Is sticking with geographic sales territories a mistake? Maybe, maybe not. Don't assume it's the best approach just because historically that's been the best route. Buyers may have evolved beyond your current sales model.
There are a variety of ways to optimize, balance, and align sales territories. The real question lies in how to select the right structure that will offer your Sales Team the most advantages and allow them to secure the most revenue each and every quarter.
Below Are a Few Ways to Increase the Effectiveness of Your Sales Territories:
- Organize by geographic sales territories
- Organize by vertical (or Industry)
- Organize by hunter/farmer (new logo/existing account)
- Organize by stratification (by opportunity size or company size)
- Organize by product
- Organize by relationship or social proximity
- Organize by a hybrid of the above
All of these sales strategies have their place, and each has the potential to benefit your company.
The Advantages of Geographic Sales Territories
- Decrease Travel and Increase Selling Time. By assuring that all of your Sales Reps’ opportunities are centered in one general area (be that a single block of offices in New York City or a collection of five states in the Midwest) you allow them to manage their time better. Instead of spending unproductive hours in the car or on airplanes, they can maximize their time selling and landing new accounts.
- Reduce Conflict Among the Sales Team. If you happen to have a couple of ambitious, feisty sales professionals on your Sales Team, you may run into problems on occasion centered on which team member an account actually belongs to. Geographic Sales Territories can alleviate some of this tension. For instance, an account is either in Texas – or it’s not. It’s either in the Empire State Building – or it’s not. Aligning sales territories this way decreases the potential for this type of conflict.
- Strong Local Knowledge and Decreased Language Barriers. Many of today’s global territories are limited due to cultural and language barriers. These are obstacles that should not be overlooked, as they can have very real effects on the overall productivity of your company. If your global organization strategically places Sales Reps within his or her native country’s Sales Territory, these language and cultural barriers will be removed. This allows for more efficient and effective selling to occur.
The Disadvantages of Geographic Sales Territories
- Limiting Growth from Ambitious Sales Professionals. One of the major risks of Geographic Sales Territories is that you may unintentionally pigeonhole an ambitious sales rep into a territory that isn’t extremely active. If they weren't held back by the geographical constraints, they may go out and obtain new accounts in different regions. With the Geographic Sales Territories, they're unable to do this.
- Lack of specialization. When Sales Professionals are assigned to Geographic-based Sales Territories, they are essentially bound to the accounts present in those territories. These accounts will likely include hundreds of companies and span dozens of industries. This means that Sales Reps must acquire and maintain knowledge about a wide array of topics. While this can work out just fine, it also prevents your Sales Team from becoming proficient in any one particular topic or industry.
Examine the Advantages and Disadvantages for Geographic Sales Territories carefully. Can you see your organization capitalizing on any of the advantages? Or can you foresee your company falling into the trap of the disadvantages? Use this information to make an informed decision about how to best define and align your sales territories and maximize your production as an organization.
Leverage the Territory Design Approach Tool for tips on territory design analysis, mapping prospects/customers to territories, and more.