Creating a Sales Territory Plan: 7 Best Practices You Need to Know

Jun 08, 2020
4 min read
Sales territory planning can be a complicated process for any business. Here are 7 best practices to build a strategic, data-driven sales territory plan.

Traditional sales territory planning is a complicated process. Now that your sales teams are working remotely, the complications have increased. Selling strategies that may have worked six months ago are not going to work now. In today’s business climate, you have NEED to be agile by constantly analyzing and optimizing your team’s territories in order to have a clear understanding of where your current sales opportunities are.  

When it comes to balancing territories, there are many factors to consider, a vast amount of data to comprehend, and a team of dedicated sales reps to contend with. Distributing these segments of varying value can seem daunting, but with the right data insights to drive planning, companies can actually reduce territory planning time up to 75 percent.

According to the Harvard Business Review, “territory design can increase revenue by 2 to 7 percent” without businesses making any changes to overall company strategy and resources. So it’s no surprise that an organization’s sales territory plan has a big impact on performance. In fact, digital territory planning can result in very positive business benefits, including:

  • 15% higher revenue
  • 20% increase in sales productivity
  • 15% increase in territory efficiency
  • 75% reduced planning time
  • Up to 30% higher sales objective attainment

To help ensure your territories are optimized and designed for peak performance, take a look at these seven sales territory plan design best practices below.

1. Assess Your Capacity and Resources

Before sales leaders can start mapping and assigning territories, it’s important to gain an understanding of their organization’s current sales resources and what they realistically need in order to hit their business goals. This comes down to accurate sales capacity planning. Regardless of territory assignments, how many reps does an organization need to be ramped and active on the sales floor to hit their goals?

Unfortunately, many growing companies under-staff their sales team because they fail to account for unforeseen turnover. When a rep leaves, it takes time to hire, onboard, and fully ramp a new salesperson. According to Business2Community, it often costs three times a sales rep’s salary to replace them. Not to mention, companies also miss out on potential deals that could be closed while the new rep was being ramped.

2. Know Your Ideal Customer Profile

First things first: businesses need to know who they’re selling to and what type of customers are best to approach. This means businesses must discover who their ideal customers are. For example, a product might sell well in any industry, but if you are a niche product that can only be sold to technology companies, or exclusively in healthcare, you need to adjust your strategies accordingly.

The best way to do this is to look at an organization’s existing customer base. Along with market research, this helps leadership identify who is most likely to become a customer. A database like Hoovers can be helpful to create new customer profiles. Then, planning teams should use these customer profiles, along with third-party data to identify areas where there are clusters of the ideal prospect companies.

3. Gather Data Insights

Data is a key factor in strategic sales territory planning. Organizations need both internal and third-party data to ensure their sales territory plan provides the strongest opportunities for sales teams to succeed. In fact, companies with data-driven sales territory plans see up to 30 percent higher sales objective attainment.

When it comes to data, businesses need insights into three key areas to ensure their sales territory plan is fair and balanced:

  • Internally Generated Data: Related to customers, prospects, and potentials. Most commonly sourced from a firm’s CRM, ERP, or spreadsheets.
  • Geospatial Data: Location of customers, prospects, and potentials. Geographic data for territory design and analysis.
  • Market Data: Demographic that’s available from public sector sources and other data that can be purchased from third-party vendors

4. Encourage a Collaborative Planning Process

Data is one piece of the balanced sales territory map puzzle. It’s also important to consider local field knowledge. Bringing in outside teams that aren’t part of the planning process can help design more refined and aligned territories.

For example, field sales managers can contribute knowledge of local markets and account relationships. Customer success, product, and marketing teams may also be able to bring in additional information to help decentralize the territory design process and produce stronger territories.

5. Automate Your Processes

Automation speeds up the sales territory mapping process, and it also helps businesses realize the benefit of data-driven intelligence. Using automated mapping tools, companies can model potential territory maps, compare different models, and analyze existing territories to identify ways to improve.

This provides an optimized sales territory map. Automated tools pull in internal and third-party data to ensure that each territory provides sales reps equal opportunity to hit their number. That way, territories are balanced and fair, allowing reps to stay more productive and performance to increase (learn more about fair and balanced territories here).

6. Assign Territories with Sales Rep Tenure in Mind

While not directly related to sales territory planning, it’s important for businesses to consider their sales rep tenure, career paths, and skills when assigning territories. According to Xactly Insights 15+ years of aggregated pay and performance data, sales reps hit their peak performance at three years.

In year one, sales reps are still learning the industry and products, so companies may consider this in territory assignment. At year five, sales reps often begin to decline in performance. While performance drops can occur for several different reasons, it’s important for organizations to use tenure as an opportunity to switch up sales team territory assignments, roles, and responsibilities.

7. Continuously Analyze Your Plan & Improve

Like all parts of a strategic sales plan, a sales territory map’s performance should be analyzed on a continuous basis. This gives leadership deeper visibility into territory performance and the ability to proactively make changes before problems derail performance. That way, territories are always optimized and performance and ROI are maximized.

Learn More on How to Plan for the Future

Ready to learn more about how to automate, optimize, and pivot your sales territory plans? Check out our solutions page for Xactly Alignstar to learn more about how to create fair and balanced territories for your remote salesforce. 

Or, if you’re more of a  hands-on learner and want to hear tips, advice, and best practices from industry experts, register for Xactly Virtual Unleashed Summit. This FREE event on June 17th features territory breakout sessions such as, Ready for a Quick Pivot? Redesigning Territories Mid-Year, where you’ll learn how to shift sales territories easily and quickly rebalance them amidst disruption. Click here for the full agenda

  • Sales Planning
  • Territory Management
Karrie Lucero
Karrie Lucero
Creative Strategist

Karrie Lucero is a Creative Strategist at Xactly Corp. She earned Journalism and Marketing degrees from New Mexico State University and has experience in the tech and SaaS industries, content strategy and creation, video production, and brand storytelling.