Sales force restructuring is most effective when the process is proactive instead of reactive. It is easy to become complacent when the sales team is doing well. Keeping a periodic check on the performance of territories and sales force will give you a fair idea about the frequency at which you need to restructure them.

What is Sales Force Restructuring?

Sales force restructuring involves reassigning the territories, redefining sales processes, and most importantly, changing the structure of the sales team.

The right sales force structure allows you to:

• implement effective sales processes in every targeted customer segment
• direct the selling effort to the right products, markets, and activities
• utilize sales resources efficiently

Reasons for Restructuring a Department

There are a number of interrelated factors that may signal the need for change. For example, companies may change their existing structure to increase efficiency and reduce lost selling time. The other major reasons for restructuring are alignment with changes in the market, product line, or go-to-market strategy.

• Market change, such as an economic recession or on the other hand, a booming economy, may require the company to change their sales process or strategy, which in turn requires a change in sales force structure.
• Launching a new product or entering a new market often causes a need to either specialize or generalize the sales force by skills and experience, and/or type of activities performed in a particular role.
• Inefficiencies in the team and low morale are often signs that something is not working. You might decide that the workload needs to be distributed differently in order to avoid the over- and underutilization of resources.
• Downsizing can be a tactic for lowering costs and maintaining profitability that can yield efficiencies when faced with poor economic conditions. In a strong market, downsizing can be considered rightsizing to structure your team for maximum bottom line contribution.
• Outsourcing can be used as a strategic move for gaining a competitive advantage. More than just a cost reduction or control, outsourcing can free up internal resources, help gain access to new markets and streamline time-consuming tasks. 
• Mergers and acquisitions demand restructuring to eliminate duplication and reconcile the differences between previously separate entities for consistency, coherence and productivity.

For instance, if you are looking to create more awareness for your product, you may invest in a less qualified sales team to do the cold calls and other related tasks. Your more qualified sales people are not burdened with an extra campaign and are free to focus their skills to do that which they do best – selling. The awareness campaign will cost you probably a fraction of the payment required for using a more specialized sales force.

Let’s look at an example of sales force restructuring where hiring a specialized sales force made more sense. A pharmaceutical company had a deep portfolio of products and their brand was entrenched in their existing markets. However, when they launched a new product in a totally different market, they could not leverage the current sales force because:

• Reps were not knowledgeable about competitive drugs already in that market, making the customer interactions stilted and ineffective.
• Reps were already at their full bandwidth and could not accommodate a new product and really do it justice.
• Sales incentives for the new product were not enough to lure sales reps to shift their focus.

In this case, even if the company paid high incentives, it would not have worked. The company eventually hired a new specialized sales force to sell into the new market.

Benefits of Team Restructuring

The structure of your sales force can have a significant impact on your customer and revenue. Sales force restructuring should be considered a good long term investment. The most important outcomes of a good sales force structure are:

• Greater efficiency of the sales force due to the right allocation of resources and accounts
• Balanced territories that are aligned with sales strategy
• More top performers as team members may get territories or accounts more suited to their skills, or with a more approachable customer base
• Increased productivity through balancing the workload to get a wider distribution of team members’ time, attention, and knowledge
• Higher profit margins by reducing overlaps and streamlining communication
• Improved decision making resulting from improved communications channels and an empowered organization

However, you should be mindful of the different advantages and disadvantages of sales organization structures.

Team Restructuring Process

Restructuring can be disruptive, but a well-thought-out and properly executed restructuring strategy focused on specific goals can smooth out some of the challenges.

• Goals: Identify and prioritize the problems that need to be solved and the opportunities you want to take advantage of. These will direct the development of you restructure and will be used to measure your success.
• Testing: Once you have a suggested restructure outlined, attack it with “what if?” questions to identify the strengths and weaknesses of how your business process will work within the restructure.
• Feedback and Buy-in: As you work on goals, restructure development and testing, involve the team. You are not asking them to make decisions, but allowing them to contribute. Not only can this generate valuable information, but it also shows respect. If team members are legitimately part of the restructuring process, there is a greater chance they will support the plan and contribute to its success. 
• Documentation: Once ready, the plan must be communicated to your team. Include the new structure, how it will impact the current structure and how roles will change. Along with proper feedback and buy-in, this can help eliminate surprises that can damage attitudes and productivity. Documentation will also serve as a reference for measuring the success of the restructure.
• Implementation: When you are ready to execute the plan, it is always best to do it face to face will all people involved. When detailing the restructure, it is important to acknowledge specific feedback and decisions regarding that input. Either set up or offer individual meetings to discuss the outcome, including how it affects that individual. Discuss next steps.

