Effective Sales Territory Planning
Sales territory planning is a crucial aspect of a company's sales strategy. It involves dividing the market into manageable territories and assigning sales representatives to maximize coverage, ensure fairness, and optimize workload distribution. I will delve into the key considerations for successful sales territory planning, including territory coverage, equity, total addressable market, and workload management.?Many of these steps will be different for your organization, depending upon your company’s business maturity, status of your product/market fit, the use of inside vs. outside sellers, and industry compartmentalization, among other factors.?However, there are best practices contained here that will serve virtually any sort of territory conceptualization.
Territory Coverage:
Effective territory coverage ensures that all potential customers within a given market are reached. It’s important to consider the geographic size, population density, and customer concentration when defining territories. You’ll also want to put some energy into segmenting the territory by industry, product line, company size, etc.?Analyze historical sales data (if any), market research, and demographic information to identify high-potential areas and allocate resources accordingly. Strive for balanced coverage to prevent over- or under-saturation of territories.?Tools like ZoomInfo and specialized databases can assist you in defining the value of territories and prospects.?As an example, in the quick service restaurant space, publications like QSR Magazine helped sketch out the major prospects in that business space.?In field-based sales models, you want to ensure that each territory is set up to be easily managed from a travel perspective.
Fairness and Equity:
To foster motivation and morale among sales teams, it's important that you work to establish fairness and equity in territory assignments. Sometimes that is easier said than done.?Distribute the territories based on factors such as market potential, customer segmentation, manageability from a geographic perspective, and revenue potential. Avoid situations where some territories are significantly more lucrative than others, as this will create dissatisfaction and imbalances within the sales force. You don’t want to have a situation of “haves and have-nots”.?This will only serve to engender dissatisfaction and employee turnover.?Make the time to regularly review and adjust territories to maintain fairness as market dynamics often change.
Total Addressable Market (TAM):
You will want to consider the total addressable market when designing territories. Identify the size, growth potential, and profitability of each market segment within the territories, like the exercise in territory coverage (above). Align territories with the potential of the markets they serve to maximize sales opportunities. Conduct thorough market research and leverage data analytics to determine the TAM and make informed decisions on territory sizing.?Be sure you are capturing all the pockets of your chosen market segment(s).?
Workload Considerations:
Balancing the workload across territories is vital for optimizing sales performance. Consider factors such as the number of accounts, sales potential, complexity of products or services, and required travel distances. Ensure that no territory is overloaded, which can lead to reduced customer/prospect attention and increased sales representative burnout. Regularly assess workload distribution and adjust the territories to achieve an equitable and manageable workload for each sales representative.?With coverage, sometimes less is more, meaning that sales reps sometimes struggle to juggle too much opportunity.?Rationalizing the size of the territory down often has the outcome of increasing performance, as counter intuitive as this sounds.
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Technology and Data Analytics:
Leverage technology and data analytics tools to support sales territory planning. Utilize customer relationship management (CRM) systems and sales analytics platforms to gather insights on customer behavior, buying patterns, and market trends. This data can inform territory assignments, optimize routing/travel plans, and identify cross-selling or upselling opportunities within territories.?Don’t be overly frugal and scrimp on purchasing relevant lists; they can save time and provide tremendous economy of scale in these exercises.?Work with other teams like Marketing, Product and Sales Operations to ensure a well-rounded perspective and shared vision.
Collaboration and Communication:
Promote collaboration and communication among sales representatives operating in different territories. Encourage knowledge sharing, best practice sharing, and cross-territory collaboration to leverage expertise and enhance overall sales performance. A good team is made up of professionals with differing and complementary skill sets and talents.?Regular team meetings, training sessions, and virtual collaboration tools facilitate information exchange and foster a supportive sales environment.
Continuous Evaluation and Adjustment:
Sales territory planning is an ongoing process, not a “one and done” effort. Regularly evaluate the effectiveness of territories and sales performance metrics. Solicit feedback from sales representatives on challenges, market dynamics, and customer insights. Adapt territory boundaries, make realignments as needed, and refine the planning process based on the evolving needs of the business and the market conditions.
Final Conclusions:
By now, you likely realize that effective sales territory planning is essential for maximizing market coverage, ensuring fairness, optimizing workload balance, and achieving sales targets. By considering territory coverage, fairness, total addressable market, and workload considerations, organizations can develop robust sales territories that empower sales teams to succeed. Embrace data-driven insights, leverage technology, foster collaboration, and maintain a continuous evaluation process to adapt to evolving market dynamics and drive sales growth through effective sales territory planning.