Territory optimization is the alignment of workload, opportunity and sales resources to provide the best possible outcomes. This can be done manually or with the help of an automated territory optimizer tool.
Manual territory optimization can be done in spreadsheets, but this method is the most cumbersome and least effective. Using a mapping software produces better results faster, but not all options include an automated territory optimizer.
Territory optimization is critical for maximizing revenue and maintaining a happy sales force. But aligning territories has a reputation for being a long, complicated process. So, true to human nature, many sales leaders put it off, even when they know it’s important.
If this sounds familiar, we’ve got good news. There are tools that can streamline the sales territory optimization process so you can reap all the benefits of good territory design. That includes an increase in revenue of up to 7%, even if you make no other changes.
That improvement can be associated with several things. Firstly, good territory design ensures that the workload is balanced among sales reps. That means there are no gaps in coverage and reps have enough time to give all their customers and leads enough attention. Happy customers mean more upsells, better reviews and more referral sales, ultimately increasing revenue.
Secondly, in field sales, optimizing your territories geographically can make a big difference in productivity. When your sales territory alignment doesn’t take geography into account, sales representatives spend too much time travelling. Ultimately, that means less time selling and lower sales performance.
Lower costs and cut travel time
With good territory alignment comes a right-sized salesforce. Your market is always changing. That can come in the form of new competitors, fluctuating market demand, churned customers or newly signed clients.
With all those factors, you need ongoing territory management to ensure you have the right number of sales reps on the ground. Sometimes when you optimize your sales territories, you find that you have too many people working a region for the amount of opportunity and need to right-size your salesforce.
Beyond finding the right number of sales representatives to serve your customers, geographically optimizing territories ensures travel times are realistic. Sales managers who have previously divided sales territories using spreadsheets often notice a funny thing when they put them on a map. Their territories don’t make a lot of geographic sense. Sometimes there are even sales representatives passing each other to serve clients. You can fix issues like this by assigning the right customer to the right rep. When you pair that with the intelligent route optimization, you can cut travel time and reduce costs.
Happier sales reps & 67% faster onboarding
Endless driving, long hours and too many clients to keep up with — it’s a recipe for burnout. But the same is also true for sales reps who are underworked. When there isn’t enough opportunity in a sales territory, the rep will struggle to hit their sales quota. That means missed bonuses, pressure from sales managers and an unhappy salesperson.
According to a 2018 report from The Bridge Group, the amount of time sales reps spend at each job is continuing to decline. In 2010, a salesperson would stay about three years at a job. In 2018, that was down to just 1.5 years. And if you’ve ever had to deal with high turnover, you know that regularly replacing staff is expensive. In fact, a 2016 survey by DePaul University found that the average cost of replacing a sales rep was nearly $100,000.
So, what’s a sales leader to do? There are many factors that play into sales turnover, but territory management can help. When you have the right number of salespeople and divide market potential evenly among them, it gives everyone a fair opportunity to succeed. You also ensure none of your sales reps are so swamped with work that they can’t keep up.
Ultimately, having a fair sales territory and a balanced workload makes for a happier sales rep. And when you do have to onboard a new sales rep, having your territories clearly laid out can cut onboarding time by 67%.
Better customer service with 30% less time on admin
You want your customers to feel good about your relationship. They’re more likely to continue spending if they enjoy working with you and may even tell others about their experience. But if clients only hear from you when the bill comes due, you’re not creating positive associations. That’s why your field sales reps need to spend time developing relationships and increasing renewal rates.
But it’s hard to do that when you have a massive sales territory and too much on your plate. That’s why it’s important for sales leaders to understand the capacity of their team. You may already have these sales productivity metrics. It boils down to a realistic picture of how many appointments your sales rep can attend, and whether that’s enough to hit their sales quota and nurture existing relationships. If you’re not sure, we’ve created a tool to help you analyze your sales rep capacity.
As a sales manager, when you combine this information with your territory planning, you make it easier for your sales team to provide a high level of customer service.
Having one tool where you sales reps can plan their strategy, make notes and plan routes can also reduce administrative time by 30%. That means even more time with leads and customers.
Why do I need a sales optimization tool?
So, you’re on board with the importance of territory optimization. Maybe you’ve even been doing it manually in your mapping software. It’s worked for you in the past, so why do you need a tool that will automatically optimize your territories?