The development of a successful restructuring strategy depends on accurate data that typically comes from diverse sources, such as client, segment, market, and individual employee productivity data. Managing sales data from the various sources through proper extraction, transformation and loading will give you insight critical for sound decision making that will maximize these proactive changes and minimize the potential for failure.

Special Challenges for Product-Based or Activity-Based Structures

Companies that restructure the sales force to specialize by product or selling activity, deal with a few challenges:

• Confusing end customers: Imagine that an end customer who was targeted by a single rep since the last few years is now targeted by multiple reps. The customer may become unsure about who the primary contact is and to whom they should direct their queries.
• Inefficiency of the sales team: Multiple sales reps going to the same customer add to the cost of sales. The need for coordination between multiple sales teams increases for sharing customer details, which once again increases time spent on non-sales activities.
• Reduced or no cross selling opportunities: Sales reps cannot sell a product which is not in their sales portfolio. Even if they know that the customer needs a particular product, they cannot recommend it, if it is not in theirs to sell.

To negate the above disadvantages, companies can take certain steps:

• Incent the sales force to drive desired behavior. For example, pay incentives for sharing prospect customers with the peer-sales force.
• Invest in a good call logging system. Choose a CRM system which enables the reps to enter their call activity in real time. Such a system also would help them easily retrieve information as needed.
• Communicate the plan and launch training initiatives. Communicate the reasons for restructuring and outline the steps of the process clearly. Answer all questions and manage any concerns with transparency to gain the trust and cooperation of your entire sales force.
• Speed things up. While it’s important that you do everything right, try to implement the plan quickly. A prolonged restructuring process can fuel rumors, make sales reps insecure and lead to loss of productivity.
• Implement a periodic feedback process. Ensure that there are regular ‘health check’ surveys where sales reps can enter anonymous feedback. It is a good practice to have even if there is no restructuring, and it becomes more important if a restructuring takes place.

Sales force restructuring is a way to ensure sales team efficiency and alignment to sales strategy. Taking a fresh look at the team structure periodically allows you to balance territories and refocus the team’s selling potential.

Looking to boost your sales team’s performance? Optymyze enables you to drive sales performance with sales commission, territory, quota, and objective management.

Check out Optymyze solutions

A sales rep is a sales rep, right? Whether you call them consultants, business developers, agents, or salespeople, you expect your sales representatives to be adaptable and well-informed: a completely reliable interface between you and your clients. You expect them to sell. It’s a tall order, no matter what the industry.

But sometimes their job calls for qualities that go over and above this already impressive list. When it comes to the medical field, your reps are more than sales mavens. They’re lifesavers.

Part healthcare specialist, part lobbyist and full-time sales professional, the medical sales representative is part of a unique breed. A dedicated sales rep will not only excel at product sales, but also make presentations to healthcare professionals, arrange appointments, organize conferences for medical staff, keep up to date with the latest clinical research, constantly monitor the competition’s moves, and stay on top of ever-changing national legislation and healthcare coverage. Sounds complicated? It is, and we’ve only skimmed the surface.

For those in charge of selling medical equipment, more difficult challenges lie ahead. The complex sales cycle, coupled with high acquisition costs, demand technical and medical know-how. The rep must understand the product well enough to supervise its installation in the operating room—with the surgeon and other medical staff present. And he or she must be prepared to adapt or change the product at all times, should a malfunction appear.

With so much on their plate, medical sales reps require a compensation plan that corresponds with their contribution. But is incentive compensation enough to motivate and retain such representatives? The answer will become clearer once we take a closer look at a medical sales rep’s career path.

