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The Cost of Territory Imbalance

Companies lose millions of dollars each year because of territory imbalance. They often don’t even realize territories are imbalanced until outside experts analyze the root cause of their annual losses. Territory imbalance is a serious problem that leads directly to low sales productivity, and inevitably to lost sales and revenue. With US sales forces costing over $500 billion a year, the impact of territory imbalance should not be overlooked.

Fishing For Dollars

TWO TYPES OF TERRITORY IMBALANCE COSTS AFFECTING YOUR COMPANY

  • Overstaffing Costs – Placing too many resources in territories that don’t have enough potential to exploit. Without sufficient activity to meet their targets, salespeople become discouraged and leave, or remain frustrated and non-productive on the payroll, draining important resources that could be applied elsewhere.
  • Missed Opportunity Costs – Not allocating sufficient resources to support territories with high potential also causes financial losses to sales organizations. Opportunities are often missed because there isn’t enough manpower to track, manage and uncover opportunity in the assigned territories. Sales reps are sometimes juggling with several opportunities at once, without the bandwidth to work proactively on finding and developing additional opportunities.

RESOLUTION: REBALANCING TERRITORIES

Analyzing imbalance costs and their origin will determine the right way to rebalance territories. Here are a few key areas to consider:

  • Planning for new territories

If market research shows potential for new territories, you need to integrate them into the territory sizing process.

Make sure your growth plan is build up on a steady structure.

Set firm limits on how large territories can grow before they become inefficient and unmanageable. Be ready today to support tomorrow’s business growth – territory mapping capabilities and an ability to simulate various scenarios will help you plan for future territory growth.

Don’t skip the important exercise of territory alignment to ensure that estimates of territory potential are accurate to start.

EXPERT INSIGHTS: SPM software that includes complex territory management components is extremely helpful. Advanced features can help you run simulations across all territories to get more insight into sales performance, using multiple scenarios. Remember that measuring territory performance also requires technical and industry expertise, as you need to exploit huge amounts of data from disparate sources.

  • Measuring territory potential and workload

This is an early and critical step. Even the best-crafted territory alignment plans will fail to deliver expected outcomes without proper oversight of sales potential and workload. At the same time, ideal territory designs are flexible so that sales forces can respond quickly to changes in market conditions.

  • Monitoring and adapting

To prevent territory imbalance and drive growth, sales organizations must monitor and adapt territories on an ongoing basis. Sales Territory & Channel Management analytics offer clues on how to maintain beneficial selling relationships, helping companies to control costs of sales, maximize sales, and target the right customers.

EXPERT INSIGHTS: Remember to estimate staffing needs in advance. By tracking and modeling huge sets of sales data from many disparate sources, analytics will help pinpoint areas for performance improvement. They may also reveal urgent staffing needs and sales areas that are overstaffed.

In the end, remember that territories with more potential should perform better than those with less potential, regardless of the salesperson. Prevent missed opportunity losses by educating your sales forces to be always ready to strike new deals. Indecision is costly, but bad decisions are always more expensive.

In an effort to optimize their sales force deployment, leading selling organizations are viewing territory management as an ongoing task, not a one-time project. This can be achieved with both Software-as-a-Service and Sales Operations as a Service. This helps ensure they maintain their competitive advantage, sending their valuable sales resources to the right places.

Learn more about sales territory design and channel management solutions and how they enable organizations to correct errors and maximize profits.

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