Helping sales teams hit their sales goals has never been an easy task: only 65% of field sales reps at large companies hit their sales quotas. The current sales environment has only made it harder than ever for reps to meet, let alone exceed, their quotas.
But before leadership starts panic-enrolling sales reps in persuasion seminars, you should take a few minutes to re-evaluate and optimize your sales territory management strategy. Consider this your sales team’s battle plan — everything from your territory assignments and goals to how you prioritize and communicate with clients and track performance.
This post is your go-to resource for learning how to set up your sales territories plan and hit your sales territory quotas at a higher rate. We’ve divided this guide into these 5 sections:
- Defining sales territory management
- Evaluating your sales territory management
- Sales territory goal setting
- Territory sales cadence management
- Tracking and managing sales territory performance
Let’s get into it.
Table of Contents
What Is Sales Territory Management?
Sales territory management is the process of creating and the oversight of sales territories to make them as effective as possible. Sales territories that are managed well will make sure that each rep’s skills are matched well to their territory and drive sales.
Sales territory management encompasses the responsibility of defining and assigning territories to reps. However, it's important to design rep territories so they can generate enough business to hit sales quotas, while also managing existing client relationships within their assigned sales territories.
Sales managers can ensure that reps are enabled for success by:
- Defining sales territories strategically
- Setting proper sales quotas
- Lowering overhead costs
- Providing their team with effective processes to improve efficiency
We want to focus on the first element: defining sales territories. A sales territory is the bounds that group various customers together.
A common misconception is that sales territories always refer to a physical, geographical area, like a border. Traditionally this has been true for most companies. However, the shift in the past year has forced teams to reconsider how to best divide territories. Since there is less emphasis on meeting in-person, it might not make as much sense to divide by geography.
Mapping technology makes it easier than ever to find the right kind of sales territory. Today, it can be based on many factors, like:
Account types can be categorized by different factors such as sales potential or stage in the sales funnel (e.g. leads and opportunities).
Audience segments are typically defined by characteristics like industry type, buyer/company persona, or products sold.
The process of defining sales territories and assigning them to sales reps is called sales territory alignment.
Managers aim to set proper sales quotas, define territories strategically, lower costs, and provide their team with effective processes to improve efficiency — this is all included in sales territory management.
Sales territory management is the process of getting the most out your territories through your sales reps. It requires a constant cycle of reviewing territories and helping your reps achieve sales goals. That sounds great, sure, but what goes into this process?
How to Set Up a Sales Territory
Setting up territories from scratch can be an intimidating prospect. However, with the right mindset and tools to understand your market and sales team, you can learn how to divide sales territory so that it is well-suited to your team and customer.
Consider Your End Goals
First, consider what you would like to get out of your planning and what the overall goals of your business are. Each company is different depending on their size, industry, area, and product. Some organizations just need to improve their overall sales, for example, while others want to increase referrals.
Think through your team’s long-term plan. Is your current plan scalable enough to meet your goals down the road? Are there future changes on the horizon, such as a product launch or regulation changes? These kinds of considerations will help you decide how best to divide territories now with an eye on the future.
Research Your Market
The right sales territories keep your customers and market in mind. Define your market to make the most effective territories to meet your goals. It will also lead to lowering costs, improving the marketing and sales process, and increasing profit.
Depending on your industry, size, and business, there are various ways you can define your market. Size, geography, and customer demographics are a few common ways that leaders seek to understand their business environment.
Evaluate Territory Quality
To make sure that territories are well-matched to the sales rep, consider the quality of accounts within each territory. Evaluate each account to measure its value. You can evaluate the value by either qualitative or quantitative measurements based on the goals you laid out above.
The value of these accounts will help you evaluate the value of each region. It can help you rank these territories based on your goals and business needs. It might help to get input from your sales team at this point. They will have insights into how the territories will look practically and the opportunities there.
Evaluate Your Sales Team
Each sales rep has different strengths and areas that need growth. Territory management means identifying these to match them with the right territory. For example, a rep that has experience closing large deals might be well matched to a territory that has more enterprise prospects, or a territory that has more start-ups might do well with a newer sales rep that can gain experience.
There are two kinds of sales rep performance indicators you should evaluate: quantitative performance and qualitative performance
A quantitative performance assessment considers how reps perform against their sales goals and Key Performance Indicators (KPIs).
Reps that exceed their sales goals clearly have the ability to land new accounts and keep existing ones. Those that miss their goals may need additional coaching or to be reassigned to another territory that may better suit their skill set.
