Sales Management Digest

How to Really Organize and Optimize Your Sales Territories
Selling Power Editors
Experts tell us that simply getting your sales territories into better alignment can boost revenues with relatively little cost investment. In fact, a few years ago, global business-consulting firm ZS Associates evaluated 4,800 sales territories at 18 large sales forces in four industries in the United States and Canada. ZS researchers concluded that
  • Of those territories, 25 percent had too much work for a salesperson to handle effectively. Another 31 percent had too little work to keep a rep fully busy.
  • In other words, more than half of those nearly 5,000 territories had a misaligned workload. ZS further determined that balancing those territories would add 2 to 7 percent to the organizations' revenues each year.
Here's how it happens. In a territory with too much work, a sales rep calls on accounts he or she's comfortable with and ignores more challenging but potentially more profitable accounts. Conversely, a rep with too little work will focus too much on customers with low potential.

The Value of Automated Territory Management Systems

This is exactly why many teams are opting to replace their Excel-spreadsheet-and-gut-feel method of territory management with an automated territory-management system. Take it from the folks at CommVault Systems Inc., where territory alignment was always a months-long process fraught with headaches and guesswork.

"When we hired or terminated sales reps, it was always a struggle to figure out if we should realign territories and accounts," says Kevin Taylor, director of sales operations at CommVault, an Oceanport, New Jersey-based data- and information-management company. At the same time, he adds, the company was struggling with assigning quotas each year, its reps' core strengths weren't being fully leveraged, and salespeople were spending more time traveling – and thus less time with customers – than CommVault thought they should be.

Taylor turned to the sales territory management experts at TerrAlign. Within a week, TerrAlign's software laid out territories that balanced geography with account potential and type, matching them to each rep's natural selling strengths. Though some reps complained about losing this or that account, Taylor says he had the data to show those reps exactly why each change was warranted. Before, they'd simply argue it out.

"TerrAlign gives us the science behind the gut instinct," says Taylor, who expects to see an increase in productivity, a reduction in travel time, and a better match between a rep's skill sets and accounts as a result of automating territory management.

In fact, it's safe to say that, if you aren't using technology to manage your territories, you're putting yourself at a competitive disadvantage. Territory-management systems not only do the obvious – help you create optimal territories based on workload, geography, and opportunity – but they also do it quickly, enabling sales organizations that use these systems to turn on a dime when there's a change in their sales teams, product line, or the market as a whole.

Turning Territory Alignment into a Competitive Advantage

Cordis Corporation, a global provider of interventional medical devices, leveraged technology to shift territory alignment from a massive, once-a-year undertaking to an as-needed competitive advantage. In the past, sales leaders at Cordis would sit down every October and start looking at whether they were going to add any expansion territories or collapse any territories, recalls Tracy Lynn Horvath, manager of sales planning and operations at Cordis. From there, she says, they would move into forecasting and finalizing compensation for the following year.

For example, when a territory is newly vacant, Cordis can use what-if scenarios to quickly evaluate whether the company should hire a new field rep, redistribute the territory, or have neighboring reps absorb it. When its market position is threatened, Cordis can address such issues as the size of its sales force compared to competitors' in a certain area. Where do competitors have a presence that Cordis doesn't?

"We can constantly ensure that we have the coverage to fairly compete," says Horvath, who estimates it would take months to make these decisions manually. "When you've got several thousand customers spread across the United States, that's hard to see on a spreadsheet," she explains.

With stories like these, it's easy to see how territory management systems are rapidly becoming must-have technology in the sales profession. Without it, it's too easy to create territories that overload rep Y and underload rep Z and give you all the headaches in morale, turnover, and results that go along with them. And, as most sales managers are painfully aware, too many territories are already being run in that way.
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