What is Sales Territory Management?

“Sales Territory Management” refers to groups of customers that sales reps are told to focus on with their sales efforts. This is called sales territory management. Sales territories are defined by location, company size, industry, and business needs linked to the product.

Sales area planning’s primary goal is to make a fair and helpful system for sales reps that boosts productivity and profits. When they’re set up right, sales areas are made so that.

• There are enough prospects in each area for sales reps to make it worth their time.
• The areas are split up so that no one rep works too much or too little.
• Reps can make their own sales strategy and improve it over time by using similar customer profiles.

As a company grows its sales force, managing sales territories becomes increasingly critical. It might not be the first thing that comes to mind for a startup, but it will be essential once they start building their sales system.

Synonyms

• Sales territory planning
• Sales management

The Different Types of Sales Areas

A sales territory is usually based on where the prospects live, but it could be any group of prospects who share a trait or feature. A lot of businesses use the following types of sales territories:

• Geographical territories: Places on Earth, like towns, states, areas, and countries.
• Industry-based territories: These are areas where the company works, like healthcare, education, or shopping.
• Product-based territories: These are the different kinds of goods that a business sells, like software tiers, hardware, or niche services.
• Size-based territories: based on income or number of employees (small business vs. mid-market vs. firm).

One step further is taken by sales managers in charge of field sales teams, who mark visual areas in one of four shapes: circle, wedge, hopscotch, or cloverleaf.

• Circle: An area that is spread out somewhat and has a lot of opportunities.
• Wedge: A narrow, elongated slice with a mix of rural and urban prospects.
• Hopscotch: Territories are cut into several rings to get the most work done and keep reps from overlapping.
• Cloverleaf: This type of coverage is split into four “petals” for more even coverage. It’s most popular in industrial markets like B2B manufacturing.

Why it’s essential to manage sales territories well

Giving sellers their areas makes them more productive because it’s easier for them to develop selling strategies that can be used repeatedly.

When you give reps territories, it’s easier for managers to monitor their progress in certain areas, making supervision and teaching better. When sellers work with customers who are like those customers daily, they better understand and meet those needs, which helps them close more deals and meet their sales goals.

For the reasons below, territory management is helpful for sales teams:

• It helps reps concentrate and work faster. By giving each rep a unique territory, you can help them focus on the most promising prospects.
• Gets the most sales attention. If sales workers know how to approach each potential customer, they can reach all the prospects in a particular area more quickly and give them the information and help they need.
• Boosts the mood of the sales team. When reps feel “protected” by their areas, they feel safer and more motivated, which makes selling more fun and helps them meet their sales goals.
• Lessens the loss of customers. When sales reps know their customers better, they can match them with goods that will help them instead of just trying to make a sale.
• Cut down on operating costs. It costs less to train and manage salespeople who focus on one area at a time than when they do many different things.
• A better experience for the customer. 83% of B2B buyers say that personalization affects their buying choice, and sales reps with territories can better offer custom solutions and suggestions.

How to Make a Plan for Your Sales Territory

Like most projects, managing a sales area well begins with a plan. Companies should work on their sales plans and objectives and use that knowledge to design territory.

Describe your customers and target market.

Who do you want to buy from you?

Creating an ideal customer profile (ICP) is an essential first step in sales territory planning because it helps you figure out if a territory is big enough to go after, how many reps you need to fully capitalize on it without oversaturating it, and what kinds of sales activities work best in that area.

Among other things, your ICP is based on core customer traits like

• Place
• Number of people on the team
• Business
• ARR and MRR
• Problems in business
• Why you should buy
• Plan for business
• Characteristics of decision-makers

When writing your ICP, it helps to think about the people you already have. When you look at sales data, you’ll see that some customers have brought in more money than others.

Make buyer personas based on different ICP customers and start looking for ways to divide them into clear groups or areas.

Set clear boundaries for areas.

Once you know your best customers, you can start making a territory map.

It would be best to make areas with a total addressable market that are big enough for reps to sell to but not so big that it’s too much for them to handle or too competitive.

