In sales, are there two terms more linked than 'territory' and 'quota'? They're the bread and butter of sales strategies and behaviors. That's why a thorough understanding of both separately and together is key to designing effective sales plans. It helps you appreciate the value that smarter territory and quota planning can bring to your business. Of course, it doesn't solve all the complexities and pain points that come along with it. Don't worry, we'll get to that.
What is Sales Territory Planning?
Sales territory planning or management is the creation and maintenance of a designated sales area or region. The intention is to create each territory to be as effective and profitable as possible. Traditionally, designing a territory was based on geography, but that tactic isn't reliable or fair. A common issue is that one territory could be defined as a large state, but it may have a relatively small population. Or the problem could be that the demographic hadn’t been researched thoroughly enough during the early pre-setting stages. Conversely, a densely populated area that is smaller may require a larger sales team to manage sales and accounts.
An effective territory planning strategy goes beyond simple geography. And sales leaders agree. We commissioned Cascade Insights to survey over 600 sales leaders and found that it wasn't a focus for SMBs or enterprises. Not only should a territory factor in size, but also the impact of competitors within a territory, previous customer and product history, along with the skills and experience of your sales team. By consolidating all these elements, you can divide and decide on sales territories in a more considered way, and as a result, allocate more realistic quotas.
What is a Sales Quota?
Quota allocation is the target set for sales professionals or teams over a given period, such as a month, quarter, or year. A quota can be a monetary figure, the number of products or units sold, or how many prospects have been converted to customers, which would be labeled as an activity-based sales quota. This dovetails with the world of sales territories as these quotas will be within a territory and the quota level often dependent on how many prospects or existing accounts there are in that territory.
A sales quota shouldn’t be confused or conflated with the term sales goal, either. While a sales goal represents the ultimate target end game for a team or individual, a sales quota is the mechanism or strategy that enables your sales team to get to that point. Not only are sales quotas deeply connected to sales territory plans, but also compensation plans and achieving performance-related bonuses, so setting these in a realistic and manageable manner is critical.
Want to know how to set and maintain a sales quota? Find out here.
Finding a way to create an optimized territory and quota plan is impeded by outdated tools, lack of standardization, and a tendency to rely on the status quo, rather than data. In fact, over 75% of sales leaders agree that their sales planning isn't as optimized as they would like.
What does an optimized plan look like? A recent Forrester report found that a high percentage of top performers have plans that are easy to understand. And 70% of top-performing reps rarely, or never, have errors in their plans.
Harvard Business Review research has shown that an effective territory and quota plan can increase sales by 2 to 7 percent. To get to a place where your sales plans motivate your sellers and drive revenue, we need to go back to solving some of the bruising pain points. Pain points like spreadsheet madness, manual errors, unfair quota allocations, and constant changes that impact productivity.
Our latest guide gives you insight into common sales planning issues and offers up solutions. Not only will we recap and say farewell to the plethora of issues that come with an insufficient strategy; it clears a path to the multitude of benefits and advantages a smarter planning solution can deliver. Here's a hint: expect to maximize revenue, create plans faster, ensure equitability and improve insights to help with better decision-making.
Get your sales planning back on track, download our latest guide to territory and quota planning today.