“Without making a single change to the company’s overall resources or strategy, territory design can increase revenue by 2 to 7 percent.” [1 - Harvard Business Review]
If you put some effort into your territories for sales, you provided them a territory based on a geography and maybe size of accounts. For the unlucky 33% of all other reps, they did not even know how their territories were built. These times demand a well crafted territory that can easily be explained.
For years, too many reps have been handed a sales territory based on the simplest of criteria. While the ability to target quality accounts has significantly progressed, leveraging this information to build territories has not progressed. Too many off the shelf territory tools are based on primarily on geography while other designs are locked in out of date spreadsheets. And now, due to COVID-19, geography means less than ever before. While creating good territories is critical, the good news is it is easier than ever before to design territories perfect for your business.
Other reasons to change territories are, "69.9% of quotas were quickly adjusted due to Covid in a study of 140 companies. And 72.1% of respondents will make changes to their go to market model sales model. Going forward, modifying territories in a flexible design is required.  "
This article shows you 4 steps to adjust territories for the remainder of 2020 and more importantly for 2021.
1) Account Segmentation
It all starts with who your sales teams should be talking to in the first place. Prioritizing accounts is a pre-requisite for territory design. At a minimum your team needs to know a profile of ideal customers so they can recognize when they are engaging one or not. This profile must be common across sales, marketing and product.
For an in-depth view of account segmentation refer to this article on segmentation.
To see an example of segmentation Click on this Live Demo. This will show you tiering of ABC&D of accounts based on metrics you can adjust.
In this second view of tiered accounts, we are displaying account potential vs their prioritization score. This can be used to focus on the top tier accounts
2) Territory Design Metrics
During the first 8 weeks of Covid, 82% of companies adjusted sellers pay.
This implies a huge change in the health of territories. To create healthy territories going forward, you need to look at a territory across several factors. For most companies 3-5 factors is the right amount to consider.
Below is a sample list of criteria to use to build territories. To have your team create the right list for you, you will need to guide them on selecting the right criteria. Sample list includes;
# of accounts by customer and/ or prospect that a rep can handle. Everyone we talk has a gut feel for this, but make sure this is validated with surveys and/ or actual CRM data
Mix by vertical – what is a healthy balance of verticals within a territory? Or should some reps be over-weighed in one vertical?
Size of prospect – don’t just look at size by their revenue or employees, also consider # of locations or the # of employees within a company who can use your service
Where is the buying decision made? At a headquarters or at the sub-locations? This can dictate who they should call on hence the location to be assigned
Personas – should your territories be based on the # of contacts or titles of the people sales calls on?
Tier of account or account score – this can be based on the fit of the company of your services, if they have engaged with your marketing, are exhibiting online interest on your competitor websites and other criteria. In the demo, we used % of A tier accounts to help build territories
In the above screen shot from the demo, we show an example of revenue potential and # of accounts by territory. Click here for the demo
To determine the right list of metrics for your team, we suggest interviews with top sellers, sales rep time surveys, data analysis to spot trends etc. Once you have a preliminary list, have the team review a sample territory.
Typically, you will also need to handle over-rides. These can happen for various reasons such as when a Global Account Manager serves all locations for a multinational, a customer demands a specific rep etc. Your design will ideally be able to handle these issues as they arise.
3) Getting the Right Account to the Right Rep
At this point, you now have accounts scored and a good handle on how territories should be built. But which rep should get which territory? In other words, do the best reps get the territories with most potential? Or most revenue? With geography less of an issue, should industry be the key criteria or number of accounts?
Similar to territories, thinking through the metrics of what makes a good rep will help you match the right rep to the right territory. Other considerations are which rep should be assigned a territory that is currently open? If you eventually plan to hire a rep for the open territory, you will need to be transparent to the rep who may be temporarily assigned to it.
A good design will make it easy to assign the right accounts to the right reps.
In the above view, we show an example where # of accounts, revenue at the county level and vertical information was used to construct territories. To optimize design, we held workshops with sales to build each territory at a county by county level.
As you complete this step, you are now ready to assign territories to reps. As clients have told us,
...this is the part of the project where things become real.
If you have different sales channels, it will be necessary to repeat all three steps for each channel. In other words, an ideal customer profile for inside sales is different than the profile for major accounts. In turn, the territory criteria is different as well across these channels.
4) Flexibility & Governance
Pre-Covid, if you created territories once a year you were best in class, now unfortunately you need a near continuous ability to have accounts, reps and territories modified month in month out.
Luckily, sales knowledge, market intell and a good data architecture make it affordable to have flexible territories that can readily be modified and assigned. Otherwise the pace of change may make the design irrelevant within 6 months. Pre COVID-19, the pace of change was already rapid and driven by buying behavior, rep turnover, computing power, connectivity, digital trends & mobility.
Going forward you also need to handle changes due to the virus, a possible recession and emerging technologies like 5G, blockchain and artificial intelligence.
To meet the challenge, think in terms of how we define digitization - setting up a process to extract useful information from data and distributing it to those who can use it to make great decisions.
This should not bring to mind, analysts creating excel sheets and reps clicking on filters or pivot tables. It should bring to mind, capabilities built into your CRM with dashboards that can easily be used to call on the right account. In addition, each of your managers and reps will be able to see their territories and be able to use to create account plans and prioritize who to work with week in week out. A process to monitor use and share best practices will help assure adoption.
Adding step 4, will ensure you are able to keep up with changes and always be aligned to the market opportunity.
Putting it all together will deliver benefits that ripple across the entire go to market strategy.
Clear definition of each channels route to revenue
Improved ability to set quotas
Improved ability to hire the reps you want by showing them the territories they can take over
Higher retention of your best reps
Match the size of your sales org to the annual market opportunity
With most firms having ~20% rep turnover per year, you will be able to quickly assign and move reps to the best territories for them and you
More accurate territories will lead to more accurate forecasting
With a more accurate forecast, finance will be able to scenario plan for the future
To learn more about Territory Design, tools on the market and to have questions answered, please comment here or contact me at https://www.linkedin.com/in/barrywitonsky/
About the Author
In the last 6 years Barry has advised 40+ small to medium businesses make great sales and marketing decisions. With his ability to provide strategic direction on capturing revenue and ability to analyze your data and market, he can give you the clarity and confidence you need. In addition, Barry spent 20~ years in various sales, marketing and product management roles.
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 Revenue Collective April 6th Results