Sales Territory Management: DIVIDE AND RULE

Sales territory management organizes opportunities spatially for better prospecting, nurturing and closure.

Sales territory management is the act of distributing sales responsibilities across teams. Not unlike emperors of yore, companies carve up kingdoms into distinct pies and unleash their best armies to conquer them. Chieftains are chosen based on their appetite for victory and the ability to get the most out of soldiers.

The ritual helps company commanders manage their empires easily and efficiently. Sometimes it’s not only location but other factors like possible spoils (revenue potential) and nature of the terrain (sector and industry), to name some, that form the basis of the pie allocation.

A quest for control

Structure and design are important in life and business. It provides order, stability and predictability, helping us understand the world and feel more in control of our lives. By sorting the vague morass of an amorphous demographic geography into a matrixed hierarchy formation, sales territories serve a similar purpose.

They promote a sense of clarity and control, remove contradiction and ambiguity, expedite fluid communication and decision making, engineer smoother operations and breed more engaged workers who are ready to take ownership and responsibility over their own slice of the pie.

What exactly is sales territory management?

Sales territory management, typically part of an organization’s sales planning program, refers to the act of breaking the organization’s macro market up into smaller, more manageable morsels.  Its overarching goal is to maximize sales and revenue.

Sales territory management outlines the jurisdiction of salespeople and creates the foundational blocks for competent sales management. Each jurisdiction is associated with a quota and a group of accounts. The territorial split is informed by a set of rules and done on the basis of various business imperatives like customer persona, region and culture, revenue size, line of business and product, account type, pain points, seasonality, referral sources, trend history, demand forecasts, sales channels, sales rep responsibilities, organization type and others.

Sales and territory leaders strive to assign well-defined market segments to team members best equipped to serve them, making for well-rounded, comprehensive coverage and laser-targeting of potential customers. This helps sales personnel focus on new leads and bring their best to the prospecting game.

For growth-oriented companies, sales territory management lends leaders strategic visibility into customer and opportunity landscapes, unique insights into the ROI of their efforts, and practical ways to organize, improve and expand.

In a complex era of digital-first customers, remote work and quick-changing business climates, devising a sales territory plan can be dicey and warrants careful consideration. Leaders must hit the right formula from the get-go or risk disorienting both employees and customers, ultimately hurting business.

The effort is worth its weight in gold, though. After all, when done right, sales territory management can positively impact nearly every vital of a commercial entity. It enhances lead quality, simplifies sales analysis, lifts customer relations, distributes workload evenly, and builds happy, high performing teams.

Why is sales territory management important in business?

Sales territory management is much more than just allotting geographies to certain people. It is an essential component of a company’s growth and sales strategy, and the cornerstone of agile, adaptable and accountable business processes. It shifts the company’s sales template from random, scattershot wins to a more scientific and intent driven maneuver - amplifying consistency, plugging system leaks, building resilience into the infrastructure, lessening lost opportunities and uncovering hidden horizons.

Here are some of the big benefits of effective sales territory management.

1. Refines strategy

Based on performance stats, team feedback, customer behaviour and market signals, the organization can set and reset roadmaps and quota targets, shuffle allocation formulas and upskill teams for incrementally better outcomes.

2.Raises efficiency

Via intelligent distribution, a deft sales territory plan cuts wastefulness and unlocks the best probability of conversion. It ensures time spent in the car or plane is trimmed, meeting schedules are convenient, effort duplication is eliminated, tracking is uncomplicated, costs are streamlined, and resources are put to their best possible use.

3.Simplifies management.

Accountability and outcomes of a territory are directly linked to specific salespeople, which simplifies analysis.

4.Enables granular appraisal

As an extension of the above, sales territory management makes possible rational and fairer performance analysis.

5.Creates better load distribution

By organizing customers into territories, sales leaders are able to attend to each customer individually.

By fluidly switching manpower across borders, they can avoid overburdening employees with territories that have an unmanageably high density of opportunities. Conversely, less profitable segments can be accorded greater attention by allocating more manpower.

Judicious load allocation also distributes lucrative markets equitably - giving everyone a chance to prove themselves, tackling the issue of underperformance and wasted potential.

Finally, intuitive load distribution can effectively regulate operational expenses, which will reflect on stabler pricing and raise customer happiness.

6.Inspires superlative performance

Sales folks perform better when battlegrounds are well outlined, boundaries are clearly drawn and there is sufficient time and resources at their disposal to apply their skills to the fullest. This is exactly what sales territory management does.

It clears the stage for members to focus on selling without having to worry about planning. Personal strengths and weaknesses are   diagnosed, mission critical tips and training is shared, and ability is assigned a playground where it is most likely to succeed.

With tailwinds set to max, the stage is cleared for a bravura performance. Rockstars emerge and laggards come into their own. A loop of great performance followed by deserving recognition creates a culture of excellence, amplifying the company’s recruiter brand, lowering attrition and attracting great talent on autopilot.

7.Helps sales forecasting

Ongoing data, trends and performance can be used to sidestep potholes, anticipate shifts, generate heads-ups, prepare for opportunities and predict future performance.

