Did you know that only 65% of field sales reps at large companies hit their sales quotas? In the wise words of the lovable screwup salesman Tommy Boy Callahan, “Holy schnikes!”
But before we start panic-enrolling sales reps in persuasion seminars, we should take a few minutes to re-evaluate and optimize your sales territory management strategy. Consider this your sales team’s battleplan—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.
Defining Sales Territory Management
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. While this is sometimes true, a territory 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.
"Territory management means helping your sales reps be both more effective and efficient."
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 Evaluate Your Sales Territories
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).
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:
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.
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?
"Assess your sales reps using the P.A.C.E. framework — Passion, Awareness, Curiosity, and Energy."
Les Lent, Sales Gravy
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.
Divide Your Sales Territories
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 compeeting 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
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).
Sales Mapping 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.
While customer relationship management (CRM) systems are awesome resources for sales teams of all kinds, traveling sales territory reps have more specific requirements. For example, the software should:
- Integrate into your sales team’s existing tech stack.
- Be mobile-compatible so sales reps can easily manage account activities and update progress while on the road.
- Provide visual tools for mapping accounts within territories and optimizing sales routes.
- Automate sales task, such as cadence management and uncovering new prospects within their territory.
- Have territory sales specific data visualization and reporting tools that make it easy for reps and managers to easily digest the data that matters to them and uncover insights.
With the right tools, sales teams will know exactly how their territory management plan stacks up—no more guesswork. But remember: it’s important to get all of your sales reps on board with the new software so that you have as much data to analyze as possible.
Once you can visualize all of your data clearly, it becomes easier to make insights and act on them.
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.