Using population to set fairer sales targets by area

A fair sales target for an area starts from how many potential customers live there, is lowered where competitors already serve them, and is then blended with what the area actually sold last year. Population gives the first part: residents in the right age groups, counted the same way for every territory. Used alone it is too blunt; ignored, it leaves targets copied from history, which rewards reps who inherited a good patch and punishes those given a hard one.

This guide is for sales managers, regional heads and franchise owners who split one national or city number between areas. It sets out the method, a worked example with a made-up team in Montreal, what goes wrong, and how an AI employee can redo the counts every quarter so the numbers stay current.

Why history alone is unfair

Most targets are last year's sales plus a growth figure. That locks in every accident of the past: a territory that had a strong rep, a large customer who has since moved, a patch that was under-served because nobody was assigned to it. An area with many potential customers and weak sales gets a small target and never grows; an area that was worked hard gets pushed further every year.

A population-based share answers a different question: if every area were worked equally well, where would the sales come from? The gap between that and last year's sales is the opportunity, and the target should move some of the way towards it.

The method, step by step

1. Fix the areas. Draw each territory once and keep the shapes for the year. Area of interest takes drawn areas; Split by territory can propose balanced shapes if you are starting fresh.
2. Count the people you sell to. Demographics gives each area its residents and nine age groups. Pick the ones that match your buyer: adults 20 to 59 for most consumer products, over 60 for some health services, households with children for education.
3. Adjust for competition. Nearby places counts the competitors in each area. An area with twice the competitors has a smaller share to win, so divide its people by a factor that grows with the competition, or simply rank areas by people per competitor.
4. Turn it into a share. Each area's adjusted count divided by the total gives its share of the national or city number. This is the target if history did not matter.
5. Blend with last year. Take, for example, half from the population share and half from last year's share of sales. The blend moves targets towards the opportunity without asking anyone to double overnight.
6. Set floors and ceilings. No area's target should move more than a set amount in one year. Write the rule down before you see the results.

A worked example in Montreal

A made-up home insurance team has four territories in Montreal and a city target of 1,000 new policies. All figures below are invented, to show the arithmetic.

Made-up figures. Population share is adults per agency as a share of the total; the blend is half and half, rounded to add up to 1,000.

East stands out: many adults, few agencies, and a modest history. Its target rises. Centre sold well last year despite few residents and heavy competition, probably on office workers and a few large accounts, so its target falls but not to its population share, because the blend keeps half of its history. North rises a little and West falls a little. With a ceiling of, say, a 30% rise in one year, East would be held at its cap and the remainder spread over the others.

The point is not the exact figures but that every manager can see why their number is what it is. A rep in East who is asked for more can see the 10,000 adults per agency; a rep in Centre can see that the target came down because the area has few residents.

What goes wrong

• Using residents for a business that sells to visitors. A territory covering the city centre has few residents and many daytime buyers. For those areas, add a footfall measure from Mobility Footfall, or keep more weight on history.
• Areas of very different sizes. Population handles size, but a huge rural area costs more to work. Weigh travel time too, or give that rep fewer accounts.
• Counting the wrong competitors. Decide which types count and use the same list for every area.
• Changing the shapes mid-year. Every comparison falls apart. Redraw once a year, at target time.
• Hiding the method. A target nobody can explain is resented. Share the table.

Keeping the counts current with an AI employee

The counts change slowly, but competitors open and close every month. An AI employee can redo the table each quarter and land it in the planning sheet.

1. Schedule: the first day of each quarter.
2. Area of interest with your territories drawn on the map.
3. Demographics set to totals for each area.
4. Nearby places counting your competitors in each area.
5. Calculated field for people per competitor and the population share.
6. The Google Sheets app writes one row per territory, where your own formula blends it with last year's sales.

The team gets a fresh row per territory each quarter, with the counts behind every share. Templates that start close to this are Split my city into fair sales territories and Fair franchise territories for a city.