As the sales world has continued to evolve and change, the definition of territory management has followed suit.
Previously, territory management was almost entirely focused on trying to solve the notorious traveling salesperson problem — identifying the most efficient routes for their outside sales reps. So, how does one manage territories today?
Modern territory management can include much more than purely the geographical management of sales teams — although that component does still exist. Territory managers now must take other elements into consideration, including average contract sizes, competitive and market intelligence, and more.
What is Territory Management?
Territory Management is the process of segmenting a sales team’s opportunities and accounts based on location, size, industry, vertical, or another optimization factor for building an efficient, effective, and equitable sales organization. The goal of territory management is to give your SDRs, AEs, and managers a feasible and digestible — albeit attractive — piece of the pie.
Common Pitfalls in Territory Management
While we can’t cover them all and many pitfalls will be (unfortunately) subjective to your organization, below are some of the more common issues that arise during a territory manager’s tenure:
Inequitable Territories
The most obvious and deleterious pitfall of territory planning is inequitable territories, whether unbalanced by something quantitative such as lead volume and deal size or something qualitative such as a desirable or concentrated location.
As a seemingly clear example of inequitable territories, let’s assume our team is tasked with selling recreational boats. One rep is given the Hawaiian Islands as their territory, another is given Minnesota. At first glance, you might think it’s entirely unfair for the Minnesota rep, but a closer look at the numbers indicates that the state of Minnesota has the second-highest recreational boat sales of any state, Hawaii on the other hand, has one of the lowest.
Now, if the Hawaiian rep’s territory was to be expanded to include California, these territories would be more equitable in market size but other considerations must also be factored in. One clear inequity from this example is the desirability of the Hawaii/California territory over Minnesota. Ultimately, all of these factors should be weighed and communicated through incentive comp plans.
Account Retention and Territory Expansion
One of the common problems (and complaints) you’ll see come up in territory management is the seemingly unfair retention of keystone accounts when it is no longer technically bucketed in a rep’s territory. You must be explicit with your team about how various situational changes will impact account retention.
For example, if a larger account acquires a smaller account from another territory, who keeps the account? If a territory is expanding, whether physically or conceptually (a changing parameter — i.e. industry, ACV ranges, etc.) do reps who’ve previously closed accounts in these new territories get to retain them moving forward? All these questions should be thoroughly thought through as your territory management processes evolve.
Pipeline Manipulation to Influence Territories
Something to look out for and guard against is reps attempting to game the system (and by system, we mean comp) by inflating, deflating, or otherwise manipulating their pipeline to get their desired outcome.
For example, if a rep sensed massive opportunities just beyond their territory, they could deflate their pipeline and push management to expand their territory, capturing those opportunities and accounts.
Alternatively, AEs might look to inflate the appearance of their pipeline if they were to realize some of the juice from their outlier territories wasn’t worth the squeeze. Not to say every team or rep will encounter this problem, but it has almost certainly been responsible for inequitable territories across many organizations.
The Ins and Outs of Territory Management
You don’t need to be a sanitation worker to understand that, “garbage in, garbage out,” in the context of your data is bad for business analytics, revenue predictions, and yes, territory management.
The quality of your territory strategy relies heavily on the quality of your inputs. You can model growth and take decisive action based on your current data, but if the data has any margin of error, it’s not likely to be the best course of action.
Below are but a few of the considerations that are inherent in the territory management department of your sales organization.
Prerequisites of Effective Territory Management
Structured and Complete Data
Not to push this reasoning to the point of exhaustion but the foundation of territory management really is your data. If your database doesn’t follow consistent formatting or is only sporadically updated for completeness, it’s not a source of truth that can be trusted 100%.
Data Dedup and Cleaning
Duplication within your data can happen for a number of reasons, but most often it’s the result of miscommunication from multiple reps or other sources forgetting (or not realizing) that the data already exists.
Cleaning your data is important for the management of missing data points and duplicate contacts, accounts, or otherwise.
Lead and Opportunity Volume
Another consideration when establishing or reviewing your territories is lead volume and opportunity management. If your team’s lead flow is strong and showing signs of growth, this is a good leading indicator that your pipeline coverage is healthy and could require more resources in certain territories.
If your team is being inundated with opportunities and having to cherry-pick which to pursue, there’s definitely money being left on the table.
Team Capacity and Rep Engagement
Another crucial element of territory management to consider is your team’s current capacity as well as the hiring pipeline, rep ramp period, and other resource management considerations.
For example, if you notice reps are struggling to keep up with their account management, and instead focusing on new leads, it could be a sign that their pipeline is becoming unmanageable and could be diverted to a new rep expanding their territory.
If reps are not engaging accounts in their territory or simply unable to service the entire
How to Turn Territory Management into Territory Leadership
Now that we are aligned on the prerequisites to effectively leverage your data for territory management, let’s turn to some of the various things you can use this data to be a better sales leader and territory overseer.
Use Engagement Data to Redraw Territories
Territory segmentation is a problem that can be solved using a k-nearest neighbors algorithm, understanding that accounts in proximity to each other (physical distance or otherwise) belong in the same territory. Unfortunately, there are often outlier accounts that don’t get as much attention as they require or deserve.
Tracking activity and engagement data gives you the power to feed this information into your territory plan and redraw the lines, redistributing available reps to accounts that haven’t been touched recently. This redistribution of reps increases your team’s overall quota and revenues.
Provide Reps With a Territory Treasure Map for Coverage
Ultimately, your role as a sales and territory leader is to guide your team to cover the target market. Sales coaching puts you in the cartographer’s seat, drawing a metaphoric treasure map where “X marks the sale.”
Whether providing reps with resources to optimize their routes and routines or coaching on sales plays and cadences, it’s up to you to have a firm grasp on the moving parts. People.ai is the GPS in this metaphor giving you real-time insight into how your territories are being managed, where gaps in the market exist, and actionable suggestions for improvement.
Strategize Territory Expansion vs. Contraction
Territory planning is the crux of the ongoing territory management process. It’s where performance in current territories is assessed, growth projections are factored in, and expansion logistics are arranged.
We’ve mentioned how leading indicators like sustained growth in lead flow can contribute to the need for planning and action, but the converse is also true. If reps aren’t meeting their quotas or the current market saturates, even temporarily, it’s important that territory lines are treated more like lines in the sand and not immovable barriers.
When and where this expansion or contraction takes place is up to the leadership team to decide. For example, if a sales leader notices that account engagement metrics are high but quotas are being missed, it could be a sign that reps have oversaturated the market and their territory should be expanded.
Use Territory Data to Make Hiring Decisions
When deciding when to grow your team in a given territory, it’s important to follow the leading indicators to make sure you hire ahead of demand and give new reps adequate time to ramp.
When it comes to hiring decisions, it’s all about the delta, or net change in your team’s activity data. For example, an increase in opportunities engaged, the number of prospects engaged, and new logos per rep can all be leading indicators of a need to start hiring and ramping.
Master Your Territory Management
Territory management is the art and science of creating a balanced and equitable sales organization. One way to be certain of your territory and pipeline coverage is to leverage modern automation to gain real-time insights from your team’s activity data.
We’ve mentioned the importance of being data-driven in territory management — as well as the nitty gritty need for clean, manageable, and automated data — allows you to extract valuable insights and strategic decisions. The key to unlocking these abilities lies in the growing suite of sales solutions from People.ai.