Earlier this year, we teamed up with the Sales Management Association (SMA) to conduct a survey on sales territory design. More than 100 organizations participated in the survey and provided insights into how they design and plan their sales territories.
Sales territories have a big impact on the overall success of a company’s overall sales strategy. Because sales territories affect each part of sales performance management (SPM), they are the foundation of your strategy. For companies to be successful and drive growth, their territories must be designed fairly and optimized to provide sales reps with equal opportunities.
1. Companies that struggle with ineffective territory planning suffer from additional sales planning challenges
Because sales territories touch each part of your sales plan, ineffective territory design can hinder the success of your overall sales strategy. The time needed to manually design and implement territories pushes back additional compensation and strategy planning.
Manual design increases the risk of human error and overlooked territory opportunities. Without all of the necessary data, plans may be designed ineffectively. Unbalanced territories can also hurt company morale by reducing sales performance and increasing turnover.
2. 64 percent of organizations feel they are either ineffective (31%) or only somewhat effective (33%) at territory design
Almost every business has a sales department, which means they are designing and planning sales territories. With more than half of businesses stating they are ineffective or only somewhat effective, which negatively impacts their progress towards company sales goal achievement, ultimately hurting the bottom line.
Ineffective territory planning also creates a greater lack of transparency. In some cases, even if sales rep favoritism isn’t present, the mere perception of it can be detrimental to team morale and motivation.
3. Organizations effective at territory design had 14 percent higher sales objective achievement than the average; Ineffective companies had 15 percent lower sales objective achievement
The SMA survey found that there is nearly a 30 percent difference in sales objective achievement between companies that are effective and ineffective at territory planning. Territories that are too large can overwhelm sales reps, leaving revenue on the table. A territory that’s too small won’t offer enough opportunities, meaning companies run the risk of missing revenue targets and losing top sales talent.
4. Companies that effectively measure key territory design data have 8 percent higher sales objective achievement
Having accurate data is vital for effective sales territory design. Data insights allow leaders to see where they need to improve territory design, balance, and travel efficiency. It also helps reps prioritize current and potential customers to focus on maximizing team productivity. Using data and analytics, companies can compare sales activity with potential and results and adjust plans more easily when needed.
5. Less than 40 percent of companies feel they can effectively measure key data in territory design
Data helps companies effectively analyze their sales territories, but more than half don’t believe they are effectively measure the key data needed. Without the right data, companies are missing out on sales opportunities, unable to track where reps spend most of their time, and ineffectively measure and align sales efforts with top company objectives.
6. More than two-thirds (83%) of organizations still use spreadsheets for territory design moderately or frequently
Companies understand the importance of data in effective sales territory design. However, the majority continue to rely on spreadsheets moderately or frequently for territory design. Technology helps automate the territory design process, increasing efficiency and reducing planning time up to 75 percent, from weeks to days. Sales managers can also become more involved in the planning process to help reduce travel costs and boost sales productivity.
7. Nearly half (43%) of companies using territory design technology say they are ineffective at using it
Data is a critical component of well-designed sales territories. Without proper data, companies are unable to assemble metrics needed for optimized planning and assess sales potential in prospective and existing customers. Organizations that are less effective at measuring key data were also less effective at achieving their sales goals.
8. Companies using technology in territory design had 10% higher achievement of sales objectives than the average
Technology plays an important role in effective territory planning. Companies using technology were more efficient in their planning process, saw increased team productivity, and achieved sales objective at a higher rate than average. In addition, these companies increased travel-efficiency, allowing sales reps to spend more time selling.
9. The majority of respondent companies (76%) assign territories by geography
Geography continues to be the most popular way to assign sales territories. Using technology and automation tools, like Xactly AlignStar help companies design optimized territories that assign sales reps territories with equal opportunities to sell (read a case study here). It also allows companies to explore other territory assignment methods (e.g., by account or prospect, potential revenue, etc.), test scenarios, and select the territories that provide the most opportunities to drive growth.
10. The majority of companies (76%) conduct territory planning once per year
The majority of companies design and plan their sales territories once per year. Nearly 40 percent of these companies believe that there could be more value in conducting planning more frequently, but they face common issues that make multiple territory assessments more difficult–time, technology, and sales disruption.
Taking Steps to Optimize Your Sales Territories
Optimized territories build a stronger foundation for your sales plan. With automated processes, sales leaders can gather critical data and analytics and collaborate with managers more easily to design territories that provide equal opportunities for reps, keep team morale high, and drive growth towards sales objective achievement.
See how your business can benefit from optimized territory planning with a personalized Xactly AlignStar demo.