Restructuring Sales Territories

Restructuring Sales Territories

During the past 20 years selling software, I’ve seen Territory Division Strategies come and go. When Sales Executives make a decision to change strategy, some sellers get creamed and others get famous. Over time, it doesn’t matter which strategy you choose– only that you leave it the same long enough for sellers to adapt, provide support that mirrors the new approach, and make final adjustments as feedback & results come in from the field.

Why change territories?

The Company’s aggressive revenue goals required it. 

Not long ago I had an amazing job in a fast growing pre-IPO company and crushed it starting in my first three quarters. I was hired while living in Utah to come aboard as the first Enterprise Sales Rep, with my target prospects being High Tech Sector with Annual Revenues greater than $2B. We landed enough new business for the Board to put a new, Pre-IPO CEO in place. His first declaration was that we’re going to an “NFL Cities Territory Model.” That is, we moved from a vertical-based, revenue banded sales territory model to a geographical model with reps based in these NFL cities. Hmm… I love Seattle, but moving was not an option!

Unfortunately, beyond the “NFL Cities Territory Model” approach there were few clear rules about transitioning accounts which showed a specific set of sales activities and were progressing from left to right in the forecast. And there were several opportunities that required decisions about revenue splits and commissions, which were delayed or not addressed altogether.

3 sales territory management pitfalls and how to avoid them

Sales territory management once consisted of taking a big map and drawing some boxes on it to delineate which rep got which piece of the map. Sure, there are still maps and boxes involved, but now there is far greater complexity to it. And there are some fairly consistent pain points when it comes to sales territory management. For example:

  • Resources are over-assigned to the same accounts
  • The territory target is too large and there isn’t enough capacity to reach it
  • Plans take too long to build and complete, and tend to be out of date
  • Assignment rules can conflict and result in coverage gaps

Poorly managed sales territories can result in negative client engagement, not to mention sales team frustration and high turnover among sales reps. Beyond that, there are most-common pitfalls to avoid when it comes to establishing sales territory management.

Pitfall #1: Having limited data– and a restrictive territory management tool

When you want to make a change, don’t set yourself up for difficulty down the road. If you don’t have a handle on your client and account data, it will be difficult for you to not only understand how well the territory (or rep) is performing, but also to make any potential improvements. Keep in mind though that you don’t want to make too frequent or too many changes to your sales territories, as it may impact client engagement, but you will want to at least have the ability to modify territories as needed.

Pitfall #2: Not involving the sales team

Don’t forget to include the sales team. This may seem like an obvious point, but you may be surprised at how often territory planning is done purely top-down with little inclusion from reps and teams. You want to create a territory plan that will take rep experience into consideration and help to motivate the sales force. That means having the right reps for the right territories, and making sure they can see that the plan takes their local business into account – ultimately, a plan the sales team can truly embrace.

Pitfall #3: Getting stuck in spreadsheets.

Companies and organizations who are winning in sales performance and territory management have adopted tools and applications that give them visibility into targets, schedules, and capacity; help them align the best reps to the right products and accounts; and reduce the sales assignment time. In this era of real-time data, many sales leaders recommend moving to the cloud for quota planning in real time and effective collaboration. With a sales application, you can also integrate a CRM system for territory rule deployment. There are sales analytics applications out there for just about any size of company, so you really don’t need to start with spreadsheets. Companies and organizations who are winning in sales performance and territory management have adopted tools and applications that give them visibility into targets, schedules, and capacity; help them align the best reps to the right products and accounts; and reduce the sales assignment time. With a sales application, you can also integrate a CRM system for territory rule deployment.

Stay away from these sales territory “don’ts” from the start, and you’ll already be on your way to greater sales success sooner than you thought possible

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