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Best Practices for Sales Territory Management
Written by: Victoria Yu
Victoria Yu is a Business Writer with expertise in Business Organization, Marketing, and Sales, holding a Bachelor’s Degree in Business Administration from the University of California, Irvine’s Paul Merage School of Business.
Edited by: Sallie Middlebrook
Sallie, holding a Ph.D. from Walden University, is an experienced writing coach and editor with a background in marketing. She has served roles in corporate communications and taught at institutions like the University of Florida.
Updated on October 11, 2023
Best Practices for Sales Territory Management
If your business is just kicking off and expanding operations, you might be reaching the point where sales management seems like a confused mess, as you struggle to keep track of hundreds of incoming sales leads from different places and assign reps to each. As Julius Caesar said, “Divide et impera” — divide and conquer.
Why not take a page out of a Roman leader’s strategy book? A common practice in sales organizations is sales territory management, which divvies up your market into geographic regions and assigns sales teams to each territory. Though you may think war strategies are a bit too much, managing your sales territories can be just as difficult as managing an empire.
If you’re struggling to organize your sales efforts, don’t worry. Though we’re no Roman dictator, we can still give you some solid, modern-day pointers on the best way to set up and manage your sales territory.
Sales territory management is the process of segmenting a company’s customer base into territories, allocating salespeople to each territory in a way that optimizes sales efforts, and managing the customers and prospects within each territory.
Though a company may be tempted to organize customers and sales representatives strictly by geographic region, it’s much better to design territories to have equal concentrations of potential customers instead.
Some tips for sales territory management are to match your territory demarcation with your business goals, build well-rounded teams for each territory, customize each team’s workflow to their territory, realign territories often, and have a solid transition plan for realignments.
What is Sales Territory Management?
Let’s start off with the basics. Sales territory management is the practice of organizing customers and potential customers into segments based on certain criteria and assigning sales representatives to those segments so they can manage and nurture the customers within.
Territories are traditionally divided geographically, but with the advent of online remote selling and the globalization of trade, businesses now choose to segment their territories based on other factors such as:
- Industry of business customer
- Customer segment
- Market potential
- Number of customer accounts
- Type of account (customer vs. lead)
Properly managing your company’s territories is important because it helps sales managers uncover growth areas, allocate sales reps to capitalize on those opportunities, and build stronger relationships with customers — all great things for your business. According to Harvard Business Review, optimizing sales territory can increase sales by 2 to 7% without any change in resources or strategy. In other words, proper territory management can grow your business and squeeze out more sales without doing anything at all.
Seven Best Practices for Territory Management
So how exactly can you divide your territory, assign employees to them, and optimize sales within those regions? We’ll answer all those questions by walking you through seven easy tips for territory management.
1. Tailor Your Territories to Your Goals
Our first tip is to be smart about your initial sales territory planning and territory design. When mapping out your territories, consider which customers you plan to target to achieve your business goals.
The distribution of sales territories should be based on your business’s ideal customer profile and what sort of sales you’re hoping to make. Are you targeting existing customers, new customers, or both? For example, if you’re hoping to upsell or cross-sell existing customers, territories with equal numbers of existing customers may look quite different from territories with equal numbers of potential customers.
Though a distribution based on existing borders—such as, say, one region per state or zip code—might be the easiest way to carve up the map on paper, you might find yourself with all your customers in one region and all your reps in another, leading to a poor distribution fit. Instead, your demarcation lines should be based on how many customers or leads are in each region so that each territory has equal and manageable sales potential.
2. Build Well-Rounded Teams
Next is to be smart about how you design and assign sales teams to those territories. Beyond a responsible and capable sales leader, you should also ensure each team covers all the bases regarding support roles and is staffed appropriately for its territory size.
Each sales team should be headed by a designated sales leader in charge of developing the territory, managing the team, and ensuring sales goals are met on time. Your leaders should be quick-witted and adaptable with great time management and interpersonal skills. If you don’t already have a sales rep worthy of being promoted to a sales leader within each team, consider recruiting one from outside the company.
It’s also crucial that each team has a balanced number of employees serving different functions. Rather than simply a team of sales reps who all go out to sell at the same time, make sure each territory has support employees as well. Some support roles could be lead generation, prospect qualification, tech support, and customer success. These employees would spend most of their time in the office (or working remotely), holding down the fort while the others are in-field. Combined, each sales territory would be relatively self-sufficient.
3. Tailor Teams to Their Territories
Now that you have the bare bones of your territories and teams set up, optimize the fit of each team to their respective territories by padding out each team to fit the sales potential of each territory.
Rather than having an equal number of reps per area, make sure the size and working capacity of each team is matched to the sales opportunity of each territory. This might mean that a team could be smaller for less salient territories or that two less-experienced reps would be needed to cover the work of your most experienced rep. The goal is that no team or rep is overwhelmed or underwhelmed by their territory.
If you find that reps are struggling to keep up with the workload, you might consider purchasing tools such as marketing automation and sales automation software to help them complete repetitive tasks like sending emails en masse, improving sales productivity. This frees up rep time for more involved customer interactions.
