Rarely does a salesperson be responsible for a single customer?
Most salespeople are responsible for onboarding and servicing customers in specific areas. Sales reps have databases of hundreds of such prospects and customers whom they contact regularly.
If we organize such databases by location, industry, size and other characteristics, these become a defined group of target customers. Such a group is commonly known as sales territory.
What is Sales Territory Management?
The most useful sales territory management definition is as follows:
A group of customers spread across a geographical area assigned to either an individual or a sales team. The process of identifying, prioritizing, and calling target customers in a specific territory is known as sales territory management.
Any salesperson will agree that there is never enough time to service all customers and prospects. Nor does every customer deserves the same attention. Some deserve more attention and time because of the opportunity size.
This is why it’s important for a salesperson to know what’s the best way to allocate time and energy to an effective sales territory. And it’s important for a sales manager to track this.
The Importance of Sales Territory Management
A territory management plan is more crucial to the success of a business than leaders realize. Below are some reasons:
1. Increase in Customers
If a territory is defined well and the sales calls are planned and executed well, the possibilities of increasing sales go up substantially. And with increased sales comes increased revenue.
2. Repeat Purchases
When customers get the attention they deserve because the sales team has figured out the opportunity and potential accordingly, they do more business with the company. This means that the business gets more revenue at a fraction of the marketing cost, which positively impacts profitability.
3. Improved Team Spirit
Good results come when people work as a team, follow processes effectively, and fulfill their roles in the entire cycle. Thus, when a team bonds, it gets good results which in turn, makes the team bond better. It’s a positive cycle to have working in your company because it exponentially increases employee productivity.
On the other hand, poor sales territory management can lead to the opposite of everything mentioned above. Over-serving a territory with low potential can lead to a waste in resources and time for the sales team.
Lack of sales can also make salespeople cut corners by trying to sell to anyone and making false promises to achieve their numbers. This leads to dissatisfied customers and a bad reputation for the business in the market.
Sales Territory Management Best Practices
Proper territory management enables salespeople to get face-to-face with as many qualified leads as possible in the finite time and resources that they have.
Here are some of the best practices for sales territory planning.
Without a clear understanding of customer potential, all customers appear the same to the sales team. The result is poor optimization of existing resources.
1. Prioritizing Customers
This aspect depends on what the company currently wants to focus on – whether it wants to acquire more customers from a particular industry, or get customers to buy certain products or services more, or grow revenue from existing customers.
If the company’s focus changes with time, the territory management strategies should be tweaked to adapt accordingly.
2. Defining the Territory
Territory, in common language, is a geographical patch of land. In the world of sales, such a territory can also be virtual.
In other words, a salesperson can also be assigned territory at a different place in the world if your organization is global. Also, customers in a territory don’t have to be close in proximity to one another; they simply have to be assigned to the rep.
You can choose to define your territories either annually or when circumstances change i.e. when your company focus changes, or your existing sales account manager leaves and a new one joins in his place, and so on.
3. Designing Call Patterns
Such plans communicate the frequency with which certain customers should get called. This often depends on what the company wants to focus on in the year (or quarter).
For instance, if the company wants to acquire new customers, salespeople will meet prospects more than customers in a territory. If the company wants to increase the wallet share of existing customers, the salespeople’s priorities would be different.
Thus, you can see how territory management is closely related to what the company wants to focus on, and how important it is to manage sales activities to help the company achieve this.
4. Executing the Strategy
The final step is for the sales team to execute the territory management strategy effectively. Without this, even the best of plans will appear lame.
When call patterns get followed, the sales force becomes a powerful weapon in the arsenal of business leaders. The team can be made to adapt when circumstances change and can continue to conduct their tasks confidently.
But when call patterns become scattered, the salesforce turns into an unruly animal, managing to hit its target only by luck. And you don’t want to leave sales – a critical aspect of your business – to luck do you?
Sales Territory Management is a subject that, like every process, should be revisited and refined consistently. That’s when it yields positive results even when times change.
Over to you. How do you define territories for your salespeople? And what tips would you like to share with the rest of the readers?
Do leave a comment. We would love to hear your insights.