A recent sales leadership survey of two hundred Fortune 500 companies found that four crucial alignment factors are completely missed or are intentionally ignored during the territory design and sales analysis process. All too often, organizations structure their territories exclusively based upon location and availability of selling resources.
- Channel Management Alignment. Territories should be designed and analyzed with respect to the Channel Management Strategy utilized by your firm. Do you use a direct or indirect route? Do strategic partners or sales agents ultimately sell your product, or do you rely on a traditional sales force structure with direct sales representatives?
- Quota Setting and Compensation Plan Alignment. Although it sounds obvious, many businesses miss the key requirement of aligning territory design with these crucial organizational components. This fundamental question must be answered: Is there enough potential in each territory to allow a rep to meet his or her quota and ultimately achieve compensation goals? Without attaining these key requirements, you will have great difficulty in retaining your sales reps, with you top performers being the most likely to leave. Territories must be aligned and balanced based upon individual quota and compensation targets.
- Lead Management Alignment. Is each territory supported by a robust lead generation funnel or pipeline? Whether lead generation is owned outside of the sales function in marketing (a best practice) or directly in the sales organization, it is crucial that this function is carefully addressed. To simply assume that leads will naturally materialize once a sales territory is carved out is a huge mistake! A well constructed process covering lead generation directly contributes to an organization’s ability to help a rep attain his goals.
- Product Portfolio Alignment. Does your territory design support your future product portfolio, or is it strictly supportive of today’s structure? A well designed territory will incorporate the flexibility to adapt as the product base grows and matures. It is important that boundaries do not have to be re-structured every year based upon new product releases or even more fundamental changes and adjustments in the product portfolio. Design your territorial coverage model with the flexibility to adapt to future adjustments and changes.
As a sales leader it is crucial to use the sales analysis framework to optimize and align your territories to achieve the highest potential growth possible.