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This form of marketing communication involves a face-to-face dialogue between two persons or by one person and a group. Message flexibility is an important attribute, as is the immediate feedback that often flows from use of this promotional tool.
For an applied interpretation see David Stringer’s MiniCase entitled Selling the benefits of personal selling at the end of this chapter.
The aims of this chapter are to examine personal selling as a promotional tool and to consider management’s use of the sales force. The learning objectives of this chapter are to:
1. consider the different types, roles and tasks of personal selling; 2. determine the strengths and weaknesses of personal selling as a form of communication; 3. explore the ways in which personal selling is thought to work; 4. establish the means by which management can organise a sales force; 5. compare some of the principal methods by which the optimum size of a sales force can be derived; 6. discuss the future role of the sales force.
Aims and learning objectives
Chapter 22
Personal selling
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Introduction
In an era when relationship marketing has become increasingly understood and accepted as the contemporary approach to marketing theory and practice, so personal selling characterises the importance of strong relationships between sellers and buyers. The traditional image of personal selling is one that embraces the hard sell, with a brash and persistent salesperson delivering a volley of unrelenting, persuasive messages at a confused and reluctant consumer. Fortunately, this image is receding quickly as the professionalism and breadth of personal selling has become more widely recognised and as the role of personal selling becomes even more important in the communications mix. Personal selling activities can be observed at various stages in the buying process of both the consumer and business-to-business markets. This is because the potency of personal com- munications is very high, and messages can be adapted on the spot to meet the requirements of both parties. This flexibility, as shall be seen later, enables objections to be overcome, information to be provided in the context of the buyer’s environment and the conviction and power of demonstration to be brought to the buyer when they request it. Personal selling is different from other forms of communication in that the transmitted messages represent, mainly, dyadic communications. This means that there are at least two persons involved in the communication process. Feedback and evaluation of transmitted mess- ages are possible, more or less instantaneously, so that these personal selling messages can be tailored and be made much more personal than any of the other methods of communication.
Types of personal selling
One way of considering the types of personal selling is to examine the types of customer served through this communication process:
1. Intermediaries This involves selling offerings onward through a particular channel network to other resellers. They in turn will sell the offering to other members who are closer to the end-user. For example, computer manufacturers have traditionally distributed their products through a combination of direct selling to key accounts and through a restricted number of dealers, or value-added resellers. These resellers then market the products (and bundle soft- ware) to their customers and potential customer organisations. 2. Industrial Here the main type of selling consists of business-to-business marketing and requires the selling of components and parts to others for assembly or incorporation within larger offer- ings. Goodman manufactures car radio systems and sells them to Ford, which then builds them into its cars as part of the final product offering. 3. Professional This type of selling process requires ideas and offerings to be advanced to specifiers and influencers. They will in turn incorporate the offering within the project(s) they are devel- oping. For example, a salesperson could approach an architect to persuade them to include the alarm system made by the salesperson’s organisation within the plans for a building that the architect has been commissioned to design. 4. Consumer This form of personal selling requires contact with the retail trade and/or the end-user consumer.
The association of personal selling with the hard sell is receding as the role of personal selling becomes more important in the communications mix.
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is generally agreed that personal selling is most effective at the later stages of the hierarchy of effects or buying process, rather than at the earlier stage of awareness building. Therefore, each organisation should determine the precise role the sales force is to play within the communication mix.
The role of personal selling
Personal selling is often referred to as interpersonal communication and from this perspective Reid et al. (2002) determined three major sales behaviours, namely getting, giving and using information:
z Getting information refers to sales behaviours aimed at information acquisition, for example gathering information about customers, markets and competitors. z Giving information refers to the dissemination of information to customers and other stakeholders, for example sales presentations and seminar meetings designed to provide information about products and an organisation’s capabilities and reputation. z Using information refers to the sales person’s use of information to help solve a customer’s problem. Associated with this is the process of gaining buyer commitment through the generation of information (Thayer, 1968, cited by Reid et al. , 2002). These last authors suggest that the using information dynamic appears to be constant across all types of purchase situations. However, as the complexity of a purchase situation increases so the amount of giving infor- mation behaviours decline and getting information behaviours increase. This finding supports the need for a sales person to be able to recognise particular situations in the buying process and then to adapt their behaviour to meet buyer’s contextual needs. However, sales people undertake numerous tasks in association with communication activities. Guenzi (2002) determined that some sales activities are generic simply because they are performed by most sales people across a large number of industries. These generic activities are selling, customer relationship management and communicating to
Prospecting Finding new customers
Communicating Informing various stakeholders and feeding back information about the market Selling The art of leading a prospect to a successful close Information gathering Reporting information about the market and reporting on individual activities Servicing Consulting, arranging, counselling, fixing and solving a multitude of customer ‘problems’ Allocating Placing scarce products and resources at times of shortage Shaping Building and sustaining relationships with customers and other stakeholders
Table 22.1 Tasks of personal selling
Personal selling is the most expensive element of the communications mix.
