Planning a sales territory requires a meticulous approach to ensure your sales team can accomplish targeted goals and build meaningful customer relationships in each territory.
But what’s the best way to approach planning new sales territories for your business? This guide will show you as we dig into:
- A step-by-step guide to planning a new sales territory
- Best practices for segmenting, visualizing, and managing sales territories
- How to use a sales territory planning template
- An example of how one business leveraged sales tech tools to streamline growth in a new sales territory
Let’s begin with a more detailed explanation of why sales territory planning is worth your time and effort.
What Is Sales Territory Planning?
Sales territory planning is a systematic process used to divide markets into manageable sections. The primary goal is to optimize sales efforts, maximize efficiency, and enhance overall performance.
Planning sales territories involves delineating specific geographic areas, industries, or customer groups. A business then assigns sales teams or representatives to these market segments and strategically allocates resources to meet predefined business objectives.
Why Is Sales Territory Planning Important?
Sales territory planning is vital because it ensures your sales team efficiently uses their time and effort. A sales territory plan also directs attention to untapped territories or markets and measures the year-over-year performance of each territory.
How to Plan a New Sales Territory: A Step-by-Step Guide
Planning a new sales territory requires a strategic approach. The following step-by-step guide provides a framework for sustained growth.
1. Understand Your Business Goals and Objectives
Begin by aligning your plan with what your business aims to achieve. Set clear sales targets for the upcoming year, factoring in how well you converted leads before and what you expect going forward.
For example, if your business is prioritizing market expansion, you might focus on territories with high growth potential or untapped markets. This approach would ensure your sales efforts directly contribute to the broader business objective of reaching new customers and increasing market share.
2. Study Your Prospects and Customers
Once your business goals are clear, shift your focus to understanding your potential customers in the new territory. Identify your most profitable customers and analyze what sets them apart. Dive into the commonalities among these customers, exploring their industries, needs, and preferences.
By understanding your profitable customer base, you gain insights that directly inform your strategy for the new territory. This ensures that your sales efforts align with your broader business objectives and resonate with the specific characteristics of your target audience in the new territory.
3. Calculate Your TAM
Calculate your total addressable market (TAM) — the total number of prospects or customers that fit your ideal customer profile. This calculation helps guide your sales strategy, ensuring you tailor it realistically to the size and scope of the potential customer base.
For instance, if your TAM indicates a substantial market size, you might adopt a more expansive approach, focusing on broader outreach strategies. On the other hand, a smaller TAM might necessitate a more targeted and precise sales strategy to maximize your impact within the available market scope.
4. Conduct a SWOT Analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats:
- Strengths. Evaluate what your company excels at and how to leverage these strengths in the new territory. Strengths could include a strong brand reputation, innovative products, or a highly skilled sales team.
- Weaknesses. Identify areas where your company may face challenges. This could be gaps in your product offerings, limited brand awareness in the new territory, or any internal limitations.
- Opportunities. Explore potential avenues for growth and success in the new territory. These opportunities could be emerging trends, underserved market segments, or partnerships that can enhance your market presence.
- Threats. Recognize external factors that may pose challenges. This could include intense competition, regulatory hurdles, economic uncertainties, or shifts in customer preferences.
5. Document Sales Territories in Your Sales Playbook
Document your sales territories in a comprehensive sales playbook. This playbook serves as a central guide for your sales team, providing them with the necessary information and strategies to navigate the new territory.
Ensure your sales playbook includes the following:
- Geographical Locations. Accurately identify and map out the geographical locations of each sales territory. Conduct extensive research to delineate boundaries and prevent any overlap.
- Segment Boundaries. Clearly define segment boundaries, addressing any potential overlap and outlining how it will be managed to avoid conflicts among sales teams.
- Assigned Sales Teams. Specify which sales teams are assigned to each territory. This clarity ensures accountability and a streamlined approach to territory management.
- Responsible Sales Reps. Clearly outline the sales reps responsible for each segment of the territory. This information ensures a designated point of contact for customers within each area.
- Products and Pricing. Document the products or services to be sold in each territory and any customized pricing strategies. This information equips sales teams with a clear understanding of their offerings and how to position them in the market.
6. Set Goals for Your Sales Territories
Goal-setting provides a roadmap for your sales teams, aligning their efforts with specific objectives and ensuring everyone works toward a common purpose.
