Sales Territory Alignment: The What, Why, and How of Aligning Your Territories

Wolf Cola, a regional beverage company, has been performing consistent and fair sales territory alignment for years - a lead comes in, that lead goes to Rep A. The next time a lead comes in, it is given to Rep B. The next lead goes to Rep C, and so on and so forth in a round-robin leads distribution process, safely logged in the related spreadsheet. 

Frank’s Fluids, a rival beverage company, also feel that they have a good handle on sales territory planning - they have four sales reps, each covering one of the four quadrants of the state. Utilizing a simple native feature of their CRM, it allows for a very straightforward sales territory alignment process, and it feels like fair sales territory design.

While different, these two territory alignment processes seem fair and simple, so they must be equitable and efficient strategies, right?

Wrong. Very wrong. If either of these soda sellers decided to delve into and implement modern territory alignment for their sales teams, they’d have a guaranteed edge against competition. 

So if your territory planning sounds anything like these two, or even if it’s been a few years since you’ve delved into territory alignment benefits and strategy, this article is for you. 

For decades it’s been known that for many companies millions of dollars are being forfeited each year due to territory inequities. Take back those forfeited assets and read on to find out what sales territory alignment is, why it's important, how to do it right, and other best territory practices. I've even provided a straightforward checklist to keep you on track. Let’s dive in!

What is Sales Territory Alignment?

Sales territory alignment is the act of dividing a target audience into distinct geographic or account-based groups and assigning them to specific sales reps.

Sales territory alignment strategies should be developed with intention. You don't assign leads willy-nilly. You match potential customers to the right sales rep based on location, industry, and/or account size. You also consider each rep's expertise to maximize their success.

Picture this: you manage a field sales team that sells industrial equipment across three states. Unfortunately, you haven't aligned your territories, so your reps often drive hours to visit prospects who have already been approached by others on your team. Meanwhile, high-value accounts are completely ignored. This should be truly infuriating to any seasoned sales individual!

But there's good news: effective sales territory alignment will ensure your reps have clearly defined areas to work. And each area will have the right mix of prospects, minimizing wasted travel time while maximizing face-to-face selling opportunities.

What are the Benefits of Territory Alignment

What if your sales reps immediately knew which leads belonged to them and thus could close deals faster? Company profits would soar high as a crow, right? Sales territory alignment can make this a reality.

Now that we have a territory alignment definition, let's talk about why it's so beneficial:

Less Sales Rep Overlap

Territory alignment will bring clarity to your field sales process.

How so? By determining which leads and clients belong to which reps. Generally, the absolute simplest way of doing this is to dice up the map and assign prospects based on region. Then tell them to only focus on their geographic areas.

If data-driven and done correctly, the alignment process will prevent infighting. It might even encourage reps to help each other (imagine that)! After all, they have plenty of their own prospects to sell to. Why wouldn't they tip each other off when they know something about a potential customer in their teammates' territory?

Overall, fair territory planning helps to nurture that positive but productive sales team culture sales managers should strive for!

Take a deep dive into the nitty-gritty and understand the negative impact of sales territory disputes, or get other territory planning and sales strategies from sales guru Jeb Blount.

Better Productivity & Morale

Speaking of productivity, fair sales territory design will keep your reps focused on what they do best: making tons of sales and bringing in piles of cold, hard cash.

Imagine two companies. One hasn't balanced its territories, so reps fight over leads. Worse, the company has a bad reputation in the marketplace because every lead is contacted multiple times. That's what happens when reps don't have clear boundaries about who they can sell to.

The second company doesn't have these problems. Its territories are perfectly balanced. Reps have plenty of time to generate new leads and serve existing customers. After all, they spend less time in the car traveling to potential buyers. This has led to greater customer satisfaction and more referrals.

As you can see, aligned territories help reps get more done. They have time to contact new leads, build relationships with promising prospects, and prioritize repeat purchases from existing customers. And since all of this happens within a specific geographic location, reps minimize windshield time and fuel expenses, which is good for your company's bottom line and rep morale. Win-win!

On the flipside, having misaligned or imbalanced sales territories can sabotage other sales initiatives, such as quotas or contests, souring rep morale without management even realizing it.

Greater Customer Satisfaction

Sales territory planning is good for customers too.

As mentioned, nobody wants to hear from three different salespeople at the same company. This is especially true if they've already told the first wave of salespeople that they aren't interested.

This won't happen when your sales reps have well-defined sales territories. They'll know exactly who their prospects are, develop expertise that relates to their prospects' problems, build meaningful relationships with potential customers, and ultimately, make more sales.

Your sales reps will also handle customer complaints in less time, because they'll be geographically closer and more familiar with each account's history.

All of these things will lead to greater customer satisfaction - and hopefully, repeat sales!

For example, Mr. Fixit, a premium mechanic tools brand, sells to many auto shops in the Boise, ID area. Before the Mr. Fixit sales team realigned its sales territories, Rep A sold to Terry's Tires, while Rep B sold to Carla's Car Kingdom down the street. Because of this arrangement, referrals were a mess.

Rep A and Rep B constantly fought over referred leads, which led to confusion for customers. Which rep should they respond to? Maybe they shouldn't respond at all and avoid the headache…

After the realignment, Rep A sells to both autoshops to help increase local rapport and routing efficiency. Meanwhile, Rep B is crushing it in an untapped neighborhood downtown. Just as important, the reps no longer fight over referrals because they work separate areas, and customers are more satisfied.

Higher Company Profits

What do you get when you combine productive sales reps and happy customers? Higher company profits. Productive sales reps connect with more leads and close more deals than unproductive sales reps. Happy customers purchase more often than unhappy customers - and refer their social circles to do the same. In both situations, your company profits.

Adversely, the financial repercussions of ignoring modern territory alignment are serious: 2-5% of revenue disappears every year due to poor rep-to-territory match and alignment. For a $50 million dollar company, that’s $1-2.5M lost before the sales year begins. 

On top of that, there are cost-saving benefits to think about too. For example, you'll avoid overhiring when you know exactly how many reps you need to cover each territory. You'll also minimize gas expenses and wear and tear on vehicles by instructing reps to only sell within their geographic regions. And in the strategic long-term, repeat and referral sales will reduce the need for expensive marketing campaigns. 

Bottom Line: If you’re not already doing it, starting proper sales territory planning can feel like low-hanging fruit for some guaranteed ROI. But continuing a regular sales alignment audit is an integral ingredient in creating the profitable efficiency machine you want your sales team to be.