Territory Planning: 3 Mistakes to Avoid

For most companies, sales planning and territory assignment is more art than science. It often involves a lot of time-consuming guesswork based on a slew of spreadsheets that can wind up missing opportunities and leaving sales reps unhappy.

Territory Planning

According to the CSO Insights 2018 Sales Optimization Study, a lot of companies aren’t happy with their territory planning efforts. Of the 300 organizations surveyed by the research firm, 57% think their territory modeling needs improvement or major redesign.

Getting your territories right can pay dividends. Optimizing territory design can increase sales from 2% to 7%, according to the Harvard Business Review.

Let’s look at three of the most common mistakes companies sales leaders make year after year in territory planning, and consider some solutions.

Mistake No.1. Spreadsheet management

Most companies base territories on sale performance using various spreadsheets. Not only are spreadsheets extremely error prone, but CRM data can differ from sales operations data, which results in people working from different sources of truth. Spreadsheets also provide little to no security in the form of permissions or access management, and they are easily shared and spread externally.

Moreover, trying to collect your territory data from various spreadsheets, emails, and other documents makes territory planning an extremely time-consuming and onerous chore. Reporting on manual processes is next to impossible.

An automated system that provides a centralized, real-time view of your territory information is key to streamlining and optimizing planning. This kind of system provides a single source of truth that captures historical performance and provides predictive data, including product saturation, regional information, and the potential for revenue from accounts within the territory. Automation enables you to model territories to balance and maximize your sales force’s efforts and budget appropriately.

Mistake No. 2: Not prioritizing sales collaboration

Your reps and sales managers will have more reason to complain if they are assigned territories with quotas they see as unrealistic, without being involved in the territory planning process. This can lead to dissatisfaction and sales rep churn if they don’t feel the process is fair and objective. If you view territory planning as simply a financial planning exercise without full engagement from sales, you are missing a valuable opportunity.

An automated solution takes all the relevant data and uses scientific prescriptive recommendations, assuring sales reps and managers that territories have been fairly distributed. Communicating the plan to the sales team early on and vetting with them is critical since they may be aware of outliers.

A territory planning solution must be tightly integrated into a sales incentive compensation product, which has the compensation data that informs the eventual makeup of the territory, so sales reps are getting enough accounts to make their quota.

Mistake No. 3: Sticking to geographic boundaries

Most companies allocate territories based on geographic lines (states, countries, or regions), and it can be an easy way to address your market. But depending on your business, there are other factors you may want to take into account to enhance your market coverage and maximize sales reps’ individual skills.

Alternatives to leverage the sales potential of your team include assigning territories based on products, industry, specific accounts, historical performance, or potential revenue, or some combination of the these. For example, if a rep.’s territory is product x, and product x is sold into industry y, then you may want to determine where industry y companies are located and divide up territories where industry y companies are located to those reps.

Also, basing territories strictly on geography can obscure the fact that things can look more connected on a map than they really are; a sales rep could wind up with a territory that requires many long drives to reach accounts. So calculate driving times as well or address geographic concerns through collaboration with sales.

By using automated processes in their territory planning, sales operations leaders are empowered with data and analysis to work more effectively with sales managers and design territories that keep sales reps motivated to drive revenue growth to its highest potential.

Contact us to learn how automating territory planning can help your company increase profitability.

By Grant Smith | September 25th, 2018 | Territory & Quota

About the Author: Grant Smith

Grant Smith

Grant Smith is a business-minded technology enthusiast and product-marketing expert specializing in customer-experience technology. At SAP, his role centers around sales performance management, thought leadership, and CX market analysis. When he isn’t glued to a computer screen, he spends time finding new adventures and places to explore with his daughters.