Sales territories are an effective way for sales managers to divide up their sales force by assigning specific customer groups to individual reps. Designating sales territories to sales reps is an effective way for sales managers to optimize productivity in field sales. However, determining the right sales territory design is a crucial part of achieving efficiency. It is important that you establish manageable and well-balanced territories to ensure effective usage of resources and time.
Sales territories are often defined by geographic location, sales history, competitive activities, customer names, sales potential and/or other metrics. As a sales manager, when creating territories for your sales reps, you need to determine how to weigh these metrics appropriately to drive potential earnings. The distribution of workload and opportunities you determine across the sales team will impact your reps’ ability to meet their quotas.
According to the researchers Andris A. Zoltners et al., sales can be increased by 2 - 7% through sales territory optimization – without using additional resources or changing the current sales strategy. Thus, every sales manager should rethink present territories to ensure achieving an even allocation of work and reaching the full sales potential of the team.
Here are the Top 4 Benefits of Having Balanced Sales Territories
1. Increased Customer Satisfaction
Every interaction with a customer impacts their experience with the product or service your company is offering and directly correlates with customer satisfaction.
A good sales territory structure reduces travel time and costs, allowing your reps to spend less time on the road and more time interacting with their customers.
Have a closer look at your reps strengths and abilities to make sure they are servicing the “right” set of accounts. For example, a sales rep who has a history of success with closing large and high complex accounts should be in future given more of those.
If reps are selling to customers they have experience and expertise dealing with, they can better present a relevant value proposition to them and foster strong relationships.
In the end, increased selling time as well as creating targeted sales rep and consumer relationships will result in higher customer satisfaction rates. This will encourage higher repurchase intentions, customer loyalty and positive word-of-mouth - all of which contribute to a strong customer base.
Remember, you will get 14 times more revenue from a ‘totally satisfied customer’ than from a ‘somewhat dissatisfied’ one (Study by InfoQuest).
2. Optimized Market Coverage
Poorly balanced sales territories can cause many problems, one being under - or over - servicing of customers. There might be salespeople who don’t spend enough time on good leads, and only focus on the ones that are located conveniently, easy to talk to or that they've known the longest.
They might be spending the majority of their time on low-potential accounts that would be better spent on high-potential leads.
Meanwhile, other reps spend too much time on low-potential accounts because they don’t have enough good accounts in their territory to stay fully busy. Again, this is wasted time that could have been directed towards trying to close more feasible deals.
By taking into account the quality of leads when balancing sales territories, you can improve market coverage and prevent cannibalization of customer accounts between your reps.
Gaps in customer coverage can be also be detected more easily and sales reps can be reassigned accordingly.
In the event of market changes, rep turnover, acquisitions, mergers, product launches, etc. you will be prepared to react properly while maintaining stable customer relationships and securing optimal market coverage.
3. Increased Sales Productivity
Productivity is a never-ending issue. Each year, sales managers and reps are told to exceed the previous year's results using existing - or even less - resources.
One way you can boost the productivity of your reps is to cut down time they spend on the road while traveling to their customers. This reduces travel costs and increases the time your salespeople can actually spend selling. Sales teams often have low rates of converting leads to decisions - with 60% of opportunities leading to “no decision” (Study by CSO insight). A balanced territory structure will give your reps more time with their customers to learn more about their clients’ pain points. This will help reps add value to their buyer/seller conversations and meet their customer needs and achieve a higher conversion rate.
A territory structure that offers optimal customer coverage will help your team to prioritize work, reduce travel time & maximize “selling momentum”. Additionally, raise motivation among your team by implementing a fair compensation plan which does not under - or over - reward reps for factors they cannot control - such as whether or not they have a “good” territory.
4. Recorded Sales Performance
Besides enabling, coaching, and motivating your salespeople, tracking sales performance is a major component of having a successful sales team.
Poorly balanced sales territories are likely to result in unfair compensation among your sales team. A rep with a “good” territory with many high-opportunity accounts may benefit from higher pay without putting in extra effort while other reps without the same opportunities have to work much harder to hit their quota. This happens because common metrics used for determining compensation tend to be determined more by geographical location - a factor that cannot be controlled by reps - than by a reps’ actual performance.
Balanced territories will make performance metrics more likely to reflect “true” performance differences as they avert unfair conditions. Hence, they are a solid foundation for building fair compensation plans that promote sales and motivation among your reps.
Supervising your reps and ensuring that they stay productive is hard to manage on top of your own tasks. Fortunately, mapping applications for sales territory management provide reporting tools to collect data from your outside sales team so you can keep up with their performance.
For example, Badger Maps is a mapping application that allows your reps to create check-ins and meeting notes on-the-go, right after each customer visit. All check-in reports and notes are saved and added to a weekly report that allow you to track your reps’ progress with clients, leads, time spent selling, etc. Check-in reports provide customer details, important meeting notes and the time since your reps last visited their accounts. Use this data to understand each reps sales process and to give them advice on how they can increase productivity.
Ultimately, balancing your sales team's territories ensures optimal customer coverage among your market. With the right balance of workload and sales potential, your sales reps can be more efficient with their time, handling opportunities in their territory and focusing on most valuable clients.