- Step 1 – Baseline Existing Territory Performance. Study your organization’s current territory performance. Assure you understand which reps are hitting target, where are margins and sales strong, etc.
- Step 2 – Analyze Existing Customer Spend. Perform account segmentation for your customer portfolio. In this step, it is crucial that you study and determine the drives for customer spend in your business. It could be a particular geography, seasonality factor, type of industry, revenue or employee size, or perhaps all of these factors culminating in the sweet spot for you business. Ultimately, you will understand which firmographic drivers contribute to sales. Your firm’s ideal customer profile will be identified.
- Step 3 – Determine Market Potential. Once you understand the drivers to customer spend, forecast market potential. Our blog discusses various techniques to tackle this process in detail in several blogs: Ultimately, upon the completion of this step you should have an estimate for total market size. Oftentimes, the marketing organization will have some rough estimates you can leverage in building this out.
- Step 4 – Map Prospects & Customer Data to Territories. This step is the actual territory creation. Decide the right balance among pure prospects, existing customers, and qualified opportunities in each of your territories.
- Step 5 – Produce Territories. In this step you will decide upon the final vertical or geographic boundaries for each patch.
- Step 6 – Review and Refine Territory Assignments. After the final territories are drafted, it is crucial to walk through historical and probable opportunity conversion and customer win rates, and compare the opportunity to each sales person’s quota. Ask yourself, “Does each territory actually allow the rep to hit his or her quota under reasonable performance expectations?” If there answer is no, you might want to iterate back and review your territory design decisions. Perhaps a boundary needs to be shifted to move more potential away or to a particular territory.
Quickly filling open territories is just as important as correctly designing sales territories.