Territory design and optimization should be an annual process for medical device companies. By adjusting territories periodically, sales organizations can avoid constrained revenue growth. This phenomenon results from sellers in large territories spending too much time maintaining existing business and not enough time acquiring new business.
Effective territory design includes a number of key elements:
- Account selection models – Most sales organizations cannot adequately cover all accounts in their market. Account selection models effectively evaluate current revenue, account level growth opportunity, cost to serve and geographic location to prioritize eligible accounts.
- Sales time studies – Documenting how a sales organization spends time is the best way to optimize territory design. Key sales time activities include prospecting, engaged selling, sales completion, administrative and travel time. Sales time should also differentiate between time associated with high-value and low-value call points.
- Sales capacity models – Based on time as well as efficiency adjustments, sales organizations benefit from a reality-based capacity model to identify the workload for an average territory.
- Territory balancing indices – Indices are a powerful tool in balancing territories using variables such as account revenue, account potential and travel time. Companies should select the most important variables and weight each one according to importance.
- Mapping software – Software can easily allow a sales organization to visually validate, adjust for geographical constraints and calculate travel time.
As with all organizational change, territory changes can create confusion for customers. Following a proven implementation process and communication strategy will empower customers to understand the rationale and also embrace the changes. Balanced territories usually translate to better service from sales representatives, and therefore, happier customers. By providing better service, a sales organization can expect to increase business with current customers and win new customers.
Learn more about the Alexander Group’s Medical Device practice. If you have questions, please contact one of our practice leaders.
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