Strategic sales planning starts with effective territory design. Without balanced territories, you can’t set fair quotas. Unfair or unachievable quotas, in turn, impact your incentive compensation, affecting the pocketbooks of your salesforce - and, ultimately, hurting their motivation and performance.
Poor Territory Planning Creates Bad Sales Performance
Your sales territories are critical to the success of your sales strategy. When your territories aren’t balanced, it wreaks havoc on the success of your compensation plan and harms sales performance.
Poorly planned territories can result in:
- Missed quotas and lower revenue attainment
- Decreased sales rep motivation and morale
- Higher likelihood of sales burnout
- Underserved customers and prospects
Poor territory planning also decreases sales rep motivation and morale, hurting overall company success. When reps feel they aren’t given fair opportunities, they are unmotivated to make sales and close deals. Even if favoritism and seniority aren’t factors in territory design, the perception alone can be damaging to your team
The Benefits of Optimized Territory Planning
The foundation of your sales plan, sales territories are a vital part of laying the groundwork for strategic execution. Sales territories touch every part of sales planning; therefore, strategic territory alignment is vital to company success.
Ultimately, the key to optimized territory planning is striking a balance between sales rep workload and territory coverage. For example, too small of a territory may cause reps to cut prices in order to make any and all deals to reach quota. When territories are too large, reps don’t have the capacity to uncover and pursue all potential sales opportunities - leaving money on the table.
By providing greater intelligence into account density and location, optimized territory plans allow companies to increase travel efficiencies, lowering travel time to reduce costs and increasing the amount of time spent selling for higher revenue attainment. Optimized sales territories give sales reps fair opportunities to meet quota and close deals, boosting morale and motivating performance.
Technology is Key to Territory Optimization
A 2018 survey by the Sales Management Association found that organizations that apply technology to their territory design process outperform the others - their achievement is, in fact, 10 percent higher than the average. Conversely, organizations that don’t apply technology into territory design were found to perform 10 percent lower than average.
Yet many companies still rely on laborious and time-consuming manual processes to design and plan their sales territories. By using manual processes, such as spreadsheets and maps, organizations miss the opportunity to integrate intelligence into their sales territory alignment.
Manual processes were simply not designed for logic. By designing sales territories without leveraging data intelligence, sales organizations miss out on potential revenue opportunity.
Effective territory planning requires data, including real-time account-based CRM information, broad geolocation data, and third party market research dat. Using built-for-purpose territory planning technology integrated with data, companies are:
- Maximizing return on sales resources
- Shortening and improving the territory planning process
- Reducing travel inefficiencies and related costs for field reps
With automated territory planning technology, such as Xactly AlignStar, sales leaders can shorten territory planning time, while building optimized sales territories that maximize sales reps opportunities and revenue. Leveraging data-derived intelligence, these tools balance sales reps workloads, while simultaneously uncovering whitespace and greenspace opportunities with existing customers and prospects.
Moving Towards Optimization
As modern territory planning has transformed, the importance of analytics, automation, and collaboration has also increased. Today, the evolution of modern territory planning is driven by three key factors:
- Data-driven insights: Using data analytics and insights, companies can see where they need to improve the design, balance, and travel efficiency of sales territories. Sales leaders can also focus team efforts on the customer and prospect accounts with the highest potential.
- Automated processes: Organizations can quickly and fairly distribute potential sales opportunities and workload across territories while simultaneously creating more cost-efficient territories. This allows sales reps to focus strategically on the strongest accounts and prospects.
- Increased collaboration: Modern territory planning tools encourage collaboration, enabling field sales managers to contribute to the process. This ultimately produces more refined and well-aligned territories, improving overall sales coverage and productivity.
With intelligence and insight into account density and location, companies can build stronger territories and optimize their control over travel time and costs. By using advanced territory planning software, sales leaders can easily build optimized territories that will balance sales rep capacity and workload more accurately and efficiently.
As the world becomes more digital, companies need data intelligence to optimize their sales plans and maintain a competitive edge. Moreover, these insights must be available across the entire sales performance management (SPM) value chain. That starts with territory planning.
Marc Gemassmer is the Chief Sales Officer at Xactly.
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