Consider the following when setting goals for your sales territories:
- Individual Sales Rep Quotas. Define individual sales rep quotas for each territory. This ensures that each rep has a specific target, creating a sense of accountability and motivation.
- Stretch Goals. In addition to standard quotas, incorporate stretch goals for each territory. These ambitious targets challenge your sales reps to surpass their usual performance. Stretch goals can also drive innovation and push your team to explore untapped potential within the new territory.
- Pipeline Assessment. Evaluate the existing pipeline in each territory. Understand the current status of leads, prospects, and ongoing deals. This assessment provides valuable insights into the groundwork laid in the territory and helps set realistic goals.
- Existing Market Opportunities. Identify and capitalize on existing market opportunities within each territory. Analyze trends, customer behavior, and competitive landscape to ensure that your goals align with the unique dynamics of each market.
7. Set Performance Metrics for Evaluation
Performance metrics serve as benchmarks, critically evaluating the performance of your sales teams and the overall success of your endeavors in each territory.
Consider the following performance metrics when evaluating your sales territories:
- Sales Conversion Rates. Monitor the percentage of leads that successfully convert into customers. A high conversion rate indicates effective sales strategies and customer engagement.
- Customer Acquisition Costs. Evaluate the costs associated with acquiring new customers in each territory. Understanding the expenses involved helps optimize budget allocation for maximum return on investment.
- Revenue Growth. Track the revenue growth in each sales territory over time. This metric directly reflects the success of your sales efforts.
- Customer Satisfaction. Implement surveys or feedback mechanisms to gauge customer satisfaction within each territory. Satisfied customers are more likely to become repeat buyers and advocates for your brand.
Sales Territory Planning Best Practices
As you begin planning sales territories, keep the following best practices in mind to ensure a strategic and effective allocation of resources.
Conduct Thorough Market Research and Analysis
A robust foundation in market analysis is the cornerstone of effective sales territory planning. Before drawing out your sales map, dive into the nuances of each territory, uncovering key players, market trends, and potential challenges.
Define Clear Territory Objectives and Goals
Whether it’s boosting market share growth, acquiring new customers, or hitting revenue targets, well-defined objectives align your team’s efforts and create a measurable path to success. Articulate precisely what you aim to accomplish in each sales territory.
Prioritize Key Customer Segments and Prospects
Recognize that not all customers carry equal weight. Focusing your efforts on high-potential clients — matching your In-Market Ideal Customer Profile (IICP) — maximizes the impact of your sales strategy, ensuring a more efficient use of resources.
Leverage Technology and Data for Insights
Data analytics and sales intelligence tools can provide invaluable insights into customer behavior, market trends, and competitor activities. By harnessing this information, you make informed decisions that optimize your sales strategy, ensuring it aligns with market dynamics.
Regularly Review and Adapt Territory Plans
Regularly reviewing and adapting your sales territories is vital for your success. Markets change, and you optimize your resources effectively by staying on top of these shifts. This process ensures your team focuses where it matters most, capitalizing on emerging opportunities and maintaining a customer-centric approach.
Sales Territory Mapping
Sales territory mapping is the strategic process of visually defining and organizing geographic areas assigned to sales representatives. This approach transforms abstract data into a clear, visual representation of the sales landscape.
By visually delineating geographic areas, you can enhance resource allocation, prevent overlap, and ensure efficient coverage. This process also enables sales teams to focus on specific regions, understand customer needs, and tailor their strategies for more effective engagement.
Sales Territory Mapping Software
Sales territory mapping software visually organizes and optimizes sales territories using mapping and Geographic Information Systems (GIS).
The software integrates customer data, demographic information, and market trends, providing a comprehensive understanding of each territory. With analytical features, teams can assess performance metrics and make data-driven decisions.
Examples of sales territory mapping software include eSpatial, MapBusinessOnline, and Maptive.
Sales Territory Management
Sales territory management is the ongoing execution of your plan, ensuring effective sales operations within designated territories.
The following tips will help you effectively manage your sales territories.
Monitor Sales Performance and Metrics
Regularly monitor key performance metrics, such as sales targets, customer acquisition rates, and revenue growth. These metrics serve as the pulse of your sales territories, providing insights into what’s working and where adjustments are needed.
Adjust Territories in Response to Changes
Stay attuned to market shifts, customer behavior changes, or emerging trends. When needed, be ready to reallocate resources, redefine boundaries, or introduce new strategies to keep your territories aligned with business objectives.
