How to Build an Effective Sales Territory Plan

The adage “fail to plan, plan to fail” applies to sales management as much as any other sphere in business. While sales managers often have extensive experience developing sales territory plans, the stakes are now higher than ever. There’s a significant premium on getting your sales territory plan right, in the same way, there is on getting your quota planning right or getting your sales team fully trained.

There’s no silver bullet for successful sales management, but successful sales territory planning can get you a long way towards your destination.

Let's explore how.

  1. What is Sales Territory Planning?
  2. Why Organizations Need a Sales Territory Strategy
  3. How Do You Build the Ideal Sales Territory Plan?
  4. Issues to Consider When Planning Sales Territory
  5. The Tools You Need to Plan Your Sales Territory
  6. The Benefits of Sales Territory Planning


What Is Sales Territory Planning?

The textbook definition of a sales territory typically points to a specific geographic coverage, a set of defined accounts, or maybe an industry sector that a salesperson or sales team focuses on. Depending on the complexity of the product or service on offer, the scale and scope of the sales territories heavily influence the number and type of salespeople engaged in each territory.

While the definition of sales territory planning isn’t new, the thinking around what now constitutes “territory planning” may be a revelation for some. Sales managers are long experienced in working out how to slice and dice the structure of their sales team to maximize their chances of success. However, the way they can now go about it is changing significantly. In the past, it wasn’t unusual to define territories based on how far sales reps could realistically drive in a day or week. Or it might have been based on what a sales manager had used in the past, with a few tweaks each year. It wasn’t unusual for territory planning to involve a great deal of cutting and pasting in Word docs or Excel spreadsheets. But these approaches drive the design of sales territories based on the needs of the business rather than the needs of the customer or prospect. This can result in some sales territories being over serviced and others being under-serviced. Either way, the outcome isn’t optimal for the business, as opportunities will likely be missed in one way or another.

What was often missing in designing a sales territory was a detailed understanding of where the most significant opportunities were, whether there had been historical sales and marketing activity, how successful this had been, and what drivers were likely to drive opportunity and revenue over the coming 12 months.


Why Organizations Need a Sales Territory Strategy

Organizations can be successful by doing what they have always done and then working hard to achieve the results they need. Nevertheless, the pressure now for greater success and the expectations of managers and other stakeholders means that taking a more systematic approach to planning sales territories – and even sales targets and incentive models– is now imperative. In a “big data” world, many would be curious why a “big data” approach wouldn’t be adopted to territory planning.

Let's explore why this approach offers value to any sales team.


1. Systematically Target Specific Sectors, Regions, Opportunities, and Customers

Sales territory planning encourages you to think carefully about who your best prospects and customers will likely be over the coming sales year and why. With that in mind, you can then research where these prospects are located, which companies and personas have the greatest propensity to buy, and potentially understand the issues and drivers that could compel them to buy.

2. Align Your Sales and Marketing Functions with Your Prospects

It isn’t unusual for the sales team and the marketing function to have something close to a love/hate relationship. Sales want the marketing function to generate leads and run campaigns that drive success. Equally, marketing wants clarity from the sales team about their plans and priorities, so they can align their efforts and expertise to solve the same problem.

A strong sales territory plan can help bridge that gap to help maximize sales productivity.

A marketing function will be able to define which sectors, segments, companies, and personas have the greatest propensity to buy over the coming months and the drivers and compelling events that sales teams can make use of.

A powerful sales territory planning solution can help translate these insights into sales territories that’ll bring sales success to the business.


3. Set Realistic Targets, Review Your Progress, and Refine Your Strategy

A comprehensive sales territory planning process allows you to set realistic targets based on opportunity and customer propensity to act. Setting realistic but challenging targets can help set companies apart from their peers by attracting and retaining salespeople who understand their market, their customers, and their problems and how their solutions can help address their needs. Salespeople want to be successful, and maximizing their chances of success, and therefore their earnings, can help a business to prosper the most.

