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Guest post by: Sue Barrett Become an Author

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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.

True Account Management is usually reserved for larger, more complex accounts requiring one or more of a team of people to manage the account(s) from the supplier.

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.

Therefore how should your sales team currently be operating?

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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