Balancing Your Sales Territories – The Silver Bullet for Sales Managers?

Every sales manager has one core responsibility every year: to ensure they hit their overall quota and objectives and to help as many of their salespeople as possible hit their quota too.

All that success comes from hard work, focused and motivated salespeople, and effective sales management planning. It’s at this planning stage that a sales manager can have the most significant impact on assuring the success of their sales teams, as well as the greatest impact on the success of the wider business.

A key consideration in this planning process is to ensure – as far as one can – that sales territories are balanced. There are two good reasons for this.

Firstly, you want to ensure that all opportunities are effectively covered. Secondly, you want a sales team that recognizes that they all have similar opportunities, face similar challenges, and are largely ‘in the same boat’.

In this blog, let’s explore the detailed business case for providing a balanced approach to designing sales territories and offering ‘an equal opportunity’ to all your salespeople. We can also look at some of the challenges in adopting this approach and how technology can help overcome them.

Why Should You Balance Your Sales Territories?

The issue of how best to balance the structure of sales territories can become important for companies for a range of reasons.

Sometimes after a merger or acquisition, the newly combined sales team may need to be re-organized to help capture the synergies and savings that are core to the business case. In this situation, you need to rebalance the sales effort to help the newly integrated business thrive.

Equally, if a new sales management team is put in place to help the business to pivot in a new direction, there’s often a need to restructure and rebalance the sales organization to maximize the chances of success of the new sales mission.

Clearly, in new companies or business units launching new products or services, it may be necessary to start a new sales team from scratch, presenting new challenges that need to be addressed and new opportunities that need to be fully captured.

So, let’s explore the business case for having an approach to sales territory management that’s well balanced for the sales team and the business.

1. It Provides a Balanced Model for Servicing Customers and Prospects

The first thing you’ll notice when sales territories are unbalanced is that there is a situation where territories are being either under-or-over serviced. An underserved territory happens when your sales team is spread too thin, with too much distance between clients and prospects or too many accounts and leads to service. A classic indicator for this is where it becomes clear that some leads aren’t effectively followed up and qualified in or out correctly.

This situation can mean that valuable customer relationships are suffering, as the salespeople themselves can’t keep up with managing their existing customers and following up on leads.

This can lead to burnt-out salespeople fed up with constantly being on the road at the expense of their family life, forever chasing opportunities they don’t have time to qualify correctly. It also means that scarce marketing budget invested in sophisticated marketing campaigns is effectively wasted, and the hard-won potential for growth is squandered.

The alternative is just as suboptimal for the business. Here you have the over-servicing of territories, with too many salespeople vying for too few leads and sales. This can create aggressive competition between colleagues for the same clients, leaving others scratching around to make a living. Some might say it’s a question of survival of the fittest, but remember that customers and prospects will pick up on this and likely form a poor opinion of a company that allows this situation to develop. You might also want to consider the reputation your company might be cultivating among potential recruits. Few salespeople want to gamble with their income and career and may decide to give your business a wide berth if that situation persists.

A sensible approach to avoiding this situation is to apply sales territory planning models to help assign salespeople to territories, preventing it all from becoming a guessing game. Their near real-time visibility lets you clearly see which territories are over or under-served, based on the potential sales opportunity, rather than just guesswork or intuition. These models can give you the insight to change your sales territory management plans so your business can grow more swiftly.

2. It Delivers Data-driven Decision-making

Sales territory planning models provide accurate data and insight, without which sales leaders may be forcing their teams to have to work much harder for their success than they really have to. Well-aligned and well-balanced sales territories come from value-rich metrics that use accurate data about market size, market opportunity, buyer behavior, and other revenue intelligence sources to provide potential territory design options. Sales territory planning models can help you determine the likely appetite for your product, whether you measure it by household income, the turnover of a business, or its headcount, for example. This capability provides insight to help you make clear decisions on resourcing your sales territories and the type of salespeople you’ll likely need.

3. It Helps Set Realistic Goals and Objectives

The process of understanding – and balancing – your sales territories go beyond getting the right people in the right place at the right time. It also provides the basis for assessing the ideal quota plan that’ll support each territory and should capture the challenges and opportunities presented by territories that are made up of existing accounts, growth accounts, or new business accounts.

Ideally, this process should be automated in some way to minimize errors and make the best use of hard-pressed finance, HR, and sales operations teams.

