Sales territory management is a crucial part of any company's infrastructure, providing the foundation for geographic sales success. An effective sales territory plan helps businesses maintain an efficient approach in competitive markets where they're challenged by new prospects and complex offerings to sell across many different channels at once.
When sales territories are imbalanced, businesses can end up spending less effort on high-potential prospects, affecting the profitability of the business.
The need for a robust sales territory plan is imperative in ensuring the right customers are being targeted at just that - their optimal time. With an allocated team, your business can maximize success by allocating resources toward customer satisfaction and loyalty with every interaction.
What is a Sales Territory Plan?
A sales territory plan is a strategy that encompasses crucial steps that the sales teams must follow to target the right prospects and ensure steady sales and profits over a given period.
Traditionally, sales territories were defined based on geographical locations only, but with time, this practice has changed. Presently a sales territory can be defined as a geographic region, customer type, or industry that must be handled by a sales team.
The objective of a sales territory is to help create seamless sales strategies and deliver optimal resources enabling the sales team to close maximum deals.
The importance of a sales territory plan can be ascertained from the fact that companies with efficient sales territory plans achieved 14% higher sales objectives.
Why do you need a robust territory plan?
Having a well-defined sales territory plan is an extremely important aspect of the sales management process because:
- Create customer segments: Companies need a sales territory plan to focus on customer segments that have a better chance of making a purchase. Moreover, companies with better customer focus witness up to a 7% increase in their sales. This goal is achieved by segmenting sales opportunities based on factors like business size and industry.
- Optimize sales strategy: Sales territory planning enables sales managers to track the progress of every team member. They can then make necessary adjustments to optimize the performance of team members.
- Align sales teams: Sales territory planning enables the sales team to channel their efforts to meet the specific needs of customers in various industries. This goal is achieved by encouraging teamwork and leveraging the experience and strengths of every team member.
- Focus on selling: Sales territory planning enables sales leaders to identify satisfied customers, comprehend their problems, and help satisfy their needs to increase the number of deals closed in a period.
Challenges to consider when planning sales territories
During sales territory planning, it is crucial to ensure transparency and fairness. Sales leaders must remember that during the process of territory allocation amongst the sales team, the principle of fairness is observed at all times. Some of the challenges that sales managers must address during this process are:
- Ensuring equal division of work amongst all team members in a sales team
- The defined sales territory must offer effective management of time taken for travel across the length and breadth of the sales territory
- Making sure that there are comparable opportunities for maximizing the compensation
- There should be a healthy mix of new customers and existing customers in a sales territory
- Every sales team must have an experienced sales head who can motivate team members to achieve goals
Creating a comprehensive sales territory plan
Without a sales territory plan in place, companies tend to spend more resources than the ROI generated. Instead, sales leaders can follow these steps to create an effective sales territory plan:
Define the market
There are several options to define a sales territory, such as demographics, geography, competition, and several others. Leaders must also analyze the customer segment that is best aligned with the company’s goals and core values.
After this segment has been defined, identify the best niche sectors that the sales teams can leverage. Going after a profitable customer segment in a sales territory can ensure better sales and reduced costs.
Define the account quality
The next step is to ascertain the value of every account in the market based on relevant qualitative or quantitative factors. After defining the value of every customer, sales teams can create a priority list to follow. This enables the team to allocate adequate attention to every account within the territory.
Define the quality of the territory
The next step in sales territory planning is to ascertain the quality of the entire territory. This process would be based on the needs and priorities of the business. To get an accurate picture of the value of the territory, sales teams must be included in the process. This will help sales leaders maximize the prospects in every territory by assigning suitable reps to accounts.
Understand the sales team
The subsequent step in sales territory planning is identifying team members with the required skills to maximize the potential of every territory. Sales leaders can then help other team members learn from the best practices for every territory and apply them in other territories. This will empower the sales team to ensure better experiences for the customers.
Identify the costs and finalize the plan
Sales leaders must identify the essential cost metrics associated with the sales territory plan. Prior to putting the plan into action, it is vital to analyze costs related to different territories. This will enable the leaders to ascertain any inefficiencies in the plan and then take corrective actions.
What are the benefits of sales territory planning?
Some of the standout benefits of sales territory planning are as follows:
- Maximizing sales and profits: By encouraging the sales team to have a better understanding of their target customer base, sales territory planning helps a company maximize its sales and profits.
- Realistic sales planning: Sales territory planning promotes realistic sales planning as behavioral traits of customers vary across territories, and this process enables leaders to better define customer segments.
- Control over sales processes: Sales territory planning helps segment the market into more manageable smaller units. This enables the sales team to deliver their best performance.
- Lower sales expenses: Sales territory planning reduces excessive expenses incurred by the sales team on targeting customers with the lowest revenue potential.
- Higher productivity: Sales territory planning helps improve the productivity of the sales team by allowing them to prioritize their efforts for targeting high-value customers and then move down the list.
Sales territory planning has emerged as an essential function for companies looking to optimize their sales processes. A large number of businesses are now using the latest software platforms to streamline their sales operations, which eventually ensures effective sales territory management in the long run.