Diagnostic Services Inc. (DSI) is a new company. It has been in business for only one year, offering diagnostic services to physicians in the Tampa/St. Petersburg, Miami, and Orlando markets. DSI carries the latest technology, including magnetic resonance imaging (MRI)
machines, computerized tomography (CT) scanners, and electron beam tomography (EBT) scanners. The EBT scanners are the state of the art in medical diagnostic equipment, and DSI is one of only three companies in each market to have them. DSI executives are particularly excited about having the EBT scanners in all three locations because these machines detect potential health problems much earlier than previous medical tests could. The EBT scanners are very flexible. They can perform individual organ scans (for example, a heart scan, a lung scan, or a spleen scan) or they can perform a full-body scan. DSI plans to use the machines to expand its market base and brand awareness in the markets in which it operates. DSI has operated for the past 12 months with six sales representatives, two for each metropolitan area. Until recently, the company has not had a sales manager. Company executives, all of whom are medical doctors, thought the motivation of each sales representative would be enough to make the company successful. However, after disappointing results in the first year of operation, the management team decided to hire a sales manager to bring some order and direction to the sales force’s efforts. DSI recently hired Lydell Washington as the sales manager. Lydell has 15 years of sales and sales manager experience with a pharmaceutical company. For the last two years, his district finished second in sales productivity for the entire company. DSI management told Lydell his mission is to increase the sales force’s productivity and name recognition throughout the three-market area by using the new EBT technology. In his first month with the company, Lydell spent a day with each sales rep making sales calls. By the time Lydell met with the sixth rep, Cindy Minnis, he already knew how to increase the sales force’s productivity. He had noticed consistency across the sales force to his questions about their workdays. Cindy’s responses were no different from the others. When Lydell asked which doctors she called on, she replied: “I call on all types of doctors. Wherever I find an office I’ll stop in and talk to them. I don’t care if they are pediatricians, obstetricians, or cardiologists. I’ll talk to anyone who will see me.” After Lydell suggested that the physicians most likely to use the company’s diagnostic equipment were cardiologists, oncologists, neurologists, and internists, Cindy said, “Really? No one ever told me that.” Next Lydell asked Cindy how many doctors she called on per day. “Only about five, sometimes six. My territory is so large I can’t seem to get around to very many offices in a day. Sometimes I run into Mike, the other DSI rep in this area, at an office. There should be something we can do to prevent us from showing up at the same office on the same day.” Lydell knew 10 calls per day is the industry standard and many times reps can do more. Finally, Lydell asked Cindy what kind of information she provided back to the home office about her activity in the field. She answered, “Not much really. I keep some notes on who I’ve talked to and what we discussed, but until now I haven’t had anyone to send them to. I guess that will change now that you’re onboard.” After he visited with Cindy, Lydell returned to his office and began to design a plan to increase the company’s sales productivity.

Questions

1. What are some of the problems that DSI’s salespeople have experienced as a result of not having had the direction of a sales manager for the first 12 months?
2. Describe the process Lydell should follow to design territories for the six sales reps currently employed by DSI. What sources of information are available for Lydell as he designs these territories?
3. What types of information should Lydell use to conduct a sales analysis of his reps’ territories? Why?