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Three Steps to More Productive Sales Territories
A Mapping Analytics Executive Brief
The Case for Territory Balance, Alignment and Optimization
When you measure the performance of your organization’s sales or service
territories, what metrics do you look at? Most executives and managers consider
revenue, costs and profitability. And with good reason: these are bottom line
indicators of how well your territories perform.
If these metrics aren’t in your favor, you need to take corrective measures. Even
if the numbers appear positive, your territories may not be performing to their
potential.
The shape, alignment and balance of sales territories largely determine their
Studies have shown that
performance. Poorly aligned and unbalanced territories have negative
80% of companies are
consequences, including:
missing 2‐7% of
unrealized sales because • Missed revenue due to not reaching all potential customers and prospects
their territories are • Spiraling costs due to excessive travel times and travel expenses with
misaligned. gasoline now well over $4/gallon nationwide
• Inefficiencies due to duplication of efforts among sales team members
• Low morale and high sales force turnover due to inequitable territories
that reward the size of the territory rather than individual effort
• Poor or excessive customer coverage due to territories too large or small
On the other hand, optimally aligned territories that are compact in size and
contiguous will help you achieve a number of measurable and sustainable
benefits including:
• Better customer coverage and customer service leading to increased
productivity and revenue
• Increased sales by prioritizing accounts with the most potential
• Reduced costs through shorter travel times — often called ‘windshield
time’ — and associated travel expenses
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• Improved morale, performance and tenure of sales people due to equitable
distribution of accounts and a level playing field for achieving rewards
• Competitive advantage through the ability to reach new opportunities
faster than your competitors
When is it Time to Optimize Your Territories?
Most companies face a territory alignment question at least once a year when
forecasting revenue growth, market expansion and new hires for the following
year. Yet it’s just as common for territory issues to crop up throughout the year,
at any time.
Often an ‘event’ takes Often an ‘event’ takes place in a company that causes territory disruption and
creates a sense of urgency around territory planning. The event is often a typical
place in a company that
business situation. It might be:
causes territory
disruption and creates
• Merger or acquisition
sense of urgency around
• New sales channel
territory planning.
• Major product launches (or retirements)
• Hiring of sales people
• Change in ‘go‐to‐market’ strategy
• Emergence of a new competitor
• Downsizing
Any one of these events will cause territory disruption and likely require a re‐
assignment of sales resources and re‐alignment of sales territories. And herein
lies the pitfall for many companies: in the rush to respond to the event and meet
business mandates, territories are quickly cobbled together. New territories get
appended to old, adjacent territories are merged, new territory maps are drawn
quickly using basic mapping software or other primitive tools, or territory re‐
alignment is never addressed — and the result is a bunch of territories that over‐
promise and under‐deliver, eventually collapsing like a house of cards.
© 2008 Mapping Analytics (877) 893‐6490 www.mappinganalytics.com
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Avoiding the ‘House of Cards’ Pitfall: A Three‐Step Process
Sales executives and
To avoid the ‘house of cards’ pitfall, sales executives and managers need an
managers need an
intelligent, straightforward and proven process to re‐align and optimize
intelligent, territories.
straightforward and
proven process to re‐align The most successful approach is to segment the process into three key steps that
and optimize territories. will lead to desired outcomes. These steps are:
1. Analyze existing data to gain a complete picture of your current territory
alignment
2. Build a pro forma territory alignment based on criteria important to
your organization
3. Optimize the pro forma model to account for real world conditions and
specific ‘must‐haves’ for your sales team
At the completion of these three steps, an organization will have an in‐depth
understanding and visualization of how, why and where to deploy their sales
resources to convert their current state into an optimized state.
1. Analyze Existing Territory Data to Get a ‘Lay of the Land’
The first step to more productive territories is to gather existing customer,
prospect and territory data. This data may reside in a spreadsheet or centralized
database. Or it may need to be collected from various sources. Internal data may
be supplemented with external market or demographic data for each territory to
better understand market penetration or potential. The more data you have to
start with, the more informed decisions you can make later in the process.
Each sales person, customer, prospect and other data point is associated with an
existing territory and plotted on a map. This may require the geocoding of
address data, which is the assigning of longitude/latitude coordinates to each
record so it can be displayed on a map and used in geographic analysis. The
geocoding process also allows address errors to be corrected, resulting in a clean,
up‐to‐date database.
If you have a hierarchical sales organization with territories rolling up to
districts, up to regions, etc., this information is considered and overlaid on maps
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and aggregated in charts and tables. Revenue, leads, forecasts or other attribute
data associated with each existing territory or account also is included in this
initial analysis phase.