Common KPIs for sales reps include:
- Individual Sales by Client: A basic metric that allows managers to easily compare rep performance by showing the amount a sales rep is selling to each client
- The number of New Contacts: Shows how reps are contributing to business growth in their territory
- Opportunity to Win Ratio (a.k.a. client acquisition rate): Shows how effective reps are at turning opportunities into new business
- Event Rates (e.g. number of appointments, number of calls): Shows how sales reps are managing their time and if they’re taking enough initiative to fill their time
- Average Deal Size: Shows how well reps are at identifying and closing valuable deals (in other words, are they focusing their time closing the right deals?)
A qualitative performance assessment considers a sales rep’s intangibles, such as their attitude and how they actually execute their job.
Les Lent, a renowned sales coach, shares the P.A.C.E. framework for judging the qualitative performance of sales reps.
- Passion: Which sales reps love what they do? Do they love the company or the product? Does this passion show in everything they do?
- Awareness: Which sales reps are carefully listening to their clients? Do they pick up on subtle clues, such as shifts in tone, and act accordingly? Do they always do their research before approaching new leads?
- Curiosity: Which reps are always asking questions? Which ones lead the discussion at your regular meetings, always offering suggestions for improving processes and best practices?
- Energy: Which reps are always on the go, whether to meet a client or try to land a new one? Do they know which leads are worthwhile, and are willing to close the conversation on leads that aren’t going anywhere?
Understanding your sales rep’s strengths and weaknesses will enable you to better align your management decisions to get the most out of your available resources.
If your sales rep is struggling to meet quota, it might be a sign that they are not well-matched to their territory. A closer analysis of both your territories and your reps will help ensure that your customers are best served, and your sales team succeeds.
How to Evaluate Your Sales Territories
Companies, customers, and sales environments are in constant change. Once you have established your sales territory, it’s crucial to continue to evaluate it to make sure it meets your needs.
Establishing effective sales territory alignment and management requires good, hard data. Some best practices for managing your sales territories are to fully understand:
- How your accounts compare in terms of services provided, lifecycle stage, revenue, costs, and profit
- Which territory has the most successful sales funnel (leads, opportunities, new accounts, conversion rates, etc.)
- How each sales rep performs in terms of their numbers and their intangible qualities
Once you have assessed each of these, you’ll be able to balance your territories in a way that creates more opportunity for your sales reps and provides a better experience for your clients (and close more deals in the process).
Your accounts will continue to change and shift after your initial assessment. Continue to evaluate them to make sure they align with your territories and goals. Once you have your territories set, it will be easier to assess their costs to find inefficiencies in the system.
Every account is different, but some are more similar to each other than others.
Accounts may share similar types of products or services. They may share similarities with the amount of revenue they generate for the company. They may have similar costs.
This last point should not be ignored.
Account costs are the expenses needed to maintain the account, including:
- Travel to and from the client
- Portion of the rep’s time spent on the account (percentage of their salary)
- Marketing or promotion costs
Once you understand each of your account’s revenues and costs, you can calculate their net profit. This will help you prioritize accounts and optimize sales territories to drive as much profit as possible per sales rep.
After you figure out which accounts should be prioritized, you can optimize sales territories to focus on the most valuable accounts and generate as much profit-per-rep as possible.
Here’s an example we hope you’ll never have to experience first-hand: Westeros. In case you aren’t a superfan like we are, the Seven Kingdoms are divided into (surprise) seven main territories: the North, the Riverlands, the Westerlands, the Reach, the Stormlands, the Vale, and Dorne.
Let’s say the Silver Company (a competitor to the Golden Company, obviously) expanded into Dorne within the past six months and only has three accounts there. The sales manager analyzed the account performance and recorded the following:
These numbers provide crucial insights.
Dorne 3 generates the most revenue, and yet it has the lowest net profit due to its high level of expenses.
Dorne 1, on the other hand, generates the lowest revenue but brings in the most net profit.
Ideally, the sales manager should focus on finding more customers similar to Dorne 1 and 2, which brings in the most profits and are more efficient to manage than a larger account like account 3.
To find new, similar accounts, the sales manager should dig in and see what factors distinguish Dorne 1 from the others—industry, size, products bought, etc. From there, they can act to help their reps capitalize on their insight.
Sales Territory Assessment
While account assessments are focused on how accounts within a territory compare to each other, territory assessments allow sales organizations to understand territories in terms of their sales funnel performance.
When assessing a current territory, you should evaluate your sales funnel to answer:
- How many leads are being generated?
- How many leads turn into opportunities?
- How many opportunities convert to deals (new accounts)?
The conversion rate is calculated by dividing the new accounts by the original number of leads.