4. It Helps Motivate Your Sales Team

Salespeople are familiar with the vagaries of defining sales territories and take the risk of the situation as the risk they accept in potentially lucrative sales opportunities.

That said, salespeople are human. So, a more scientific approach to defining sales territories – and the quotas they support – and also demonstrating that approach, can get your sales team onside for the new sales year. It helps illustrate the opportunity open to them and can keep them focused on success rather than looking for better opportunities elsewhere.

The Challenges of Implementing a Sales Territory Planning Model

In fairness, we’ve yet to find a sales manager or sales VP unaware of the value of a systematic approach to having balanced sales territory management. We spend little time explaining the benefits of this approach; our conversations center on the challenges of taking this approach and how technology can help them.

So, let’s look at some of the challenges.

1. What Data Do You Need?

Sales leaders are blessed and cursed by having access to more data than they know what to do with. It’s easy to be overwhelmed by just the data available from a company’s sales, marketing, and finance systems, let alone any external sources.

The value of all this data – if you can master it – is that it can offer you a powerful picture of how your customers and prospects engage with you. You can see where your leads, opportunities, and deals came from and also for which type of companies or consumer demographics. You can see how long it took for leads to convert into sales and what compelling events inspire buyers to make a decision. You can see what motivates a buyer to buy from you, their decision-making process, and the scale of effort needed to convert leads and opportunities and also to retain customers. You can also see how easy it is – or isn’t – to cross-sell and upsell your customers and which of them have the greatest propensity to do that.

With a well-defined model of how your customers buy from you, you can apply the same model to those customers and prospects you need to engage with if you want to grow your business.

You can access a range of external data sources – some free, some paid-for – that help you better define and understand your sales universe, sometimes known as your Total Addressable Market.

As you can sense, there’s no shortage of data available; the challenge is capturing and making sense of it – which takes us to our next challenge.

2. Capturing Your Sales Planning Data

Identifying your critical sales territory planning data is one thing; capturing it is quite another, especially as sales functions rarely have a friendly data scientist close to hand.

The good news is that your data applications offer a range of ways to integrate their data into other systems so that non-data scientists like you or I can access that data with little technical skill or coding experience.

The aim is to capture the data you need in a single unified environment that’ll allow you to interrogate a large volume of data so you can make sense of a complex situation and find the insights that’ll help you make the right decision when developing the ideal sales territory management plan for your business.

3. Analyzing Your Data

Once you have captured the data set you want to work with, the next step is to start analyzing it and see the trends and dynamics that shape your market and your business. You can research this yourself or hire a contractor to explore the issues involved. Equally, advanced AI capabilities can do much of the heavy lifting for you, which can be especially useful as you progress through your sales year and begin to look for possible territory options for next year as your customer preferences change, or as you launch new products to satisfy their needs.

4. Presenting Your Results

Having identified, captured, and analyzed your data, the last stage is presenting the results. This isn’t necessarily the final stage, but rather it’s the beginning of the complex but valuable work needed to translate all your insights into actionable decisions. For the best outcome, you will likely want to present multiple options to a range of stakeholders in the sales team and the wider business to get their perspective and ultimate buy-in into the decision.

Part of this process can be a ‘what-if’ scenario planning to see what options provide the best outcome for the business. For example, does it work best if your salespeople have a geographic territory or territories defined by specific sectors? Should they mix existing customers, growth accounts, and new business accounts, or should these each have their own clearly defined sales team, quotas, and sales territories, for example? Alternatively, does having a team of Sales Development Representatives (SDRs) provide a better option for your business, based on your data? Having more options like these help you make better decisions.

5. Integrate Your Sales Territory Planning with Your Incentive Compensation Management Planning

Having the ideal sales territory structure isn’t the end game in itself; it’s more a means to an end.

Getting the proper sales territory structure means you can get the right quota plan in place, too, based on a realistic assessment of the opportunity in each territory and the financial demands of the business. The quota needs to be challenging but not unattainable. Otherwise, a sales team will quickly become demotivated.

Incentive Compensation Management – especially the financial rewards on offer- must also be factored into the overall model. Should a sales plan offer a commission-only model? Should it provide a low base and a high commission model, or is a more equitable 50/50 base/commission model for On Target Earnings (OTE) a better way forward? Again, scenario planning models help you work out the ideal balance of sales territory planning, sales quota planning, and sales commission modeling that gets you the desired results. 

Get more insights into how technology can help you optimize and balance your sales territory and quota plans by downloading our eBook, The Complete Guide to Sales Planning.