4. Assign Reps Based on Social Proximity
Sometimes, a rep and a sales prospect will simply click personality-wise. Rather than leaving these fated meetings up to chance, sales managers and leaders should encourage prospect-rep bonding by assigning reps to leads based on social proximity.
In other words, when researching sales leads in each territory, your team should make note of the lead’s interests, skills, and area of expertise, and assign a rep with a similar profile to them. For example, if your company sells CRMs and discovers a small accounting firm that may be a potential customer, a sales rep who minored in accounting in college would be uniquely qualified to understand the firm’s unique needs and strike up a sales conversation full of technical lingo.
Tracking and analyzing customer profiles may reveal enclaves of sales prospects with unique characteristics in each territory – take, for example, Dalton, Georgia, which produces 75% of the world’s carpets and rugs. With knowledge of these regional industries, your sales managers can then reallocate your sales reps to territories based on these traits to create more meaningful sales conversations.
5. Manage Your Reps’ Cadence
Your sales cadence is the rhythm and structure of your sales process: how long each stage of your sales pipeline takes, how much time passes between each interaction with a lead, and what channel you use per communication.
As a company, standardizing your sales activities helps reps keep track of where in the sales process they are, and managers identify areas for improvement in their sales strategies. Customers from different regions will also have a consistent customer experience, boosting your brand image and authenticity.
Though you should generally have a standardized cadence based on your product and sales cycle, each territory might have a unique cadence based on its unique attributes. For example, a territory with a higher concentration of senior citizens might prefer a cadence favoring mailed advertisements, as opposed to a territory full of millennials who prefer email communications. As such, the sales leader of each territory should be responsible for working with sales reps to identify the unique trends of each territory and modify the team’s workflow and cadence to suit its prospects.
6. Align Territories Often
After a while, you might notice that your territories aren’t as lucrative as before, or that your reps are struggling to keep up with the workload. At that point, it’s time to realign your sales territory.
Sales territory alignment is the process of redistributing and reallocating your territories and teams to optimize their efficiency once more. Customers are always changing, so the sales potential of each territory will change as well, over time. According to the Alexander Group, poorly-kept territories can lead to constrained growth in up to 30% of those territories, limiting sales growth. Frequent alignment helps your business allocate manpower away from saturated markets to growth areas, fully capitalizing on each territory’s sales opportunities.
To understand how well each territory performs, pay attention to sales data such as the total revenue, sales, number of new leads, and average time to close per region. Analytical tools such as CRM or territory mapping software can also provide more extensive metrics such as territory balancing indices and sales capacity models.
How often you’ll need to align your territory depends on your specific industry: slow-growing industries might get away with alignment every three to four years, but fast-paced industries such as retail, technology, real estate, and medical sales should strive to align their territories at least once every year.
7. Have a Transition Plan
Finally, as you reallocate your customers to new sales reps based on your annual sales alignment, have a hand-off procedure in place to prevent your customers from falling between the cracks or feeling off-put by the change.
If a sales team is shifting leads between territories or otherwise reshuffling their leads, they should go through each and every lead and make sure that someone on the other side of the shuffle is ready to receive them. Once again, a CRM could provide a central location for lead management, automatically assigning leads to their new reps.
If your sales model relied on building in-depth relationships with a small number of customer accounts, you may also want to send out a message to all affected customers explaining that your company is in the process of sales territory realignment, what they should expect, and how the alignment will result in more attentive care from their new account manager. This will reassure your customers during this uncertain time, keeping them happy with your company.
To the uninitiated, sales territory management might sound like gerrymandering for businesses. But with a solid sales territory plan, smart territory assignment, and well-managed territory performance, a business can get the most mileage out of its field sales efforts, driving more growth with less resource waste.
By following these seven best practices, your business can quickly divide your customers and reps into balanced territories that reflect your company’s sales strategy, creating a neat and orderly sales department that keeps your sales managers, sales representatives, and customers happy. With luck, you’ll soon be running a sales empire!
Sales territory planning is the process of consolidating your company’s total addressable market and assigning them to sales teams. Sales territory management goes a little bit further and addresses how your company’s sales managers supervise each territory’s sales team and optimize each individual territory on a day-to-day basis.
How you segment your sales territories depends entirely on your sales methods. If you rely on sales agents going out into the field and meeting customers face-to-face, it would generally be best to arrange your territory geographically so reps don’t have to travel too far between meetings.
However, if your agents operate remotely online, you have a lot more flexibility in your segmentation. You could instead assign all of your high-value accounts to your best sales reps, for example, or all accounts from a single industry to a rep with experience in that industry. However you choose to segment your territories, make sure that you’re considering your sales reps’ capabilities and limits when assigning them to the territories.
If you’re new to sales and territory management, some CRM software includes territory management capabilities, such as Salesforce Territory Management for enterprises that allows custom territory rules and analyzes data by territory.
If your company has a little more of a budget, designated sales territory mapping software such as Badger Maps, BatchGeo, eSpatial, and Yellowfin can help you visualize where your prospects are and allocate reps to regions.
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