Ensure Equitable Workload Distribution
Ensure that workloads across sales territories are distributed equitably. Consider factors like territory size, potential, and complexity. This not only prevents burnout among sales reps but maximizes efficiency across the entire team.
Provide Support and Resources to Sales Reps
Offer continuous support and resources to your sales reps, whether it’s training programs, updated marketing materials, or sales tech tools. Empowered reps are better equipped to navigate challenges and contribute to territory success.
Handle Territory Conflicts and Challenges
Whether it’s overlapping territories, disputes over leads, or differing objectives, swift resolution is crucial. Establish clear communication channels and a defined dispute resolution process. Encourage collaboration to turn challenges into opportunities for growth.
Sales Territory Methods
Sales territory methods are approaches used to organize and assign territories for sales operations.
Here are some common methods and approaches to sales territory planning, along with the pros and cons of each method.
Geographic Territory Segmentation
Geographic territory segmentation breaks down markets based on location. This method ensures that each sales rep is responsible for a specific geographic area, enabling focused and localized strategies tailored to regional nuances.
Pros
Localized Strategies. Enables tailored approaches specific to regional characteristics, leading to better engagement.
Efficient Travel. Reduces travel costs and time by assigning reps to defined geographic areas.
Clear Accountability. Clearly assigns responsibility, making it easy to track performance within each region.
Cons
Limited Industry Focus. May lack specialization in industry-specific nuances or challenges.
Overlapping Boundaries. Geographic territories might not align with market demand, leading to overlapping efforts.
Potential for Inequality. Varied market potential across geographies could result in imbalances in workload and opportunities.
Account-Based Territory Segmentation
Account-based territory segmentation divides territories based on specific key accounts and tailors strategies to high-value clients’ unique needs and characteristics. This method ensures a personalized and strategic approach to account management.
Pros
Highly Targeted Approach. Precision in targeting high-value accounts for personalized engagement.
Strategic Account Management. Enables tailored strategies for each key account, fostering long-term relationships.
Maximized ROI. Focuses efforts on high-potential clients, optimizing resource utilization.
Cons
Narrow Market Scope. Might miss potential opportunities outside the selected key accounts.
Resource Intensive. Requires in-depth research and personalized strategies, demanding significant resources.
Risk of Account Loss. Heavy reliance on key accounts could pose risks if they encounter challenges or fluctuations.
Industry-Based Territory Segmentation
Industries have their own rules, challenges, and language. With industry-based territory segmentation, sales reps become experts in a designated industry, allowing for a deep understanding of client needs and industry trends.
Pros
Specialized Knowledge. Sales reps become experts in a specific industry, building credibility and trust.
Tailored Solutions. Strategies aligned with industry challenges and trends, providing relevant solutions.
Focused Marketing. Allows for concentrated marketing efforts, resonating better with industry-specific audiences.
Cons
Limited Market Reach. May miss opportunities outside the designated industry.
Industry Fluctuations. Vulnerable to economic downturns or changes specific to the chosen industry.
Skill Set Variability. Reps may need diverse skill sets to adapt to different industry requirements.
Hybrid Territory Segmentation
Hybrid territory models combine elements of different approaches. This approach allows for a tailored strategy considering elements from two or more sales territory segmentation methods. The hybrid model also ensures adaptability to diverse market conditions.
Pros
Adaptability. Combines the strengths of different methods, allowing for flexibility in diverse market conditions.
Optimized Resource Allocation. Maximizes resource utilization by blending varied strategies based on market needs.
Cons
Complex Implementation. Requires careful planning and execution to balance multiple elements effectively.
Potential for Confusion. Reps might find it challenging to navigate hybrid models without standard guidelines.
Tailored Approaches for B2B and B2C Sales
B2B and B2C markets have distinct preferences. A sales territory segmentation method that works for a B2B audience might be less strategic for a B2C audience.
Consider account-based or industry-focused strategies for B2B businesses where relationships and long-term partnerships are crucial. In contrast, B2C businesses might benefit from a geographic segmentation approach to efficiently reach a broader customer base.
Sales Territory Planning Template
The following template transforms insights from this blog post into an actionable format.
Territory Overview
Purpose: Set the stage by outlining the key details of the territory, including geographic boundaries, potential market size, and any unique characteristics.
