Territory Design- Precision Counts with Guest Blogger Desiree Grace

Does anyone out there love playing Darts? It’s great for beers
with buddies in the bar, but not so great for designing sales territories. Once or twice in my past life as a sales rep, it felt like someone higher up used a map and a dartboard to design sales territories. It's time to take a thoughtful, analytical, and strategic approach to designing and organizing our sales territories. It's important to communicate the strategy and the data behind any changes thoroughly and respectfully to all stakeholders. That includes the sales reps, the internal support teams, and the customers.  Any significant or impactful changes also need clear and proactive change management. Here's why.

Your sales territories need to align with your strategy. Let’s say you want to add industrial contractors to your mix, as you’ve learned most industrials in your market outsource some or all of their maintenance to outside industrial contractors. Your overarching strategy is to diversify your customer base to future-proof your business. Hopefully, your team already knows this. The addition of industrial contractors is the trigger for re-aligning sales territories. Let’s also say this increases the sales potential, but not the existing sales in said dirt. You have some tough decisions to make, and some of this depends on your compensation model. (Compensation models need their own blog post.)

Ultimately, you don’t want to hurt your existing sales team. You want to push them to expand the customer base, which takes time. So, maybe you don’t impact their compensation, but you adjust their SMART goals. Or, maybe you incentivize them to expand, while not negatively adjusting their base pay. Regardless of what you do to your compensation model, the goal is to motivate your sales team and retain them.

While it is important to align with your strategy, you should also consider the following:

·       Territory Potential

• What are your market share goals? Are you maximizing your potential?
• Is the territory so large that you don’t have enough consistent contact with your customers?
• Are there segments under-served by your competition?

·       Customer Type

• Develop expertise in a particular customer type or vertical market. 
• Local geography can be the most efficient option in some cases.

·       Customer Quality

• Small customers take less time than large customers with multiple decision-makers and departments. Be aware that your salesperson can spend an entire day at a large meat-packing plant.
• Do the customers pay their bills on time? 

For Example: Consider if Slow-Pay Electric should even be on you sales call roster. Maybe it’s time to be reactive only with this pokey persona, or, if you cannot resolve the issue, stop wasting time calling on them.

·      Travel time and distance for the salesperson

•    “Windshield time” is wasted time, even with cell phones. Yes, I said that. You want your salesperson to be efficient and effective. Time is money.

·      Typical Sales Cycle to acquire a new customer

• If you are adding development accounts to the territory, be realistic. The best super salesperson will take 12-24 months to fully bring that new account on board.

·      Typical customer acquisition costs

• It may be necessary to run a D&B check, credit applications might be required, and EDI implementation may be necessary as well. All of these are important considerations, among others, and the general rule of thumb is that it takes 3-5 times as much investment to add a new customer as it does to keep an existing customer. Plan accordingly.

·   Any major initiatives that could be impacted by a re-organization of territories—see below.

For example, if you are in the middle of a major new product launch, consider the timing of your re-org. If you are in the middle of implementing that new storeroom contract, consider the timing of your re-org. It's easy to lose momentum when you change sales territories, so consider if the changes need to happen now or if it’s better to wait. Avoid kicking the proverbial can down the road indefinitely, but be sensitive to the fact that a re-org will impact other initiatives.

Also, before your territory changes are set in stone, involve your sales team. They have market and customer insight you need to know. Plus once involved in the decision, they are more likely to support the execution instead of dragging their feet. This discussion should never be going through the motions for appearances. Genuinely listen to your team to prevent missed opportunities and costly mistakes. They can prevent a misalignment in territory design and help with the transition plan.

Finally, Communicate!  Let the back-office staff know what is going on and why. Reporting may need to be re-aligned, for example. Then, once your internal team is informed, and any necessary operational changes are in process, reach out to impacted customers. Advise customers of what is happening, the why, the when, and, if required, the transition plan. Your top impacted customers will likely need some hand-holding--a.k.a., a transition plan.

If you need a transition plan, where Joe shadows Jenny before he takes over the Big Kahuna account, make that happen. Keep in mind that customers need to understand and not be disrupted. Investments in a smooth transition pay for themselves. Be sure to have more than one touch-point or relationship with the customers. Maybe Big Kahuna keeps the same inside salesperson. Maybe the sales manager reaches out bi-monthly for the first 6 months to see how the transition is progressing. NEVER make the change, wash your hands, and move on—certainly not for your biggest, most important customers, without staying in contact with them. Consider inviting them out a couple months post-change for a check-in, a game of Darts, and some dinner at their favorite bar.  That’s the point of this blog post—save the Darts for socializing and use the best practices discussed above for aligning sales territories.

Guest Blogger: Desirée Grace

Desirée Grace is an expert in building long-lasting relationships with customers and strategic partners, with a proven track record of securing additional wallet share throughout the entire relationship. She confidently shares her extensive experience with teams, equipping them with the best practices needed to become senior sales and marketing leaders. Throughout her career, Desirée has gone above and beyond traditional sales and marketing roles to advance the goals of the entire organization, particularly in the areas of finance and accounting, human resources, and operations.

 

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