An effective sales plan also helps sales managers to review their progress as the months and quarters go by. With a sales territory plan based on customer needs, rather than intuition or “gut feel,” sales managers can take a rounded view of what’s working and what isn’t. If they’re ahead of target, they can review the model to understand why and capitalize further on their success. If they’re behind, they can see if the problem is moving deals through the sales pipeline (and why), or perhaps whether it’s insufficient leads and opportunities. With an excellent understanding of the opportunity available to them, sales managers are much better positioned to navigate the challenges of their sales year to a much more successful conclusion.


4. Effective Sales Territory Planning Allows You to Focus on Selling

Sales managers don’t sign on to endlessly reviewing spreadsheets filled with the lists of potential customers and spending time reviewing their options. They certainly don’t sign on to expend time and energy understanding why they’re behind on their targets and how best to fix the problem.

Instead, their priority is supporting their sales teams and their sales reps to be as successful as possible. They can help ensure their time isn’t wasted and maximize the value of the two hundred plus selling days available to them each year.

Having a richly informed sales territory plan in place at the beginning of each sales year helps maximize the impact of your sales and marketing campaigns. It can help ensure you are targeting your customers and prospects in the right way, at the right time, with the right message and the right product.


How Do You Build the Ideal Sales Territory Plan?

A systematic approach to sales territory management plays a valuable part in maximizing sales productivity. What’s the best way to implement this model?

1. Define Your Business Goals and Objectives

The key to having a successful sales year lies in having an excellent grasp of your goals and commercial objectives. These’ll vary by business, but common themes will likely include revenue metrics, market share metrics, product or service-specific revenue metrics, and potentially customer signup or renewal metrics.

Ideally, these metrics will focus on growth, but not always. Companies in mature markets will seek to maintain their existing customer base to maintain their financial position. It’s by no means unusual for a business to have a blend of positive growth, neutral growth, and declining growth models, depending on its portfolio of offerings.

Other dynamics involved might include developing customers in a specific sector or developing new transaction models, such as subscription pricing, that point the business towards new and different types of customer relationships in the future. Equally, migrating customers from existing products to new products may be part of the plan. Targeting your competitors' customers to encourage them to switch to your product is another possible tactic.

Whichever approach you wish to take, it makes sense to decide on your objectives before designing your territories. It’s also worth having these initial plans approved by the other stakeholders in the business before proceeding much further to ensure everyone is always on the same page.

2. Know Your Customers' Needs, Issues, and Drivers

With a clear picture in your mind about what you’re looking to achieve commercially, the next step is to think carefully about the other half of the business equation – your customers and prospects.

It’s almost impossible to know too much about your customer from a sales and marketing perspective. Over and above building a professional relationship and rapport with a prospect, having a deep understanding of their industry issues and their business impact is especially important. Suppose a sales rep understands how industry dynamics are playing out for their prospect in terms of their ability to cut costs or increase revenues. In that case, they’ll be well down the road to solving their customer's problems, especially if they can demonstrate that their grasp of the issues is better than your competitors.

The scale, scope, and complexity of a prospect's problems will strongly influence the length of the sales cycle and the buying process. In short, the more complex and expensive the proposal, the more people will be involved in a buying decision and the longer the sales cycle. In all likelihood, as a result, the smaller the sales territory will be. Equally, products and services that solve less-complex problems will have shorter sales cycles and likely larger territories.

Understanding this dynamic and how it may change over time will help you design and manage the optimal sales territory plan for your business.

3. Do a SWOT Analysis

The business environment is dynamic, with scope for opportunities to capitalize on and threats to defend against.

The industry standard for understanding these dynamics is the SWOT analysis (Strengths, Weaknesses, Opportunities, Threats). While less commonly used in territory planning, it nevertheless offers a valuable perspective on the dynamics at play and therefore points to ways that a business' time, budget, and resources should be deployed to maximum effect.

Defining and understanding the opportunities and threats a product, service, or business is exposed to and how they relate to each other can help define the ideal sales strategy and hence the optimal design of the sales territories. It can also serve as the basis for the marketing function to create additional promotional campaigns for specific sectors to address specific sales and marketing issues.

4. Build Your Strategy

With a solid understanding of what you’re looking to achieve and the dynamics of the market you’re engaging in, you’re well-positioned to build your sales strategy. Your sales territory plan will be a key element.

