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Best Practices for Creating and Maintaining Territories
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What are Territories?
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They’re tools for allocation.Territories are groups of customers, or geographic districts that are assigned to a single field representative or group of representatives.
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Dividing up Customers is Tough.
For entrepreneurs and small businesses, the easiest way to divide up a constantly growing pool of customers is through territories.
Setting up territories can be easy with the right planning, but first, ask yourself the following questions:
What criteria should I use for dividing up territories?How do I balance cost of travel with gain from territory?What factors in my industry are specific to me?
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Don’t go it alone.One person cannot make a big enough impact to establish a product in the market. Invest in merchandisers, whether it means hiring your own team, or partnering with a 3rd party.
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Setting Benchmarks and Goals
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Balance & Define
Be Clear.
Strive to balance:WorkloadPotential GrowthTerritory Size
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So Where Do I Start?
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Method OneMarket Potential Method
Evaluate obstacles in an area being considered.
Decide what the future potential for growth is in that area.
Figure out the desired level of penetration for your business in
the territory.
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Method TwoHistoric MethodLook at sales or penetration from
the previous period.
Look at competitors or market leaders for figures if your business
has none.
Incentive your criteria (sales, promotion, etc.) to balance
individual drive and teamwork.
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Method ThreeFull-Time Equivalent
Determine how many full-time equivalent field reps are on the
team.
Multiply by the break-even point per field rep.
Add in desired profit margin to get a rough estimate for desired sales
in a territory.
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Evaluate the Customer and Create Territories
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Avoid the Number One Common Mistake
Stick to the Plan
Don’t divide up territories based on the number of customers in an area.
This may seem like a good idea at first, but if reps are physically visiting each location, there may be big variations in the distance between customers. How do you get around this? Prioritize potential sales volume above number of customers reached
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A thin line to walkAccording to a study by Northwestern University:“Many sales forces are losing a significant amount of money each year due to territory imbalances.”
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Build from the ground upThe same Northwestern University study claims:“Well-Managed companies are overcoming the obstacles to good territory design by using a structured process to ensure that their alignment enhances sales force productivity.”
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Crunching the Numbers
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“If the statistics are boring, then you’ve got the wrong
numbers.”—Edward Tufte
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Know what data you need & how to get it
With mobile technology, each rep can have a mix of physical and virtual customers to even the
workload.
Physical interactions with clients are generally longer than virtual ones.
Will your reps need to drive to reach customers? If some client meetings are virtual and others digital, try tracking average interaction time.
Data is King
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Use the right tools for the job
GPS tracking tools let managers see where their reps are in real time, so
that they can help customers quickly.
Reps should be able to quickly communicate with managers
wherever they are.
Make sure to leverage mobile technology that gives your reps all the tools they need to perform in the field.
Collecting Data
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Adapting and Evolving
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Change to stay alive
Re-evaluate & Re-align
Over time, demographics within each territory will change, as will the technology being used those territories.
Make it a habit to review and tweak territory strategies about once a year. While it’s not easy, annual evaluation leads to a more productive and happier field team.
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Let clients know when you’ve switched reps up, so that they are not caught off guard.
Switch it up
A Northwestern University study shows that for some customers, a change in rep is a good thing. How do you know when to change?
Have a central benchmark to judge each territory by.Make sure that benchmark is quantifiable.Take into consideration team morale, personality, and skill.
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Putting together the pieces
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Keep at it!
While often difficult to implement, and impossible to perfect, territory management is a vital skill for any entrepreneur or business to have. Being able to optimize the work of teams in the field may seem like a minor addition to a business plan, but when customers build a repertoire with field representatives and interact with them regularly, it opens the door to new leads and potential customers.
Without sales territories, field representatives are not operating at the efficiency they could be, but with them, businesses can perform beyond what they previously thought possible.
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Thank you!