As the complexity of a purchase situation increases so the amount of giving information behaviours decline.
Sales people undertake numerous tasks in association with communication activities.
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customers. Other activities such as market analysis, pre-sales services and the transfer of information about competitors to the organisation are industry-specific. Interestingly, he found that information-gathering activities are more likely to be undertaken by organisations operating in consumer markets than in b2b, possibly a reflection of the strength of the market orientation in both arenas. The role of personal selling is largely one of representation. In business- to-business markets sales personnel operate at the boundary of the organ- isation. They provide the link between the needs of their own organisation and the needs of their customers. This linkage is absolutely vital, for a number of reasons that will be discussed shortly, but without personal selling, communication with other organisations would occur through electronic or print media and would foster discrete closed systems. Representation in this sense therefore refers to face-to-face encounters between people from different organisations. Wright and Fill (2001) found that doctors used the sales representatives of pharmaceutical companies as a means of forming images of the companies themselves. In other words, the sales force, whether inten- tionally or not, served as a corporate identity cue and provided valuable signals. Many authors consider the development, organisation and completion of a sale in a market exchange-based transaction to be the key part of the role of personal selling. Sales per- sonnel provide a source of information for buyers so that they can make the right purchase decisions. In that sense they provide a good level of credibility, but they are also perceived, understandably, as biased. The degree of expertise held by the salesperson may be high, but the degree of trustworthiness will vary, especially during the formative period of the relationship, unless other transactions with the selling organisation have been satisfactory. Once a number of transactions have been completed and product quality established, trustworthiness may improve. As the costs associated with personal selling are high, it is vital that sales personnel are used effectively and efficiently. To that end, some organisations are employing other methods to decrease the time that the sales force spends on administration, travel and office work and to maximise the time spent in front of customers, where they can use their specific selling skills. The amount of control that can be exercised over the delivery of the messages through the sales force depends on a number of factors. Essentially, the level of control must be regarded
The role of personal selling is largely one of representation.
It can be argued that members of the sales team must be free to adapt messages at the point of delivery because individual clients are themselves different and have different needs and requirements. Lloyd (1997) believes that, when selling to doctors, medical representatives enter into conversations that are appropriate for individual doctors. An example concerns two products manufactured by Schering-Plough. They have two hayfever products (one nasal and the other an oral antihistamine), and sales representatives are expected to decide which to present (in detail) to doctors, based on the representatives’ knowledge and experience of each individual doctor’s preferences and the needs of their patients. This flexibility is framed within the context of the product strategy. Decisions that impact upon strategy are not allowed. There is freedom to adapt the manner in which products are presented, but there is no freedom for the sales representatives to decide the priority of the products to be detailed.
Question
Why do you believe the presentation of medical products is controlled so strictly?
Task
Next time you come into contact with a sales person, in a non-work situation, find out if the products or ser- vice they sell are prioritised.
ViewPoint 22.1^ Hayfever under control
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are taking place. For example, decisions related to the installation of products designed to automate an assembly line may well be a sensitive issue. This may be due to management’s atti- tude towards the operators currently undertaking the work that the automation is expected to replace. Any complexity needs to be understood by buyer and seller in order that the right product is offered in the appropriate context for the buyer. This may mean that the buyer is required to customise the offering or provide assistance in terms of testing, installing or sup- porting the product. When the complexity of the offering is high, advertising and public relations cannot always convey benefits in the same way as personal selling. Personal selling allows the product to be demonstrated so that buyers can see and, if necessary, touch and taste it for themselves. Personal selling also allows explanations to be made about particular points that are of con- cern to the buyer or about the environment in which the buyer wishes to use the product.
