This blog is the fourth in a series of sales planning fundamentals written by Xactly Chief Sales Officer Marc Gemassmer. Read part 1 on sales planning fundamentals, part 2 on ramp time and attrition, and part 3 on quota planning.
Knowing Where to Draw the Lines
So far, in my blog series on sales planning, we’ve looked at:
- Part one: Adopting the right sales planning approach
- Part two: Evaluating sales rep ramp time and attrition
- Part three: Ensuring accurate quota planning and allocation
In today’s post, I’ll talk about territory planning. Territory planning represents the foundation of sales performance management (SPM).
Just consider the trickle down effect. You must have the right territory design in place to accurately allocate quotas. Accurate quota allocation impacts your team’s ability to achieve their anticipated incentive compensation. This, in turn, affects rep satisfaction and—ultimately—the retention of your top performers.
Is Your Territory Planning Still Stuck in the Dark Ages?
Everything starts with territory planning.
Yet, for something that has such a direct effect on sales success, organizations continue to conduct territory design the same way they did 20 years ago – with spreadsheets and maps.
According to research by the Sales Management Association (SMA) earlier this year:
- 83% of organizations still use spreadsheets frequently or moderately to design territories
- 61% of organizations have rarely or never used purpose-built solutions for territory design
To stay competitive, sales organizations need to stay ahead of the curve. With a function so vital to your sales success, why would you still use a spreadsheet?
A Personal Story About Territory Balance
Early in my sales career I had an experience that taught me the value of accurate territory alignment for top line performance.
I was working as a rep. I was a top performer and had 42 accounts—all in California. My manager called me in one day and asked me to identify my top seven accounts—the accounts where I’d focus most of my energy on to make my money the coming year.
I rattled them off, and he said, “Great. Take the remaining 35 accounts and please divvy those up between the other two reps on the team.”
Well, I blew my stack. In fact, I probably should have gotten fired for my response. All I heard was, “I’m taking territory—I’m taking opportunities—away from you.”
The result? That same year, I ended up having my best year as a rep and my best financial year ever.
At the same time, the accounts that I ended up giving up also brought in more revenue for the company. Because the other two reps on the team weren’t spread as thin, they could service those accounts with the right amount of time and attention – adding to the company’s bottom line.
This is a classic example of not leaving money on the table through effective territory design. My boss knew that I didn’t have the ability to focus because my territory was too big. I was stretched too thin, and that was causing problems for the company.
You need to know where to draw the lines. With right-sized territories, you serve existing customers better, uncover new sales opportunities, and balance workload with rep capacity.
Why You Need Data to Draw the Lines
Sales leaders sometimes look to NFL cities as a guideline to create territories. If a city’s big enough to have an NFL team, you should put a rep there, right? So what do you do with cities that have two NFL teams? There goes that idea.
You’re trying all these different things to figure out where to draw the lines. The fact is that NFL team cities don’t show you where to draw the lines. Spreadsheets don’t show you where to draw the lines. Your ‘instinct’ won’t show you where to draw the lines.
In today’s digital world, you need data to draw those lines. Territory alignment must be a data-driven process.
Advanced and automated territory mapping software ensures that data provides the foundation for your territory alignment.
It does this by:
- Enabling the seamless integration of third party data sources
- Comparing the balance of territories side-by-side
- Providing prescriptive recommendations for improvements
Drive Revenue and Lower the Cost of Sales
This is the goal of every sales leader. As a leader, I’m continuously looking for new ways to reach that goal.
The SMA research uncovers that organizations using automated technology for territory design increase sales performance up to 30 percent more than those that do not.
It’s easy to get bogged down by the daily, weekly and monthly tactics and execution that you absolutely need to manage your organization. However, it’s a longer end game. As leaders, we need to be looking for new approaches to maximize performance and stay ahead of the competition.
If you’re interested in learning how advanced territory planning software can help drive revenue and lower costs for your organization, please contact us. We use this software ourselves and can share how the territory planning process has improved for our own business since adopting it over a year ago.
Ineffective territory design impacts your entire sales performance. If territories aren’t balanced, you won’t have enough coverage to achieve goals. If your territories aren’t fairly distributed, your quota allocation will be off – hurting your sales team’s motivation and performance.
Don’t overlook this vital piece of sales planning.
Want to learn more about territory planning? Join us Jan 17 for a sales territory mapping webinar with Commvault Director of American Sales Operations, Bob Malandruccolo, to learn how territory planning can improve your sales performance.