Territory Coverage – a useful performance indicator
# 52 March 2017
Territory Coverage is a performance indicator measuring the number of customers the sales people have visited in their sales districts during a specific period. (The term ”district” is used to describe the set of customers a sales person is responsible for, which could be organised by geography, industry segment or just a list of named accounts).
It is common in sales organisations to follow up sales people on how they drive their business opportunities – i.e. how good they are at finding new opportunities, developing them and winning the deals. In some industries sales people don’t conduct their business like this, which means you need other metrics when following up.
Following up on territory coverage could be an alternative instead. It is particularly useful in industries where sales people work their customer base primarily through repetitive sales calls, for example following up on purchase volumes and securing orders, rather than finding new deals.
Territory coverage is normally expressed as the percentage of customers in a sales district that has been visited by the sales person during a specific period. For example: If the sales person has 100 customers in the sales district and has visited 85 during the quarter, the territory coverage is 85 % for that quarter.
We see three distinct benefits of measuring territory coverage:
- Driving performance. Measuring and giving performance feedback has a strong motivational effect on sales people and drives performance.
- Verifying that customers are visited. Customer visits are vital in securing loyalty and developing the relationship with the customer. Therefore you want to assure that your customers – at least the most important ones – are visited regularly.
- Basis for balancing sales districts. If a sales person is not able to cover his district, you need to investigate. The reason could be that the district is more challenging for some reason. If the sales person doesn’t have time to visit his most important customers, you need to transfer customers to another sales person who is in a better position to cover these customers. Alternatively, if free capacity cannot be found in other sales people, you may have to recruit more sales people. Introducing a stricter priority where less important customers will not receive as much attention is another way of solving it.
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