Buyer significance
The significance of the product to the buyers in the target market is a very important factor in the decision on whether to use personal selling. Significance can be measured as a form of risk, and risk is associated with benefits and costs. The absolute cost to the buyer will vary from organisation to organisation and from consumer to consumer. The significance of the purchase of an extra photocopier for a major multinational organisation may be low, but for a new start-up organisation or for an established organisation experiencing a dramatic turnaround, an extra photocopying machine may be highly significant and subject to high levels of resistance by a number of different internal stakeholders. The timing of a product’s introduction may well be crucial to the success of a wider plan or programme of activities. Only through personal selling can delivery be dovetailed into the client’s scheme of events.
Communication effectiveness
There may be a number of ways to satisfy the communication objectives of a campaign, other than by using personal selling. Each of the other communication tools has strengths and weak- nesses; consequently differing mixes provide different benefits. Have they all been considered? One of the main reasons for using personal selling occurs when advertising alone, or any other tool or medium, provides insufficient communications. The main reason for this inad- equacy surfaces when advertising media cannot provide buyers with the information they require to make their purchasing decisions. For example, someone buying a new car may well observe and read various magazine and newspaper advertisements plus information on the web. The decision to buy, however, requires information and data upon which a rational decision can be made. This rationality and experience of the car, through a test drive perhaps, balances the former, more emotional, elements that contributed to the earlier decision. The decision to buy a car normally evokes high involvement, and motivation occurs through the central route of the ELM. Therefore, car manufacturers provide a rich balance of emotional and factual information in their literature, from which a prospective buyer seeks further information, experience and reassurance from car dealers, who provide a personal point of contact. Car buyers sign orders with the presence and encouragement of sales persons. Very few cars are bought on a mail order basis, although some are bought over the Internet. Personal selling provides a number of characteristics that make it more effective than the other elements of the mix. As discussed, in business-to-business marketing the complexity of many products requires salespeople to be able to discuss with clients their specific needs; in other words, to be able to talk in the customer’s own language, to build source credibility through expertise and hopefully trustworthiness, and build a relationship that corresponds with the psychographic profile of each member of the DMU. In this case, mass communi- cations would be inappropriate.
Significance can be measured as a form of risk.
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There are two further factors that influence the decision to use personal selling as part of the communications mix. When the customer base is small and when it is dispersed across a wide geographic area, it makes economic sense to use salespersons, as advertising in this situation is inadequate and ineffective. However, web sites and the use of interactive marketing com- munications can provide increased communication richness and obviate the need for sales representatives in some situations.
Channel network factors
If the communications strategy combines a larger amount of push rather than pull activities, then personal selling is required to provide the necessary communications for the other mem- bers of the channel network. Following on from this is the question regarding what infor- mation needs to be exchanged between members and what form and timing the information should be in. Handling objections, answering questions and overcoming misconceptions are also necessary information exchange skills. When the number of members in a network is limited, the use of a sales force is advisable, as advertising is inefficient. Furthermore, the opportunity to build a close collaborative rela- tionship with members may enable the development of a sustainable competitive advantage. Cravens (1987) suggested that the factors in Table 22.2 are important and determine when the sales force is an important element of the communications mix. The roles of personal selling and the sales force are altering because the environment in which organisations operate is changing dramatically. The repercussions of these changes will become evident following the discussion of the tasks that personal selling is expected to complete.
Web sites and the use of interactive marketing communications can provide increased communication richness
Advertising relatively Personal selling important relatively important Number of customers Large Small Buyers’ information needs Low High Size and importance of purchase Small Large Post-purchase service required Little A lot Product complexity Low High Distribution strategy Pull Push Pricing policy Set Negotiate Web-enabled communications and exchanges High Low Resources available for promotion Many Few
Table 22.2 When personal selling is a major element of the communications mix
Source: Adapted from Cravens (1987).
How personal selling works: sales processes
A number of conceptual schemes have been proposed to explain the various stages in the sales process. These can be distilled into nine main stages, set out in Figure 22.1. The alignment and rigidity of the sequence should not be overstated, as the actual activities undertaken within each of these stages will vary not only from organisation to organisation but also between salespeople.
