Effective territory design is the basis of strategic sales planning. Balanced territories allow you to set fair quotas, which have a huge impact on your incentive compensation and success of your salesforce. Ultimately, if your sales territories aren’t optimized, you hinder sales reps’ motivation and performance.
The Effect of Bad Territory Planning on Sales Performance
The success of your sales strategy relies heavily on well-planned sales territories. Unbalanced sales territories can negatively impact your compensation plan and lower sales performance. When your sales territories are poorly planned, it can result in:
- Drops in revenue earnings and failed quota achievement
- Lower sales rep morale and decreased motivation
- Higher frequencies of sales burnout
- Unsatisfied prospects and customers
Perhaps the biggest effect your territory planning has is on your sales team. Poorly planned territories decrease sales rep motivation and morale, which hurts overall company success. When reps feel their territories are unfairly planned, they are less motivated to close deals and over-perform. The perception of favoritism and seniority in territory design alone can be damaging to your team even if it’s not a true factor.
Taking Advantage of Optimized Territory Planning
Sales territories are the foundation of your sales plan, and they play a vital role in laying the groundwork for optimized strategic execution. Sales territories touch every part of your sales plan; and therefore, company success is highly reliant on strategic, data-driven planning.
Ultimately, striking a balance between sales rep workload and territory coverage is the key to optimized territory planning. For example, if you create territories that are too small, reps may end up cutting prices in order to make any and all deals to reach quota. Territories that are too large may eliminate sales reps’ capacity and ability to pursue all potential sales opportunities - leaving money on the table.
With optimized territory plans, companies have greater intelligence into account density and location. This allows them to increase travel efficiencies by lowering travel time, reducing costs , and increasing time spent selling for higher revenue attainment. Optimized sales territories create equal opportunities for sales reps to meet quota and close deals, which ultimately, boosts morale and motivates performance.
Territory Optimization is Driven by Technology
A 2018 survey by the Sales Management Association found that companies implementing technology into their territory plan design process outperform others. In fact, they achieve sales objectives 10 percent higher than the average. Organizations that don’t use technology in territory design, on the other hand, were found to achieve sales objectives 10 percent less than average.
However, the majority of companies still rely on laborious and time-consuming processes to manually design their sales territory plan. When companies use manual processes, such as spreadsheets and maps, they overlook opportunities to increase planning efficiency and integrate intelligence into their sales territory alignment to create equal opportunity territories.
In all reality, manual territory design processes were simply not designed for logic. Designing sales territories without leveraging insights and data intelligence, companies are hindering their own growth by missing out on potential revenue opportunities.
Data is necessary for optimized territory planning. Companies must analyze real-time account-based CRM information, broad geolocation data, and third party market research data in order to build fair territories. Data, alongside built-for-purpose technology, ultimately helps companies:
- Maximize return on sales resources
- Shorten and improve the territory planning process
- Reduce travel inefficiencies and related costs for field reps
Automated territory planning technology, such as Xactly AlignStar, enables sales leaders to increase their efficiency by shortening territory planning time. The end result is optimized sales territory plans that maximize sales rep opportunities and drive company revenue. By leveraging data-derived intelligence, territory planning solutions help balance sales reps workloads and uncover sales opportunities with existing customers and prospects.
Implementing Optimization Techniques
Modern territory planning is transforming. The importance of insightful analytics, automation techniques, and planning collaboration has increased. Today, modern territory planning is driven by three key factors:
- Data-driven insights: Data analytics and insights allow companies to uncover plan areas needing improvement, as well as design balanced and travel-efficient sales territories. Sales leaders can then focus team strategy on the high-potential customer and prospect accounts.
- Automated processes: By automating territory planning processes, companies can design cost-efficient territories that allow them to quickly and fairly distribute potential sales opportunities and workloads. As a result, sales reps can focus strategically on the strongest accounts and prospects within their territory.
- Increased collaboration: The importance of collaboration is becoming more important in every aspect of sales planning. Today, territory planning tools encourage collaboration that enables field sales managers be part of the planning process. This creates more refined and well-aligned territories, ultimately improving overall sales coverage and performance.
Increased intelligence and insight into account density and location allows companies to build stronger sales territories that optimize control over travel time and costs. With advanced territory planning software, territory planning teams can efficiently design optimized territories that emphasize a balance between sales rep capacity and workload.
In a world becoming more digital by the day, companies need data intelligence and analytics to optimize their sales plan and maintain a competitive edge in their market. Moreover, these insights must be easily accessible across the entire sales performance management (SPM) value chain, starting with territory planning.