The purpose of using sales territories is to assign sales accountability and to measure sales progress. A sales organization can choose to make this a simple process or a complex process. I am sure there are examples of organizations that require many layers of management and measurement that make the process somewhat complex. My vote is for keeping it simple. Build sales territory maps using counties, states, and zip codes.
Sales territory creation organizes your sales force. In most cases sales managers want their sales people in separate, clearly delineated sales sections. This helps drive accountability; it focuses the sales person on their own unique set of goals. It also anchors the sales territory assignment in sales logic; that is, territory assignments are developed through an awareness of facts.
One fact may be the concept of sales territory overlap. The best sales territory software will include the ability to show territory overlap as an option. Sometimes sales managers allow sales people to share territories, others do not. Allowing overlap could be due to legacy relationships, work load, or training realities. Each company handles sales overlap differently.
Sales territory facts can be multifaceted. A sales territory could be assigned based on historical sales data. Sales volumes vary by region and balancing the sales load, as well as sales compensation, only makes sense. Contributing factors towards an historical sales territory assignment might include the number of sales people available for assignment, how geographically spread out your target area is, and where most of the sales are located.
Sales territory facts could also include results of a demographic analysis. The sales assignment justification may use population, median income, and household levels per zip code as its basis. Or some companies may choose to import additional demographics such as health or real estate statistics, depending on your industry. All statistical additions should contain a location component (zip code, county) to connect it to territory assignment logic.
Still further factual justification could be based on the location of customers and known prospects. This is especially important where sales and service rep travel has a significant impact on expenses. A visual analysis of key customer locations informs the sales manager of obvious territory assignment needs, and leads to proper focus on more dense and thus complex areas. Add to this list a view of where your sales people start their day (office or home) and where all your competitors are located and you have a pretty complete picture of your business network.
Most business mapping software applications provide an easy and simple way to build sales territories by applying standard administrative districts e.g., counties, states, and zip codes. These common geographic segments simplify and organize sales territory management.
For the most part, the physical boundaries of these areas are well known, and agreed upon. This can come in handy when attempting to negotiate sales responsibilities between two or three aggressive and commissioned sales reps; all sales professionals can agree on a boundary and an account location.
A zip code, county, or state is also easily converted to a demographic map. Population, household, income or other demographic data sets are routinely published in geographic segments which enable informative map views that can help define and quantify a territory. Especially when selling consumer products a demographic perspective can clearly illustrate market potential.
When drafting boundary lines for territories it just makes good sense to follow existing administrative boundary lines instead of creating arbitrary lines. Here’s a partial list of reasons why:
• Arbitrary lines have no basis in the real world. How does a sales person adhere to an imaginary random line? Random lines create gray areas which can decrease accountability.
• Arbitrary lines are a lot more work to create, requiring advanced drawing tools and techniques that take time away from the business of selling.
• Because arbitrary lines require more work, sales managers are reluctant to change them which can impede territory management, territory adjustments, and process measurement.
• Arbitrary areas cannot be associated easily with published Census demographics.
Using simple administrative districts as a basis for sales territories allows managers to create higher level territory tiers or regions that provide overall sales management districts for handling groups of sales associates. These management regions distribute the management load while providing sensible geographic segmentation to the sales process.
Developing sales territories based on administrative districts also allows users to build spatial queries that relate and display account and prospect business data to sales territories. Now your critical account base and your target accounts are associated with sales territories, and that is the fundamental criteria for sales territory accountability. Armed with such a geographic sales database a sales manager should be able to drill up or down to view sales results and responsibilities at various levels within the sales organization. Measurements applied on a monthly or quarterly basis will provide all the detail necessary to improve results. As a result sales planning, travel and measurements will all improve.
Export those results and expectations into your sales funnel analysis and begin to control your future.
In review, Sales territory software assignments drive sales decision making, develop sales goals, and help sales people monitor their own progress. Use a web-based business mapping software to help you build sales territories. It should be easy, affordable, and an improvement to your business work flow. If it’s not, go find another one.
www.mapbusinessonline.com – America’s fastest growing business mapping software. Contact us for a web demo of sales territory management tools.