Designing Territories for Your Top Talent to Drive Revenue

Since January 1st, your top 3 sellers have all left the company. The one that actually completed his exit interview put it bluntly: “My quota has been unrealistic for five quarters. I’ve brought in new business in new verticals. I’ve filled my pipeline with qualified leads. Still, there’s no chance of hitting my kicker this quarter. Simply put, my LinkedIn network is more valuable to the competition.”

It sounds like your comp plan is not working. But does the issue go even deeper? These strong sellers may not be in the right territories calling on the right accounts. It may be time to assess whether your territories are optimally designed.

When sales operations decides to take on a territory analysis, they care about three things:

1. Determining the number of accounts, prospects and total potential for each seller.
2. Creating accurate quotas and comp plans.
3. Getting the best reps in the best territories.

In many organizations, territories are designed on historical precedent. SalesOps may also use intuition to "gut check" whether these patches are fair. But further analysis can be eye opening. There may be unbalanced patches of customers, suspects, opportunities, spend potential and geography.

Here are five steps for designing your territories.

1. Segment customer base and analyze market potential

Organizations that have conducted analysis of their territories first segmented their customer base to understand the market. To do so, they relied on four pieces of data:

1. Customer master database. You need to know the current accounts, where they are, and what they are spending.
2. Complete set of opportunity records. What opportunities are in the pipeline and what is the total potential?
3. Complete set of Lead records. What is at the top of the pipeline?
4. Third-party suspect database. How large is the market for your product or service?  What is the potential for organizations that have been touched?

Needless to say, the more accurate your sales force automation data, the better. 

2. Rank your talent

With these four inputs, you can assess the true potential of your market. The next step is to look at your sellers. Ask the following questions:

• What was revenue attainment per rep last year?
• How much potential is in their territory patch?
• How many current customers and opportunities are in their patch?
• How many ideal company prospects are located in their territory?

Stack rank the sellers based on these criteria. You will need this data later to ensure the top sellers are in the best territories.

3. Map customers and prospects

Determine where each prospect and customer is located. Choose locations where the buying center would be located (typically HQ). Determine what each account is currently spending and the workload required to service the account. This is also the time to consider your sales org structure: How many of those accounts are enterprise, key accounts, and SMBs? What types of sellers will be calling on each account?

4. Create territories

You can now create territories and assign relative quotas and compensation packages based upon realistic potential. Consider the number of customer accounts and their potential spend. Do the same for prospect accounts. Finally, think about the workload required in each territory.  

5. Review territory map

Take the seller stack ranking you created in Step 2. Are the top sellers managing the territories with the top potential? You may need to move sellers into new territories. You need to ensure the best people are managing the best territories. You may also need to add and subtract accounts based on analysis. 

The Benefits

You’ve now realigned territories and the right sellers are managing them. Your resource allocation is optimized. The benefits will be realized in three ways:

1. Balanced territories allow for better customer coverage and equal opportunity. The organization will realize its true revenue potential.
2. Aligned territories enable greater selling time and reduced travel. The sellers will have more time to sell.
3. Provides confidence in quota setting and compensation plan (with accelerator payments). Both the organization and the seller will see the benefits.

There are many causes of seller turnover in a sales organization. In our experience, most cases like this are due to misaligned territories. A strong territory design project relies on properly deployed account segmentation. These two in combination will allow your top sellers to flourish. They will bring the revenue in and be compensated for it. Keep your top talent by giving them the territory to make the number.