Stagnating turnover, unbalanced external sales territories and dissatisfied employees – this was the situation for an LCD manufacturer as of the beginning of this year. Thanks to a precise determination of the company's regional turnover potential and a subsequent sales optimization, the external sales team managed to significantly improve this situation.

Turnover was stagnating in our sales territories and things were definitely going downhill. It's clear I have to make some changes as soon as possible." These were the words of the head of sales of a large LCD television manufacturer when he approached GfK GeoMarketing at the beginning of this year. The manufacturer had an external sales force of 20 employees who sold the company's products solely through specialty retailers for consumer electronics (e.g., MediaMarkt). The head of sales wanted to restructure his sales operations in order to save money and resources while simultaneously bringing stability to the turnover figures. "We need an optimization based on objective criteria, as I don't feel confident basing such an important decision solely on the subjective feedback of my sales team or resellers."

Determing the exact turnover potential at the sales location

The sales head decided to first evaluate the situation of the company as it stood, including its market share and the potential turnover for the German market. Here he was able to use GfK data on potential such as the GfK POS Turnover for the Retail Trade dataset. This dataset reveals the regional distribution of retail-related turnover directly at the point of sale (POS). As such, the dataset is a valuable guide to the retail draw and available market potential of a given location. In order to achieve the maximum possible precision in the market analysis, GfK GeoMarketing calculated GfK POS Turnover figures specifically for the LCD television product line. Using this information, the LCD manufacturer was able to find out the precise turnover potential for its products at the relevant points of sale.

Evaluating market penetration

By regionalizing the turnover figures onto all German postcode districts, the manufacturer was easily able to apply the calculated turnover potential to its existing sales territories. The geomarketing software RegioGraph was then used to visualize the results by importing the existing sales territory structure as well as the GfK POS Turnover data on LCD televisions. RegioGraph quickly displayed this information on digital maps. The initial analysis of the turnover figures for LCD televisions revealed a widely varying distribution of potential, with high concentrations in the southern, western and northern regions of the country. Further clarity was gained by comparing this data on potential with the company's actual turnover figures. The company was then able to see at a glance the regions in which its market penetration or relative market share was below average. Variances between the company's individual sales territories also became clear. While sever-al external sales force members were performing extremely well, others were not maximizing the available potential in the regions to which they were assigned.

Optimizing sales territories based on potential

The results of the analysis confirmed that an optimization was necessary. Together with GfK GeoMarketing consultants and the entire sales team, the sales head defined the priorities for the new external sales force structure. A key criterium was that the new structure should better exploit the existing market potential. Additional goals were to ensure optimum accessibility for all customers, preserve key customer-representative relationships and assign an equal workload to each external sales force member. The GfK POS Turnover dataset provided a valuable resource for evaluating the turnover for which customers were responsible and then dividing them accordingly into class categories. These results were then used to determine visitation frequency. Using RegioGraph's sales territory planning tools, the manufacturer was able to generate various potential restructuring scenarios and adopt and finetune the software's best suggestion based on its unique goals and criteria.

The manufacturer carried out the optimization such that every external sales force member was assigned a territory with nearly equal turnover potential. Naturally, it's not feasible for every sales territory to have exactly the same potential without creating geographically impractical territory assignments for some sales force members. Consequently, a unique sales goal was determined for each external sales force member that took into the account the profile of the territory to which the member had been assigned. This made it possible to base bonuses on objective, clearly defined goals. It's important to remember that the employer who generates the highest turnover isn't necessarily the best member of the team. Often employ-ees with a high level of turnover are disadvantaged because they must generate more growth than other employees. Sometimes this growth simply isn't feasible for the territory to which they are assigned.

Attaining your goals with geomarketing

The manufacturer was able to bring stability to its turnover figures thanks to the optimization of its sales structure. There was an additional positive outcome as a result of having so precisely defined the turnover potential for LCD televisions. "We modified our production plan based on our knowledge of the existing turnover potential. This allowed us to save significant production and storage costs," explains the sales head.
 
The new sales structure will remain effective for all of 2009. "Due to the dynamic nature of this market, we plan on re-evaluating next year whether there have been any changes in the turnover potential," says the sales head. "We've already made a major step in the right direction thanks to the implemented restructuring."

GfK data on retail potential at a glance

GfK POS Turnover for the Retail Trade

The GfK POS Turnover for the Retail Trade dataset shows the regional distribution of point-of-sale retail turnover, revealing the location of attractive retail venues in Germany. This information provides invaluable support for location planning, external sales force management and advertising planning. The dataset is available for all of Germany's postcodes and municipalities with more than 10,000 inhabitants as well as for numerous additional European countries. Customized POS turnover figures can also be calculated for many products and sales channels.

GfK Retail Purchasing Power

The GfK Retail Purchasing Power dataset reveals the amount of general purchasing power avail-able for retail spending. The data is calculated at the population's places of residence and offers valuable insight into a given region's disposable income. The dataset is available for all German postcodes, municipalities and more than 2.5 million street segments, as well as for numerous additional European countries. GfK GeoMarketing also calculates purchasing power indices for around 60 product lines (e.g., bread products, toys, etc.).

GfK Retail Centrality

GfK Retail Centrality is a measure of the attractiveness of a city with regard to its ability to draw and sustain retail trade. The dataset reveals the retail drawing power of a given city by comparing the demand of the inhabitants (GfK Retail Purchasing Power) with retail turnover figures (GfK POS Turnover for the Retail Trade). The GfK Retail Centrality dataset is thus an invaluable tool for location planning and evaluation. GfK GeoMarketing  calculates data on retail centrality for all German postcodes and municipalities with 10,000 or more inhabitants as well as for numerous additional European countries.