Some firms do not set formal sales territories because they are small or local, sell through personal relationships, sell complex high-technology or capital goods that need specialists, have only a few specialist salespeople, lack the resources to manage territories, or want to give salespeople freedom to sell anywhere.
A sales territory is composed of a group of customers or a geographic area assigned to a salesperson.
There are certain instances in which territory formation is not appropriate.
Poorly matched salespersons and territories become liabilities to the sales organizations.
Reasons for Not Establishing Sales Territories
These are the main reasons for not designing or establishing sales territory in the firm as follows:
1. Small Business
A small business is not in a position o draw rigid territorial lines.
It has to be quite flexible about who will handle a particular account.
Related: 23 Key Benefits and Importance of Establishing Sales Territory.
2. Social or Personal Relationships
It is not possible to form sales territories where social relationships or personal friendships are often the basis of sales, especially in the field of financial services.
It would obliviously be counterproductive to place territorial restrictions on such relationships.
3. High Technology Selling
In high technology selling, there are often a very limited number of potential customers nationwide that require highly specialized advice.
Bonus: 16 Key Factors Affecting the Size of Sales Territory.
4. Limited Number of Specialist Salespeople
WHen the specialist salesmen are limited in number, and formation of territorial boundaries would be foolhardy.
Related: 6 Powerful Methods of Setting Sales Quota (Step by Step).
5. Local Business
When a firm has a local business, the formation of sales territories is not possible.
6. Lack of Resources
Separate sales territories require huge financial resources.
Hence, due to limited resources territorial division is avoided.
7. Dealings in Fixed Assets
When a firm deals in the business of fixed assets such as land, plots or houses, it has no use to form sales territories.
Related: 18 Important Aspects and Characteristics of Sales Territory.
8. Work Freedom
When salespersons want the freedom of work and contacts or when they do not want to tie or linkage with any particular territory, the establishment of any territorial boundaries will not require.
Thus, now you understand the reasons for not establishing sales territories.
Related:
- 13 Importance and Objectives of Sales Compensation Plan (Explained)
- 15 Key Benefits of Sales Training or Coaching (Explained)
- 10 Main Types of Salesman for Selling Products (Explained)
- 13 Factors Affecting Structure of Sales Organization (Explained)
- 15 Functions and Services of Retailers with Examples
