For sales and operations leaders dividing sales territories is an important strategic decision. When you divide territories effectively, you ensure your sales reps focus on their regions and customers better. That means improved efficiency, sales productivity and more sales.
Below is a step-by-step approach to how to divide sales territories.
Step 1: Crunch your data
Start by collating and analzing your market and sales data using mapping software. Consider customer data, population, industry data, and competitor locations and assess your sales potential by customer type and segment.
Step 2: Set your sales territory priorities
An effective territory management plan starts with honing in on your key objectives. What will you prioritize?
- Sales productivity and utilization
- New account prospecting
- Workload balance
- Revenue growth
- Cost reductions
- Resource allocation
- Customer service and relationship continuity
- Product profitability
- Balanced quotas
- New accounts
- Competitor locations
Selecting your primary objective will guide your territory division process.
Step 3: Segment your data
Once you have crunched your data (Step 1), segment your target customers and prospects into logical groupings. Your groupings can be geographic, by industry type, customer size, distributors and other variables.
Step 4: Think of equitable workloads
You'll want to build sales territories to ensure there is a balance both in terms of potential revenue and workload. Reps spend about 35% of their total time selling. You need to ensure that they maximize their selling time and minimize travel. And that territories have equal sales opportunity (or sales potential). Motivation spikes and teams hit quotas more often when your sales reps have equal opportunity to succeed and hit quota.
Step 5: Resource allocation
Resources management is another critical consideration. With limited budgets, staff and support, you must consider allocating and rightsizing your sales resources to ensure each territory is supported effectively. The great news is that you can achieve that result in minutes using a territory optimizer.
Step 6: Minimize disruption
You and your sales team will have established customer relationships and a strong local presence in some geographies. It would be best to involve your sales managers and reps in the final stages of your territory division process. That all-important local knowledge and feedback can prevent disruption. Some customer relationships should continue (because your local representative has a strong bond with the customer). Some will move; for example, a key account manager may need to manage the relationship of a large customer with multiple locations in multiple geographies. Continuity can be crucial to future customer growth. Read these Territory Management 12 proven tips.
Step 7: Minimize travel distance
Minimizing travel distance for reps results in more time with customers and prospects and more sales. When you use a territory optimizer with a workload index, your territory mapping software will calculate travel time and ensure to divide sales territories that minimize miles.
Step 8: Be flexible and divide often
Sales territories should not be set in stone as your market is dynamic and subject to seismic changes annually. Customers move, acquire others, the competition gets more robust, the economy changes direction, and many other factors impact alignments.
So divide sales territories annually as a minimum and build in some flexibility to update your alignments on the fly (like when a sales rep leaves)
Step 9: Use a Territory mapping software tool
You need territory mapping software to maximize your time and achieve the best data-backed territory designs. Look for a solution offering powerful mapping and visualization with territory and route optimization. The power-trio from eSpatial is the best available and easiest to use.
Step 10: Measure results v expectations
Once you have divided your territories, you must monitor performance and meet your priority (Step 2) and revenue expectations.
We recommend a minimum quarterly review.
Step 11: Support your reps
Sales training and coaching are incomplete without territory support. Maps excel when you need a rep to understand their sales territories. Seeing is believing. Sales operations and leaders can explain how the sales territories were created, share account and customer details, and help plan routes. Onboarding new reps is so much easier with a well-thought-out territory management plan.
Remember, there is no one-size-fits-all approach to dividing sales territories. Your business, market, and customer relationships are unique, and you will uncover regional differences that require flexibility. But with a clearly defined process for "how we divide sales territories", you will reap the rewards of higher sales productivity, effectiveness and revenue.
It's an ongoing and active process, but rewarding.