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How to Create a Sales Territory Management Plan

Sujan Patel

Sujan Patel is the founder of Mailshake, a sales engagement software used by 38,000 sales and marketing professionals. He has over 15 years of marketing experience and has led the digital marketing strategy for companies like Salesforce, Mint, Intuit and many other Fortune 500 caliber companies.

Read more articles by Sujan Patel →

• December 23, 2020

Thomas Edison once said, “Good fortune is what happens when opportunity meets with planning.”

This quote sums up why creating a sales territory management plan is so important. You’re in business to take advantage of the opportunities in your industry – yet you won’t have a shot at reaching them if you don’t have a good plan in place.

To better capitalize on the opportunities that exist in your market, here’s how to create a sales territory management plan that’ll bring the good fortune Edison promised your way:

Why Are Sales Territories Useful?

Defining sales territories offers a number of benefits:

They prevent over- and under-servicing

When an area is under-serviced, salespeople are spread thin, which can lead to crucial follow-up steps falling through the cracks. If you under-serve an area long enough, your reputation will suffer.

When an area is over-serviced, on the other hand, salespeople can become bored and anxious. When there aren’t enough opportunities to go around, they end up becoming overzealous and risk driving prospects away. Sales territories help strike a balance.

They help retain and incentivize talented salespeople

Nobody wants to fall short of their sales goals. But when there isn’t a fair opportunity for salespeople to meet their goals to begin with, you risk losing them to competitors who offer greater earning potential. Balancing sales territory assignments provides an equal opportunity for every salesperson to maximize their compensation.

They create a sense of pride

Giving a rep or a team their own territory provides a sense of ownership. It’s up to them to make the most of it – they know that nobody is going to find and nurture leads for them, so they work harder to make sales happen.

It All Starts With Market Segmentation

You can’t sell to people you know nothing about, and the best way to learn about people is to talk to them. A lot of them. Start the conversation by conducting:

• 1-on-1 interviews
• Surveys
• Focus groups
• Chat with frontline employees

Categorizing your customers helps you stay organized. They’ll often fit into buckets with different geographic, demographic, psychographic, and behavioral traits.

Now that you know a little more about your customers, it’s time to hone in on who your target audience is and what motivates them. To go deeper, ask some specific questions that uncover buyer personas in greater detail.

This exercise’s end product provides you with just about everything you and your sales team need to divide and conquer your outreach strategy. You’ll know your ideal customer’s job title, whether they’re an SMB client or mid-market, and what their fears for the upcoming quarter might be.

That level of granularity will serve you well when crafting a sales territory management plan.

Define & Share Your Core Objectives

Strategy is everything. It’s what matters most to your stakeholders and to your employees. Ultimately, everyone wants to know that the company is on the right track.

That strategic vision should guide your company – it states what you are today and what you aspire to be in the future. A crucial step in creating a sales territory management plan is ensuring that your team understands the company’s vision, strategy, and objectives or goals that’ll get you there.

To begin, talk to key stakeholders and conduct some research to figure out what strategy to implement with your sales territory planning that most closely aligns with the company’s long-term goals.

Here’s where knowing the difference between goals and objectives becomes important.

Goals are the desired results you want to achieve. Typically, they’re long-term and broad in nature. They’re often used as a guide for all your sales efforts. Goals are also often limited by your company’s budget, talent, and bandwidth. Some common goals are:

• Retain your current customer base
• Reach out to potential clients
• Gain new clients from competitors

Objectives are specific, measurable actions taken to achieve your goals. Objectives focus on the short-term and can often be assigned to a team or a territory. Some strategic objective examples are:

• Increase sales by 30% by October.
• Boost revenue per sale by $150.
• Close 10% more business in the Northwest sales territory.

It takes critical thinking to create both inspiring and realistic sales objectives. Here are a few tips to get you started:

1. Keep them brief and actionable: One sentence statements are ideal because they provide a constraint that keeps the objective short and easy to communicate.

2. Get buy-in from the sales team before declaring an objective: Gathering a general consensus will make the team more likely to rally around it.

3. Be as precise as possible: If you refrain from using ranges and offer a specific target, then people are more likely to hit it. Reserve any stretch goals for yourself or senior leadership.

4. Use plain English that’s free of any jargon: Everyone from the newest BDR to the most senior VP should understand your objectives.

5. Make them realistic: Hearing the objectives should feel more like a challenge and less like a dream. If you set forth an objective that seems unrealistic, it’s best to back it up with a concrete action plan to show how it’s attainable.

Create Inside & Outside Sales Strategies

Most sales territories will have a mix of inside and outside sales. Inside for SMB and mid-market, and outside for enterprise and beyond.

