As we march towards the start of a new year, the annual ritual of territory planning is upon us. Effective planning and management of sales territories can boost the sales team’s morale and increase sales. But since this process kicks in just once a year, most companies don’t have a well-defined operationalized process to plan the territories. In most small-mid size companies it is up to specific individuals who decide based upon guts and instincts, instead of data-based insights.

Here is my take on how to create a successful battle plan for defining and managing territories.

  1. Go-To-Market Strategy

There are numerous ways to define a territory using attributes such as Geography, Customer Segment, Customer Size, Demographics etc. To set up effective territories, sales leaders must first understand their business environment and their Go-To-Market (GTM) strategy for the year.

Knowing your GTM strategy and your business priorities are the first step towards defining the territories.

  1. Market Analysis and Segmentation

Before you can develop an effective sales territory plan, you need to take stock of your existing clients, prospects and leads. Start by grouping your customers and prospects based on location, industry vertical, purchase history, size, etc.

Not only must you know who your current and future customers are located, but you should also be able to answer the following questions about each group:

  • What are your customers buying? Are certain solutions, services, or products outperforming others?
  • Why are your customers buying?
  • Which causes prospects to not buy?
  • What is your conversion rate? Where do conversions tend to drop off?

Answering these questions will help you spot overarching trends in the market and better craft your territories.

  1. Evaluate Sales Reps

After the GTM strategy and market opportunities are analyzed, it is time to take a closer look at your team.

Assigning sales reps to the territories where they can perform best is key to effective territory management. Sales rep’s placement will depend on their performance and experience, as well as the account and territory assessments.

When evaluating sales reps, two assessments should take place: one for quantitative performance- the number of accounts the rep has, the number of new contacts the rep has contributed, the conversion rate for leads to opportunities, etc., and another for qualitative performance -Does the reps have the skills and ability to be successful with this group of customer? For instance, if the territory has customers who prefer in-person meetings, you should pick the sales rep who can be available for in-person meetings without requiring too much travel or budget.

  1. Define Territory Specific Targets

Whether you are mapping out a new territory management plan for the whole team or redefining a specific rep’s sales territory, it is always best to set clear and measurable goals specifically defined for that territory.

Distributing the company’s Targets/Quota evenly across all territories is often not the most effective way to manage the territory. In determining territory-specific targets, one should consider factors such as – pipeline (vault size), purchase history of customers, marketing initiatives planned for that territory, and market research on customer sentiment.

  1. Communicate

All the effort put in defining territory and targets will go waste if the sales rep is not onboard with the GTM strategy or the reasons why the target quota is attainable. It is important for sales management to have 1:1 communication with each sales rep to answer concerns and ensure that the sales rep is motivated and excited about the potential of the territory.

  1. Ongoing Evaluation

Territory planning is considered an annual task, but it should not be. Your sales team is constantly changing, and so is the potential of the territory. As new leads enter the funnel the workload of the sales team needs to be managed on an ongoing basis, at least quarterly if not more often. If you notice that a rep or territory is underperforming, it’s crucial to get to the root of the problem and modify the sales territory management plan as necessary.

One should not be afraid of making mid-year changes when needed. Mid-year changes, though painful to administer, provide the much-needed course correction and new impetus to the sales team for long term success.

An effective Territory management plan can help spread out the workload for your sales team, allowing them to complete tasks more efficiently, build better customer relationships, and increase the good-quality leads that they get. Just as important is the motivation it provides to your sales team if they feel like they are being productive and accomplishing a lot of the sales goals they set out to achieve.