Lateral thinking for territory design
Graham Barlow, Managing Director of territory mapping experts Tech4T, explores the strengths and weaknesses inherent in territory design
All things are created equal – right? Not necessarily so! Typically when creating a territory infrastructure for your franchise business, there is an underlying need to create ‘x’ territories of equal opportunity.
Finding out exactly what the ‘x’ is can be a little daunting if you want to maximise the potential earnings from your franchise territory sales.
However, there is another factor that comes into play and that concerns the potential franchise owners themselves. The people who end up buying and working your territories are not likely to be equal. Some will be more dynamic than others. Motivation will be different. Selling and marketing skills will be different. The list goes on. Hence if you give the same amount of opportunities to each franchise owner, the resulting sales outcome and territory exploitation could be considerably different.
So where do you start? Well firstly you need to have a realistic take on the time, effort and resources needed for a franchise owner to close each sale to their customers – that’s in an ideal world. Knowing this, combined with background demographics that make up the end customer profile, hot spots of market potential, competition and market saturation, prospect-to-sales conversion rates, and the actual sales process deployed, will enable you to determine the number of opportunities that are needed for, say, a pro-active franchise owner over the next three to five years.
That, of course, will vary considerably dependent on your product and/or service and how much you plan to sell the territory for, plus what your own ongoing revenue model is.
You also need to allow some margin for contingency but what will result is an optimum territory size in terms of required opportunities.
Now, remember not all franchise applicants are created equal. You need to be able to match the prospective franchise owner to a number of opportunities that suits both you and them. So how can you do that when designing the territory infrastructure?
Perhaps the best way is to consider the minimum and maximum number of opportunities that different people can handle, and devise a scorecard approach to your own franchise owner prospecting and application process that helps pinpoint where each sits. The resulting scores could be based on your assessment measures that include: past skills and work experience, knowledge of your product or service, drive and ambition, health and ability (and willingness) to work long hours, business acumen, past achievements, etc. An appropriate level of opportunities to suit that individual can then be determined based on their score.
That done, you now need a flexible territory structure where in fact sub-territories are created and then used as building blocks that can be combined into the final territory to deliver the required number of opportunities that suits the franchise owner.
Each sub-territory will contain the minimum number of opportunities required for a franchise owner at the low end of your scorecard. In the example pictured above, sub-territories 196 and 209 combine to form Territory 25.
Now you are in a position to work out the ‘x’ number that I mentioned at the start of this article. Based on the profile of your franchise owner’s end customer, the geographic area that you are developing needs to be analysed to find out how many people (or households, businesses, etc.) in total there are, and that total divided by the minimum number of opportunities needed.
The result tells you the number of sub-territories that need to be created – each balanced by drive time and opportunities of the right kind. You can then combine sub-territories to suit each franchise owner thus maximising their chances of success while minimising under-utilisation of territories.