1. Getting in Can Prove Quite Difficult

Normally, a sales rep position requires little more than a high school diploma or an associate’s degree. Nor is specific previous experience usually required. However, when it comes to medical sales, qualities many people develop in college, grad school, or specialized training programs are integral to a rep’s success. Excellent communication skills, confidence, analytical skills, and constant business awareness are only the beginning. Most candidates usually have some sort of medical background, if not a life sciences or medical degree. Previous experience working in a hospital or clinic is also par for the course.

These kinds of prerequisites can discourage new candidates while also fostering more attachment between experienced reps and their current employers. Establishing a clear and promising career path, and using a clear compensation plan can slow this trend and also make the domain more attractive to future talent.

2. Training Takes Longer

Due to the fact that companies that focus on medical sales look for deeply informed candidates, future reps might be discouraged to find out that many companies have prolonged training processes in place. Some organizations require that each person on the sales force spend time with an experienced medical sales representative before gaining his or her own clients or territories, as part of a shadowing program. Others simply place new hires at desk jobs before moving them into an actual sales role.

While a candidate applying for a manager position may easily expect some amount of training, the idea of continuous professional development might not sit so well with those interested in medical sales. Clear communication of the job’s benefits can be a first step to easing up this process. Sales enablement programs could also provide beneficial support and coaching, especially for guiding salespeople through their first deals. But in the final analysis, it’s the companies that implement clear, strategic compensation plans, on top of sales enablement programs, that will bring talented reps in the door and gain their trust and loyalty.

3. The Work-Life Balance Can Be Problematic

Imagine that you’ve recently begun to work for a medical device company, and one of your first real contacts has just turned into one of your first sales. You’ve closed the deal. Now…off to enjoy the bonus, right? Not quite yet. Remember: in this domain, not only is the sale difficult to make, but it is also an ongoing process.

If you just sold medical equipment, here come months or years of calibration, maintenance, and possibly even training of medical staff. If we’re talking about a biopart (also called a biomaterial, the product of biomedical engineering), pulling off the sale may have required you to enter the surgical area to ensure that its specifications were identical to those requested by the medical staff. And if you sold a large kit, you may have had to sterilize parts for the operation at hand while setting aside others for future use.

Such auxiliary activities may have their appeal for the impassioned salesman or the healthcare specialist, but they can certainly create a less-than-perfect work-life balance. Extra hours are standard. And a substantial amount of time may be spent traveling from one client to another, not necessarily to sell a specific product, but to answer questions about previously sold materials. Managers need to take extra care to compensate correctly for potentially hectic work schedules, especially since freelancers and self-employed medical sales reps are rare in this field.

4. The Responsibilities May Outweigh the Benefits

Because they bring specific expertise to the sales experience, good medical sales reps are difficult to find. They’re also deeply appreciated by their customers. Over time, their knowledge only grows, at times approaching that of a healthcare specialist. But with increased expertise comes increased responsibility.

Though a rep is in no way answerable for a product’s quality, he or she does occupy a potentially thorny intermediary position between the beneficiary and the product. And the stakes can be high. Imagine, for instance, that a medical device is found to have been contaminated. The rep would stand right in the middle of the storm of repercussions: recall costs, corrective surgeries, the PR disaster, and shattered customer trust in the manufacturer.

Sometimes, a medical sales rep’s responsibilities can catch up with him or her in the future, long after the actual sale. That’s because devices or bioparts might be sold one year, only to be used years later. To ease everyone’s concerns, the rep should be armed with as much information about a product as possible before selling it.

5. Information Is Hard Won

Having to manage unexpected information is hard. So is having to deal with a lack of information, which is a pervasive problem for medical sales reps. They have to be in touch with the newest products and latest research developments (in an industry that changes by the hour), as well as what the competition’s up to, but attaining this data is never easy. The same is true when it comes to getting a hold of accurate information about legislative changes. With very few official sources to rely on, reps often turn to private networks and forums such as Cafepharma.

The official information that a rep does manage to get is therefore highly valuable to his or her employer. So is the rep, whose reports may provide market insight, and can be used during new product development. To motivate reps to continually put energy into fulfilling their extensive role, a flexible compensation plan is a must. Such a plan might include the possibility of royalty payments, should the rep meaningfully contribute to research.