Tip: Use this section to capture the essence of the territory, providing a quick snapshot for easy reference.
Market Analysis
Purpose: Dive deep into the market dynamics. Analyze industry trends, customer behavior, and competitor activities to inform strategic decision-making.
Tip: Regularly update this section to reflect evolving market conditions.
Customer Segmentation
Purpose: Identify and prioritize customer segments based on factors such as demographics, pain points, industry, and potential value. Use this information to tailor your sales approaches.
Tip: Leverage data analytics to refine customer segmentation for more targeted strategies.
Sales Objectives and Goals
Purpose: Clearly articulate what you aim to achieve in the territory, whether it’s market share growth, customer acquisition, or revenue targets.
Tip: Make objectives SMART—Specific, Measurable, Achievable, Relevant, and Time-bound.
Resource Allocation
Purpose: Break down the budget for the territory, specifying allocations for personnel, marketing, travel, and other necessary resources.
Tip: Regularly review and adjust resource allocations based on performance and market changes.
Customization Tips
Industry-Specific Customization
Tip: Tailor the template to suit the unique needs of your industry. For example, for enterprise software technology sales, emphasize emerging trends.
Team-Specific Adjustments
Tip: Consider customizing sections based on individual strengths if you have a sales team with diverse skillsets. For example, adjust accordingly if a sales rep excels in account-based strategies.
Continuous Improvement Section
Tip: Include a section for periodic reviews and improvements. Encourage team members to provide feedback on the effectiveness of the plan.
Sales Territory Planning Example
In this real-world case study, Stef Iacono, 6sense’s European Marketing Director, shares insights from the launch of the EMEA territory in December 2021.
Here’s an overview of the challenges faced during that process and how 6sense’s platform helped make the launch a success.
Building the Target Account List (TAL)
Building a target account list can be tedious, often involving lengthy discussions between marketing and sales teams. The process usually involves reconciling differing opinions and insights from both teams to ensure the list accurately reflects the target audience and maximizes the effectiveness of sales efforts.
6sense simplified the entire process for Iacono’s team. After receiving information on the ideal customer profile, 6sense used AI to generate a target account list, eliminating debates and relying on unbiased information.
Understanding Buying Stages
Iacono’s team encountered a common challenge of efficiently managing accounts in different buying stages. To overcome this, they used 6sense to reveal the buying stages of each account. With this information, they adapted their strategy, focusing on accounts in-market and primed for sales.
Generating Awareness in New Territory
Generating awareness in a new sales territory is a standard challenge. While digital advertising is usually the quickest way to overcome this challenge, Iacono’s team faced advertising constraints due to local legislation and a low number of accounts in the awareness and consideration stages.
6sense’s integration with LinkedIn Ads provided a cost-effective solution, tailoring ads to each buying stage. Using the account score filter, they were able to identify where strong-fit accounts were in the buying journey and target them with tailored LinkedIn ads.
Prioritizing and Adding New Accounts to Prospect
Another common challenge in launching a new territory is populating the CRM with relevant accounts for effective prospecting. Despite limited data, adding new accounts and prioritizing accounts further along the buying journey becomes crucial.
Iacono’s team addressed this challenge by creating a Salesforce orchestration, generating accounts for prospects in the decision and purchase stages. This streamlined CRM population allowed for efficient outreach to prospects actively in-market.
Dividing the Sales Territories
The challenge in dividing sales territories lies in preventing overlap and establishing clear ownership to avoid potential conflicts and inefficiencies. It requires a nuanced approach to determine which sales team leads a deal, especially with international accounts. The goal is to ensure a fair and effective distribution of accounts among regional sales representatives.
Iacono’s team resolved this issue by operating on an “ultimate parent company” basis, where an account belongs to the AE in its region. A nuanced 80/20 split was applied for international accounts based on the buyer’s location, allowing precise ownership allocation and avoiding potential conflicts among sales teams.
Conclusion
Strategic sales territory planning is essential to your company’s success. It aligns objectives, optimizes resources, and guides your sales teams to conquer markets. Embrace the strategies and best practices shared in this guide to elevate your planning.
6sense can help you gain actionable insights on potential customers in new territories and implement data-driven decisions, ensuring your sales territory planning translates into tangible achievements and sustained growth.
Want to see how for yourself? Book a demo of 6sense!
