A Path To Profitability: Systemizing Sales Territory Planning

Many small and medium-sized businesses assume that having a sales territory plan is a complex suite that only giant corporations require to keep their large teams organized. Such assumptions have led to companies, losing thousands and millions of dollars per year just because they fail to optimize their sales territory strategy. This not only results in wasted opportunities but also leads to high turnover as sales reps fail to support their individual financial goals.

So what exactly is Sales Territory Planning and why it should be a critical part of every business’ annual sales plan? In this article, we’ll cover the following points:

  1. What is Sales Territory Planning?
  2. Factors that influence a good sales territory plan
  3. Tips to create a successful sales territory plan

What is Sales Territory Planning?

I’ll try to explain this phenomenon in the most simple way possible.

Take the example of a company selling Cloud Technology to restaurants: We all know that with social distancing being practised all over the world, most independent restaurants, and food chains are pivoting to off-premises dining that would require them to have a robust online ordering system in place. Now the companies offering the technology are racing to get the maximum number of restaurants under their belt and this would mean reaching out to even those businesses that are located in small counties and cities around the country.

Now imagine sending out a team of 5 field reps, to a remote location (let’s say Hill County in Texas with a population of 30,000+) to sell the Online Ordering System to restaurants and similar businesses. With only a handful of restaurants and food trucks in the entire county, how many new customers do you think your team of 5 sales reps would be able to add?

In this case, the reps will not be able to meet their annual targets and the company would have wasted a significant amount of resources just to acquire a few new clients.

An effective sales territory plan ensures that that the time and energy of each sales rep is focused on the activities that offer them equal opportunities to earn incentives, while the company maximizes sales and profit.

Sales Territory Management is the process of creating, managing, and optimizing, sales territories to salespeople who’d be responsible to drive sales from the allocated territory. This aspect of the planning includes strategically defining territories, setting goals, and providing sales reps with the tools they need to hit their territory quotas at a higher rate.

Factors that influence a good sales territory plan

When allocating territories among your team members, you must make sure that each rep gets an equal and fair opportunity to close deals and earn revenue for himself, as well as the organization. To ensure this, ask yourself the following questions:

  • Does the territory optimization ensure an equal challenge for each role?
  • Does the territory provide an equal shot at quota attainment and revenue generation?
  • What has been the performance graph of sales reps in the past few months or weeks?
  • Does the territory in question provide a good mix of existing and new customers?
  • Does the plan provide opportunities for an effective contact schedule?

Once you have evaluated each of these, you’ll be able to find inefficiencies in the system that would require you to work on solutions to create a beneficial experience for both the sales reps and the clients.

Tips to create a successful sales territory plan:

Define territories and goals clearly

This is the first and the most important stage of crafting a Sales Territory Plan. Focus on the who, where, when, and why to categorize and split your customers into various segments and subsequently define goals for each territory.

Most companies focus on geographic and industry-based clusters as it’s easier to acquire new customers from areas or industries with existing customers. Understanding your Total Addressable Market (TAM) will help you identify and segment prospective customers and companies by region.

When setting goals, look into the historical data, and forecast outcomes using the SWOT analysis. A SWOT analysis can help identify internal and external factors that can affect the performance of the territories as well as sales reps. This will allow you to focus on geography and demographics that are most likely to deliver results, rather than simply trying to cover the most ground.

Create a contact rotation schedule

When you are managing multiple sales teams looking after multiple territories, creating a contact rotation schedule can be the golden compass for ensuring everyone is pointed in the right direction.

It’s important to ensure that the prospects are provided with all the information and resources they need to move forward in their buying journey without feeling annoyed or overwhelmed.

Part of this step in the process is to determine when and how often a person in a particular territory needs a phone call, a scheduled visit, or a marketing promotion. You can use a CRM or a calendar to keep your schedule on track.

Have a plan to make adjustments

Keep in mind that any kind of change in the eco-system — from climatic to political, and perhaps, economical can have a great impact on the needs of your customers. Depending on the solutions you offer and the sales pattern over time, leave some room to make adjustments and changes to the goals for each territory if necessary.

The ultimate goal should be set to meet the changing needs of the territory or territories in a timely and effective manner. Make sure you measure progress and modify aspects of your territory strategy if you are unable to get the desired results.

Deploy an automated solution to improve sales performance

Sales Territory Management is a never-ending cycle of assessing, allocating, and adjusting goals and territories. It can be pretty easy to get lost in the ruckus of assigning tasks and tracking goals. However, to master territory management, you need to keep a track of all the metrics in conjunction with sales quota and commission plans to gain a competitive advantage.

Deploying an automated system for territory alignment can help improve performance, reduce salesforce turnover, reduced time spent in adjusting yearly changes, as well as ensure accurate account allocation.

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