Analyzing current territory performance is necessary to understand the relative performance of each rep/territory to isolate drivers of success. In this step you are looking for trends in past performance that will generate hypotheses to focus upon during subsequent Territory Design Analysis steps. Examples of hypotheses World Class companies consider when baselining performance include:
- Certain geographic areas have a higher propensity to buy our products and services.
- Certain products and services are more likely to be bought by particular customer segments.
- Certain customers spend more on particular products and services than other customers.
- Certain reps have greater ability to sell particular products and services.
- Certain reps have greater ability to acquire new customers or upsell existing customers.
- The market demand for our products and services is increasing/decreasing over time.
- Our current pipeline is sufficient/insufficient to achieve the short/long term revenue objectives.
To expand upon the last hypothesis, “Our current pipeline is sufficient/insufficient to achieve the short/long term revenue objectives”, here is an example of one of the types of analysis to perform. On a territory by territory basis, look at the number of opportunities, the total value of the pipeline, the historical win rate for the territory and the forecasted revenue based on the value of the pipeline and win rate:
How does a forecasted $6M productivity per territory and a total of $89.8M revenue compare to the goals for next year?
Many questions result from this analysis which would be answered as the territory analysis is completed:
- Rep2 and Rep9 are less than 51% of the mean in terms of number of opportunities. Are these territories undersized in terms of the number of prospects?
- Rep1 and Rep4 are more than 204% of the mean in terms of number of opportunities. Are these territories oversized in terms of the number of prospects?
- Rep2, Rep3 and Rep14 are less than 36% of the mean in terms of the total pipeline. Are these territories undersized in terms of the total market potential?
- Rep4 and Rep12 are more than 157% of the mean in terms of the total pipeline. Are these territories oversized in terms of the total market potential?
- Rep5 and Rep13 are less than 32% of the mean in terms of the win rate. Are these territories focused on customers that are not a good fit for the Ideal Customer Profile?
- Rep9 and Rep12 are more than 154% of the mean in terms of the win rate. Are these territories focused on customers that are exceptionally good fit for the Ideal Customer Profile?
Of course the talent of the sales rep in each territory could be driving the results above. However, as we discuss the rest of the steps of territory design in future posts it will become clear how talent and market potential can be isolated to gain a clear understanding of performance.
Companies often make the mistake of throwing away the historical territory performance when they embark on new territory designs. This is a mistake as much can be learned from past success/failures which must be taken into account if the goal is constant improvement.