article | September 26, 2011
Sales Analysis: Do you have optimally aligned and balanced territories?
Your sales reps tell you they are busy, constantly working customer issues, pursuing opportunities in the current account base, and even prospecting new logo business. Everyone is constantly working, therefore you must have well-balanced and optimally aligned territories, right? This is not true. Upon a closer examination, many sales leaders realize their alignment is far from optimal or balanced.
So, as a sales leader, why should you care if your team’s territories are balanced and well-aligned? Sales consulting surveys consistently find that a portfolio of well-balanced territories create a 10% – 12% annual revenue increase.
Let’s examine the key components of balanced territories while comparing them to your organization:
- Profit/Margin. Nearly all world class sales organizations have the ability to analyze a customer based upon a profitability statistic like contribution margin or EBIT with a carefully designed account P&L. Once you can measure the profitability for each account, assessing margin contribution by each territory becomes a key indicator of alignment. If margins are out of whack in a particular territory, it will tell you something about the overall balance of this region.
- Number of Deals. In some businesses, the count of deals is more meaningful than the actual number of accounts managed.
- Number of Partner Channels Managed. Perhaps you don’t sell directlyto the end client, but through a channel partner.
- Number of Accounts and Sales. This is the most commonly used metric for territory balancing.
Sales Analysis Territory Design is one of the most basic and fundamental performance factors that if managed correctly, well position your team for future success.