, ‘territory’ today, you’re not referring to a patch of dirt.
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Free Download - Sales Management --Unmask the Confusion of Territory Account Assignment By Dr. Rick Johnson |
Sales Management --Unmask the Confusion of Territory Account Assignment
When I carried a bag, sales territories were defined
geographically. Of course, that was in
the old days. My daughter calls it the
days of Black & White Television. In reality, color television came out
when I was still only seven years old. But
in the days when I was a field sales rep, the 70’s & 80’s, a sales person got a chunk of geography and
you were told this is your patch of dirt. You go out and you farm the territory
and you build the business. However,
for the most part, if you are going to grow your territory it has to grow by taking
market share from the competition.
Territories today need to go from
being geographically defined to being
key account assignment defined. So, in
other words, when you use the term, ‘territory’ today, you’re not referring to
a patch of dirt. You should be referring
to a group of assigned accounts. Ask
yourself the question --- “How many accounts can one sales person effectively
call on?”
Normally, territory planning as a sales person involves
looking at prior sales to that account. It’s strictly historical data and that’s not good enough. Sales people must reach another level of
granularity, in terms of buying influences and the total number of potential
customers in your market . So there should be a database that if you
just imagine a circle which is ALL consumers of product in your market, that’s
the distributor served available market. (SAM)
Some of those customers buy from you and some don’t.
Your computer database shouldn’t consist of just your customers. It should consist of ALL customers and there’s a level of granularity
beneath it, in terms of where these “buy” influences are. In other words, there’s a lot of things that are different
based on the mix of products . But as
you collect data, by buying influence and it aggregates up to a
customer, then you relate that customer
back to the total potential. This is the beginning of determining territory
account assignment.
This is not really complicated or tricky, but here’s what most of us have – most of us have
this list of accounts and we want to sell more. We want higher gross profit
(GP) so we go back to the manufacturers and ask them to give us an extra
discount. Let’s buy a rail car or
container of this stuff. Right? So our territory design starts from that
premise.
Territory account
assignment is fundamentally a time management problem. For you to really get a
grip on how to design sales territories and again we’re looking at piles of
accounts, you need the right answers on higher GP, manufacturer negotiations,
pricing, inventory management and market share growth. Ask yourself the question --- “How many
accounts can one sales person effectively call on?”
Here’s what should happen….there should be a balance in
every field sales guy’s territory between account maintenance, account
development, and prospecting. Now let’s
define the differences. Account
maintenance is a relationship with accounts that you are already getting a maximum
share of their spend. You are just servicing the customer; keeping the customer
happy.
Growth accounts are those accounts that you are doing a fair
amount of business with but you aren’t getting a maximum share of their spend.
These are your targeted penetration accounts. This is where the majority of
your growth is going to come from.
Prospecting is essentially trying to find an opportunity
where you have no volume and it may or may not have
potential so there’s a constant churning.
What you’re trying to do with prospecting is look at the movement and
buying influences in your industry. You
may be in an industry that requires a lot of prospecting or you may be in an
industry that requires a lot less but every sales person has to do some level
of prospecting. That does not mean the field sales people go out making a bunch
of cold calls and use of 20-30 or 40% of their time. Typically leads get qualified by inside sales
first, appointments can even be set up
and field sales go out to determine
potential and begin building a relationship. You are always looking at where
the buying influence’s moving. That’s
what the prospecting is. Who are the
people that I need to reach to maintain a control of this account? Prospecting is about looking for
opportunities with new accounts that
have the potential to provide a significant increase in sales in the next 90
days.
Change is powerful – many sales people have very little
flexibility in their mindset and they think they’re doing a really great job by
always having the same call frequency.
The key objective is to allocate time to opportunities for increase
instead of existing volume.
Sales management must analyze territories with their sales
people and determine if the company is getting maximum coverage based on the
market potential. Forget the concept of each territory being a patch of dirt
and the sales person assigned that territory as being the owner of every
account that resides within it. That’s old school thinking. If you want to
maximize your sales effectiveness and increase market share, think coverage.
Again, how many accounts can one sales person effectively call on and still function
as a demand creator instead of a demand fulfiller. Perhaps you have territories
where the potential for growth is so high it would warrant adding a junior
sales person based on account assignment that can develop and nurture
additional business within that geographic footprint and actually create new
self sufficient territories that produce market share growth.
Think about it. No sales person ever wants to give up
accounts or territory. This is true even in cases where they don’t even know
all the accounts. After all, one or two of these accounts might buy something
by accident and they want the credit. It always amazes me when I ask
distributor sales people how many accounts they handle and the answer is 100 or
150 or even more. Realistically, they will even tell you that they can’t
possibly call on all of them. Just as realistically many of them don’t warrant
a face to face personal call. However, that does not mean we should ignore
them. Big accounts were once small and chances are there are some of those
accounts that really have great potential and they are not being called on.
As sales management, do your homework, figure out the
real potential of those accounts. If there are 100 plus accounts but they don’t
warrant face to face contact you can still set up a proactive inside sales outcall
program to maximize coverage and increase business. If there is a lot of potential within those accounts, shake up the
territories using the assigned account concept. Experiment with the junior
sales person concept. Start with a prototype program in a high potential select
territory to start with. A side benefit of the junior sales concept is the
development of bench strength for the future. It also allows you to do some
pruning without the traditional sales dip that normally occurs when a territory
is vacant while you find a replacement rep
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About the Author: Dr. Rick Johnson RSS for Dr. Rick's articles - Visit Dr. Rick's website www.ceostrategist.com - Sign up to receive "The Howl" a free monthly newsletter that addresses real world industry issues. - Straight talk about today's issues. Rick Johnson, expert speaker, wholesale distribution's "Leadership Strategist", founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. Need a speaker for your next event, E-mail rick@ceostrategist.com. Dr. Rick Johnson has over 35 years of experience in distribution sales and operations. Rick�s career can be broken down by decades. The first ten years of his distribution career were spent with the largest steel-processing distributor in the world (Joseph T. Ryerson). The second ten years began with Rick starting his own processing distribution center from scratch. In the first year, sales reached $1 million dollars and had grown to $25 million in its tenth year when Rick sold the business to one of the major national chains. The third ten years of Rick�s career dealing with financially troubled Turn-A-Round companies. After completing ten years of TAR work, Rick decided a decade of acting like Darth Vader was enough and became a consultant to the Wholesale Distribution Industry in 1999. Rick received an MBA from Keller Graduate School in Chicago and a Bachelor's degree from Capital University, Columbus Ohio. He also served six years in the United States Air Force as a survival instructor. Rick completed his dissertation on Strategic Leadership and received his Ph.D. in 2005. Rick is frequently published in numerous magazines including a column in Supply House Times, with over 250 different articles published to date. He�s also a published author with eight books to his credit. Click here to visit Dr. Rick's website   Star Status in Sales Whine or Shine Sales Management Jobless Recovery An Oxymoron Stay Calm Dont Panic Are You Doing the Moon Walk Going Backwards While Moving Forward |
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