For any growing business, being strategic when mapping your sales territory can significantly enhance your team’s efficiency and overall success by ensuring that your customers have a dedicated sales rep who is knowledgeable with their specific needs. According to a study by The Sales Management Association, organizations that design sales territories effectively are 14% more likely to achieve their sales goals.
To create a successful sales territory, it’s crucial to identify the needs and buying behaviors of any given demographic. Understanding the characteristics of your target demographics will help you determine how best to serve these customers.
What is a Sales Territory?
A sales territory is a segmentation of prospective clients which can be divided by industry, geographical area, product, or other customer demographics. The benefit of segmenting customers through territories is to balance the workload among sales reps, while also ensuring that your prospective customers have a designated sales rep to help build trust and loyalty with the company.
By assigning sales reps to specific territories, organizations can maximize sales potential by increasing the efficiency of your sales team and building more meaningful relationships with customers.
Why Sales Territories are Important
A well-defined sales territory map can improve the efficiency of your sales team, therefore, increasing the sales potential of your team as a whole. Other benefits to a sales territory include:
- Balanced workloads: every rep has an equal opportunity to make sales, while reducing the risk of potential burnout for any given team member.
- Unified approach: coordinated efforts from team members allow each rep to be more strategic in their prospecting by dedicating support to all customer leads without overlap.
- Personalized service for clients: clients will be placed with reps that are more knowledgeable about their specific needs, making them more likely to complete a purchase.
Ways to Divide a Sales Territory
There are many effective ways to divide a sales territory. Ultimately, it comes down to your organization’s specific needs, goals, and resources. Some ways a company may choose to divide a sales territory include:
- Geographically: One of the most common ways to divide a sales territory, a geographic territory is created based on physical boundaries such as states, counties, regions, or zip codes.
- By Product: When working with different products, it often makes sense to divide your sales reps based on which product they are more knowledgeable with. Different products may have different target demographics, so it can be beneficial to dedicate certain team members to specific products.
- Customer Type: For companies that serve a wide-range of diverse customer profiles, dividing the sales team based on the type of customer could be an effective strategy. This would include segmenting your team based on target demographics and characteristics.
- Industry: Similar to customer type, mapping your sales territories off of industry could give your sales reps an advantage because of the unique challenges that face each industry. By having a territory defined by industry, reps are able to familiarize themselves with industry-specific terminology and factors, allowing them to better serve potential customers.
Tips for Mapping a Sales Territory
Mapping a sales territory can be daunting, but as mentioned above, it really just comes down to knowing and understanding your customers. Here are some things to keep in mind when outlining your territories.
- Define Your Goals
Effective sales strategies always begin by having clearly defined goals of the outcomes you are trying to achieve. As such, the first step with mapping a sales territory is having a clear vision on what your organization is trying to accomplish. For example, are you trying to expand your reach into new regions? Or, are you focused on breaking into industry-specific markets? This step, above all others, will help you understand what strategy is most conducive to achieving these goals.
- Research Your Markets
After you have clearly defined goals, you will want to thoroughly research the markets that you are looking to serve. This includes analyzing historical sales data, customer information, and market analytics to identify patterns and trends. Consumer demographics, competition, population, and revenue potential are other key details to focus on during your research. This information will be instrumental when determining how you want to divide your sales team.
- Market Segmentation
Using the consumer and market research from step two, you can create customer profiles that will lay the foundation for logical market segmentation. The whole point with segmentation is to ensure a more focused approach from your sales teams, so they can hone in on the unique needs of their respective territory. From that standpoint, it can also be helpful to understand the strengths of your sales team and which members are best equipped to manage a specific territory.
- Map Your Territories
All of the research that you have completed by this point should have you properly prepared to begin creating territory outlines. Think of how many potential customers are in a given territory as well as the complexity of the sales involved with the segment, this will help determine what resources are needed to adequately serve a given market. Take inventory of your team to gauge skill level and strengths to find sales reps that have the skills best suited to serve each specific territory.
Additionally, sales territories are supposed to work to balance the workload of your sales team, so ensure that territories are divided in a way that gives each rep a fair share without overwhelming them.
- Monitor Success
In order to ensure the success of your territories, you need to continually monitor sales performance. This can be defined by revenue generated, deals closed, new prospects acquired, or any other metric that can help gauge sales productivity. Organizations should be prepared to assess the territory’s success regularly as market conditions are dynamic and may need to be adjusted over time.
- Communicate with Your Teams Regularly
Maintaining open lines of communication with your sales team is vital to monitoring the success of your territories. Your sales reps are the ones in the field working directly with customers, so they have a unique insight into what customers are looking for and how to increase customer engagement. It could be as simple as reallocating resources to a given territory, but you need to communicate with your team regularly to be made aware of any potential challenges affecting your team, so you can properly mitigate these roadblocks.
Track & Measure the Success of Each Sales Territory
Depending on how your territories are structured, there may be variables that make incentive structures different for each territory, causing an added level of complexity to tracking and managing commissions for your sales team. When calculating sales compensation for multiple sales territories, you need a flexible and reliable solution to make sure that your commission payouts are accurate.
Core’s platform is an extremely flexible solution that makes it easy to setup specific commission conditions for each territory while comparing revenue generated from each sales team. No matter how you’ve organized your sales territory commissions, Core can automate it.
Contact us for more information or schedule a demo and we’ll show you how easy and affordable it can be to simplify territory commission management.