You are a rookie salesperson with Associated Medical Supplies, Inc., a wholesaler of disposable medical supplies. As a new salesperson, you are finding it difficult to convince accounts to switch from their current suppliers. The doctors with whom you are having the most success tend to be small, single practices located in rural areas. Competition for these accounts is not as intense, perhaps because their purchases are fairly small. They usually place about $900 worth of business with you every month. Nevertheless, they seem to be most appreciative of your weekly visit to take inventory of their supplies and write an order. Furthermore, it is better than no sales at all.
Lately your boss has been hassling you because productivity has not increased as much as he had hoped when he placed you in the territory. In particular, direct selling costs, including compensation, are currently 15 percent of net sales, whereas the total company’s target is for direct sales costs to be 10 percent of net sales. In light of this, you are wondering if spending time on small rural physicians is the best way to manage your territory. You have calculated that your cost per call is currently $34.50. Should you be calling on these small physician practices? What is the smallest size customer you should pursue in order to meet your company’s selling cost objectives? What actions might you consider in managing your territory better?