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Territory Management vs. Account Management
| Guest post by: Sue Barrett |
Article Overview: Terms such as Account Development, Account Management and Territory Management are often interchanged indiscriminately by many a sales people and managers thus creating confusion when it comes to sales planning, portfolio allocation and recruiting the right kind of sales person for your business. I thought it might helpful to define these terms and give you a little more perspective. All sales people involved in developing long term viable business relationships with the right kind of customers should be doing Account Development: Here is our definition of Account Development taken from the BARRETT Sales Competency Dictionary.
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Territory Management vs. Account Management
Terms such as Account Development,
Account Management and Territory Management are often interchanged
indiscriminately by many a sales people and managers thus creating confusion
when it comes to sales planning, portfolio allocation and recruiting the right
kind of sales person for your business.
I thought it might helpful to define
these terms and give you a little more perspective.
All sales people involved in
developing long term viable business relationships with the right kind of
customers should be doing Account Development: Here is our definition of
Account Development taken from the BARRETT Sales Competency Dictionary.
Account
Development: Develops account profiles and plans
for each customer with a thorough understanding of the customer’s business and
their needs and works with that business to yield greater penetration rates for
further viable sales.
It makes sense. However, when
it comes to field sales planning it is critical, not just to know whom you are
calling on and how you are calling on them, but to know what type of portfolio
allocation and management your sales portfolio requires.
Are you and your sales team working
a territory or account management strategy?
The difference is quite important if
you want to run a successful well managed sales team and business. Let’s
look at the two most common terms used when it comes to sales portfolio
management:
Account
Management
Relates to a Sales Representative
entrusted with managing an account or series of accounts. This, for
example, would include the responsibilities for locating and negotiating to
acquire clients’ accounts within a Territory, State or Nationally. Account Management is not necessarily territory bound in
practice, however, it does involve:
- positioning yourself and your business at multiple levels with the client account,
- handling all major decisions related to that specific client and
- working with all key people within that account including the key decision makers, influencers, coaches, etc.
Territory Management
Relates, in the main, to a Sales Representative or Merchandiser with a Territory to manage – this is most common in businesses such as:
- Pharmaceutical Sales: calling on GP’s, Hospitals and Pharmacies within a specific geographical area.
- Selling into Retail: selling into and managing all the different retail stores in their territory i.e. Supermarkets, etc.
- Some Mortgage Franchise Sales: in a number of these franchises, they have set Mortgage Brokers up with a designated geographical territory calling on consumers within that area.
If you are unsure about what is right for you here is some information from Sykronix, a marketing research portal that might help you:
REASONS FOR ESTABLISHING SALES TERRITORIES
Better coverage – salespeople cannot cherry pick; territory assignments constrain salespeople to work with less profitable customers or prospects as well as the most desirable accounts
Reduced selling costs – assigning responsibility to a single salesperson ensures that there is no overlap in coverage; customers and prospects are called upon by only one salesperson
Improved customer service – assigning responsibility to a single salesperson helps to ensure that all customers and prospects receive adequate servicing
More accurate evaluation of performance – if territories are relatively equal with regard to workload and potential, then salesperson performance can be compared on an equal basis; if territories are unequal in a known way, then adjustments can be made in evaluation of unequal performance
WHEN NOT TO ESTABLISH SALES TERRITORIES
Sales coverage is far below sales potential – e.g., a new company wants to cherry pick for the most profitable prospects first
The sales force is highly specialized – e.g., when the sales force is organized along the lines of product specialty rather than along the lines of customer location
Sales are made on the basis of personal contacts and by referrals
SOME GUIDELINES FOR DESIGNING TERRITORIES
Sufficient potential – with insufficient potential, a salaried salesperson will not be used effectively, and commissioned salespeople will leave the company for greener pastures
Reasonable size – is a salesperson’s time being spent traveling or making face-to-face sales calls?
Adequate coverage – is the salesperson able to service all accounts and able to meet new prospects?
Minimum impediments – try to set territories such that rivers, mountains, railroads, etc. set the borders of territories rather than run through the middle.
DESIGNING TERRITORIES
Determine appropriate focal points and boundary areas
Political boundaries – state, city, county, etc.
MSAs –
Trading areas –
Natural boundaries – mountains, rivers, railroads, etc.
Determine territory shape for efficient use of time and routing
Wedge – slices of a pie; use when salespeople work out of a common office
Circle (or square) – use when salespeople work out of a home office
P.S. Then there is
Category Management: Relates to someone being given the responsibility of managing a ‘Category’, example ‘Footwear’, they would manage Shoes, Socks, etc. but they would not be responsible for shirts etc.
Also thanks to Tom at Golden Circle for the additional insights.
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About the Author: Sue Barrett RSS for Sue's articles - Visit Sue's website Sue is one of the leading voices commenting on sales today. Sue has a unique way of getting to the heart of the matter - she combines extensive knowledge, research, insight, and practical experience with a deep sense of compassion to bring forth a more enlightened way of thinking and participating in the world. This makes her stand out from the usual crowd of existing business commentators. Her ability to distill complex ideas and relate them to life's everyday challenges and opportunities has audience members and readers leaving with a stronger understanding of "self" and how they can begin to achieve excellence through purposeful action. Presenting and writing on a wide range of topics about the world of 21st Century selling Sue's presentations and articles include sales philosophy and culture, sales leadership and coaching, sales training, selling skills, resilience, neuroscience in selling and more. Sue's articles are some of the most widely read in Australia and she is gaining a following overseas as well. Besides publishing on Barrett Sales Blog site, Sue has been the lead sales writer for www.smartcompany.com.au since 2007, and is also regularly published on other highly regarded publications such as Australian Anthill Magazine, Niche Magazine, Marketing Mag, Business Chicks, and Business Deals. Click here to visit Sue's website   Why everybody lives by selling something part 2 Territory Management vs Account Management Great at sales but they dont fit the culture Competing motivations creating confusion Getting back to the sales basics |
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