Let’s take another look at Westeros. Say you’ve expanded into four territories and want to evaluate your sales funnel performance. Your numbers may look like this:
|Territory||Leads||Opportunities||New Accounts||Conversion Rate|
Here are some noteworthy insights:
- The Westerlands yields the highest conversion rate and therefore has the strongest performing sales funnel.
- The Vale has the lowest conversion rate (by quite a large margin) and therefore has the weakest sales funnel.
From here, the sales manager should move around resources to generate even more accounts. They can, for example, move a sales rep from the Vale to the Westerlands to capitalize on the available opportunities, or they could analyze why the Vale may be underperforming.
Sales Rep Assessment
With proper analysis of your accounts and sales territories, you can effectively assign the right sales reps and help them be successful. But in order to know who the right sales reps are for each territory, you need to consider the sales rep’s individual performance as well.
The job of evaluating your sales territories is never truly done. As your company and sales team grows, goals change, and demographics shift, territories may need to shift to accommodate them. Plus, additional data can provide insights that were not available before when setting up territories.
Consistently re-assessing your data, checking in with your sales team, and evaluating any new goals will help ensure that they continue to be successful.
Automate Your Evaluation
Assessing your accounts, sales territories and reps doesn’t have to be time consuming. By automating how you collect, analyze and report performance data, you can save time and increase sales productivity and effectiveness.
This mobile-first software provides you with the automation you need directly on your mobile device, along with industry-leading territory mapping, team management, and route optimization. Your sales team can call, email, or route to customers and prospects quickly and easily directly from within the platform with the click of a button. The Quick Actions simultaneously allow reps to automatically log a call, email, or visit, enabling your team to keep up with their administrative work with very little effort and ensures clean data practices and increased insight across the board. With this data, you can easily see how your accounts, sales territories and reps are performing — making evaluations simple and efficient.
Map My Customers maximizes your team’s sales through a more intuitive workflow. The purpose-built sales tool simplifies your team's day-to-day, making it easy to capture untapped data and equipping you to make revenue-driving decisions.
It can serve as your sales CRM or integrates with many of the top CRM options. By optimizing your processes, the platform enables you to make sure that your salespeople spend more time doing what they're meant to do: selling.
Tips for Effective Sales Territory Management
At the end of the day, the way you shape and allocate resources to your sales territories has a massive effect on your bottom line. Once you’ve evaluated your accounts, territories, and sales reps, you can start the challenging work of doling out your available resources for maximum success.
Well-balanced territories will allow you to get the most out of all of your reps, while also giving you a better understanding of who your top performers are. The more equal the opportunity is between territories, the more level the playing field for your reps — this provides major benefits.
For example, if a territory is over-served, there are too few opportunities per rep—your team won’t have enough to do. This leads to money and time down the drain, and also means other territories will likely end up under-served.
If a territory is under-served, there are too many opportunities per rep. If your reps take on more accounts than they can effectively service, it leads to lower value accounts and dissatisfied clients.
With well-balanced territories, your reps will be motivated to take full advantage of the opportunities in their territory without competing against their own team or overwhelming themselves. Territory optimization software, like TerrAlign, can help you achieve this balance.
Sales Territory Goal Setting
After all this talk of hitting KPIs, it’s time to ask: what KPI should you be targeting?
Typically, we start by looking at sales quotas and sales targets. These are often conflated, so let’s take a moment to define them.
Sales quotas are specific numerical targets that reps should hit by specific dates, like:
- Close 10 new deals each quarter
- Increase territory revenue by 10% this year
- Increase conversion rate by 5%
Sales targets, on the other hand, are more intangible goals with no specific date, like:
- Expand into a new region
- Build a market for our new product
- Explore upsell offers
Both goals types should be based on all information available, such as historical sales data and the performance assessments we previously covered.
For example, if a territory has a decent number of accounts that have lower-than-average profit margins, goals should be directed toward landing new, more profitable, accounts.
Opportunity-Focused Sales Goal Setting
Beyond sales quotas and targets, you should define goals based on how to maximize opportunities with specific account segments.
One way to do this is by organizing accounts based on the K.A.R.E. framework, which categorizes current and potential accounts in the following way:
- Keep Existing accounts the company wants to keep. Qualities include solid relationships, acceptable profit margins, and minimal investment.
- Attain: Target accounts the company wants to acquire. These match the profile of existing customers and have high-profit potential.
- Recapture: Previous accounts the company wants to win back. These accounts would be easy to land and would have acceptable profit margins.
- Expand Existing accounts that have the potential for upselling and cross-selling. These are typically major clients, show strong growth potential, and could reap large additional profits.
With your territory goals in mind, you should develop a “kare-full” plan to make those goals a reality.
