Executive Education

Why Territory Planning is Critical and How to Get it Right

A sales territory refers to a group of customers for which an individual salesperson or team has primary responsibility for selling to and managing. Although it’s common for sales managers to create teams by geographic boundaries, they may also use other factors such as sales potential or whether the group contains new or established customers.

When a sales manager creates territories efficiently, all sales teams benefit from increased sales, a larger customer base, and improved morale. The company enjoys maximized sales and a fair division of resources.

Unfortunately, this isn’t always easy to do. As a result, organizations suffer due to unbalanced sales teams. Some of the most common issues in companies with unbalanced sales teams include an unfair distribution of sales opportunities among the representatives, different compensation levels, and sales representatives resigning to seek better and more balanced opportunities with another company.

Below are several best practices for territory planning that will help sales managers avoid these common problems.

Start Planning as Early in the Year as Possible

Sales representatives should know their territories and potential prospects on the first day of the fiscal year to avoid wasting time and missing sales. Companies experiencing growth also need to factor in territories for new salespeople that they plan to bring on board.

This might mean assigning part of a currently non-covered territory that will eventually go to a new representative to an existing representative for the time being. It will be more work for that person, which should mean more pay. The upside is that sales managers won’t have to re-plan territories every time a new person joins the team, or someone leaves.

Make Territory Decisions Based on Data

A sales manager should never assign territories based on geography alone. He or she also needs to consider hard data such as the mix of customers and prospects in a specific area, the specific industry, and how close two representative would be in proximity to each other when working their individual territories. It’s equally important to look at the support each representative would receive in his or her territory from marketing and other areas as well as the level of penetration with existing accounts.

One thing that most sales managers are keenly aware of is that they must avoid the appearance of favoritism when assigning territories to their sales representatives. It quickly breeds resentment if some representatives feel that others have received an easy territory that makes meeting their sales quotas an effortless experience. Changing territories at least once a year is one way to meet this challenge. As high-performing representatives receive promotions, sales managers should adjust the territories left behind and assign them to newer representatives and those who still require more coaching to meet their sales goals.

Of course, problems will still arise even when careful planning goes into territory assignment. That doesn’t necessarily mean the assignments were wrong, just a bit unbalanced. Look for common patterns early on and make the necessary adjustments to enjoy better balance across the entire sales team.

Benefits of Creating Aligned Sales Territories

When an organization has a balanced workload for its sales professionals, it obviously maximizes profits. Perhaps even more importantly, good sales territory assignments result in satisfied representatives who willingly go beyond what is expected of them. This improves overall morale and individual career satisfaction. Lower staff turnover saves significant costs on hiring and training replacements as well. Reducing fuel and travel costs is another benefit of well-planned sales territories.

Performance Reporting

Using mapping software to visualize sales territories also simplifies the process of performance reporting. For example, sales managers can aggregate mapping software to obtain a quick view of performance by representative and sales territory. The data filtering feature makes it possible to break down individual metrics even more, such as looking at sales above and below a specific dollar amount. Individual sales representatives can perform many of the same functions. This allows them to understand their territories and unique challenges even better.

Data visualization enables both managers and salespeople to obtain details about a territory that wouldn’t be available with typical spreadsheet applications. By understanding such factors as customer types and demographics, it’s easier to tailor sales presentations to meet the needs of specific customers. These capabilities increase collaboration within a team instead of fostering unhealthy competitiveness or resentment.

Balanced sales territories benefit the entire organization as well as the customers it serves. Enhanced reporting software only improves things further by making it possible for representatives to share information via a cloud application from anywhere in the country.


Have you read?
Best CEOs In The World 2018: Exceptional Chief Executives
Rich List Index: The World’s 1,200 Billionaires; Meet The Richest People On Earth
India Rich List For 2018: Richest Indian Billionaires.

Boris Dzhingarov
Boris Dzhingarov, founder of Cryptoext, graduated from the University of National and World Economy (UNWE) in Sofia, Bulgaria with a Bachelor's degree in marketing.