What is the optimal number of sales territories for your team?

Yes sales strategy is an important aspect to consider. There are industries where you don't need regular interaction with all customers for example if you are a raw material or a standard commodity supplier and you are getting orders automatically. On the other hand if you are part of the fashion industry you may need to present your new collections frequently.

The nature of your business should determine your strategy and your strategy must determine how your territorial mapping will be . So you are expected to have adequate knowledge of your brands, territory and competitions to determine the numbers of reps to cover your territory optimally

The optimal number of sales territories for your team depends largely on your sales strategy: If your focus is on complex solutions with long cycles and intensive interactions, fewer, larger territories with dedicated reps might be most effective. This allows for deeper customer relationships and tailored solutions. On the other hand, if your strategy is volume-driven, targeting standardized products with efficiency, more territories with a higher number of less specialized reps might be beneficial to cover more ground quickly. Align the structure and number of territories with the nature of your products, sales cycle length, and customer interaction style to effectively balance workload and market coverage.

Market size is important but I don't agree with just a simple distribution because some markets with low potential may be much more complex in terms of regulations or cultural differences that there is more work to be done.

Your market potential directly impacts the optimal number of sales territories: Assess the total revenue opportunity considering market size, growth, demand, and competition. Use this estimation of market potential to determine the coverage needed. A practical approach is to divide the total market potential by the average sales quota per rep, providing a clear idea of how many sales territories are necessary to effectively reach and serve the market. This calculation ensures that your sales force is appropriately sized and strategically distributed to maximize market coverage and meet your sales objectives. Adjust the number of territories as market conditions and company goals evolve.

Your sales capacity is a critical factor in determining the optimal number of sales territories: Evaluate your team's ability to engage in sales activities, factoring in the number of reps, their competencies, and overall productivity. Use metrics like calls, meetings, and deals per rep to quantify capacity. Compare this capacity to your market potential to identify whether your team is oversized, undersized, or well-matched for the market. If your capacity exceeds market potential, consider consolidating territories or increasing quotas to optimize resource use. Conversely, if market potential outstrips capacity, expanding the number of territories or augmenting your team might be necessary.

Your sales performance, reflecting the results of your activities, is influenced by lead quality, conversion rates, customer retention, revenue per deal, and satisfaction. Monitoring it through metrics like revenue, growth, efficiency, and effectiveness is essential. Analyze these to understand how your sales territory plan impacts goals. Low-performing territories might necessitate adjustments in size, boundaries, or resource distribution, while high-performing areas offer best practices to emulate and opportunities to reward top performers. Regularly evaluating and refining your sales territories based on performance ensures that each contributes optimally to overall business objectives, maintaining a dynamic and responsive sales strategy

In a perfect world, sales territories should be small and accessible by driving. Unfortunately, resources will often not align with that strategy, and sales leaders will need to be creative. Super-regionalization of smaller territories, into a larger team with a regional leader can be a good strategy. The team members primary territory will still be a smaller region, but they can work to support each other across regions, share a common budget and maintain an acceptable work-life balance. There’s no one size fits all approach, so we need to remain flexible and adjust our strategy as needed.

Deciding on the ideal number of territories for a sales team is not a one-size-fits-all scenario. It involves considering factors such as market size, product complexity, and team skills. A personalized approach, involving discussions with individual team members to understand their capabilities and interests, is essential for determining the most effective number of territories. This dynamic process requires ongoing assessment and adjustments based on both individual and team performance.