The first step in most sales territory management plans is to divide territories into groups based on location, like a country or region. As they set up their sales infrastructure, they add factors like company size, interest in a product or service, and more to their map.

When you set up reps’ areas, ensure they are well-balanced in terms of the size, complexity, and resources needed to cover them well.

Think about how far away one region is from another as well. Your sales process will not work as well if there is a lot of territory overlap.

Find Out What Each Team Member Is Good At

A few essential signs can help you figure out what each team member is good at:

• How well sales went
• Amount of years of work
• Number of years working for the company
• Knowledge of the business
• Knowing the area well

These metrics can help you determine which territories are best for your reps. Some sales organizations, especially those that do some of their business in person, benefit from having professionals in the area. In contrast, others will weigh more on industry experience or sales history when deciding where to put reps.

Companies that use tiered pricing ensure that the best salespeople are in charge of the most critical deals by putting more experienced reps in charge of the business segments and giving newer reps jobs in emerging markets.

Set goals for the territory

Your territory management plan should help you reach your territory goals. There are real business goals in them, like:

• More money is coming in
• More wins than before
• Higher rates of keeping
• More money is coming in from new markets

Setting lofty goals is what makes an initiative effective. They need to be measurable and attainable within the time allowed. Also, they should be the same in every territory to make sure everyone is treated fairly and stop reps from competing with each other.

A goal might be: “Our territory plan was successful if we increased sales in New Territory X by 25% year over year.”

Leaders need to be able to assign the right KPIs and sales tasks to each territory. Setting goals for this helps them do that.

Make a plan for the territory.

It’s time to make your sales area management plan now that you have clear goals and an idea of what each team member is good at.

1. First, make a map of the territories based on the criteria you’ve already come up with, such as location, company size, product interest, and business verticals.

2. Based on their skills and experience, put team members in charge of their regions.

3. Include a complete list of each territory’s success goals and key performance indicators (KPIs). This should include each representative’s sales and particular customer goals for churn, retention rate, CLV, and CAC.

4. Make an action plan that tells people what they need to do to reach the goals you’ve set for them. This could include email outreach, virtual talks, and in-person meetings.

5. You should also devise a way to reward sales reps for meeting or beating their goals or set awards for those who go above and beyond.

6. Get the sales team on board and then work with them to improve the area plan.

Sales leaders must also plan for regular reviews and changes to handle their territories effectively. Talk to the reps, look over their success records, and make changes as needed.

Set and keep an eye on sales KPIs

There can’t be a sales territory management plan without a way to track and evaluate progress toward goals. Many businesses already use sales KPIs to track overall sales, but a few more are unique to each territory.

Some goals that each area has in common are:

• Total money made
• Meeting monthly or quarterly goals
• The number of demos scheduled and given
• The size of a typical deal
• Average income per account
• Lead get-back time
• The rate of lead growth
• Length of the sales cycle

When managers set sales goals for reps in their territories, they should also consider the size of each territory, the types of people who live there, and whether customers are expected to grow or shrink in that area.

Sales managers will also look at KPIs from the past, which show how successful sales territory management projects were generally.

Some of these are:

• Loss of customers
• Rate of customer engagement
• The value of a customer over their lifetime
• The cost of getting a new customer (CAC)

These measures show how often territory assignees talk to the correct prospects, how well they meet customers’ needs, and how long they can keep relationships with those customers. This lets higher-ups know if the sales team is on the right track or if the territory is worth pursuing in the long run.

Best Practices for Managing Sales Territories

When putting area management plans into action, sales leaders should keep the following best practices in mind:

Give instruction

Training might not be possible with a brand-new territory management project, especially if it’s one of the first ones in place in a new company. There are still some things that sales managers can do to make sure that their reps have the skills and information they need.

Work on improving their ability to deal with people, negotiate, solve problems, and provide good customer service.

Introduce the goods and services, describe the ideal customer, and give advice on how to make sales. This is because reps can better plan for success when they know more about their area.

As the strategy becomes more solid, keeping records for future sales onboarding is essential. When leaders give territories to new reps, a knowledge base and internal guidance will help them get up to speed faster, be more productive, and keep more of their reps.

