Your organization loses valuable revenue if your sales reps work poorly designed sales territories. And your sales team underperforms relative to their territory's sales potential.
It is common for organizations to plan, design, and realign sales territories in spreadsheets. It can be convenient. Who doesn't use excel? But you sacrifice effectiveness for efficiency, and the consequences are serious:
- Lost revenue
- Built-in inefficiencies
- Sales rep productivity slips
- Lower available selling time
- More windshield time
Imagine carving an apple pie with the sole objective that everyone receives an equal share, and you must do it manually. Sounds easy, but there are several complications:
- You must divide the fruit equally, too (but you can't see it; remember it is hidden from view)
- You must carve 500 equal slices
What a challenge, and if you are in sales operations or sales management, it may feel like it is an impossible task. Territory mapping software eliminates manual processes and changes the game for you.
Read more here on how to balance territories.
1. You can bake a bigger pie
When you design and realign sales territories, you grow the pie. Think of sales potential as your existing sales plus available market share you could capture if you maximized your sales resource utilization.
2. You can design equitable sales territories
Equity matters for several reasons. You want your sales team to have equal opportunity to achieve their sales quotas, or you build in the potential for higher sales team turnover.
Also, you want to ensure your field reps can work their territories efficiently and effectively. You don't want sales territories that reward or penalize the salesperson. It happens too often. Sales rep A has a sales territory with so much sales potential it requires little effort to unlock it (if you are easily hitting quota, why push?)
Sales rep B works in a territory with low sales potential, and no matter how hard they try (and they do try hard), they cannot hit quota.
3. You can slash design time
With sophisticated sales territory mapping software, you can reduce administration time by more than 50%. And because you can visualize territories on maps, it transforms decision-making as collaboration soars.
What is territory management?
Territory management is the process that:
- Allocates customers and prospects or products to field sales representatives
- Assigns zips or points(accounts) to a sales territory alignment
- Optimizes sales workloads, ensuring equity among teams
- Eliminates inefficiencies in territory design
Territory management is critical for sales performance management, salesforce planning, resource allocation, incentive planning, and financial reporting. Because most territories include real-world addresses or locations, they are simpler to design, manage and analyze with a data visualization tool.
Why use territory mapping software?
Territory mapping software enables:
- Territory vizualization
- Hierarchical views of sales territories
- Territory realignment functionality
- Territory optimization capabilities
- Balance with a workload
- Weighted balances
- An ability to layer multiple datasets for greater insight into your data
- Sharing capabilities second to none, as seeing territory alignments on maps transform understanding
- Scenario planning
How does territory mapping software boost revenue?
Let's go back to our apple pie analogy. Your job was to carve 500 equal slices without the aid of sophisticated algorithms. It is impossible to do it without the right tool. And every inaccurate slice costs your organization money.
Some slices are too large and others too small, resulting in inequity. Poor territory design produces lower morale and higher sales or service staff turnover. Everyone demands an equal share, and the organization will gain more than improvements in staff motivation. Sales will grow too.
Sophisticated sales territory mapping software with a workload index can carve up territories, ensuring all your sales and service reps have equal opportunities. And that it requires equal effort to work the territory and exploit the sales potential.
Return on sales effort
So what is a workload index? Think of it as a return on sales effort measure. And let's work through an example. Using a workload calculator sheet below and focusing on one sales rep, we will analyze from left to right.
Account types - in this scenario, our rep has five account classifications from A to E. A accounts are the highest value customers.
Number of accounts by classification - in this example, our rep has 20 A accounts, 34 B accounts etc.
Call frequency - represents the number of times in a year the sales rep calls on a customer. So all A accounts get 8 calls per year.
Workload is a combination of three measures,
1) Time spent in a call - in this example, a rep spends on average 90 minutes in a sales call
2) Average travel time - for our sample, the average is 30 minutes. Territory mapping software should do this calculation for you. If you don't know it, you can use an estimate based on your experience.
3) Call frequency - already populated in column D.
Workload in hours and in # of sales calls is calculated, showing you the total workload required to service all customers.
% hours worked by account type gives you the first valuable metric to review. So in column J, you see the percentage of hours (25%) your sales rep spends on A accounts.
Working left to right, you see the revenue generated in A accounts is $3,000,000 representing 63% of total sales generated.
Well, if 25% of your sales rep's effort delivers 63% of the revenue, you have an imbalance and a significant opportunity to grow revenue by adjusting the workload components.
By contrast, 33% of the rep's effort is spent with C accounts, delivering just 9% of total revenue.
What is the takeaway?
Our conclusion? We are under-servicing our A accounts and over-servicing our C accounts.
Our average revenue per hour for an A account is $9,375, and for a C account is $1,019. Adjusting our call frequencies and redistributing workload should have a significant impact on rep productivity and revenue growth.
There is scope to rightsize the sales territory and workload (in this sample example, we could transfer C, D, and E accounts to inside sales or online) and grow revenue, reducing service costs while driving productivity.
With your teams working in balanced territories, customer service levels improve. More time is available to sell, prospect, service, and grow accounts. On average, you will unlock up to 12% more revenue. And the smarter approach is to use a power sales territory mapping software solution, slashing time and effort.