Sales and revenue leaders invest significant resources to increase sales force productivity via performance management, training programs and the sales compensation srogram, but often invest too little in sales territory design and optimization. Sales organizations that thoughtfully design and optimize sales territories can realize 10%-20% increases in sales productivity.
Effective territory design includes a number of key elements:
The approach to analyzing and designing the best territories should consider several important factors:
Optimally sized sales organizations and well-balanced territories can yield 10%-20% increases in sales productivity and may even generate cost savings. These best practices will help.
Territory design and optimization should be an annual process. If territories are not adjusted periodically, sales organizations can encounter situations where growth is constrained in up to 20%-30% of territories. This phenomenon results from the fact that sellers in large territories have to spend too much time maintaining the business that is already built. To compound the issue, sellers in larger territories are usually the best sellers.
To free the best sellers from maintenance selling, sales leaders should holistically evaluate territories as part of a defined planning process and shift workload from high workload to low workload territories. This will ensure all territories have an opportunity to grow.
As with all organizational change, territory changes can create confusion for customers. Following a proven change management process and implementing an effective communication and transition strategy will allow 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 more easily win new customers.
Using analytics and benchmarking, sales leaders must regularly evaluate deployment decisions to drive results:
Intuitive sizing and deployment will maximize profit contributed by sales organization. Your business can see revenue lift opportunities increase by 20% while cost reduction and reallocation increase by 10%-15%. You can achieve these increases by following these steps:
Alexander Group conducts ongoing productivity and deployment research to curate market practices, establish benchmarks and obtain useful metrics to inform territory management decisions and processes. Four key strategies are reflected in the data and findings:
Companies that invest in automated tools reap strong ROI through faster cycle times.
Automation drives operational efficiency. Automated tools offer instantaneous collection and analysis of territory inputs, decrease design errors and require less human capital to complete manual work. Many companies are investing the time and resources to develop a “clean” master database to feed more automated processes.
Partially centralized corporate teams define the processes and business rules for territory management, while allowing field teams to modify corporate’s definitions to support local needs.
Partially centralized companies provide business rules, such as coverage blueprints, account load maximums and segment breakpoints to guide rationalized and consistent territory design. These business rules act as guardrails to ensure the field’s design aligns with the company’s global execution strategy.
As companies grow and evolve, the methodology to design territories tends to become more complex. More inputs are used and the design algorithm becomes extremely convoluted, which prolongs the design process.
Best-in-class companies regularly reevaluate appropriate inputs to design territories. They also conduct correlation analysis to determine relationship strength between inputs and desired outcomes. This exercise generates a concise, but applicable, list of globally available inputs to design territories that drive consistency and efficiency.
Territory evaluation tends to be primarily on-cycle.
A majority of companies cite that the biggest gap for territory management is having a robust set of metrics and dashboards to measure territory performance and health. Companies want to move from lgutfeel and field’s word on territory performance, to utilizing data and KPIs to guide decisions. It is absolutely critical to have comprehensive and accurate data to complete territory analysis.
Alexander Group leverages proven methodologies, thorough research and many of the most successful organizations’ perspectives to guide territory design strategies. Contact us to speak with one of our Sizing and Territory Design leaders today.