6. Legislation Is Always a Concern

As many medical sales reps discover, the lack of information affects more than sales. It affects the company on all levels. Reps must be fully aware of difficult-to-obtain current legislation. They also have to keep drug formularies and similar paperwork up to date, and pay attention to any upcoming changes in the healthcare field. A change in a medical plan, for instance, may bring special taxes and obligations that the rep will need to both understand and explain.

In light of the need for this kind of documentation, a comprehensive legislation depository should be created and regularly updated. Such a depository should contain all local and federal laws that impact the field and should be easily accessible.

7. Specialization Is in High Demand

With the steady rise of new pharmaceuticals and the constant improvements being made to medical devices, familiarity is hard won. This is why most reps usually specialize in a particular medical field. One the one hand, this makes each rep highly valuable to his or her employer and to other potential employers. On the other, it means that employers have a narrow pool to pull from.

It’s difficult for a sales rep who knows everything about a certain medical device to migrate to a whole new specialty. To counter this phenomenon and maintain a top sales department, employers should consider offering courses across specializations as well as other nonfinancial rewards to their top performers.

8. There Is No Formula for Success

Since each sale involves a long-term commitment to both the client and the product, the pressure on medical sales reps is high. Add that to the fact that in many cases reps have to make their pitches in front of a professional, and you can see why self-confidence is vital.

Other vital characteristics for medical sales reps include resilience and flexibility. Making a sale in this domain does not guarantee further successes. Many times, the client has to recommend the product further, to his patients or direct customers. If the product doesn’t fare well, future attempts to approach that client may fail. This is further evidence of the need for continuous job training.

If you’re a sales leader in a company that focuses on healthcare, you understand the challenges of replacing highly skilled reps, and know their loyalty affects your organization’s success. You can further your efforts to gain that loyalty by acknowledging the skills and nurturing the potential of each member of your sales force.

A flexible and generous incentive compensation plan, on-demand access to data, and top-notch sales enablement techniques – including coaching and training – are essential to this purpose. Unlike reps in some other fields, medical sales representatives don’t see their job as a stepping stone. They’re invested in the field. Make sure they reach their potential, and your own investments will pay off.

Pharmaceutical companies impact just about every American’s life. Our country is home to approximately 67,000 pharmacies, and according to a Mayo Clinic study, seven out of ten people in the United States take at least one prescription drug. From testing to production to selling to prescription, a medical product’s journey is complex and involves countless professionals.

The most significant of these professionals? For drug companies that want to stay in business, the answer is easy: sales reps. A pharma rep’s job is demanding, intricate, and at times exhausting. It requires specialized training in pharmacology as well as comprehensive knowledge of subject matters as diverse as biology and sales techniques. Succeeding as a pharma rep also takes a great deal of perseverance – not only to get the job done, but also to withstand misconceptions and misguided stereotyping.

Challenges and myths

If you’ve ever seen a pharma company hosting a banquet-room lunch for doctors and formed the assumption that pharma sales can be bought, think again. The complex relationship between reps and doctors is often incorrectly regarded as a quid-pro-quo system that starts with drug companies providing free meals and paid speaking engagements to doctors in exchange for those doctors prescribing their products. While it’s true that a strategy’s at work here, it’s not designed to woo. It’s about time – which, as we know all too well, doctors have very little of.

Often, coffee or a meal is the only avenue for pharma reps to get in front of a doctor. Moreover, the overwhelming majority of doctors won’t promote a drug they don’t like or believe in. So what’s actually happening at these lunches? The real answer is that salespeople and doctors are coming together to build a partnership focused on determining the best therapy options for patients.

That may sound like a lofty goal for a salesperson, and it is. That’s due not only to the stress of the sales process itself (which includes battling through the myth that reps lack sufficient education to interact with and inform doctors), but also because attaining and retaining a position is no walk in the park.

Many pharma reps come to the job with a background in chemistry, biology, or premed. According to the Princeton Review, pharma companies commonly demand that their sales employees have an advanced degree in the medical field. During their initial years in the industry, they often take advanced courses in pharmacology to deepen their knowledge of their company’s product line. Doing so helps them convey complex scientific and medical concepts in accessible language.

