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. It’s difficult to grow revenue faster than your industry’s growth rate and faster than your competitors. The Revenue Growth Diagnostic tool will help you determine if you are likely or unlikely to make your number.
How do I get the most of out of my sales force and know that my current organization is right going forward? The answer is to balance customer requirements, company revenue expectations and sales rep workload to grow revenues.
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:
- Utilize effective Sales Territory Software can help in this process
- 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.
Why is this an important topic? Some reps only make their revenue objectives by selling to the easy accounts. Others are spending too much time with accounts that do not fit the ideal customer profile. And yet, some sales reps have so many accounts to cover they cannot serve all of them correctly. Territory misalignment is a common cause of missed revenue targets.
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 he weren’t held back by the geographical constraints, he may go out and obtain new accounts in different regions. With the Geographic Sales Territories he is 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.
Have expectations gone up and you might be wondering if you can make your number? Here is an interactive tool that will help you understand if you have a chance at success. Take the Revenue Growth Diagnostic test and rate yourself against SBI’s sales and marketing strategy to find out if:
- Your revenue goal is realistic
- You will earn your bonus
- You will keep your job