Crafting Your Inside Sales Strategy

Naturally, cold calling and cold emailing are at the forefront of an effective inside sales strategy – especially considering that 78% of decision-makers report having arranged an appointment or attending an event as a result of a cold email or call.

Ideally, you’d have sales development reps (SDRs) and marketing generating a sales pipeline full of meetings and opportunities. From there, an account executive comes in to sell the benefits and focus their energy on closing deals.

Modern inside sales teams rely heavily on marketing and sales automation software like Mailshake, which puts cold outreach on autopilot and makes following up a breeze.

Mapping Out an Outside Sales Strategy

Unless your company solely focuses on enterprise sales, then you’ll likely only have a handful of field reps. If that’s the case, it’s imperative that you include them in the strategy session to get their buy-in and ownership of the process.

Although field reps spend more time traveling, they’ll still spend a fair amount of time on phone calls, sending emails, and scheduling appointments. Here’s where breaking down the budget and the ideal time they should spend on each prospective client before moving on is crucial.

Schedule all visits well in advance, so you can map an ideal route based on proximity. Plus, travel tends to be cheaper when you book it in advance.

Identify & Assign Territories

To maximize these benefits, assign territories in a smart, cohesive way that spreads out opportunities as evenly as possible, while leaving little to no room for overlap:

Four Ways to Identify and Divide Sales Territories

Geography

This is arguably the most popular way to divide up territories. Boundaries like countries, states, and zip codes work well, especially since doing it this way virtually ensures that there’s no overlap. The biggest downside, however, is that it can be difficult to make geographic territories equal.

As an example, in 2020, Texas had fifty companies on Fortune’s 500 list, while Iowa only had three. Unless you make an arrangement that compensates less opportunistic territories, you may find that reps assigned to weaker areas start to become resentful.

Commuting also becomes difficult when dividing territories according to with geographic divides. If a sales rep in Florida is assigned to cover Washington State, they’ll be in for a lot of late-night calls and long trips, given the three-hour time zone difference.

Company Size

Dividing territories based on company size can also make a lot of sense. Under this type of arrangement, senior reps with proven track records typically get the bigger deals, while newer reps learn the ropes with smaller clients.

Unfortunately, it can be tricky to accurately gauge a company’s size. Some companies acquire others and grow in size overnight, in the same way that others could sell off parts of their business and drop in size. Finding up-to-date, reliable information on company size can be expensive, and doesn’t always predict value. Depending on the product or service lines being sold, it’s entirely possible for the lifetime value of a small customer to exceed that of a Fortune 500 enterprise.

Industry

Dividing by industry can be an interesting tactic, as it incentivizes reps to specialize in their particular niche. When assigned a particular industry focus, they may study the industry in greater depth, so that they can easily build rapport with prospects and be prepared to overcome common obstacles and objections.

Where this type of territory arrangement gets tricky is when companies span multiple industry segments. A property management accounting software company, for example, could be classified as being part of the real estate, accounting, and SaaS industries..

Alphabetical

This method is self-explanatory. It’s random and likely provides an equal opportunity for everyone. The biggest disadvantage to this route is that you get little to no specialization among your salespeople. Because they’re selling to all sorts of people or companies, with different sizes and unique needs, they’re less able to hone and refine their pitches over time.

If you go alphabetical, it’s good to create some ground rules. For example, if a company name begins with “The” does it fall into the “T” territory? Run an alphabetical list of all of the companies in your CRM to identify other issues that arise.

Best Practices for Dividing Territories

No matter what approach you use to defining sales territories, make sure you evaluate your sales team’s skills, interests, relationships, and work styles as part of the process. Determine what teams or individual reps match best with the target demographic of each territory. For example, if one rep has past experience selling in a particular industry, make sure their territory assignments give them the opportunity to reach these types of customers.

Or, if you’ve got a rep that seems to thrive under higher account loads because they’re able to make more calls, send more emails, or make more visits, they may be a good fit for a territory in a large market with more potential clients.

Allocate Resources & Monitor Performance

Once your territory management plan is complete, it’s time to roll it out. One way to do this is to schedule a kick-off meeting where you’ll divvy up territories in a “professional sports draft style” presentation. Take the time to explain the plan’s reasoning and how it aligns with the company’s strategic vision to gain buy-in from reps as needed.

This kick-off process pairs well with the development of fresh dashboards, metrics, reports, and short-term goals for the month or the quarter, so that people know exactly what’s expected of them. Let reps know when you’ll be reevaluating sales territories or making tweaks throughout the year, and leave ample time for questions, so that everyone feels both informed and motivated to pick up the phone or start firing off emails.

Ultimately, sales territory management planning isn’t rocket science, but it does require a certain level of finesse and critical thinking. Take the time to do it in a thoughtful manner that considers not only your customer and stakeholders, but your staff as well.