I started my career as a technical sales rep for the DuPont Company (a long, long, long time ago). Back then, the de facto way of structuring a sales team was to give each sales rep his/her own territory. And those sales territories were almost always built around geography… whether the company was selling regionally, nationally or globally. It made it easy for ‘road warriors’ to visit a lot of clients and prospects on a single road trip.
But today, with so many geographically-dispersed companies working virtually – and so much selling being done by phone and on tools like Zoom™ – defining sales territories by geography is not your only option. It’s also likely not your best option.
Defining Sales Territories
There are 4 primary ways to define sales territories:
- By geography, as mentioned above, is still an option. And for those that have clients that are based in a single, centralized office – that works fine. But what about those companies with multiple offices… or that have different brands based in different locations? With those sorts of ‘overlap’ issues, it can get very confusing. And yes, you can define a set of rules to manage through it, but it will – I promise – get convoluted over time, resulting in conflicts between sales reps.
- By client size. This idea has some logic behind it… give the small clients to your more inexperienced sales reps and the biggest companies to your most senior ones. But how to you define ‘large?’ By company revenue, by the number of employees or maybe by potential? Often ‘small’ (in size) companies will represent a large opportunity… and a large company a small one. Or what happens when a ‘small’ firm grows and crosses over to become categorized as a ‘large’ one… do you just switch sales rep and start the relationship all over?
- By industry served. Assuming you serve several different industries (as 90% of firms do), you could assign a rep to each industry… one for CPG, one for technology, one for financial services, etc. While the lines might be ‘cleaner’ than the other methods, it does have the potential for creating some very lopsided sales territories. CPG, for example, is very likely to be much larger than any of the others… and perhaps all of the others (combined). And that’s not really fair when compensation is involved.
- Randomly… yup, it’s also an option. As sales leads come in, they are handed off to the reps in rotating order; e.g. lead 1 goes to rep A, lead 2 goes to rep B and so on. Then it repeats. As a sales rep, you get what you get. It’s the luck o’ the draw! And from the perception of the sales rep… it NEVER works out evenly – most feel like they’re getting the short end of the stick… that the distribution is not equitable.
So, Which Method is Best?
I’ll start with the declaimer that it depends on a lot of factors… what you sell, who you sell to, the size & structure of your sales team etc. But, for most situations, I do think there is a clear winner… and for several reasons. I think that for larger firms, the best method for defining sales territories is to do it by industry served. Here’s why:
- By assigning different reps to different industries, over time, each rep will develop an expertise in their They become an expert in the trends of the industry they serve, the key players, common issues, etc. They become recognized on the trade show circuit, they build relationships with all kinds of people and businesses therein and they develop a high level of credibility. They become “known.”
- By attaining that ‘expert’ status in an industry, they get better at selling within that industry. They understand which solutions are best for solving which problems. They can bring to bear those shared experiences, so clients don’t have to not worry about trying something new… it’s already been ‘proven.’ Buyers want to know that their sales rep is good… and specifically, good in their
- It also becomes part of their sales presentation. Which of these is more compelling?
“I sell to all kinds of companies in all kinds of industries.”
“I specialize in this industry and no other. I have a depth of experience with companies in this space and can hit the ground running with you.”
To be fair, these sorts of sales issues are never easy. Every company and their specific situation is unique… the people, the products, the processes and the culture. But, in order to maximize your selling efforts – whether you have full-time salespeople or a team of seller-doers, defining sales territories (however you decide to do it) can create a very helpful framework for managing your sales team and getting their buy-in.
Good luck and good selling.