Sales Optimization Models—Sales Force Territory Planning

Abstract

There have been a number of important developments and applications of operations research‐based models in the domain of sales management that have contributed significantly to enhancing sales force productivity. In this article, the authors provide an overview of the key sales resource allocation and deployment decision problems faced by firms and extant model‐based solution approaches. Understanding and estimating relationships between selling efforts and sales outputs, that is “sales response functions,” lies at the heart of models for planning the sales force size, territories, and allocating selling efforts within territories. The authors briefly review the main challenges and proposed methods for such estimations, and a well‐known example of an optimization model (CALLPLAN) that utilizes such measurements for allocating selling efforts between customers and prospects in a salesperson's territory. This is followed by a description of models that have been proposed for the design of sales territories; that is, the assignment of sets of customers to salespeople, and sales force sizing, as well as integrated sizing, territory design, and allocation models. Throughout, the article notes outstanding issues for further investigation and closes with directions for future research.