Territory management: Definition & objectives

territory management

Sales coaching tips can definitely help you improve sales performance, but sales strategies also need robust foundations. Territory management is one of them. Indeed, you need to know how to allocate your sales resources team if you want to make the most of it. As we’ll see, territory management extends far beyond simple geographic divisions; it encompasses a sophisticated blend of data analysis, market research, and strategic decision-making. Let’s take a deep dive and see how it all works, and how to get started properly.

Product Manager – Coachyz
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Territory management, a complete guide

What is territory management?

Definition and purpose of territory management

Territory management is a planning and organizational process designed to sort customers and prospects out by creating different customer segments based on a specific criterion. It can be geography but other sales data criteria are also commonly used to create territories:

  • industry;
  • market potential;
  • account size (sales resources needed);
  • past performance.

The bottom line is establishing a system which enables you to spend enough time with each lead so they turn into profitable and lasting customer relationships while optimizing resource distribution. This is a “divide and conquer” approach. Territory management has three main missions:

Territory management missions

Besides, territory management is integral to sales forecasting, leveraging data collected from this process to foresee upcoming sales trends, forecast potential revenue, and adapt strategies accordingly. This proactive methodology ensures that your sales representatives are well-prepared for market fluctuations, enabling them to adjust to changes and sustain a consistent revenue stream.

Importance of territory management in sales strategies

Territory management is key to the success of your sales strategies. Indeed, it facilitates efficient resource allocation while improving overall opportunities at the same time. This process involves covering territories strategically to achieve various goals:

  • productivity boost;
  • even workload distribution among team members;
  • strong customer relationships through territory alignment which basically means
    picking the right sales representatives for the right prospects or customers.

Beyond a simple grid overlay, territory management highlights the value of investing effort and consideration. A balanced productivity across sales territories contributes to a healthier business environment with fewer management challenges: it helps sales managers provide equal opportunities for quota attainment to every sales rep. As a result, you get better rep retention and make substantial cost savings by having a low turnover on that front.

So yes, territory management is vital to sales strategies. And this is one of the two reasons why you should create a Territory sales manager job opening. The second reason is that territory management requires full-time attention as well as a specific set of skills. To keep it short, here are a few examples of the job requirements:

  • a lot of travel time from one customer to another ;
  • ability to monitor and adjust in real-time ;
  • sound sales experience ;
  • organizational, leadership, negotiation, customer service and communication skills ;
  • creativity and innovation to design solutions adapted to a given territory ;
  • data collection (surveys, KPIs) and interpretation.

Territory management: Benefits

Sales teams benefit significantly from focusing on pre-assigned territories. This way, nobody does something that has already been done which maximizes productivity and makes the best of every business opportunity. When you assign territories, you:

  • clarify responsibilities;
  • promote collaboration between team members of the same territory;
  • facilitate knowledge-sharing and joint efforts on challenging accounts.

The whole process gets streamlined since you establish how territories are assigned (to the appropriate sales reps). It saves time and allows your sales reps to concentrate on engaging with prospects and customers better than when you handle assignments manually.

Specializing in territories transforms sales reps into experts, as they gain in-depth knowledge of the unique needs, preferences, and challenges of customers in their assigned areas. This expertise enables reps to provide tailored solutions. It is more consultative than solution selling.

Performance reporting on different territories helps sales managers identify high-performing areas and areas for improvement in order to make the best decision. Overall, territory management is particularly effective for enterprise companies with complex sales structures, segmentation, and lead processes, offering efficient management of large sales teams and diverse territories.

How to set up territory management?

how to set up territory management

Evaluate your market

To optimize sales territories, it’s essential that your sales representatives align with prospects and customers on characteristics such as:

  • location;
  • budget;
  • purchased products or services;
  • identified needs.

Just like with inbound sales, a comprehensive understanding of customer behaviors, including triggers for purchases and inhibiting factors, facilitates the development of targeted messaging. Sales reps are not interchangeable, they all come with their own experiences, strengths and weaknesses.

This is why sales leaders need to assess their business environment, considering factors like geography, size, demographics, and competition. Aligning territories with core company values, goals, and revenue-generating segments also helps identify profitable markets.

All the work you do in this initial step will guide your decisions on the location and type of customers to be targeted in the sales territory. The process begins with collecting and analyzing market data:

  • buying trends;
  • past sales performance;
  • purchase volumes, etc.

Research your competition

Now that you have a good picture of what your potential customers want, you need to proceed to finding out what is already available to them! Indeed, by understanding competitors’ market presence, assets, and liabilities, you are able to identify untapped opportunities and potential threats.