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buy after the prepared presentation. This behavioural view is vendor-led and discounts the cognitive processes of the buyer in its attempt to control the process and the differing needs of different buyers. A third model focuses on buyers and their needs. The role of the salesperson is to assist buyers to find solutions to their problems. According to Still et al. (1988), the salesperson needs to understand the cognitive processes of buyers in respect of their decision to buy or not to buy. This approach has been termed the ‘buying formula’ and is based on the satisfactions that a buyer experiences when placing orders as a solution to perceived prob- lems (from work based on Strong, 1938). The sequence of the model, therefore, is that a buyer first recognises a problem or a need. A solution is then found, which is purchased, and the buyer experiences a level of satisfaction. This formula can be seen in Figure 22.2. The solution contains two components, the product or service and the name of the organisation or the salesperson who facilitated the solution. When a buying habit is formed, the formula adjusts to that in Figure 22.3. To complete the formula, buyers must regard the product and the source as adequate and experience pleasant feelings when thinking of the components to the solution (see Figure 22.4). Still et al. (1988) emphasise the need for salespersons to ensure that all the components of the buying habit are in place. For example, it is important that the buyer knows why the
The ‘buying formula’ is based on the satisfactions that a buyer experiences when placing orders as a solution to perceived problems.
Figure 22.2^ The mental stages involved in a purchase
The buying formula Source: Still and Cundiff, Sales Management: Decisions, Strategies and Cases, 5th, © 1988. Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.
Figure 22.
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product is the best one to resolve the identified problem and they must also have a pleasant feeling towards the source. This means that any competitor attack will be rebuffed because the current solution is deemed adequate. Reasons and pleasant feelings constitute the major elements of defence in a buying habit. While some people might reject this approach, the essence of the buying formula is that a long-term relationship can develop as a result of the satisfaction with the solutions offered by the salesperson. If solutions are based on knowledge and experience that the buyer can iden- tify and empathise with, then the strength of the relationship is likely to be reinforced. It will come as no surprise that successful salespeople appear to hold high levels of interpersonal skills, are able to relate to customer problems, have solved similar problems and are experts at solving such problems (Rothschild, 1987). A host of factors can influence the buying process, but one growing area of interest concerns the symbolic meaning of offerings and the communication aspects of products and services. This is referred to as semiotics, the science of signs and meaning. Through consump- tion, people communicate non-verbally who they are and the roles they are playing at a par- ticular moment. Consumption allows people self-expression. This perspective is important to the salesperson, as the perception that buyers have of them can influence the sales process. Stuart and Fuller (1991) found that a buyer’s initial perception of a salesperson, the products and the organisation they represent, is strongly influenced by the clothing worn by the repres- entative. Dress codes and uniforms, they conclude, can be used by an organisation to shape the desired customer perceptions of an organisation’s size and ethics. The implication is that marketing communications should not ignore issues about the dress code of an organisation. Although expectations have changed radically since IBM insisted that all its representatives wore a white shirt and plain tie, dark blue suit and black shoes, the way salespeople present themselves affects the perception of others and can influence the outcome of the sales process. ‘Communication apprehension’ refers to the degree to which an anxiety concerning communication will negatively affect a
The complete buying formula Source: Still and Cundiff, Sales Management: Decisions, Strategies and Cases , 5th, © 1988. Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.
Figure 22.
‘Communication apprehension’ refers to the degree to which an anxiety concerning communication will negatively affect a salesperson’s performance.
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The primary and traditional sales channel is the field sales force. These are people who are recruited and trained to find prospective customers, to demonstrate or explain the organisation’s products and services and to persuade prospects that they should buy the offering. Orders are then signed, and the salesperson reports the order to their organisation, which then fulfils the details of the customer’s order, as agreed. However, while life is not this simple, this broad perspective is assumed to be the primary sales channel of many organisations, particu- larly those operating in the business-to-business sector. In some ways, salespersons are like any other unit of resource in that they need to be deployed in a way that provides maximum benefit to the organisation. Grant and Cravens (1999) suggest that the effectiveness of the sales organisation (or unit) is determined as a result of two main antecedents: the sales manager and the sales force itself. These are shown in Figure 22.5. An organisation is linked to its customers through three main processes that Srivastava et al. (1999) refer to as core business capabilities, namely product development management, supply chain management and customer relationship management (see Table 22.3). Ingram et al. (2002) make the point that the centrality of the customer to the organisation highlights the crucial role of sales strategy with regard to the organisation’s overall customer interaction process. In order to decide on an appropriate sales strategy, the nature of the desired communi- cation needs to be examined. Are there to be salespersons negotiating individually, or as a team with a single buyer or buying team? Is a sales team required in order to sell to buying teams or will conference and seminar selling achieve the desired goals? What is the degree of importance of the portfolio of accounts, and how should the organisations be contacted? The primary, and traditional, sales channel is the field sales force. These are people who are fully employed by the organisation and are referred to as the direct sales force. Salespersons, like any other unit of resource, should be deployed in a way that provides maximum benefit to the organisation. Sales organisation effectiveness results from the performance of salespeople, organisational factors and various environmental factors (Baldauf et al ., 2002).
