There are number of criteria that have to be considered when performing a sales territory planning exercise. All of them have to be considered because they affect the productivity of the company in one-way or another. There are often correlations between these criteria and a substantial change in one will in most cases affect several others. So it’s important to look at all of them instead of only focusing on one or a small group. A narrow consideration will often result in unexpected productivity results.
For the most part, these design criteria can be classified into three general types: Geographic, Organizational and Activity based.
The Geographic criterion takes into account the travel time and the distance between the sales person and the customer. When planning your sales territories you have to consider how accessible an area is. Is an area geographically connected to other areas that the sales person has to visit? Can the area be accessed by public transportation and are there impassable natural obstacles like mountains and rivers? A compact area is ideal for any sales person because it reduces travel time. Travel time is unproductive so less of this means more for your revenue.
The Organizational criterion involves the “setup” of your work force and your areas. It includes the number of areas that you have to work with, the number of people you have and where they’re located, the geographical size of each area (are you working with towns, provinces, states, etc…) and other factors that affect the assignment of sales people to particular areas.
The last criterion, Activity-related, looks at the workload of each sales person based on the location and the customers he’s assigned to. Districts have to be balanced when it comes to workload. This is done in the interest of keeping things fair between the sales personnel. There are differing views on this criterion however and some established authors are of the opinion that the balancing of territory workload should not be the primary consideration but the maximization of profit. This is a policy decision however and it’s up to the company to decide which to prioritize when planning their sales territories.