Analyzing what offer is already on the table for your customers is the best approach to define accurate and relevant market boundaries, setting up your company for successful market integration. This second layer of research accomplishes two main things for you:

  • further refines resource allocation;
  • ensures sales teams focus on areas with the greatest potential.

Moreover, studying competitors provides a benchmark for evaluating the effectiveness of sales strategies and performance. This knowledge allows businesses to differentiate their offerings, tailor messaging, and enhance customer targeting within specific territories. Ultimately, thorough competitor research enhances the precision and strategic alignment of sales territory management, contributing to improved market positioning and sustainable growth.

Analyze available sales team resources

You have scrutinized all the external sales environment, it is time to focus on internal factors, namely: your sales team. You need to know what you will be working with: the goal here is to understand the type and volume of customers your business can handle. The best way to deal with this is to make a list of all the strengths and weaknesses of your team. Then you’ll be able to leverage the former and address the latter.

Assigning reps to territories based on their applicable skills is a key step. For instance, allocating a rep with experience in closing large enterprise deals to a major multinational blue-chip SaaS company makes more sense than giving the account to a junior rep fresh out of university. Make sure to encourage continuous learning and best practice sharing among team members as it will be much more beneficial in the long-run than having a few expert lone-wolf top-sellers.

See what every member is proficient at, but also what is their geographical availability: don’t forget to factor in transportation time and costs! Striking a delicate balance between efficiency and efficacy is all about strategic resource allocation. Allowing your reps to work in the most suitable environment benefits everyone: the team members, the managers and of course customers themselves.

Map out the territories

In the final stages of constructing a sales territory plan, it is essential to precisely define the characteristics of each territory (geographical, industry, revenue, product boundaries, etc). To that end, effective territory management requires a comprehensive assessment of costs associated with each territory, with a specific focus on customer acquisition costs. This indicator will also help you later, to pinpoint and address any inefficiencies in the system. For now, this is the step where you literally map out who gets assigned to what territory. If you decided on the geographical criterion, just use a map of the country/continent/world as a visual support. If you chose let’s say, for the sake of the example, market potential, any visual aid, as long as it speaks to everyone, will do.

Among the best practices, it is a very good idea to establish clear and realistic goals and parameters for your sales teams, basing yourself on the work you did during the first three steps.

Analyze data and monitor performance

When it comes to establishing effective coverage in new territories (and even in old ones), performance review and sales operations are the name of the game. It needs to be done on a regular basis and it needs to be done thoroughly, with metrics such as:

  • sales per client;
  • number of new contacts;
  • client acquisition rate;
  • event attendance rates;
  • average deal size.

Territory management is constantly fluctuating, which calls for adaptability. As a result, it is crucial for sales representatives to meticulously maintain records in a CRM, facilitating adjustments on the fly and tracking of successful approaches. Also, Territory management seamlessly integrates with pipeline reviews and sales forecasting, assessing each representative’s performance against quota and leveraging performance metrics for strategic insights.

In conclusion, effective territory management is the rock upon which you build successful sales strategies as it involves all of the ground work: optimal utilization of resources, enhanced customer engagement, and sustainable revenue growth. By carefully delineating and organizing geographic areas, you streamline your operations, target the right audience, and capitalize on local market nuances. The strategic deployment of sales teams, coupled with data-driven insights, gives you the tools to quickly adapt to evolving market trends. Mastering territory management is not just a competitive advantage but a necessity for businesses aiming to thrive.

Evolution, adaptation and innovation are just the way we like to view business at CoachYZ. Each day, we assist managers and decision-makers in embracing a different approach to unlock their maximum potential. If you’re eager to be part of this transformative journey, begin your coaching adventure with us!

territory management
Product Manager – Coachyz

Coaching remains an essential tool in our toolbox, despite the ever-changing professional world. In the digital age, our approach has evolved from simply informing journalists to delivering rich, engaging content directly to our target audience. Good coaching must be personalized, relevant and adapted to the digital world to ensure optimal online visibility. What’s more, the incorporation of multimedia supports such as videos, images and interactive links can considerably enhance its impact. 

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Territory managers play a crucial role in handling multiple sales teams within a specific geographic area for a company. Territories can also refer to other segments (type of industry, type of product, account size, etc.). Collaborating with various departments, the territory sales manager focuses on elevating company sales and revenue by implementing employee training, refining customer service strategies, and crafting impactful sales plans.

In sales, territory planning is how a company creates groups or segments or territories of customers or prospects. It is also how sales reps are assigned to those territories, considering productivity, equal workload balance and long-term sales growth.

By analyzing various factors like geographical availability of the team members (i.e. do they need to make a long distance business trip to visit the customer?) ; areas of individual expertise ; experience, etc. The factors you need to consider really depend on your business. For instance, a local company doesn’t need to deal with geographical issues.

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