Reps may also have to learn how to interpret data and statistics so as to gain an understanding of both public and private health issues. As a primary source of information for doctors, they have to be prepared to discuss various diseases and new clinical studies, stay up to date with the competition, and thoroughly explain the qualities that make their product better than the competition.

In short, every last one of them has to become a trusted member of the local medical community.

“I love my job” vs. “I need to make more money” – a.k.a. motivation

The intensity, the intellectual challenge, and the satisfaction of helping patients may be just what draws people to this career. “You cannot get discouraged doing a job like this,” says James Bowden, a pharmaceutical sales specialist. “After all, by filling the shoes of a pharmaceutical representative, you bring a great added value to a physician and his or her patients through the drug products that you promote. Do not let anyone else tell you otherwise. That is why I’m doing what I love the most, and that is helping people live longer, healthier, and an overall better quality of life.”

In the best of all worlds, pharma reps are driven by an innate passion for the profession, and they find jobs with companies that value their unique skills and ability to build long-lasting relationships with doctors. But we don’t live in an ideal world, which means that reps’ financial satisfaction is a vital consideration.

A pharma rep’s earnings are 20-30% commission-based – a far higher rate than you’ll find in other industries. But the market is highly competitive – so much so that a “pay for performance” cult has developed and begun to take hold across other sales verticals. Recent HBR research shows that the number of companies offering bonuses or other forms of pay based on performance increased by 6% between 2014 and 2016 alone.

That sounds like great news for pharma reps, right? All they need to do in order to earn financial rewards is hit quota on a regular basis.

Of course, that isn’t as easy as it sounds. With quotas often set at unachievable heights, pharma reps are flying on a wing and prayer. Less than half will succeed – which means the majority will fail.

As you might imagine, failure is not a great bedfellow for reps, who tend to thrive on success; failure leads to frustration and loss of interest in selling your product. If you’re in a leadership position, you can avert such a scenario by instituting business processes that ensure goals are challenging but achievable – present and future – even during periods of enormous change.

How? With the right technology, for one. Advanced technology enables accurate quota management, balanced territory design, and – most importantly – forward-thinking comp plans that tap into your people’s inner motivations.

Gamification, for instance, appeals to salespeople’s competitive spirit. Visibility into individual and team performance will also light a fire beneath them; it’s empowering for reps to have access to sales and call-planning insights that indicate which doctors or institutions are likely to be most receptive to their overtures. Proper visibility also helps reps decide which doctors and institutions would benefit from more visits – and which would not. Add on a bonus calculator, which should be included with any truly robust technology solution, and reps can capitalize on these insights by projecting how much they can increase their earnings. When reps feel inspired to maximize their compensation, the company is simultaneously rewarded with better bottom-line performance.

But technology is only as good as the people who implement and use it. That means it’s vital to bring in expert staff who know their way around the tech and can help you utilize it to its full potential. These experts can conduct ongoing analyses of processes, continually gain and share insight, and cement improvement and revenue growth as an integral part of your company culture.

Beyond love and money

They’ve followed your bliss. They’re not living paycheck to paycheck. They’re energized by running from one doctor’s office to another, checking in with pharmacies, attending conferences, and taking extra courses. But something’s still missing. What is it?

Too much of the time, like many remote workers, your reps are alone. Keep them involved by fostering interactive programs; regular coaching and training sessions are a good place to start. It’s also absolutely vital that your solution can be accessed on mobile devices. The addition of social apps can encourage productive conversations and encourage reps to share inside tips and best practices. Push notifications that provide regular updates on quotas, targets, sales results, and other performance indicators can be a great tool to keep salespeople informed while fostering connectivity.

The bottom line

Pharma sales reps truly are a rare breed, and they’ve got a unique brand of responsibility to the end buyer. Just think about it: when you go to the doctor, it’s typically the pharma rep’s recommendations that end up on your prescription slip.

In such a vital field, giving these professionals the right tools to succeed can have a tangible impact on the life of nearly every American.

Big data, smart data, data lakes, data warehouses, data repositories! It seems like nowadays, the word “data” makes an appearance at every sales conference and in every article. Though this article’s no exception, it’s a little different: we’re here to help you understand these oft-confusing terms and find your way to the right solution.

