In Step 5, we take the initial territories created in Step 4 and model a variety of scenarios to optimize the territory design. As with Step 4, a Territory Optimization tool isn’t required, but having one will greatly improve the quality and speed of decisions.
Work begins by balancing the territories across weighted dimensions including:
- Number of existing customers
- Number of prospects
- Total market potential
- Total workload
- Total existing revenue
- Total existing profit
- Number of existing opportunities
- Value of existing opportunities
- Rep skill
The simulations should include different combinations and weights of the dimensions. Each time a simulation is run, the output is captured in graphical and/or tabular form to save the results. World Class companies initially run diverging simulations to capture the boundaries of possible extreme thinking. This helps them identify possible opportunities within their Territory Design. They then run converging scenarios to tune the model along the dimensions of greatest significance.
In addition to the quantitative analysis, a qualitative look is required as well. This qualitative view will provide the reasonableness test that cannot always be accomplished with just quantitate data. Key questions to ask as part of the qualitative review include:
- Are there local variations that need to be accounted for in the territory design?
- Would the performance potential of the current a player talent be optimized with some changes to the territories?
- Are there synergies amongst certain accounts that need to be grouped together?
- Do recent trends suggest that certain areas should be the focus of over-investment?
- Are all the “right” accounts covered appropriately?
- Is the workload really balanced across sales reps when consider the needs of individual accounts, travel, etc?
- Are the geographical boundaries clear or will there be much confusion amongst the sales staff?
- How many account re-assignments are required under each scenario? What are the pros/cons of the re-assignments? How disruptive will this be?
- Are certain territories biased toward hunting/farming or big/small accounts? If so, are the hunters/farmers or big/small account experts assigned to the ideal territories?
- Is the territory design aligned with the organization’s sales plan strategy?
As a result of the qualitative assessment, manual or automated changes are made to the territories to optimize them across all the critical lenses.
Quality time must be spent in this step. It’s the last chance to make changes to the Territories before rolling them out to the field. Once rollout occurs, the positive/negative implications of territory decisions will ripple through the organization. It is prudent to know what these are before changes are set in motion that will impact the sales reps, customers, partners and sales results. Through combining quantitative optimization with qualitative reasonableness, the chances for success will improve.
Learn more about Sales Analysis & Territory Design.