Missed opportunities or The product of this analysis is a series of maps, charts and reports that provide
customers might stare the current ‘lay of the land.’ While the main purpose of this step is to gain an
you in the face. unbiased understanding of the existing state of your territories, often a number
of ‘ah‐has!’ occur when the data is presented. Inequitable, illogical or unbalanced
Oversaturated or
territories may become immediately and visually apparent. Missed opportunities
underserved areas stand
or customers might stare you in the face. Oversaturated or underserved areas
out in a glance.
stand out in a glance.
2. Build a Pro Forma Territory Alignment
With the initial database work complete and a clear picture of existing territories
— for better or worse — now available, the territory alignment process becomes
much more dynamic. It’s time to create a proposed alignment based on criteria
important to your business.
While a proposed The shape and balance of proposed territories can be based on any number and
alignment may be combination of criteria. Therefore, it’s essential to understand which criteria are
optimal for revenue important to your business. Otherwise, you will likely end up with the wrong
potential, it may be too territory alignment.
burdensome in terms of
For example, while a proposed alignment may be optimal for revenue potential,
travel time, relocation of
it may be too burdensome in terms of travel time, relocation of sales people or
sales people or costs
costs associated with each sale. Likewise, having centrally located sales people
associated with each sale. does not imply a fair distribution of accounts.
If you are unsure about which criteria to use for balancing territories, a series of
rapid alignment scenarios will provide insight. Territory alignment and
optimization software plays a key role in delivering quick, accurate results.
Criteria to test may include:
• Revenue potential for each territory
• Number of accounts or workload in each territory
• Number of territories required/desired
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• Location of sales people in relation to customers and prospects in each
territory
• Lead distribution within each territory
• Proximity to your stores/offices/service centers
• A modeled attribute, for example, a score based on a customer/prospect
profile
The result of the pro forma stage is an optimized territory alignment, a sort of
sales territory utopia. But the process is not complete. You still must take into
account the real‐world factors and organizational uniqueness which all sales
forces operate under.
3. Optimize the Pro Forma Model
Invariably a number of real‐world conditions infringe upon the ideal alignment.
Your goal, therefore, should be to create an optimized territory alignment within
In this step, the
the bounds of real‐world conditions.
knowledge of sales
executives and
In this step, the knowledge of sales executives and regional/local sales managers
regional/local sales is crucial. You may know, for example, that certain accounts must remain with
managers is crucial. specific sales people. Or that some sales people cannot be moved. Or that you
have given control of some areas to distributors or partners.
This phase of territory alignment is typically interactive, with discussions going
back and forth among various sales managers as to which conditions must be
met. The optimized pro forma alignment is manually tweaked as needed.
Once a final territory alignment is agreed upon, every sales manager should sign
off on it and be prepared to ‘sell it’ to their sales force. Since the alignment will be
balanced, fair and customized to your specific situation, selling it to sales people
should be relatively easy.
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How to Get it Done
While this three‐step process to more productive sales territories may seem
intuitive and straightforward, its execution actually requires expertise and the
right software and data tools.
Simple or generic mapping software may be useful for drawing territory maps;
however it does not offer the required algorithms or features to create optimized
Consider partnering with
territories.
a firm that specializes in
sales territory
Instead, consider partnering with a firm that specializes in sales territory
optimization and has the optimization and has the analytical expertise to do it. Look for a firm that:
right tools to do it.
• Has a track record of successful territory optimization projects and can
provide reference accounts
• Can quickly understand your business and territory requirements
• Uses a proven methodology for sales territory alignment and optimization
• Works iteratively and interactively with your sales organization
• Offers software tools and training for organizations that want to ‘go it alone’
or maintain alignments over time
About Mapping Analytics
Sales executives seeking to achieve optimal results from their sales territories rely
on Mapping Analytics. Since 1989, we have provided analytical services and
mapping software enabling organizations to balance and optimize territories
during periods of growth, mergers & acquisitions, channel adjustments, and
changes in their sales force or sales strategy.
Our clients — from Fortune 500 companies to startups — are able to increase
revenue from their territories while being more efficient, fair to their sales team,
and cost‐conscious. To learn more about Mapping Analytics, sales territory
design, and ProAlign™ — our sales territory and alignment software — please
visit www.mappinganalytics.com or call toll‐free (877) 893‐6490.
© 2008 Mapping Analytics (877) 893‐6490 www.mappinganalytics.com