Most organizations know what they want out of their sales operations, but they often struggle to transform that vision into a reality.

That’s especially tricky to achieve when you need to process large volumes of data from multiple sources. Cleaning, centralizing, validating, and analyzing data are all highly technical and intensive tasks, but the value they can bring to your company is immense.

Data storage: the first stop, but not the destination

A data lake is, in effect, a repository that allows you to store both structured and unstructured data at any scale. The main advantage of this architecture is that the data can be used in its “natural format” – i.e., without having to be structured first – for the purposes of processing, analytics, and visualizations.

Data swamps, meanwhile, are damaged data lakes that either are inaccessible to their potential audience or cannot provide any valuable information. In other words, a data swamp is a data lake “gone bad.” The line between data lakes and data swamps can be a thin one, especially since there’s a relatively low number of users who can realize the full benefits of data lakes.

While undeniably popular, neither of these concepts is particularly new or revolutionary. To perform proper data management, you’ll have to concentrate on both structure and format, which brings us to another highly used term in the data world.

One of the most common ways of storing large volumes of data, data warehouses are essentially massive repositories of integrated data drawn from one or multiple sources. Warehouses can store both current and historical data; they’re used to create reports for both sales reps and management, but also for analytics and similar operations.

In contrast to data lakes, information isn’t “thrown” into a warehouse; rather, it’s transformed, structured, and assigned a specific purpose (say, a particular business area).

Where lakes typically need an expert hand to be useful, warehouses are typically either semi- or fully automated – offering easier access for the common user as well as for company leaders who want to analyze sales figures and related information.

Your North Star: data processing

The debate over the merits of data warehouses vs. data lakes is difficult to settle. In our experience, though, the most important detail is not your storage methodology, but the way you process your data.

For example, one of our largest clients is a national telecommunications company, and they came to us with an enormous amount of data to process. What architecture recommendation did we make for them? None at all. Although we did ultimately utilize a flexible storage solution, that wasn’t one of our prime considerations.

Our client’s business units required the permanent processing of many terabytes of data that had been drawn from multiple sources in multiple formats. The large volume of kickouts and the consequently low quantity of valid data made both storage and usage into major issues.

The first step was establishing best practices for processing the data. It was no problem to replace our client’s legacy systems and combine their formerly disparate data sources into a single repository. However, cleanliness, not storage, was our main concern – so once we got the data in one place, we evaluated it for purity and prioritized it accordingly with logical algorithms.

With the data centralized, the next step was to make it widely accessible through our easy-to-use, code-free data management.

Suddenly, our client’s salespeople had instant access to information about customers and prospects, while management gained the power to execute accurate sales planning. This repository ultimately came to be recognized as a single source of truth for the company’s multiple business units – enabling the creation of better metrics along the way.

The point is, despite storage type and general architecture being common points of contention, they were in fact the least of our client’s problems – and they should be the least of yours, too. No matter how you’re keeping your data, if your reps and managers don’t have easy, real-time access to digestible information, all your investments in storage will be moot!

Data transformation: the wind in your sails

The concept of a single source of truth for corporate data is gaining wide appeal. However, just as a lake isn’t much good if the water is contaminated, a data repository can’t help you much if the data hasn’t been transformed into a usable format.

As many businesses have discovered, the data ocean’s perils don’t stop at processing. Even if you do have a flexible storage solution and know precisely what data is going through your system, it will eventually become obsolete. No matter which route you’re taking, new layers of information will be added constantly, making your data run deeper and deeper.

So, how can you stay afloat?

Well, instead of pushing against the current, use it to your advantage. Consolidate disparate information into a single platform so that you can analyze your data and use it as a catalyst for sales enablement. In other words, strategically transform your data into the wind that fills your sails (or sales!).

It’s great to see companies starting to discover the potential of a single source of truth – after all, we’ve been talking about it and doing it for years. However, making the best of your data requires turning it into actionable insights that can not only improve your reps’ performance, but also give you a whole new perspective on the sales organization.

Those deep and meaningful analytics are the lighthouse that helps you make port in a storm of ever-shifting data.

With our no-code Data Repository and ETL capabilities, Optymyze can handle even the most complex data management as well as extraction, transformation, and load (ETL) requirements – managing and processing thousands of data tables with hundreds of millions of records that comprise multiple terabytes of data.

We all get territorial sometimes. It’s part of being human; when someone’s territorial boundaries are violated, it naturally sparks a defensive response. That may be unavoidable in life and in love – but when it comes to sales territories, conflict doesn’t need to be inevitable.

It’s a simple formula: sales reps will cry foul whenever they feel their sales territories are distributed unfairly, triggering infighting and chaos. Obviously, fruitful territories are a big deal, given that they translate into better quota attainment and higher compensation. So it’s only natural that when salespeople think their accounts are getting taken from them without good reason or that other reps are overstepping their designated territories, tensions flare up. Of course, if you’re a sales manager, preventing this scenario should be one of your top priorities.

Although some healthy competition is natural – even beneficial – fights over territories are bound to affect team cohesiveness and, ultimately, your bottom line. That’s why it’s vital to ensure that your sales territories create a collaborative environment that motivates your reps to work toward achieving your company’s goals.

Go beyond geographic territories

Approximately 20 percent of sales organizations still delineate their sales territories using only geographic dimensions. This is a useful strategy for preventing conflicts between salespeople, but it’s also a simplistic approach that can result in ambitious sales reps getting stuck with territories that aren’t particularly active – a situation that not only creates resentment but also prevents them from realizing their full sales potential. Fortunately, there are other territory management strategies that can prevent infighting more effectively while getting more productivity out of your reps.

Dividing sales territories optimally starts from the ground up. There’s no one-size-fits-all solution for sales force structuring; rather, there are numerous possibilities, each with pros and cons. A well-designed structure may incorporate elements from any or all of them, just as long as it outlines clear selling roles and responsibilities while leveraging your people’s skills and experience with specific industries, types of accounts, or products and services.

Remember: there’s no such thing as a perfect, immutable sales structure. As businesses expand, merge, go international, or add more segments, their sales structures need to be adjusted accordingly – and that isn’t always easy since such major changes often result in territory infighting. For instance, going through a merger without a sound process for realigning territories can result in some areas becoming flooded with your reps, who end up competing with one another for accounts. It won’t be long before those conflicts between your salespeople turn from isolated events into a nagging problem.

If revising your sales structure sounds like a daunting task, consider bringing in sales territory management experts who can help you eliminate territory infighting and create a more tailored sales structure, all while working toward longer-term goals such as expanding into other markets.

Approach territory planning as an ongoing process

Once you have a flexible, effective sales structure in place, the next step is implementing a territory management plan that will help you allocate resources fairly and efficiently, preventing imbalance and infighting.

No set of territories is a finished product; the need for changes, be they big or small, will inevitably present itself. It’s crucial to make rapid, data-driven decisions to account for factors such as new customers, changes in customer purchasing behaviors, and major turnover. Who should get the accounts that once belonged to the sales director who just left your company? What territory will you assign to new sales reps that will motivate them and put them in position to succeed?

The answers to such questions lie, just waiting to be uncovered, in your sales data. Which of your reps is great at chasing down new prospects and having initial conversations, and who’s best suited to demo your products and close the sale? Do some of your salespeople excel at handling large enterprises, while others have an innate capability for closing smaller deals? A strong, agile territory planning process needs this information to leverage your sales force’s skills in ways that maximize productivity, shorten sales cycles, and avert conflict.

Properly aligning or realigning sales territories also requires the ability to model various scenarios and evaluate the impact of changes before rolling them out – factoring in sales data such as workload, capacity, number of accounts, market trends, and revenue and account potential. This typically involves some collaboration, so it’s important to have a streamlined process in place that incorporates all the relevant stakeholders.

The bottom line

Territory infighting is a seemingly minor problem that can trigger enormous headaches down the road, so it’s best to have a system in place that reaches multiple levels of the organization. Start with a thoughtfully designed sales structure, and reinforce it with an agile, data-driven territory planning process that ensures optimal coverage. That way, your reps won’t ever need to argue about who’s getting the best accounts – and you’ll be able to tackle change head-on.

Planning your sales territories is about much more than just drawing borders. You have to balance several key aspects: from skill distribution to sales force tenure, from turnover to territory sizing and so on. Each of these elements can significantly impact the success of your business.

Research shows that effective territory management can result in attainable quotas and increased rep productivity, resulting in increased sales and reduced costs.

Let’s take a look at the main steps in territory planning and what determines the success of their implementation.

1. Play with scenarios. Territory modeling can take your results from good to great. Correct modeling requires experience supported by the right data and tools to ensure the end result is decisive. Flexible sales performance management software allows you to evaluate different scenarios and reach the right decisions. Running different territory simulations with real data can show you the overall impact on all affected individuals, directly or through hierarchy rollups. Modeling enables you to size territories effectively, forecast with greater accuracy, and budget appropriately.
2. Evaluate skill distribution. Assess individual contribution and draw the conclusions that will help you sustain sales performance with a consistent coverage of territories. Identify top, average and low performers. Look where growth rates are highest and which are the most stable segments. Translate all KPI data into meaningful percentages, such as which territories are below the national or regional average. You sit on a mountain of data, so use it! This way, you will know where you have to work harder, transfer knowledge, or improve team performance. Also, you can identify areas that require a partnership with HR to retain and/or develop talent.
3. Analyze tenure and turnover. You know what losing experienced reps can do to your sales performance. Research from DePaul University indicates that it takes an average of 6.2 months to replace an open sales position. And the bottom line impact of losing an experienced rep is about $115,000 ($29,000 acquisition costs, $36,000 training costs, and $50,000 in lost sales. What do you do when that happens? Start by mapping turnover to sales performance to identify geographies where the two trend lines sharply diverge. You then have a few ways to manage the situation: partner with HR to improve employee engagement in trouble areas, involve Sales Ops to reassign talent to the geographies most in need, or adjust compensation plans within those regions to increase retention through long-term incentives. In a similar way, the expectation is that tenure should drive sales performance, so look for signs where they are going separate ways.
4. Look at territory sizing. Split/merge sales areas if needed. When was the last time you resized territories? Is the current division aligned to market conditions? Measure current market share/market share growth and compare to the similar time last year. If salespeople are the same, and market conditions have improved, yet sales have dropped, this is your hint to take action. Remember, it’s the market that drives territory sizing, not the other way around.
5. Use compensation plan design to optimize territory coverage. Keep an eye on your compensation plan and be ready to make adjustments if you want to succeed in transferring knowledge from one place to another. For example, some areas can be tougher than others or simply new and undeveloped so market share might be very low. If you expect sales talent to accept a challenging territory, make sure the incentive matches the complexity. Synchronize your compensation plan to your business strategy and any changes planned for the sales team.
6. Use the power of big data. Effective reporting can shed new light on your sales performance in each territory and bring you closer to your targets. Explore data from the different areas to trigger actionable items, like dropping or adding a sales channel. Geographic information, market conditions, and customer data can help you recognize opportunities, improve performance, and increase sales. Identifying leakage and misalignments can also drive decisions that will change territory performance.
7. Make change your ally, not your enemy. Big sales organizations are very slow to change. Sales Ops departments can play a big part in making change easier and achieving the desired outcome. Your goal is to compress the time that passes from the moment a problem materializes until you solve it. Bring forward data to support solutions as soon as possible and sketch action plans faster. Is your organization ready to play the changing game today? Answer these seven questions to assess your organization’s capacity to change:
   • How many changes has your company deployed over the past three years?
   • How many changes does it have planned over the next three years?
   • How many automated triggers are in place to detect early signs that change is needed?
   • Are skills and tenure evenly distributed across all territories?
   • Are your compensation plans aligned to business strategy?
   • Is your Sales Ops organization agile enough to react before the competition beats you to it?
   • How often do you simulate results of territory changes before actually making a change?

If you are displeased with the answer to one or more of these questions, it might be time to step up your game. Typically, implementing change across territories can take months, even years. You need the knowledge and the tools to compress that time. Remember that all the players in the market know their game. Making the best decisions in the shortest time is what makes the difference.

Originally posted on Dec 9, 2015