Territory mapping is an important component of sales performance management. The optimal sales territory mapping for your company and your goals may be terrible for another company.
You may improve your territory mapping and your sales results by considering more factors in your sales territory design. Some factors that follow here may be helpful, while others may be of no use to you.
Setting Territory Boundaries
There are a number of ways to set territory boundaries. Some organizations designate boundaries by geographic area, while others assign certain salespeople to work with clients in particular industries. In other cases, certain salespeople may be assigned to work with specific accounts. Each of these approaches has benefits and drawbacks.
The most popular method for mapping sales territories is to use geographic boundaries. It's also the easiest way to create territories. Some geographic territories encompass a large city and the surrounding area, while others might include a state or multiple states that share borders.
This approach often causes problems for sales organizations. Giving one salesperson a territory with highly desired clients poses a risk because if they lack the sales effectiveness to win those accounts, the organization can end up with poor results .
When you serve multiple industries, you can often improve your sales results by providing your clients with a subject matter expert. Using industry boundaries allows you to leverage this approach because each salesperson gets to know the client's business and industry. This allows them to develop and use their industry acumen to create value, giving them an advantage over a salesperson who lacks their level of knowledge.
Named Client Boundaries
Another popular way to provide territories is to assign certain clients to each salesperson. This is a popular way to handle large, high-visibility, competitive clients. Companies that use this approach provide each client with an account executive, who serves a limited number of clients. As the client grows, they may also be assigned an account manager. Smaller companies may find this approach to be expensive, while larger sales organizations often find it a good way to grow revenue and improve the lifetime value of the client.
Other Territory Factors
Establishing your territory boundaries is just one thing to consider when developing your mapping approach. The following elements also come into play.
Past Territory Performance
To improve your sales territory mapping, start by looking at each territory’s sales history, including the customers and prospective clients it includes. You might also look at each customer's buying habits and pain points to get a full picture of the needs to be addressed in each territory. Also, look at any changes in a client's environment and any trends that might cause you to change your approach to the territory. This exercise will surface new opportunities for growth.
In the industry I spent the most time in, we prioritized large cities. We had competitors who preferred to work in small cities, relying on their dominant position to keep the few large clients in the area. When these sales organizations lost a large client, their revenue dropped because there was no replacement available.
The reason for sales territory mapping is to maximize your results. There are dozens of factors you can consider for each territory, including the number of prospective clients, the growth potential, and its economic health. You might also consider the cost of pursuing a territory. For example, recently there has been a trend of companies moving out of expensive territories and into more business-friendly states. This is something to consider as you undertake your sales territory mapping. Market potential can help determine the investment you make in a territory.
Territory Competitor Analysis
You need to know which of your competitors are in a territory. This is especially true when your major strategy is competitive displacement, or said another way, eating your competitors’ lunch by winning their customers away.
Part of succeeding in a territory means knowing which competitors own what clients, and how to counter their strengths and take advantage of their weaknesses. Later, this will help you with your sales strategies.
Resources and Budgets
Each territory needs a budget for salespeople, marketing, and travel expenses. Taking care of the clients you acquire and serve in a territory may also require additional resources, like a customer success function, customer service, or some other resource to succeed.
Sales Goals, Revenue, and Performance
Once you’ve established your territories, it’s important to consider the goals and strategies that will be most appropriate in each. Every territory is different, so it’s important to plan your targets for each one, including how reach them and how you’ll measure progress.
Territory Sales Goals
Every territory needs measurable goals, starting with revenue. You'll also have a growth goal to determine the net new revenue you need from each territory. Large sales organizations often use market share goals for sales territories.
Net new revenue can come from existing clients via cross selling, but most sales territories will have sales goals around new clients that contribute to net new revenue and the potential for growth.
Territory Sales Strategies
An effective sales organization will have an overall sales strategy and an approach. When you have different markets for different territories, you can improve sales by matching the strategy to the territory’s needs. When working with a territory’s existing clients, cross-selling and upselling are important strategies.
Also consider the strategy that best fits with what you are selling. If you have both a transactional offering and one that requires a consultative approach, you will need different sales strategies for them. If a market has a unique need, you may need to address it by choosing the right strategy or tailoring what you usually do. For example, large clients often have complex buying behaviors, so the strategies you use in territories with large clients need to support that.
Measuring Sales Territories
There is no end of metrics and KPIs for measuring sales territories, but selection is important. Sales leaders have dashboards that look like they are designed to land a spaceship on Mars. Measuring results in each territory requires several sales KPIs.
The four core KPIs are revenue, net new business, new client acquisition, and budget attainment. For some sales organizations, sales volume is also an important measurement. You should also look at KPIs that measure sales effectiveness.
An Effective Action Plan
Effective sales territory mapping combines understanding the need of different markets, setting measurable goals, and leveraging the right resources and strategies. It requires a comprehensive understanding of the market, the competitors, and the customer’s needs.
An effective action plan should provide the resources to achieve success to ensure that the sales team can attain its goals. The action plan must include a budget for salespeople, marketing, and travel expenses, as well as metrics to measure the performance of each territory and strategies to maximize sales in each. Each territory’s specific action plan should also include a plan to target new clients and increase market share.