In the House Cleaning discussion we commented briefly on Sales Territory structure, not because it is unimportant but rather because it is VERY IMPORTANT, can be rather complex, and deserves to be reviewed in depth in order to properly function as a "management tool". 

Typically the Manufacturer grants the Agency exclusive rights in a geographical area, expecting in return an acceptable level of sales from that area.  The Agency in turn assigns portions of that area to the Reps in the organization, calling each a Territory. 

Performance evaluation, yours in terms of Sales and the Manufacturer's in terms of Shipments, within the area as the Manufacturer views is essential.  Far more important than the Manufacturer's view is your view of the area.  Remember, the objectives are:
  1. Generate commission payments that meet or exceed YOUR goals;
  2. Support your Customer's quest for sales revenue;
  3. Achieve the highest level of sales, and shipments, for each and every Manufacturer you represent.
Yes, that is the priority!  It may not be a view you share with the Manufacturers, or the Customers, but the chances are good they know it and are comfortable with it.

You present products from multiple Manufacturers to each of your Customers.  In most cases you will limit the discussion to those Lines that "fit" the Customer, and include the complimentary Lines.  A critical factor in defining the content of a sales call is knowledge of the Manufacturer's product line, a lack of familiarity with the Line may cause it to be overlooked, or omitted when in fact it should not be.

In order to measure performance against YOUR goals why not define a Sales Territory as "a group of Customers who should be measured and monitored as a group". 
  1. Assigning "kitchen shops" to a separate Territory from "yard and garden shops" may help in seeing that all of the applicable AND the complimentary lines are being sold to ALL appropriate Customers.
  2. Key Accounts, however you define them: Large or related Customer accounts that must be managed as a group; or, A group of Customer accounts being focused on for a particular reason.
  3. Free standing stores, those located in a mall, or urban versus rural, may be meaningful groupings.
A Sales Territory must be small enough to be properly served and managed by the assigned Rep yet large enough to justify that Rep's efforts.
The answer is to assign the Customer to a Sales Territory based on both geography and category.  This will undoubtedly require one Rep be assigned responsibility for several Sales Territories.  That's OK, if all of the Territories are performing well, you don't have to worry about the Rep.  On the other hand, a Rep that is doing well may be "leaving money on the table" by failing to recognize the value of a particular type of Customer or the applicability of a Line to a group of Customers.
In some cases you will want to provide reports based on the assigned Rep, regardless of the Territory structure, in others you will want the report to make Territory assignment and structure visible to the Rep. 

If you have Reps specializing in some of the Lines you represent, you may have more than one Rep calling on the same Customer.  The answer may be to assign Manufacturers to a "Division" and then establishing the Rep's Territory responsibility as a combination of the Territory and Division. 
Another option in this case may be to "split" Commmissions between the Territory.Rep and the Writing.Rep, assigning 100% of the Rep Commission to be paid to the Writing.Rep.  There is a catch though, the Territory Performance reports will NOT identify the Writing.Rep, however the Territory Sales by Manufacturer reports WILL identify the source of the Territory sales.

Reviewing the performance for each Manufacturer by Territory, rather than by Rep, should assist in identifying successes, opportunities, and/or problems, with a particular Customer group. 
Lessons from the School of Hard Knocks
These notes are the result of telephone conversations and email exchanges over the years.  The purpose here is twofold: