Optimizing sales territories is a constant challenge for sales organizations. Universally, sales territories exist that are either too large (risking lost opportunities), or too small (risking lost productivity). In some instances, this is driven by legitimate constraints. However, in many cases, changes in strategy, market structure, competition, or demographics that should trigger territory changes have been overlooked. Sales rep performance, expansions, or downsizing can also necessitate territory adjustments.
Optimizing sales territories has a number of benefits, including better customer coverage leading to increased sales or improved efficiency, as well as the ability to quickly adapt to the market and remain competitive. Data is a crucial piece of this process.
Analytics help you make informed changes and ensure that territories are balanced and perform to their potential. Looking at key metrics of workload such as number of accounts, customer segmentation, sales rep location, lead distribution, revenue, and revenue potential can immediately make unbalanced territories apparent. In order to get a clearer picture of which territories need adjusting, look at these key metrics:
Workload balance measures how much diversity exists in workload across all territories. In other words, it reveals whether there is too much workload for an individual salesperson, or not enough to keep them busy. Optimal distribution of workload is critical to ensure that each salesperson can maximize their accounts.
Aim for a relatively equal workload across territories, recognizing that it may not be possible given geographic (or other) constraints. This ensures that reps are able to devote sufficient time and attention to all of their customers and prospects. Benefits include better sales coverage and improved customer service.
Potential-to-workload ratio measures the sales potential of a territory against the workload in that territory. This helps you judge the effort required to effectively service customers and prospects in that territory. Potential-to-workload ratio is also useful in determining if there is enough sales potential to justify the investment and give the salesperson a chance for success. Efficient distribution of potential is important because it helps maintain internal equity and promotes fair assessment of individual sales performance. Although sales compensation plans can account for differences in potential, it can add complexity and perceptions of inequity.
If you cannot reach a relatively equal potential-to-workload ratio across territories, it may be a sign that your organization needs to establish different selling roles and sales talent for different types of customers.
Look at territory data frequently, not just once a year, and find ways to optimize the deployment of salespeople in a way that gives customers the necessary attention and reps enough opportunity, while maintaining productive relationships. When turnover happens, review the territory to see if there are opportunities to improve balance.
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