One of the essential pillars of a successful business is a robust and organized sales territory strategy. Studies show that effective territory management can increase overall sales, improve customer coverage, and reduce costs.

Territory planning requires careful thought and consideration because it's crucial to get it right the first time around. Constant changes in territory division hurt salespeople's productivity and take a toll on employee morale. And from the client's perspective, frequent changes in account managers lead to unstable relationships.

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Understanding, planning, and managing sales territories can make or break your sales efforts. Your reps need a firm grasp on the specific customer segments they're accounting for and the general framework of your team's territories over all. 

The way you structure, define, and distribute the territories you work with has massive implications when it comes to your organization's sales efficiency and bottom line. 

A solid sales territory plan and exceptional territory management can be significant assets to a successful sales team. Here's some perspective on how to do them right. 

Sales Territory Planning 101

1. Define your market.

To effectively set up territories, sales leaders must first understand the environment of their business. There are numerous ways for a business to define a market. Factors could include geography, size, and consumer demographics — among others.

Know what is unique to your business and prioritize based on what your climate demands. A solidified market will lead to lowered costs, increased sales, and a foundation for setting up effective sales territories.

2. Assess account quality.

After a target market is determined, sales leaders need to evaluate the value of each account. The measurement could be either quantitative or qualitative depending on the product or service the business offers. For example, a beverage company might rank the value of their accounts by net profitability while a company that relies heavily on customer recommendations could focus on accounts that are more likely to provide a referral for their company.

By identifying the value of each account, you can prioritize accordingly in your sales territory planning. If you are looking for a way to assess your organizations’ clients, click here to calculate your custom information. Here is a quick example of what your calculations would look like:

Sales territory planning assessing account quality

3. Assess territory quality.

After assessing the quality of each account, it is important to rank territories. As with the accounts’ values, this process is subjective based on different business needs and priorities. If your business sells products across industries, your territories could be divided and quantified by those industries. Determining what sales territory supports which areas of the sales funnel will also help you score territories into high, medium, and low value.

To get a better picture of territory value, include your sales team in these discussions. After all, no one knows the territories better than the reps who work within them each day. That way, you can assign the appropriate reps to maximize the potential of each territory.

4. Assess rep strengths.

The next step towards effective territory management may be the most important of all. After determining the quality of each sales territory, it is crucial that you assign reps with the applicable skills to develop and optimize each set of accounts. For example, a territory that is defined by large enterprise deals needs to be handled by a rep who has experience closing big deals. By strategically assigning qualified reps to accounts, you will empower your reps and ensure the client receives the best possible service.

Here is an example of how to calculate your rep’s performance. Click here to find out who is the strongest performer in your organization.

Sales territory planning reps' strength

5. Review and consolidate.

The four steps outlined above prepare a business to put a sales territory plan into action. The last thing a business needs to do is a final diagnosis of costs associated with each territory. Analyzing cost metrics — like comparing ideal versus actual number of visits and mileage per rep in each territory — will help managers zero in on specific inefficiencies in the system.

After you have reviewed your plan, consolidate it. By following these five steps, your business will be on its way to having a more satisfied workforce, as well as increased customer growth and profits.

There are some strides businesses can take to ensure their sales territory management is as efficient and effective as possible. 

Practice sound cadence management.

Proper cadence management — the process of prioritizing, structuring, timing, and conducting account interactions — is central to successful sales territory management efforts. Your reps need to be able to gauge account priority level, group accounts based on that assessment, and determine the best frequency, pattern, and nature of touches between them and contacts.

A solid cadence might look something like this:

Cadence for sales territory management

Source: HubSpot

Cadences will differ from territory to territory. It might take some trial and error, but properly managing territories often hinges upon how you contact the prospects you're trying to reach within each one.

To learn more about sales cadences, check out this article.

Consistently keep track of your data and customer needs.

Territory management is dynamic by nature. You can't expect a specific territory to remain stagnant in terms of how it responds to your sales strategies. Circumstances change, and you need to be able to change with them.

That's why your reps need to keep records of their sales data in a CRM — making sure you're keeping tabs on what is and isn't working for you. Have reps maintain notes from their appointments and keep them on record. Stay abreast of every trend within each of your territories to ensure that they're being catered to as effectively as possible.

Don't forget to pursue new leads.

Effective sales territory management isn't specific to existing accounts. Though that's obviously a crucial component to the process, it's not the only one. Always pursue new business — one way or another.

That doesn't mean forgetting about current accounts. You still need to keep them happy — particularly high volume ones. But if you want to grow your business, you have to consistently pursue new opportunities within your territories. Both kinds of customers serve their own essential function to the health of your business, so both need their fair share of attention.

Remote Territory Management

Not all sales territories require an in-person presence, and there are instances when your reps will have to work remotely. If this is the case, your reps still need to abide by the best practices mentioned above, but in all likelihood, they'll need to adjust their cadence.

A cadence that rests on in-person interactions is going to have to change if those interactions can't happen anymore. It might mean finding a new progression that incorporates more phone time and remote tools like video calls.

It might take some trial and error, but you have to land on a cadence better suited to handle remote interactions — and that might not look like the one your reps are used to using.

An effective sales territory plan can be the difference between well-organized, cohesive, successful sales efforts and inefficient, scattershot wastes of resources. It's essential that you have a properly structured sales territory plan and the proper tools in place to help your reps manage their customer segments. 

Editor's note: This post was originally published in July 3, 2018 and has been updated for comprehensiveness.

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Originally published Mar 31, 2020 3:30:00 PM, updated April 01 2020

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Territory Management