Territory Sales Cadence Management
The key to successful sales territory management is ensuring that all accounts are properly managed and given the proper resources. That is, reps are able to dedicate the right amount of time to each account—which can be achieved through cadence management.
Cadence management is the process of organizing account visits based on account priority.
To begin, your sales team should first determine each account’s priority level. From there, you can group similar accounts and determine how many touches they will need over a given period of time.
Call Rotation Plans
At the start of each significant time period (quarter, fiscal year, etc.), create a call rotation plan for your various accounts. Lay out the number of each touch type (e.g. email, phone call, visit) each account bucket receives. In other words, a call rotation plan is cadence management put into action.
For example, your sales organization may decide high-priority clients need two in-person visits, two phone calls, and four emails per month. Sales reps then know to plan out these touches for their high-priority clients.
Simply put, cadence management and call rotation plans ensure your sales reps are dedicating the right amount of time to the right accounts. To help keep on top of them, consider adopting a cadence management tool.
After all, reminders on your CRM are often snoozed and forgotten. God forbid you’ve tried to set actual alarms on your phone to track this vital part of client acquisition and management.
Tracking and Managing Sales Territory Performance with Software
Knowing the right strategies for sales territory management is an excellent start, but in order to leverage all of your opportunities and ensure effective sales territory management, you and your team need the right tools.
Sales territory management is never a one-and-done affair. It’s an ongoing process that you’ll constantly be tweaking and modifying.
But if that makes it sound more daunting, take a breath — it means you will never be perfect, so give yourself (and your team) permission to try new things and see what works for you.
One of the only guarantees is that in order to keep an eye on all this data, you’re going to need the help of some digital friends (aka software).
In times past, sales territory planning and management went something like this:
- Set up a map
- Outline areas
- Sit with salespeople to get their feedback
- Give them an area and hope for the best
Thankfully, it no longer has to be a shot in the dark. Data has changed sales and territories from a vague art form to a more precise science. With the right tools, leadership can gain insights and make calculated moves to better serve customers and make the most of their sales team.
Now, with Map My Customers’ robust sales territory management software, you can:
- Visualize your sales territory data on a map
- Analyze and optimize your territory management strategy based on smart models
- Understand your sales territory performance through reports on results
You don’t need to be a master analyst to make more well-informed decisions about your sales territories — our easy-to-use, mobile-friendly app does it all for you.
Visualize Your Data With Sales Territory Mapping
Sales territory mapping isn’t just seeing where your territories are on a map — it’s the ability to visualize how territories are performing and map territories using a combination of area, sales and customer data. While the data from CRMs can provide valuable data, it can be challenging to interpret on a spreadsheet.
Territory mapping software can provide valuable visualization to make management easier and more accurate. It is easier to see if your territories are balanced or not, and how well each one is performing. It also clearly lays out territory to avoid overlaps between reps. Without a map to clearly lay out their areas, it is easy for a rep to encroach on another’s territory without realizing it. Accurate territory mapping can help avoid confusion and potential negative team dynamics.
With territory mapping software, you can easily populate your sales data on a map and adjust the territories to suit your team’s needs. You can create sales territory maps in seconds using zip codes, demographics and your business data — visualizing your accounts has never been easier.
Optimize Your Territories With Smart Models
Other territory management softwares may be able to visualize and assign territories, but how can you be sure it’s the right strategy? Territory management software cuts out the guesswork — it builds smart models that set your reps up for success.
Our software builds and compares fully optimized territory models for you. Modeling with just a single data point is risky and unpredictable. Map My Customers takes all of your data and sales goals into account and builds a more comprehensive model. This means your territory management strategy will be based on zip code, opportunity, open deal value, previous revenue and more key indicators of territory performance.
By layering and weighing every business consideration, you can guarantee an even distribution of opportunity for your reps, build a more predictable business model and increase the efficiency of your team to drive deal movement. But just because it’s comprehensive doesn’t mean it’s difficult to use — all you have to do is populate your data and we do all the rest of the work for you.
Understand Your Performance With Territory Reporting
In order to improve and optimize your sales strategy, you need to know what’s working and what’s not. With territory reporting, you can better understand why some territories are outperforming others. With the software, you can surface variables that lead to your best performing territories and better distinguish which results are based on rep performance and activity and which are distinct to the territory.
Territory reporting helps you make more well informed decisions — helping you continue to improve your strategy, increase your performance and target territories that drive more revenue.
Next Steps to Revamp Your Sales Territory Management
We’ve covered a lot of ground. From evaluating your current sales territory management and setting the right goals, to enable your team with proper technology for their job. I challenge you to review this guide with your management team and determine what changes you can make to better utilize your resources and far surpass your sales goals!