A sales strategy will vary, depending on whether you’re engaged in account management or new business development. It’ll also vary according to the complexity of the offered product or service; the sales cycle involved. It may also vary according to how transactions are closed, whether face-to-face or using e-commerce applications.

For the benefit of all, it needs to be defined, documented, and presented so that “all compasses point north” in the business.

5. It's All in the Sales Territory Action Plan

With your objectives and strategy in place, your next focus is execution.

Each sales territory – carefully designed using a host of business and external data – will have an activity that’s created and owned by the sales rep responsible for that territory.

The action plan will vary by territory. Some’ll build revenues by taking new products and services and presenting them to existing contacts. Others will reach higher and more widely in the organization to build from an initial base. Some plans may include targeting business for the first time and finding out who the best people are to engage with the problems you could solve. It’ll be sensible to collaborate with the marketing function to identify those individuals who should be targeted, but also to help build propositions based on the issues those prospects are likely to have.

6. Review and Assess Your Plan Regularly

With your sales territories in place and the supporting plans being executed, you’re well-positioned to review progress on a regular basis. The detailed insights should give you confidence that you’re engaging with the right sectors, segments, and personas. You can measure both the inputs – sales calls, meetings, marketing campaigns – as well as the results –leads, opportunities, and revenue – and see where you’re ahead or behind. Review your plans and tweak them as you need to meet your other objectives.

Issues to Consider When Planning Sales Territory

Having looked in some depth at how sales territories fit into the broader go-to-market strategy, let's explore how you might design a sales territory that’ll help you achieve your objectives.

1. Revenue Source

Ultimately, sales is all about revenue, and it’s essential to understand where revenues come from and via which channel. Ideally, when designing your sales territories, you should fall back on historical data covering revenue sources to see how your business gets traction in the marketplace. This’ll help you understand which sectors have the greatest propensity to look to your business to solve their problems as well as how they typically engage with you.

2. Leverage Industry Metrics

Use industry metrics to help shape your sales territories. It might involve identifying fast-growing sectors or those sectors with exposure to growing industry problems that you can help with. For example, these issues could be constrained revenue growth, accelerating costs, or a need to better manage business risk. In other sectors, demographic changes might be an opportunity to be capitalized on or a threat to be addressed.

3. Align Your Territories with the Right Salesperson

Salespeople each have unique strengths and experiences and the same can be said for sales territories. We’ve talked about the science of designing a sales territory using metrics to optimize the design. There’s also art in aligning the right salesperson with the right territory.

In some cases, this’ll be easy, especially where there are pre-existing relationships. In other situations, industry expertise will show you who gets a particular territory. Another dynamic to consider is the personality traits involved. Some salespeople are natural “farmers,” outstanding at developing relationships that yield results over the long term. Others are more suited to acting as hunters, preferring to find and close business before moving on to the next prospect.

However you choose to approach this issue, having a good understanding of potential sales territories makes it easier to align them with your existing salespeople or potential recruits.

The Tools You Need to Plan Your Sales Territory

All this may seem excessive work to deliver the final results, but a well-designed sales strategy supported by an optimal sales territory plan will pay significant dividends. Using the right tools goes a long way to reduce the sales planning and management workload, so you can focus on the fundamentals of leading the sales effort in the business.

Territory Mapping

Territory mapping is at the core of designing sales territories – it shows which sales rep owns which territory and who their sales manager is. Keeping track of all this, especially during the planning phase and during all the handovers at the beginning of every sales year, is essential but potentially overwhelming when you consider all the sales territories you could have in your company. You could easily have a mix of geographic territories, named customer account territories, and channel account territories. In addition, you could have sales overlay teams to promote specific products. Add in the sales management, and territory mapping can quickly become complex, with plenty of scope for accounts to be missed during the planning stage or sales quota misallocated. Effective territory mapping is essential if the sales year is to start smoothly.

A standard solution to this challenge is to mix and match spreadsheets and even flip charts to keep track of everything during the planning stage. Sharing information in these formats and making sure everyone is on the same page is fraught with difficulty. This is how mistakes get made.

A better alternative is to have a SaaS-based platform that allows everyone involved to access the territory maps to see at-a-glance which accounts specific salespeople have and who looks after a specific account, including all the subsidiaries. You can also see who is aligned to these territories from a management and product specialist perspective.