Plan for growth and keep track of progress.

The people in charge of sales need to monitor the KPIs set earlier, both on a micro (per rep) and macro (overall area) level.

By looking at the general performance of the territory, they can see where the sales territory management might be lacking and decide if those gaps can be filled. For instance, if a neighborhood consistently beats its goals, it’s probably a good place to focus your efforts. Low-performing areas might need to be reorganized or looked at again to see what changes could be made to make sure the quota is met.

Individual performance monitoring brings to light problems with the selling process that big-picture trends might miss. One or two people might lead a sales team that does a great job. This would mean that sales are increasing and the company is making money, but it could also mean that the whole team has problems and hidden costs.

Managers in charge of sales QBRs should review the results every three months. They should celebrate wins and find trouble spots. Since sales workers do the selling, it can be more telling to hear how they feel about specific areas or projects than to see numbers and graphs.

Take care of your sales pipeline.

Sales pipeline visibility is necessary to run a sales territory (or any kind of sales force) well. It’s the only way to see what’s going on and where the possibilities are.

A sales channel tells people on the sales team:

• Where each customer is in the buying process
• How long does it take to move them on to the next level?
• What number of leads turn into sales?
• What goods or services are prevalent in each area?
• What needs to be changed to make more sales?
• Why buyers may not be in line with their goals

The pipeline shows sales managers the work of everyone on their team. They can easily find performances that don’t fit the norm, spot trends, and change their strategies as required.

Give data in real time.

Real-time information comes from, among other things, being able to see the pipeline well. For companies to get real-time information, they need a sales tech stack that works together.

Real-time information shouldn’t need a lot of manual input, either. Every time a seller and a buyer interact, like when a sales price is delivered, a proposal is signed off on, or a sales demo takes place, the event should be recorded automatically in a CRM system so that it is easy to find.

Sales leaders need up-to-date information about what their reps are doing and where they are in the selling process. This also helps with managing sales territories and other parts of the business. With real-time data, Leaders can track customer happiness levels and lifetime values. They can also find ways to improve service to make customers more loyal.

Make use of CRM.

Customer relationship management, or CRM, is at the heart of all sales efforts. From the first time, a seller sees a prospect to when the customer stops doing business with the company, CRM logs, tracks and improves every step of the customer path.

CRM tools can help with almost every part of managing a sales area.

• I am making a list of customers and target areas. Since CRM already has customer information, it’s easy for leaders to divide customers into groups based on specific traits to make regions more efficient.
• They are making maps of sales areas. Instead of “guessing” or trying things out and seeing what works, management teams can use CRM to look at past data to find the most reasonable places to set up territories.
• I am setting goals. With the correct CRM insights of Sales Territory Management, the company leaders will already have a good idea of what solid but reasonable sales growth and seller performance look like.
• Tracking of KPIs. CRM has all the success tracking metrics that are needed. Managers can set up scheduled reports to run at set times, which makes it easy to see what needs to be fixed.
• They are changing things. CRM data also shows how reps react to strategy, region, or tactics changes, which helps management decide quickly if they need to.

CRM simplifies sales tasks that would otherwise be boring, like data entry. This ensures that sales go smoothly, which helps the whole team reach their goals more quickly.

Make use of CPQ.

Another essential part of sales area management is CPQ software, which automates many tasks that need to be done during the selling process.

Solutions for CPQ can include:

• Make it easy for sellers to make correct proposals and quotes quickly
• Help sales workers choose products, set prices, and give discounts.
• Make sure that business rules and customer rules are followed.
• Have people in charge sign off on new quotes in minutes instead of days.
• Add sales tax and other fees automatically
• Connect to CRM to keep track of all your contacts with customers in one place.
• Share information about goods that do well in certain areas or with certain types of customers.

Agents don’t have to worry about making mistakes when they use CPQ, so they can spend more time talking to customers and finishing deals. Automating the quoting process also ensures that all areas get accurate quotes, which is very important for sales leaders who want to monitor their team’s sales performance.