Optimize Accounts by Redesigning Your Sales Territories

An optimized sales territory can result in more than just revenue growth; it can contribute to improved customer coverage as well as improved retention of your top sales talent. When it’s time to redesign sales territories, follow these six steps and use our Sales Territory Alignment tool to help you optimize your territory opportunities.

Step 1 – Baseline Existing Territory Performance

Start your territory redesign by taking inventory of what actions you currently have in place. Evaluate the following to gauge current territory performance:

• Prior revenue performance. How has this territory performed overall in the past? Is its performance sustainable, or does it need to be redesigned?
• Product/service revenue mix. How profitable are the sales in the current territory? Are you reaching the maximum profit in your areas? Or will augmenting the territory plan improve revenue?
• Current pipeline opportunities. The current territory plan needs to be equipped with new opportunities and the ability to provide new lead generation.
• Seller talent. Ensure your team has the capabilities and capacities to service the accounts.

Step 2 – Analyze Existing Customer Spend

By segmenting your accounts, you can identify how your customers are buying; territories can be determined from this behavior. Are they buying based on geography, a seasonality factor, or industry? Is it based on revenue or employee size? Or are they buying based on a culmination of these factors?

Determine their spending habits and segment them based on this information. The more you know about your buyers, the more you will understand which drivers contribute to their sales. Determine these factors by using historical customer spend to find correlations in spending.

Step 3 – Determine Market Potential  

Once you understand the factors contributing to customer spend, it is crucial to forecast the market potential. By determining the account's spending habits, and evaluating the current state of your territories, you should have enough information to estimate your total market size. Next, determine overall spend potential for each prospect and customer. 

Step 4 – Map Prospects & Customer Data to Territories

Up until now, your process has been rooted in data analysis. Using the information gathered above, find the balance among prospects, existing customers, and qualified opportunities. Map your design with the following approaches:

• Focused account consolidation (customer driven). Distribute accounts and prospects throughout your territories based on how you can balance revenue. How much attention does each customer need? If you fill your region with too many high-priority accounts, you will likely lose them trying to accommodate the needs of each one. Conversely, if you decide to fill your territories with accounts that demand less, they are less likely to become key revenue drivers and potentially lose interest.
• Workload leveling (activity driven). Does the market potential indicate there is a balance across customers and prospects? Assign reps based on convenience, ensuring all your territories have a similar structure and balance. Adjust accordingly from there based on demand in the area and seller performance.
• Territory compression (cost driven). Are your territories designed to optimize revenue growth? The goal when creating territory plans is to maximize profit and productivity while minimizing your cost of sales. Determine where your sellers will be best suited in different areas of opportunity.

Step 5 – Produce Territories  

In creating your first draft of territory design, you were able to determine your motives behind each territory. Use this step as an opportunity to perform quality assessments in developing your ideal sales territories. Compare them to different scenarios of each area and account to consider implications for your final version. Consider the following when balancing your territories:

• Number of existing customers.
• Number of prospects.
• Total market potential.
• Total workload.
• Number of existing opportunities.
• Value of existing opportunities.
• Seller potential.

Step 6 – Review and Refine Territory Assignments

When finalizing your proposed territories, create goals for both the area in question as well as the seller who's managing it. Are the accounts able to be serviced sufficiently? Are the sellers ready to hit their targets? Optimize your boundaries to ensure everyone is on the winning team. How will your sellers acclimate to their new territory? Involve a variety of roles from your marketing and sales team to ensure the success of your new territories.

• For sales operations, analyze data in territories for sellers to further develop their accounts and prospects.
• For sellers, customize the plan based on client knowledge and intimacy.
• For sales managers, oversee and review territory plans and coach sellers on performance. Coordinate the necessary resources to achieve goals.
• For marketing, develop programs that contribute to demand and lead generation within the territory.

Use SBI's Territory Alignment Tool for an effective review of current territories, enabling data tracking and alignment with your sales plan. This systematic approach ensures territories are not only efficiently managed but also strategically positioned for growth and success.

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