In short, using a tool like eSpatial’s Territory Optimizer will give you better results in a fraction of the time. Doing it manually can be finicky and involves a lot of trial and error. Typically, optimizing just one sales region will take days or weeks. With Territory Optimizer, you can get balanced territories 92% faster.
Not only can you optimize your sales territory design in a few clicks, you’ll get better results. Trying to divide territories fairly without the right tools is like trying to slice a pie evenly – down to the ounce – by hand. Even tougher, the slices can’t be in the traditional shape. They need to have a center point. You’re going to eyeball those pieces of pie, then spend ages weighing them and carving off small bits to try to even out the distribution. With a Territory Optimizer, you have an even distribution in just a few minutes. Then all you have to worry about is customization.
With those results, including a Territory Optimizer in your sales performance management strategy is a no-brainer.
Now that you know some of the benefits of using a Territory Optimizer, let’s look at how it works in your sales territory plan.
Creating a sales territory plan from scratch
When creating a sales plan, sometimes you’ll have to build a new set of territories. To get started, login to eSpatial. If you don’t have an account, you can sign up for a free seven-day trial.
Once you’re in eSpatial, click on the “Territories” tab at the top of the screen to navigate to Territory Manager.
Select “Create Manually” and then choose either ZIP Code Tabulation Areas or US counties as your regional dataset. Click complete.
Once you’re in Territory Manager, you can use the Add Data button to upload your own datasets. This will be the information used to create your territories, so consider uploading things like customers, leads and sales rep locations.
After you’ve uploaded your data, click “Optimize Territories” and adjust the settings in the new window. To make sure you have an even distribution of sales opportunity, we recommend optimizing based on sales potential.
Once you’ve hit complete, eSpatial will create a draft set of optimized territories. From here, you can customize them so they fit your sales strategy.
If you have existing territories, you can use eSpatial to make sure you’re maximizing productivity and providing a balanced territory assignment to each salesperson.
When you already have your territories mapped, you can use them to create an optimized territory plan. For example, if you lost a salesperson in one region, you could filter down to that area to adjust the territory alignment. If you want to temporarily cover the territory with your existing salespeople, you can adjust the number of territories in just a few clicks. Since the process is quick and easy, you can be more dynamic when responding to changes in your market or staffing.
Territories naturally fall out of alignment over time. Territory Optimizer lets you balance them in just a few clicks.
Without the right tools to understand their data, many business leaders follow their instincts when making decisions. Territory mapping allows you to back decisions with data and take a strategic approach to scenario planning.
During times of change, you need to make decisions quickly. But analyzing multiple approaches, presenting them to executives and coming to an agreement can take months.
Using eSpatial's Territory Optimizer, you can quickly model multiple scenarios. Let's say you're putting together a plan for future growth. You want to see what your business would look like if you expanded your sales team by 10%, 30% and 50%. Within 10 minutes, you can have three new scenarios mocked up. Each will show you where to divide territories, how much sales potential there is when divided among more territories, and how many customers each sales person will have to manage.
Each scenario can be saved as its own territory map and sent to decision-makers to evaluate. Instead of weeks, you've provided advanced scenario planning options in minutes.
Well balanced territories can help you maintain a happier sales team. But even in the best scenario, you'll still have turnover. In some sales organizations, this can be close to 20%. If you have 100 sales reps, you'll need to replace 20 of them per year. That's a lot of territory adjustments.
You won't need to re-adjust your sales territories every time — sometimes you get lucky and are able to quickly hire a new rep. When you do need to tweak things, Territory Optimizer makes it fast and easy. For example, you could filter down to a specific region and move from five territories to four. That way you could provide temporary coverage for a vacant territory. You may even discover that the workload is still manageable with fewer reps and decide to make it a permanent change.
We’ve talked a lot about territory planning from the perspective of a sales organization or sales operations manager. It's a critical piece of the puzzle for those companies. But there are other businesses that can benefit from territory mapping software, including:
If your business includes multiple locations, you need franchise territories. Creating demographic maps with sales analytics can help you uncover new areas that are ripe for new locations. And being able to show an attractive new territory can help seal the deal with a prospective franchisee.
In the service business, speed and efficiency are key to delighting your customers. By creating an optimized territory plan, you can ensure you have enough resources to cover customers in each area. That means you can provide the best service and hit your service level agreements (SLAs).
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