Sales Analysis: Three Most Common Territory Design Mistakes
Sales Analysis: Posted by Bryce Record on Thu, Aug 18, 2011
Many companies struggle to get something as fundamental as using sales analysis to properly structure territories. Assuring the right person is assigned to the right patch is a critical piece of setting up the ideal success factors in your organization. Avoid these three common missteps:
- Territories based strictly upon historical precedent. All too often, sales leaders make decisions based only upon where sales were derived from historically, and not on how they want to position their company for the future. Past performance is not necessarily indicative of future sales! In addition, most sales mangers are challenged with continuing to grow sales and revenue in order to make their number. Territories should be aligned based upon a mixture of established customers, combined with immediate opportunities, and pure prospects. In total, a territory should be based upon a complete view of market potential in and out of the immediate sales funnel. If the entire sales organization is based strictly upon what happened in the past, future success will be difficult to maximize.
- Territories based upon sales rep location. Basing territories strictly upon where your sales people are located is a mistake. A recent client explained that of twenty two sales reps, only three were willing to relocate and were truly “movable”, basically indicating that much of the organization’s Territory Design is determined by where its employees are willing to live. This is a huge error. Don’t be constrained simply by where your reps are willing to live. If people will not go where they need to be to build the business, it might be time to upgrade some of your sales talent and phase out the lower performers.
- Undefined hunter territories. This problem exists in many organizations that have chosen a Sales Structure with selling role specialization. The thinking behind not defining territorial boundaries for hunters is oftentimes as follows:
- Any boundaries would constrain a rep’s ability to grow.
- Enabling every rep to go after the largest and juiciest accounts will create an aggressive organizational spirity, ultimately fueling a competitive environment as sales reps compete for best accounts.
However, this is NOT true. There are three potential pitfalls to this rationale:
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