How to plan your sales Territory: Follow the money

?How to plan your sales Territory: Follow the money

Planning a sales territory will be a key skill in all the sales jobs you will have in your career. This article describes a simple method I have been following that cuts through the noise of ABC Analysis, tiering exercises and other alignment and prioritisation tasks you will have to do. The easy answer to put your valuable time into the right activities in your patch is: FOLLOW THE MONEY!

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4 sources of revenue in your territory

There are entire bookshelves of literature on this topic and you can always make it more complicated and detailed while growing with your role. Personally, after 12 years in IT sales, i can say that there are four simple sources of revenue within any sales territory that I have been in:

1. Core Installed base
2. Growth installed base
3. White space big clients
4. White space small clients

These sources of revenue for the company are listed from the easiest to the hardest for you to make a deal. The more money a company in your territory is already sending, the easier it will be to make a new deal. Lines of communication have already been established, cheques already have been written, security has been cleared, so this is where you start.

Two techniques which are often thrown around in the installed base are upselling and cross-selling. An upsell is the process of selling more of the same product while a cross sell is the process of selling a new product from your company to an already existing client. Usually it is easier to upsell than to cross-sell. Prioritise the activities in your accounts accordingly.

Your quota will often be calculated as a sum of all the money that is already flowing within your territory in the last year +20%. Especially technology companies will expect your sales territory to grow at least double digit year over year to keep shareholders happy. If you got a territory or company with less aggressive growth goals, consider yourself lucky and work the patch.

While the installed base is the part of your territory where you build the base to make quota and get into over performance, white space will be the area where careers are built. Breaking into new accounts is one of the hardest things you can do in sales. If you do it successfully and repeatedly it will get noticed. You will be chosen to train others and share your best practices. Be aware that you will have to invest 5-6 times more time into these accounts for the same result than into installed base. Making quota with white space, unless that is all you have in your patch, is making your live a lot harder than designed.

Core Product

The Core product of a company is where it makes the most revenue across all of the business. This is usually the product you directly associate a brand with. Growth rates for these products are comparatively low, but the share of the overall revenue of the company is very high. Here are some examples for you to illustrate the principle:

Company and Core product pairings in the tech sector:

• Salesforce: Customer Relationship Software
• Oracle: Database software
• IBM: Supercomputing solutions
• SAP: Enterprise planning Software

Company and Core product pairings in the car sector:

• Volkswagen: Golf (interestingly Polo and Tiguan sales start to outpace Golf sales)
• BMW: 3 series
• Porsche: 911 (interestingly Macan and Cayenne have outpaced the 911 in recent years)
• Tesla: Model 3

As a seller you will always be paid a cut from the transaction size of the deals you make. This takes different forms on many compensation plans across industries. More often than not the basic idea is that your main part of variable income will be a cut of 5 - 10% of the revenue you create in your territory for 60% to 80% of variable pay.

The other 20-40% will be tied to a specific goal the company or your sales manager want to achieve. These can be breaking into a specific white space account, reaching team quota for a specific geographical region, or achieving a specific revenue number for a specific product.

Action items in core product accounts:

1. Look at all of the contacts on the closed contracts in your territory and introduce yourself.
2. If you are not the one holding the contact/Account make sure to stay close to the person who does and that they keep in touch with the client.
3. Identify the accounts with a big blueprint in core but 0 revenue in the growth products. Think about how to drive a cross-sell after the upsell in core is secured or how to combine it in one bigger sale.
4. Place this cross-sell well in advance of the renewal window of the existing core product contract

Growth Product

Growth products are the parts of the portfolio with the highest growth rates in revenue. Depending on the product these grow 10% to 500% in spend towards the top line revenue year over year. These products often connect with the core product in some capacity, but take a spin on it with new technology. In some cases it can also be another use case of the product with a slight adjustment. Some examples of a growth product at the time are:

• Pfizer: Covid Vaccine
• Car industry: E-Cars
• Tobacco industry: Vape products
• IT industry: Cloud applications

Each of these growth products represent a major shift in the market for the company you are working for. Therefore the company has little to no experience on how to estimate and allocate quotas for these growth products. This is where your over performance is achieved easiest without risking too much. The product, market and client base are established, there is some growth identified, but you do not have to reinvent the wheel. The homework you have to do for this area is:

Action items in growth product accounts:

1. Identify which of the products in your companies portfolio have the highest growth rates
2. Identify the companies in your patch which grow the fastest who already have your core product
3. Cross sell the growth product to the existing core client

Big white space

White space clients are the accounts within your territory that currently do not have any products from your company. These clients are usually the hardest to prospect into as you will have to invest the most amount of time to get the same amount of money out of them compared to installed base.