CRM Applications

CRM applications are an excellent tool to help develop the optimal sales territories. It contains a vast array of commercial and revenue intelligence that can be captured and consolidated to provide a perspective on how customers and prospects have been engaged and with what success. This information may also help you understand how your customers buy your products and services. Is it from the website, via a call center, through your sales channel, or direct from a rep? You may also see issues like purchasing frequency and product selections. All these yield valuable insights into how your customers and prospects behave. You can understand how you can best engage with them from a sales, marketing, and product development perspective.

Customer Mapping

Customer mapping is the reverse of territory mapping – it’s about understanding who looks after specific accounts. This matters because a sales territory plan may split account coverage by revenue type, for example, product, services, education, training, or support. But ensuring all these aspects of account responsibility are allocated properly – with a sales quota if necessary – is an important task in helping make sure all the revenue bases are covered. It also helps steer leads and customer queries to the right individual during the sales year if a customer inquiry or invoice query comes in. It can also help with revenue recognition issues if a sales incentive program supports commission splitting as part of a split account management model.

Rep Tracking

Keeping track of account reps and the territories they’re responsible for is key to efficient and effective use of a limited resource. Seeing what account management responsibilities an individual has is a sure-fire way of ensuring they aren’t overloaded with opportunities. It also helps to ensure that the sales opportunity is split evenly across the sales floor.

Revenue Tracking

The last piece of the territory planning jigsaw is revenue tracking so that you can see how your territories are performing as planned.

While no forecasting model will be perfect – that’s why the sales leadership has quota coverage – ensuring that a territory or product is performing as planned is essential to ensure that the year-end target is achieved. Suppose you find yourself ahead of the game in the first quarter or so, then fantastic. It gives you a buffer for later in the year and scope to capitalize on your good fortune. But if you find yourself falling short, despite your best-laid plans and analytical efforts, then you’ll want to know where more action needs to be applied to the sales process, whether it be lead generation, lead conversion, or closing.

The Benefits of Sales Territory Planning

While it may seem an unnecessary overhead, there is significant value in putting in the effort to align your sales, marketing, and customer engagement fully. Let's explore the value in more detail.

Improved Customer Service

Probably the single most valuable aspect of sales territory optimization is that it optimizes your customer engagement. It ensures that you have the correct number of people in each territory and the right person promoting the right products to the right people at the right time.

Executing Your Strategic Plans

Pivoting a business in a new direction is one of the greatest challenges a manager can face. Success requires a good understanding of where your business is right now and where you want it to go. Effective territory planning delivers that capability by helping you plan your next move with hard data you can rely on. It gives you confidence that you have an informed picture of where the opportunity lies, even as your customers, markets, and business change.

Workloads that are Evenly Distributed

There’s little value in having some parts of your sales team hugely overperforming and others scrabbling around for business. This is a recipe for high staff turnover as people begin to burn out or look for better opportunities elsewhere. A better approach is having opportunities more evenly distributed between territories so that you have a more balanced workforce that can better serve your customers' needs and deepen your relationships with them.

Fresh Insights

The data you consolidate can help you understand how best to optimize the design of your sales territories. It can also help you understand more about how your salesforce operates on a day-to-day basis. Wouldn't it help to understand your most effective salespeople and why? Would it be helpful to see who can move opportunities through your sales pipeline the fastest? Wouldn't it be helpful to see who are best at working their way around a business to craft a proposed solution that yields the big-ticket deals? If your answer is yes, then leverage the same capabilities you used to understand how best to develop your sales territory plan and use them to better understand how best to manage your sales territories day-to-day to maximize your results.

Make the Best Use of Your Selling Time

Sales teams only have around two hundred selling days a year, so there’s an imperative to make the best use of every day. This means making sure that your salespeople spend their time with those prospects most likely to spend money with your business. Automating your territory planning and management takes away the need for you to spend time wading through spreadsheets and flip charts to get the best outcome for you and your business. Leverage your business and market data to get your salespeople talking to the right people at the right time and about the right product.

Learn about selecting the right territory and quota planning for you by reading our blog, Costly Mistakes to Avoid When Choosing Your Territory Mapping Software.