Territory management is an ongoing process, not a part of strategic planning.

Dear Reader,

Topics like “territory planning” and “carving accounts” receive considerable attention this time of year in the context of preparing for next year’s sales execution. Even ChatGPT “thinks” it’s a foundational “truth.” Let’s step back and ask some objective questions about the connectivity between strategic planning and the support work intended to help sales reps. For more context on strategic planning, explore previous editions of Congruence Catalyst.

Instinctively, every company performs ongoing territory management.

If 20% of sales reps resigned immediately from a company, would we wait until the end of the year to reassign the opportunities or prospects for which they were responsible? I hope not. Would we ask a new sales rep hired in October to sit around without prospect- or opportunity-level responsibility until the “sales kickoff” four months from now? Obviously not.

It is a foundational necessity to assign and reassign work to individuals, and the same applies to sales reps and their responsibilities. Sales work assignment spans lead generation and pipeline management processes, along with other levers like effective organization design, hiring, performance, and compensation management of sales representatives. This sales work assignment is as much business as usual as assigning individuals to different stations on an assembly line.

What’s the chatter about “territory planning” and “territory carving” in the context of strategic planning?

A Salesforce blog states, “Territory Planning helps sales and service operations manage and rebalance territories.” Another sales technology-centered consulting website says, “Territory planning is the process of dividing a customer market into segments and assigning them to sales teams to maximize sales growth.”

Okay, sure. While this framing sounds reasonable, isn’t this what we stated above was essentially Territory Management, which is ongoing? Isn’t that what we do when a sales rep quits or when we hire another one?

Additionally, according to a report from The Bridge Group, the average tenure of sales representatives was 18 months in 2018. This is likely lower than reality because the source skews heavier toward high-churn sectors. Regardless, if the average tenure of sales reps is relatively low, then it makes little sense to have a massive periodic operation to reassign accounts.

So, why are sales teams engaging in these periodic territory planning efforts?

Mistake 1: Cleaning up after poor processes masked as “territory planning.”

Imagine we have a guest visiting our house this evening. We end up spending all day cleaning and arranging our home. Does this intense activity reflect that we have a guest coming? Or does it indicate that our day-to-day life is poorly organized, resulting in a messy home? I’d say the latter. Ideally, a guest should be able to walk into our place without notice, and we should feel it is in good order.

If our sales activities, including who is responsible for what in our company, are not well managed, we will inevitably need to clean up. Our prospecting and opportunity management might be ad hoc. Reports that should enable useful work management may not convey why things are going well or not on a regular basis.

A quarter-end or year-end cleanup activity has nothing to do with the future. It is simply a short-term clean-up of a messy operations ecosystem, only to have it get messy again.

Mistake 2: "Territory planning" is a reaction to baseless revenue goal setting.

Revenue goals and quotas are not part of a company's strategy, despite the prevailing misuse of the word “strategy” in the context of forecasts and budgets. Strategy is a decision about who the company sells to, what the company offers, and how the company will deliver. Each company’s strategy is unique and specific.

Additionally, 90 percent of strategic planning activities should not touch revenue or expenses. They must focus on connecting operations to strategy and improving operations. The projected maturity of operations provides guidance on the company’s realistic revenue potential.

Companies often set revenue targets as a multiple of the most recent revenue figures. Such multiples are frequently benchmarked and have little to do with the company’s unique composition. Setting a sales quota decoupled from operations is a common practice but a mistake. This is not “strategy” or “strategic planning.”

Concepts such as carving accounts are based on the flawed assumption that all sales activities and assignments are designed AFTER a total target revenue and associated individual quotas are set. Decisions must flow in the opposite direction.

All measurable aspects of a company come from its operational maturity. For instance, whether a person can run 10-minute miles next year doesn’t stem from a desire set by external pressures. It comes from the reality that the person could run 11-minute miles this year, and there is a training program they can embrace to improve and reach 10-minute miles.

The interpretation that territories require rework around strategic planning stems from the erroneous approach of starting with revenue goals and working backward to determine what operations would be needed to achieve those goals. Although many sources propagate this, companies that take this path will see a lot of inefficient activity without value.

Mistake 3: Technology-centric and role-centric moats skew behaviors.

When stakeholders in a company act in their own interest without considering the complete picture, it can hurt all stakeholders. What are the sources of poor guidance regarding this territory stuff? Follow the money!

Sellers of Customer Relationship Management (CRM) and peripheral solutions have created ecosystems that train and encourage their primary users in a manner that sustains the use of those technologies.

