The Definitive Guide to Sales Territory Management
Your sales territory management likely isn’t cutting it. But the good news is, you’re not alone. An Insidesales.com survey of large companies ($500 million plus in revenue) found that only 65% percent of field sales reps are hitting their quotas.
In the wise words of the lovable screwup salesman, “Tommy Boy” Callahan, “Holy Schnikes!”
The likely cause? Sales reps, on average, are only spending a third of their time actually selling.
But it may not be their fault.
You may need to find new ways to improve sales accountability. Beyond that, it is likely time to re-evaluate and optimize your entire sales territory management strategy; from your territory assignments and goals, to how you prioritize and communicate with customers and track performance.
This post is your go-to resource for learning how to do all of the above 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
Defining Sales Territory Management
Let’s get started by reviewing the terms we need to know for effective sales territory management.
First off, what is a sales territory? Most people think it’s just about a set geographical area. Sales territories can also be set based on account types, audience segments, and other customer data points.
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.
If a sales rep’s goal is to find new business (hit their sales quota) and manage existing client relationships within their assigned sales territories, a territory sales manager’s job is to ensure their team is enabled to be successful.
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”
by HubSpot | Tweet this!
In other words, territory management is the process of getting the most out your territories through your sales reps.
Sales territory management requires a constant cycle of reviewing territories and helping your reps achieve sales goals. That sounds great, sure, but what goes into this process?
Evaluating Your Sales Territory Management
Establishing effective sales territory alignment and management requires good, hard data. You need 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).
Account Assessment
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. This can include everything from gas to-and-from the client, to the portion of the employee’s time (and thus, salary) spent on an account.
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.
Let’s look at The Seven Kingdoms for example., It’s divided into four main territories (The North, The Rock, Vale, and Dorne). YourCo Inc. expanded into Dorne within the past six months and only has three accounts.
The sales manager analyzed account performance in the territory and found the following amounts:
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.
The sales manager should dig in to see what separates this account from the others (e.g. specific industry or products bought), and then do what they can to assist their reps based on this 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 determine how many leads are being generated, how many opportunities come from those leads, and how many of those opportunities convert to deals.
Let’s turn back to The Seven Kingdoms region example and review sales funnel performance for each territory:
In this example, we can see The Rock yields the highest conversion rate, while Vale yields the lowest.
After evaluating the overall performance of each territory, the sales manager may want to move resources around. Such as moving a sales rep from Yale to The Rock to take better advantage of available opportunities.
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 quantitative 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 by @LesLent — Passion, Awareness, Curiosity, and Energy.”
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.
Creating Balanced Sales Territories
How you establish your sales territories can have a huge impact on your bottom line.
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.
If a territory is overserved, your team won’t have enough work to do. You have too many team members for a particular region. Prices will inevitably rise due to the increase in costs, and this will result in a decrease in sales. Due to the oversaturation of resources in certain regions, you may find that other territories are underserved.
On the other hand, if a great sales rep has an oversaturated territory, they may take on more accounts than they can effectively service. This leads to their lower value accounts not getting adequate attention (which can lead to your competitors swooping in to take them).
Having accounts in close proximity to each other minimizes travel time for your reps, enabling them to serve more accounts in less time
With equal sales territories, your reps will be more motivated as they aim to take full advantage of their territory, without over thinking about how unfair the territories are. They can focus on competing with each other to see which rep performs best.
Which, of course, helps you determine who your top performers are.
Territory optimization software, like TerrAlign, can help you achieve balanced sales territories so you can better utilize your available resources.
Sales Territory Goal Setting
Goals for sales reps typically start with sales quotas and targets.
Sales quotas are specific, numerical targets that reps need to hit by a specific date. These include goals like “closing 10 new deals every quarter” or “increasing territory revenue by 10% this year.”
Sales targets, on the other hand, include goals like “expand into a new region” or “build a market for our new product.”
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 sales territory management is ensuring all accounts are properly managed, meaning reps dedicate the right amount of time to each account.
Cadence management, the process of organizing account visits around account priority, does just that.
First, sales personnel should group their accounts into buckets based on priority (leveraging the strategies above). From there, you can assign the number of touches over a given time period for each bucket.
Next, create a call rotation plan at the start of each significant time period (e.g. quarter, fiscal year).
Call rotation plans 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.
Map My Customers is the ultimate territory sales tool for cadence management, optimizing sales routes, automating sales tasks, and more — try it for free now.
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
Knowing the right strategies for sales territory management is a great start, but to really leverage them and ensure effective sales territory management, you and your team need the right tools.
While customer relationship management (CRM) systems are used by sales teams of all kinds, traveling territory sales reps have more specific requirements.
They need territory sales management technology that can do the following:
- 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.
Get all the above features and more with Map My Customers to increase territory sales revenue, efficiency, and accountability — try it out now for free.
Without the right tools, sales teams will never be able to tell if their new territory management plan is achieving its goals.
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.
Want to learn how Map My Customers can help you do this? You can watch a video demo, attend an upcoming webinar, or book a live 1-on-1 demo here, or jump straight into a free trial to explore it yourself.
Have any additional thoughts or ideas on effective sales territory management? We’d love to hear them in the comments below!
