Territory Optimization: No More Drawing Maps by Hand Blog 5 of a 6-Part Series

Nov 01, 2017
6 min read
Manual territory design is time-consuming and inaccurate. Learn how Cox Automotive improved their sales territories with automated, data-driven planning.

For the past few months, we’ve followed Cox Automotive’s journey to create a world-class sales operations organization and an unstoppable sales force as they heard feedback from their sales compensation, developed a plan for change and gained buy-in from stakeholders across the organization. In blog 4, we tracked along as Cox Automotive dug into their data feeds and flows to ensure the data they received told the right story. This week we’ll dive into Cox Automotive’s strategy for territory optimization.

As is common for organizations of their size, territory optimization seemed like an unsolvable challenge for Cox Automotive's sales team. With a constantly growing sales force and ever-shifting market landscape, there was a critical need for a data-driven approach to territory optimization to proportionally distribute opportunities across performers of all levels. This approach would need to be fueled by continuous feedback from the sales team while also supported by cold, hard numbers. 

Unleashed Virtual: Ready for a Quick Pivot? Redesigning Territories Mid-Year

Before: Hours of Drawing Maps by Hand 

Cox Automotive once used a manual territory management tool tied to their compensation process to draw new territories by hand.

Lauren Taronji, Sales Compensation Analyst at Manheim, the largest subsidiary of Cox Automotive, described it as a grueling process. “It would takes hours to work through the territories because each one was drawn by hand. You would circle a ZIP Code and see how many accounts were in there. You drew circle after circle after circle, exporting it into Excel and creating pivot tables just to know how many accounts one person had – and we had hundreds of sales reps.”

It was awful and time-consuming, and you didn’t even end up with great territories anyway. Sales leaders have no time to sit and do that all day. – Lauren Taronji, Sales Compensation Analyst at Manheim

Ultimately, drawing territories was arbitrary as the number of accounts were distributed evenly but the productivity of each account was an unknown.

Taronji explains, “You’re throwing darts at a board and hoping for the best. One person may have X number of accounts in just one city, and another may have the same number of accounts across three states. How do we know each rep had the same opportunity to visit all of their clients? What if one client brings in 100 cars for one rep, but another rep has a ton of clients that don't bring in any business?”

In Tandem: Segmenting the Sales Team

While considering a new tool for territory management, Cox Automotive’s sales compensation team also saw the need for segmenting the sales team to make the most impact out of optimizing territory distribution. The state of the sales team was that there were two main segments – inside sales and field sales. Inside sales tackled lower tier accounts, while field sales had the higher tier, higher yield accounts – but there were no real rules around how accounts were distributed.

Pulling in leaders from sales, sales effectiveness, and finance, the sales compensation team had several sessions where they took data from the advanced analytics team and scored accounts by three main criteria – frequency of transactions, opportunity score, and volume tier. By looking at the data, they concluded that inside and field segments was not as impactful as segments based on account behavior.

The sales team would now be segmented into three categories: the “grow” team, focused on businesses with high growth potential; the “manage” team, focused on current accounts with maxed out potential but a need for nurturing; and the “discover” team, focused on identifying new opportunities. Now, with more sophisticated account and sales team segmentations, territory distribution could be calibrated to a more precise degree.

The Process: SPM Configured for High Visibility and On-the-Road Calculations

The sales compensation arm of Cox Automotive ultimately selected a new, dynamic territory optimization tool as part of their overall Sales Performance Management (SPM) strategy. In it, Cox Automotive pulled account data and mapped it on a virtual map with high visibility and fast responsiveness. Not only could maps be easily drawn to show how many accounts were in each proposed territory, but the tool also provided calculations such as territory drive time and estimated time required to talk to different client types.

According to Taronji, “We were now able to see what we're asking of the sales reps - how much time they need to spend behind the wheel and how long it takes to talk to a client. For example, let’s say it takes a ‘grow’ rep 20 minutes to talk to a client in his segment. If you want him to talk to each of his clients once a month, adding in drive time between clients, the tool lets us calculate how much time we’re asking of them for the month.”

The process was not always smooth-going. These were big changes, and the sales reps were not quite happy about it all. “Our sales reps’ main business is the car auction business. In auctions, it’s already a little old-fashioned and people are quite comfortable printing their run lists rather than doing it online,” explains Taronji. “So getting their buy-in would take some work and communication. We didn’t want them to think that we were going to take our own data-driven approach and shove it down their throats. It needed to be a partnership.”

To do this the sales compensation team was intentional in bringing the sales team in early and getting feedback throughout the process as they first started to consider a new territory tool and segmentation strategy. Ultimately, the sales team was the “feet on the street” that would provide information that the new tools couldn’t, such as accounts wrongly labeled “manage” when they should be “grow” accounts. As the sales team was brought into the project they provided valuable feedback and were won over in the process.

Ultimately, we came out of the other end of it all with a product that was 100 times better than what we had before, and it only took half the time as our previous system. What once took three sales compensation analysts months to do, we could now do with one person in the course of a month, even after we acquired 100 new sales reps. —Taronji

After: Sales Comp a Career Path, Not a Desk Job

"I can't believe how far we've come in this time. I used to think, how could we improve? How can we automate any of it? Now here we are, a year later. I can go on vacation now! I used to be so nervous going on vacation, being stressed out the entire time, thinking, ‘What's falling apart while I'm gone?’ It's crazy how far we’ve come," said Taronji.

With a proper territory optimization tool in place, the sales compensation team cut their time creating new territories in half. Optimized segments were in place, accounts were distributed for maximum impact, and sales managers now had the visibility needed to quickly adapt to new information and changes in the sales team.

According to Taronji, not only did the process improve for sales reps, but it made a huge difference on the sales ops side as well. “My job as a sales compensation analyst used to be focused on Excel and pivot tables, a lot of head-down kind of days, grinding through the data. Now, I have the opportunity to be creative, inquisitive, and genuinely make a difference. I now feel like I have an actual career path and am truly engaged in my work on a day-to-day basis.”

Is the path to improvement over? Cox Automotive says, not yet. On their relentless drive to become an unstoppable sales force, the Cox Automotive sales ops team continues to improve efficiencies in the territory optimization process, including a streamlined approvals process and automating data feeds from their CRM system.

Join us in a couple of weeks for the final blog in the series to uncover how Cox Automotive revamped their quota management system, as well as the surprising results of each of these SPM optimization measures as the varied pieces added up.

  • Sales Planning
  • Territory Design
Karrie Lucero
Karrie Lucero
Content Marketing Manager

Karrie Lucero is a Content Marketing Manager at Xactly. She earned marketing and journalism degrees from New Mexico State University and has experience in SEO, social media and inbound marketing.