Think about it this way: How many of us have felt that “my screen time is too high,” “I doom-scroll too much,” or “my phone needs to be on silent most of the time”? Smartphones are the greatest creation of the past two decades, yet we often feel they are taking over our lives beyond the point of usefulness. Similarly, technology-centered operations design can lead to non-value-creating activities.

Similarly, job categories such as RevOps have increasingly focused on sustaining the relevance of the position itself instead of what’s truly beneficial for the company. Imagine someone who must type 1,000 rows of data daily. They could continue doing this indefinitely, or they could create automation that runs every morning, freeing the company from that responsibility. Which option would they choose?

It depends on two factors: whether they have the skill to automate and whether they are confident they can add value in other areas once the automation is complete.

If a person in a sales organization is not directly contributing day-to-day to selling, their job should be to improve how others with selling responsibilities do so. But this creates a conflict of interest around working oneself out of a job.

Enablement roles like RevOps, which used to be called “Sales Operations,” have time-bound responsibility to improve sales processes and reporting. This means these roles must be prepared to leave and do something else once the improvements are complete, which is not commonly understood.

Misusing technology and enablement roles can result in a conflict of interest. Beyond a certain point, such silos drive toward their own sustainment rather than the best outcomes for the entire company.

It creates ineffective activities like “territory planning” and “account carving.” These activities are equivalent to manually typing 1,000 rows daily and insisting on the importance of manual data entry when the correct answer is to automate. In this scenario, automation equates to a mature process.

A process is only a “process” if it is repeatable and reproducible.

Let’s revisit the question about what happens if 20% of sales reps quit tomorrow. A mature operation would anticipate this scenario and be recruiting sales reps for weeks. Mature performance management would also reveal early on that the sales representatives are likely underperforming, necessitating proactive management rather than waiting for them to find new jobs and abruptly quit.

Alternatively, perhaps we have 20% of top performers that we cannot retain long-term if a better-paying employer poaches them. This is also a predictable outcome for which we should be prepared by embracing a perpetual recruiting mindset for emerging sales reps.

When one or more sales representatives leave and a new one takes their place, we must recruit based on the territories that need coverage or the industry-specific skills necessary to sell effectively. Conversely, we shouldn’t carve territories in a manner that fits the specific sales representatives on staff, especially given the tenure mentioned earlier.

Can you see that assigning territories or accounts to sales representatives is an ongoing process? Why would we reassign accounts or responsibilities en masse during an annual kickoff meeting? The only reason to consider periodic “territory planning” and “carving accounts” activities necessary is a lack of effective sales processes, which include assignments to territories, industries, accounts, and opportunities.

Effective processes are like a smelting facility. We don’t shut them down; they are continuous.

We can only improve them while they run, which brings us to the connection with strategic planning.

Maturity improvement is the connection to strategic planning.

Now, strategic planning can influence territory management in two ways.

First, a company’s operations may not be mature across the process and organization design building blocks mentioned above. This represents the need for a strategic initiative that must be prioritized through strategic planning to improve how reps are assigned to sales activities, including the territories they are aligned with.

“Territory Planning” or “carving” is not a tangible maturity change. It’s the equivalent of repackaging the widgets we have into different boxes. It doesn’t change the total number of widgets or how we use them. A company’s average daily total revenue target on December 30th and January 2nd of the following year must be exactly the same because nothing has fundamentally changed.

A strategic initiative that spans teams such as sales, marketing, HR, finance, IT, etc., is the only path to evolve toward a mature sales process that includes territory management. Conversely, this strategic initiative is not a “sales initiative.”

Second, our strategy might refine “who” we serve. This might imply that we want to target a new customer group and stop chasing one we previously pursued. However, this is not merely a sales decision; it is a company-level decision. The reality of whether this new customer group proves more fruitful must be part of our regular selling approach.

If we treat a new group of prospects as a special unicorn, we won’t know whether our decision to include them in our sweet spot was correct. We might sell well to them in the short term due to excessive attention, which translates to higher acquisition costs. Conversely, we might fail to sell to them because we induce anxiety in the sales reps, claiming that we have never sold to this group before.

Our sweet spot of prospects is chosen because we believe we can sell to them and that all other enablers will be in place to support sales reps. Treating prospects differently implies we lack an effective who-to-serve strategic choice.

Here is our final takeaway:

Anyone in a sales function who is not directly selling or does not have a core responsibility for specific opportunities should be accountable for time-bound efforts to improve sales processes or analyses that help active selling efforts. An annual cleanup effort that looks different each year is not a process and reflects an inability to maintain a clean house throughout the year.

If you have friends or colleagues who would appreciate this type of thinking, please invite them. Let's connect more Playmakers who care about the whole company! Subscribe here.

John Oommen | Congruence Architect.