Why Sales Territories Matter: Complete Guide

We could provide an answer to why sales territories matter in a sentence or two. They give shape, structure, and rigor to a sales strategy and guide the behaviors of your sales team. And they stop people just chasing the places and leads that they want to. But such a simplistic definition is doing a disservice to the importance of effective sales territory planning and management. So, in this blog, we’ll look closer at the key areas that can make or break your sales territory plan, and cover the importance of investing in a territory planning software solution.

The Importance of Sales Territories

Although a world without borders may appeal on some idealistic level to some, the reality is that this is unlikely to work on any level for long – particularly in the sales sector. By definition, a sales territory is an area industry/sector or account grouping assigned to a sales team or individual. That parameter is a line in the sand that provides responsibility for the team or individual to meet their quota allocation within that territory. Every one of your sales territories can then be analyzed and benchmarked to calculate commission payments and if the wider sales objectives have been reached. The main functions and benefits of applying sales territories can be broken down as follows.

1. Gain and Sustain Comprehensive Market Coverage

Deciding on and dividing up sales territories has the advantageous outcome of ensuring every area and opportunity is covered fairly and evenly. Early and thorough market research is the foundation of territory planning. This reveals areas where a bigger team is needed to contact prospects, or possibly a smaller team so the territory is not over-resourced. This part of the planning, providing it’s done in tandem with a supporting software solution, can provide insight, in the presence of competition and where the bigger accounts may lie. Improved market coverage also reduces that old bugbear of “white space” — also known as those geographical areas that can fall outside of conventional sales territory boundaries. Always remember the first and last rule of any sales territories planning club; Size doesn’t necessarily count.

2. Gives All Sellers a Level and Transparent Sales Landscape

When your sellers know the rules of engagement, they understand what can be gained and achieved by playing fair, and what they stand to lose by bending the principles. Setting well-researched and balanced territories means that each one can be divided up without favoritism or prejudice. Of course, for those in the decision-making seat, they are within their rights to make sure strong performers are allocated territories where they can use their proven skills to secure bigger or more difficult accounts, while newcomers can earn their selling stripes as part of a team working on multiple leads. This process of transparency and equity can be better supported with a robust territory and quota planning software solution, such as the one offered by ourselves.

3. Responsibility, Resourcing, and Remuneration

The establishment of sales territories is just the beginning of the sales story. Constant monitoring and re-evaluation of those territories mean you can see from the metrics and graphs if there is an issue with over or under-serving, and if your sales teams need to be redeployed. The structure of sales territories allows any manager to plug in, and analyze individual or team performance against any number of criteria When a sales territory is functioning to its optimum, your sales staff can tackle their quota allocation and targets without feeling overstretched. This, in turn, means that they can keep a decent and well-deserved commission payment within sight.

Make Sales Territory Your Main Priority

If you were to add further advantages, such as the strengthening of customer/client relations, applying more rigorous rules and planning to your sales strategy is a no-brainer. Your sales division will be more accountable, efficient, and organized while being better motivated as they have direction and parameters (both physical and metaphorical ones).

Turn the theory of sales territory planning into practice by harnessing the power of Varicent’s Territory and Quota Planning software today, or why not book a demo and give our solution a test run.