8.Nurtures customer loyalty

Since each region is serviced by a dedicated salesperson or team, the latter can devote sustained contact, develop deep understanding of pain points and build strong relationships, leading to fulfilling customer experiences.

9.Lifts sales figures

Better coverage, efficient processes, smarter controls, enthusiastic employees and happier customers, not surprisingly, will translate into juicer sales figures.

Signs your sales territory design could be ready for a reboot.

·   Inconsistent and unpredictable sales outcomes across territories.

·   Uneven performance by sales reps.  

·   Broken and disrupted experience for customers.

·   High percentage of time-suck activities like travel, paperwork, etc...

·   Duplication of effort.

·   Unengaged teams, high burnout, consistent attrition.

·   Conflict due to overlapping territories.

·   Drained resources and costs, low ROI.

Best practices for creating an effective Sales Territory Management roadmap

Knitting together the various moving parts of a thriving sales empire – with a million cues and signals running wildly in different directions – is easier said than done. Slicing, dicing and grouping converts this unwieldy chaos into bite-sized bits for hungry businesses, and gold in the hands of keen sales leaders.

While no two companies will have the same sales territory framework - especially in a climate of complexity - there are some universal components that feature prominently in nearly every sales territory strategy. Let’s take a look at some of them.

1.Identify the market

It always helps to begin at the, well, beginning. Some questions you need clear answers to, right at the outset, are:

What percentage of the territories constitute your ideal customer profile (ICP) : ‘Revenue assets’ who are most likely to buy from you and remain loyal to you?

What is the character and texture of each account – for example, are the sales coming off the shelf, through google ads or via referrals?

What is the demographic distribution within the region vis-à-vis consumption preference, income, age and other parameters?

How do your products and services stack-up – in terms of fitment and desirability - with the local demographic? 

How far, or near, from the territory do your sales employees live?   

What kind of tiered or matrixed structure would be best for the region?

2.Define and design

Next, you need to define the matrix and design the hierarchy of your territories. Hierarchical relationship between territories at various levels will influence how data aggregation and visibility are rolled up.

Some key goals here are to spread accounts proportionately, see to it that each area has a lucrative mix of existing and new accounts, and that travel time and distance is not a deterrent to performance.  

What kind of division-of-sales-labor would be appropriate for the multiple customer bases that exist in a certain territory? If, for instance, you are a furniture manufacturer targeting a portion of the city that features three distinct demographics - factory owners, hospital admins and students - breaking the area up on the basis of end-user persona would make much more sense than a simple geographical division. The former would give your sales folks the opportunity to research and understand each demographic deeply, nurture channels of building relationship, and grow the business sustainably.

To sketch out your territory shape and silhouette, combine legacy insights, expert hunch and real time learnings. Assign geographic boundaries, category boundaries, revenue boundaries or something else that resonates the closest with the greater business objective and larger organizational goal. Make sure limits are starkly demarcated yet elastic enough for agile adjustments at any time.

3.Analyse territory quality

How much of time, effort and manpower are you willing to pump into in each territory, and how much do you expect to receive in return? Rationing role to territory is a sophisticated exercise best done with nuanced consideration by experienced and perceptive sales leaders.

Put in the effort to determine the ‘quality’ of each territory as you plug your players into them. Some factors to crunch here are length of sales cycle, frequency of repeat purchase, incidence of churn rate, whether territories are currently underserved, how many reps are needed to serve the map satisfactorily, the state-of-happiness of sales folks serving customers, whether opportunity planes are balanced or skewed, and other relevant angles.

Apply logic techniques such as ‘What-If’ scenarios to get an inkling of the latent potential of the territory. The ultimate goal is to prioritize territories based on the potential returns they can generate.

4.Examine your consumer

From the pains they are trying to solve, to the kind of products they are currently buying, to the choices they have from the competition, to their frequency of purchase, to the date of their last purchase, to unchartered new needs you can help them  discover, to the budgets they have - try and get as firm a grip over your audience pulse and condition as you can.

Tier them into categories basis variables like size of ticket, ease of conversion or keenness, risk volume ingrained in the account or any other gradation yardstick that will add substance to your sales program.

5.Allot the duties

This step – horses for courses - is the unique feature of a sales territory exercise, and the big reason you are tinkering with sales territory management in the first place. This is the make-or-break part, and also potentially the most rewarding. When treated in the spirit of a game or challenge, it can be fun too.  

A quick case to clarity the scope. It’s unwise to assign someone who specializes in closing large enterprise deals featuring long sales cycles to a territory that is predominantly stocked with short cycle FMCG products – even if for the sake of quick ROI gains. The step may not backfire immediately, but square pegs in round holes can prove expensive to the business in other ways like frustrated morale and opportunity cost.

Mapping crew to territory must be done in a manner that ensures a good match with

(A) the specific nature of needs of your audience, (B) the kind of product or service you sell, and (C) the strengths, experience, abilities, aspirations and expectations of your salespeople. Doing a SWOT (Strength – Weakness – Opportunity – Strength) analysis can be a good idea. Wisely cherry-picking hands for each region not only adds steam to sales momentum but can also help reduce the risk of territorial conflicts, while optimizing travel expenses and available time.

