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February 29, 2012
The Ups and Downs of Vertical Sales Territories
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Advantages of Vertical Sales Territories
Become the Expert. Think about when you are personally in the midst of the buying process (especially when purchasing something large or outside of your comfort zone). Don’t you feel more comfortable if your salesperson is a specialist? You want to be told with certainty what you will receive with your purchase, when it will benefit you, how it may hurt you, etc. There are huge benefits to acting as the thought leader when guiding a prospective client through the buying process. This is sometimes known as consultative selling. It adds trust and credibility to the relationship, breaking down the barriers that naturally tend to arise between a sales person and their customers. Vertical Sales Territories allow your Sales Reps to specialize on one industry, and thus utilize all of the benefits of being an industry expert.- Name Recognition. When you hear Boeing, what do you think of? (Airplanes.) What about Apple? (Electronics.) Or GM? (Automobiles.) These companies have all become major players in their respective industries, and the benefits to achieving that are plain to see. Just hearing these company’s names makes you intuitively think of them as industry leaders, trusted as the reliable experts. Implementation of Vertical Sales Territories allows you the opportunity to build a strong presence in that industry. Developing your name to the point that it is instantly perceived as an industry expert will undoubtedly lead more potential clients through your door. Customers want to do business with the organization that has it together – the one that’s known as a staple in the industry and will get the job done right. It’s more difficult to build this perception if your Sales Reps are bouncing around to ten different industries within their geographic territory. Vertical Sales Territories allow more opportunity to achieve this name recognition.
Disadvantages of Sales Territories
- Increased Travel Time. The relationships between different Sales Territory Strategies (Vertical vs. Geographic) create some give and take scenarios. Geographic Sales Territories are specifically designed to cut down on travel time. Vertical Sales Territories don’t have that benefit, and thus your sales reps could likely spend more time on the road, traveling from client to client.
- There are Lots of Industries. You may not have enough sales people to cover all of the industries that you should be covering. Unfortunately, this can cause some industries to be neglected. It is possible that you may not be able to play the “expert” role in all of them. The result is potentially losing out on accounts.
- Pigeonhole a Good Rep in a Bad Industry. This is a risk that you will incur whether you choose Geographic Sales Territories or Vertical Sales Territories. There’s always the chance that a good sales rep gets assigned to a bad territory. However, as a Sales Leader, it’s your job to get the right players in the right places. Take care of that and this disadvantage will be nothing to worry about.
What Sales Territory is Right for Me?
Different industries have different trends, and therefore a “one size fits all” approach to developing successful sales territories doesn’t exist. For some companies, a Vertical Sales Territory will be a perfect fit. For others, anything other than a Geographic Sales Territory would be foolish. If you’re having trouble figuring out what suits your organization best, contact SBI for a Free Consultation.