The primary and traditional sales channel is the field sales force.
Antecedents of sales organisational effectiveness Source: Grant and Cravens (1999). Used with kind permission.
Figure 22.
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The performance of salespeople is a measure of their work or task-related behaviours, and the results of their activities and inputs. Therefore, a sales management control strategy should refer to the degree to which sales managers actively manage the inputs as a well as reward against targeted outcomes (sales, market share, etc.). From this it is possible to identify two main sales management approaches, behaviour based- and outcome-based control systems (Baldauf et al ., 2002). Essentially, control through behaviour-based systems is founded upon managing the inputs or processes to a salesperson and rewarding them with a high fixed salary and low commission. Conversely, control through outcome-based approaches is characterised by a focus on results, little managerial supervision and direction and high levels of commission as an incentive to perform. Some see the outcome–behaviour systems as a continuum (Anderson and Oliver, 1987) whereas others see these as two discrete activities (Piercy et al. 2004). Many organisations use a hybrid approach, but research by Baldauf et al. indicates that sales managers appear to utilise a ‘coaching rather than command and control management styles’. The emphasis appears to be on the long term and the value of developing relationships. The performance of salespeople is therefore enhanced by sales management strategies that are based on generating positive behaviour. However, results from previous work undertaken by Piercy et al. (1998) supported many previous findings that salespeople with high levels of behaviour performance also exhibit high levels of outcome performance. This implies that sales managers should spend a greater amount of their time selecting, training and developing salespeople rather than just selecting, directing and measuring results. Further research by Piercy et al. (2004) indicates that the way sales managers emphasise outcome or behaviour controls needs to reflect region or country differences, local personnel inputs and the need for flexibility in the implementation of control strategies. From this brief overview of sales management responsibilities it can be concluded that they are responsible for five broad activities associated with salespeople. These are:
z selection and recruitment; z training; z size and deployment; z motivation and supervision; z evaluation, control and reward.
Of these space is devoted only to the issue of size and deployment.
Category Explanation Product development management Developing and maintaining suitable products and services to meet customer needs and provide customer value Supply chain management The acquisition and transformation of resources (inputs) into valued customer offerings, throughout the supply chain Customer relationship management Creating, sustaining and developing customer relationships for mutual benefit.
Table 22.3 Core business capabilities
Source: Adapted from Srivastava et al. (1999) by permission of American Marketing Association.
Control through outcome-based approaches is characterised by a focus on results, little managerial supervision and direction and high levels of commission as an incentive to perform.
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Weaknesses
The level of specialised knowledge is reduced, as many products have to be promoted by each salesperson. Furthermore, salespeople under this structure tend to be allowed greater freedom in the design and execution of their working day. Consequently, the number of new customers is often low and the line of least resistance is usually pursued. This may also conflict with the objectives of the organisation, as, for example, call patterns may not be compatible with the overall goals of the sales force.
Product-based sales force
Under this type of structure, the organisation has different sales teams, each carrying a par- ticular line of products (see Figure 22.7). This is often used by organisations with large and diverse product lines. Also, organisations with highly technical and complex products, which require specialist knowledge and particular selling techniques, prefer this form of sales force structure.
Strengths
The most important advantage of this approach is that it allows the development of product knowledge and technical expertise. In business-to-business markets this factor can lead to improved source credibility, since the level of expertise, and possibly trustworthiness, can be important if the messages are to be persuasive and effective. If the organisation’s production facilities are organised by product (separate factories), each with a sales team operating out of the unit, then there can be increased cooperation, which in turn benefits the customer. Sales management is better able to control the allocation of the selling effort across all prod- ucts under this type of structure. If greater focus on a particular product is required, then more salespersons can be allocated appropriately.
Figure 22.7^ A product-based sales force structure
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Weaknesses The major disadvantage is that there is a high probability that there will be duplication of sales effort. A customer could be called on by a number of different salespeople, all from the same organisation. Selling expenses are driven higher and management time and costs rise as the company attempts to achieve coordination.
Market-based sales force
Organising a sales force by market or customer type is an activity complementary to the marketing concept (see Figure 22.8). This form of sales force organisation has increased in popularity, as it allows products with many applications to be sold into many different markets and hence to different customers.