6.Divvy up, but fairly

While rockstars deserve to be rewarded with high value prospects or easy-to-convert accounts, remember that top performers are also the most suited to convert tough customers, stubborn accounts and ignored markets. Don’t be averse to a little experimentation.

Go with your gut and try circulating a certain portion of the pizza more randomly: Catch folks by surprise, and they could surprise you pleasantly. The idea is to apportion workload and high-quality leads justly amongst top performers and laggards both, so that everyone has a fair chance - and faith and trust with the leadership remains high. Finally, see to it that everyone has the support they need - be it information, training, etc - and don’t forget to be their biggest cheerleader.

7.Set SMART goals

Establishing crosshairs is key in any project. When you can clearly see what you must aim at, it lets you assess your readiness, clear out obstructions and control the progress path. Set territory level goals from Day One and make sure they are S.M.A.R.T. – Specific, Measurable, Achievable, Relevant, Time-bound. Go for a data driven approach that accounts for variables, has room to accommodate consensus on milestones and KPI’s, takes a realistic view of success and keeps things attainable. Translate the big vision into a goal statement and transfer to paper - unambiguously documenting what’s at stake and elaborating activities necessary to breast the tape.

8.Use data profitably

Data will be your lifeline throughout the journey, providing vital insights for territory optimization and closing gaps in coverage. It will point out areas you need to double down on (that is, where you are going right), and rituals that need to change.

Get resourceful and mine every kind of data at your disposal – be it internally generated cues on ERPs and CRMs, territorial information extracted from daily interaction with customers or sector and market specific data available from industry platforms, expert forums and third-party sources.

To keep data fresh, relevant and accessible, create a data governance framework, establish data policies and standards, build protocols for data adoption and documentation, insist on data ethics and transparency, ensure data privacy and security, streamline data integrations and perform regular data analytics and audits. Remember to use both quantitative (measurable and rational) and qualitative (subjective and experiential) approaches in your calculations for a holistic evaluation.

9.Build your tech backbone

Good data habits can only be built on a culture of technology. In the age of AI, if you are stitching zonal insights manually, you are already behind. Carry out regular training and upskilling to ensure your teams can work tech to their advantage, and present purposeful reports for the senior management at regular intervals.

CRM systems can help capture data around customer segmentation, areas of improvement and lead quality. Mapping software can be beneficial for visualizing territories, route planning and geo-fencing for accurate lead assignment. Territory optimization tools can be effective for work redistribution, assigning accounts and sales forecasting.

The three big areas to track are sales growth, sales rep performance and territory costs. 

Remember that sales territory management informs other areas of sales as well -  such as pipeline review and sales forecasting - so your investments in tech are going to pay off with compounding effect. A bedrock of technology lets teams track, share, pre-empt fires, optimize and automate performance, while dynamically adjusting sails to take ‘notes as they go’ and make smarter decisions in real time.

Hit the tech highway, get Compass: Xoxoday Compass simplifies the complex incentive plans involved in territory management with a cutting-edge, feedback driven algorithm that reduces operations and auditing efforts by 90% and increases sales productivity by 80%. 

10.Spread the wisdom around

Territories need not be synonymous with silos. Build cross territory communication channels that allow the free-flow of learning and insights, so that best practices from each zone can be passed onto other members. Invite reps to share their first-hand knowledge of customers, competitors and local dynamics.

Nurture an ethos of collaborative, ground-up learning that’s founded on continuous criss-cross of knowledge osmosis. This will help your sales engine become more resilient, and level up the entire team towards an outstanding performance.

11.Keep revisiting the map

Constant fluctuations to the company’s product and service suite, market trends, buyer behavior, competitive landscape and business goals can cause territorial boundaries to blur, shift and become obsolete. Sales territory management needs to keep up, and be a constantly evolving process. Ignoring the practice of regularly examining the validity of territorial boundaries can sabotage the company in a variety of ways. It can get in the way of prospecting, trap teams in unproductive activities, and frustrate efforts at scaling growth.

12.Involve sales in the planning

More the cooks, richer the broth. Bring your frontline army to the decision-making table. No CRM, expert prediction or manual can match their intimate knowledge of the territories they mingle with every day. Trusting their intuition and embracing their inputs makes your sales territory management truly actionable.

TERRITORY TERROR?

Not hitting your quotas despite having great talent on board and putting in your everything? The answer could lie in one of sales’ most common, yet overlooked, issues: Mismatched territories.

Truth be told, executing a truly high-performance sales territory management program can be complex, and calls for a sophisticated level of experience. It’s not for everyone.

Not sure how or where to reboot yours? Get Compass. 

Xoxoday Compass simplifies territory planning by adding clarity, savings and momentum at every step.

Design smartly organized and highly motivated territory teams transparently and seamlessly with Compass and start hitting those numbers with confidence again.