When you are planning your territory you can look for the accounts with the highest revenue numbers as a company. IT and marketing budgets will often be allocated as a percentage from their total annual revenue. Return on investment plans can get you budget for a 1 dollar in x amount of dollars out logic, but for targeting purposes assume 2% - 10% of yearly revenue to be spent on IT and/or marketing projects.

The more money the company has to spent, the more likely it will be that they will test a different solution compared to what they are currently using. As a second step you can think about how much risk this company is willing to take and how innovative they are.

Pick the clients with big budgets who are innovative first in your patch to increase your chances of a white space deal in your patch. You want to do some of these as you did not get quota assigned to these clients and it is also good for your career development to show that you can break into new accounts.

Action items for big white space accounts:

1. Calculate their project budgets as 2% - 10% of their yearly revenue and rank them biggest to smallest
2. Do a little research on the top ones on how innovative they are, how much risk they take on and who anyone in your company might know there already
3. Take into account that these white space accounts will take longer to prospect into. Find a good reference similar to them to convince of your product

Small white space accounts

Small white space accounts would be where you turn your attention last within the sales territory you receive. This is because it will take a lot of time to get into them while the rewards will be comparatively small based on the available budgets. Based on the size of your territory you want to develop a semi-automated approach to these by clustering them by industry vertical or geography depending on how outreach makes most sense.

Match these accounts ideally with products of your company which have a low barrier to entry from a complexity and budget perspective. Ideally you pair one of these products with a compelling event in the industry. This is where your delegation and automation skills as a sales representative should shine the most.

Action items for small white space accounts:

1. Pool these accounts by industry, geography, any commonalities you can find
2. Develop a semi automated approach for them with a monthly cadence
3. Work with your marketing and BDR departments on these accounts to keep them warm
4. Be fast to notice compelling events in the market that might shift an entire cohort away from a certain product (like mergers and acquisition, bankruptcies etc.) and have the right fit from your portfolio ready for a deal

Your territory plan

With this general approach that can be refined with the tools and network you find at the company you are working for I made my life a lot easier as an Account Executive to get to quota and beyond. Sometimes you can get lost in all of the reviews and tiering exercises some companies do. This is how you can get back to basics:

Action items in core product accounts:

1. Look at all of the contacts on the closed contracts in your territory and introduce yourself.
2. If you are not the one holding the contact/Account make sure to stay close to the person who does and that they keep in touch with the client.
3. Identify the accounts with a big blueprint in core but 0 revenue in the growth products. Think about how to drive a cross-sell after the upsell in core is secured or how to combine it in one bigger sale.
4. Place this cross-sell well in advance of the renewal window of the existing core product contract to close it on renewal

Action items in growth product accounts:

1. Identify which of the products in your companies portfolio have the highest growth rates
2. Identify the companies in your patch which grow the fastest who already have your core product
3. Cross sell the growth product to the existing core client

Action items for big white space accounts:

1. Calculate their project budgets as 2% - 10% of their yearly revenue and rank them biggest to smallest
2. Do a little research on the top ones on how innovative, risk averse and who anyone in your company might know there already
3. Take into account that these white space accounts will take longer to prospect into. Find a good reference similar to them to convince of your product

Action items for small white space accounts:

1. Pool these accounts by industry, geography, any commonalities you can find
2. Develop a semi automated approach for them with a monthly cadence
3. Work with your marketing and BDR departments on these accounts to keep them warm
4. Be fast to notice compelling events in the market that might shift an entire cohort away from a certain product (like mergers and acquisition, bankruptcies, government regulations etc.) and have the right fit from your portfolio ready for a deal