Strengths By calling on a single type of customer, a greater understanding of customer needs develops. Such customer specialisation can be used to foster specialist selling approaches for different markets. The size of specialist sales forces can be varied in accordance with internal and external requirements. This is important for organisations operating in highly competitive and fast-changing environments.
Weaknesses As with the product structure, duplication is a primary difficulty. The costs, however, of operating under this form of structure are higher than any of the others. These three approaches to sales force design are not mutually exclusive, and most major organisations use a combination of the three to meet the needs of their various stakeholders.
Figure 22.8^ A market-based sales force structure
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cent will produce 20 per cent of sales (B accounts) and the final 65 per cent will yield only 15 per cent (C accounts). z Task 1. Classify customers into categories: Class A: large/very attractive = 300 Class B: medium/moderately attractive = 400 Class C: small/unattractive = 1, z Task 2. Determine the frequency and desired duration of each call for each type of account: Class A: 15 times/pa 95 mins/call = 23.75 hours Class B: 10 times/pa 63 mins/call = 10.50 hours Class C: 6 times/pa 45 mins/call = 4.50 hours z Task 3. Calculate the workload in covering the market: Class A: 300 accounts 23.75 hours/account = 7,125 hours Class B: 400 accounts 10.50 hours/account = 4,200 hours Class C: 1,300 accounts 4.50 hours/account = 5,850 hours Total workload = 17,175 hours z Task 4. Determine the time available per salesperson: 40 hours/week × 46 weeks/pa = 1,840 hours z Task 5. Determine selling/contact time per salesperson: Contact: 45% = 828 hours Travelling: 31% = 570 hours Non-selling: 24% = 442 hours z Task 6. Calculate the number of salespersons required:
number of salespersons = = 20.
A total of 20 or 21 salespeople would be required using this method. While this technique is easy to calculate, it does not allow for differences in sales response among accounts that receive the same sales effort. It fails to account for servicing and assumes that all salespersons have the same contact time. This is simply not true. One further shortcoming is that the profitability per call is neglected.
The sales potential method
Semlow (1959) was one of the earliest to report the decreasing-returns principle when applied to sales force calculations. The principle recog- nises that there will be diminishing returns as extra salespeople are added to the sales force. For example, one extra salesperson may gen- erate £120,000, but two more may only generate a total of £200,000 in new sales. Therefore, while the first generates £120,000, the other two only generate £100,000 each. Semlow found, for example, that sales in territories with 1 per cent potential generated £160,000, whereas sales in territories with 5 per cent averaged £200,000. Therefore, 1 per cent potential in the second territory equates to £40,000 (200,000/5) and £160,000 (160,000/1) in the first. The conclusion reached was that a higher proportion of sales per 1 per cent of potential could be realised if the territories were made smaller by adding salespeople. As asked above, what is the optimum number of salespersons, because costs rise as more salespeople are added? Semlow’s work provides the basis for some of the more sophisticated techniques and derivatives of the incremental or marginal approach. It is relatively simple in concept but exceedingly difficult to implement. The conclusion, that a salesperson in a low-potential territory is expected to achieve a greater proportion of the potential than a colleague in a high- potential territory is, as Churchill et al. (1990) say, ‘intuitively appealing’.
total work load contact hours
The principle recognises that there will be diminishing returns as extra salespeople are added to the sales force.
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Territory design
Having determined the number of salespeople that are necessary to achieve the set promotion objectives, attention must be given to the shape, potential and equality of the territories to be created. The decomposition of the total market into smaller units facilitates easier control of the sales strategy and operations. A sales territory is a grouping of customers and prospects assigned to an individual or team of salespeople. The reason for the establishment of sales territories is mainly oriented to aspects of planning and control. Sales territories enable the organisation to cover the designated market, to control costs, to assist the evaluation of sales- person performance, to contribute to sales force morale and to provide a bridge with other promotional activities, most notably advertising (Still et al ., 1988). Churchill et al. (1990) suggest that the steps depicted in Figure 22.9 are the most appro- priate. The objective is to make all territories as equal as possible with respect to, first, sales potential, as this facilitates performance evaluation, and, second, work effort, as this tends to improve morale and reduce levels of conflict. The most basic unit is a small geographic area. Small units permit easier adjustments to be made and allow for the reassignment of accounts from one salesperson to another. Units can
Key steps in territory design Source: Churchill et al. (1990) Sales Force Management , 3rd edition. Reproduced with permission of The McGraw-Hill Companies.
Figure 22.
