Mastering Sales Territories in Sales Management
A well-defined sales territory strategy is essential for maximizing your sales team’s efficiency, targeting the right customers, and boosting revenue. Whether you operate in a network distribution model or a brick-and-mortar network of physical locations, sales territories help businesses, focus team efforts and drive growth. In this comprehensive guide, we explore the importance of sales territories, how to create and optimize them, and how location intelligence can be leveraged to achieve these goals.
What Is a Sales Territory?
A sales territory is a defined geographical area or a specific segment of customers assigned to a salesperson or a sales team. These territories are designed to manage and optimize sales activities, ensuring that sales efforts are focused on the right targets. Sales territories can be defined based on various factors, including geography, customers’ demographics, industries, or a combination of these.
Sales territories are used by B2B (Business-to-Business) and B2C (Business-to-Consumer) companies, whether they operate in insurance, telecommunications, finance, real estate, technology, food and goods distribution, etc.
In B2B environments, territories are often mapped out on a broader geographic area, focusing on the optimization of distribution and logistics. For B2C companies, particularly in brick-and-mortar retail, territories are more localized, aiming to attract and serve consumers in specific areas. Even in service-based businesses, sales territories play a critical role in targeting the right clients and tailoring offerings that meet the unique needs of customers within each designated area.
The Important of Establishing Sales Territories
Geographic sales territories are crucial for several reasons. Firstly, they ensure efficient resource allocation. By defining clear territories, businesses can maximize their sales team’s time and effort, reducing wasted resources and travel time.
Moreover, sales productivity significantly increases with well-planned territories. Sales teams can concentrate on selling rather than competing internally for accounts, leading to a more collaborative and effective work environment. Each Sales Representative knows its specific area of responsibility, making it easier to measure performance and set meaningful targets. This accountability fosters a sense of ownership and increases motivation among the sales team.
Additionally, well-defined territories are essential for businesses to efficiently cover the market. They enable companies to access previously untapped customer segments, expanding their reach and maximizing revenue potential. This comprehensive market coverage ensures that no opportunity is left unexplored, creating a winning strategy. A study by the Sales Management Association found that companies with well-defined sales territories had a 14% increase in sales and 28% higher customer retention rate, compared to companies without defined territories.
Finally, scalability is a key advantage. As a business grows, its sales territories can be adjusted to accommodate growth, ensuring continued success. This adaptability is crucial in a dynamic market environment, allowing businesses to remain agile and responsive to ever-changing conditions.
How Often Should You Update Sales Territories?
The frequency of updating sales territories varies based on industry, business goals, and market dynamics. Many businesses review and update their territories annually, aligning with budget and planning cycles and allowing adjustments based on market and performance changes.
In fast-growing industries, quarterly updates are more effective, enabling quick adaptation to market shifts and resource reallocation. Significant business events, such as mergers or new product launches, also require immediate territory adjustments.
Regular monitoring of key performance indicators (KPIs) can highlight disparities in territory performance, suggesting the need for a realignment. Customer feedback and changes in preferences might also prompt updates to address specific regional concerns.
Changes in the competitive landscape, like new market players or exits, impact sales territory dynamics and require vigilance and adaptability. Technological breakthroughs and data insights can further inform on optimization efforts.
Lastly, as your customer base and number of contracts grow, adjusting territories ensures manageable workloads and adequate customer attention, maintaining high service and performance levels across all regions.
How to Optimize Sales Territory Mapping?
Optimizing sales territory mapping involves a strategic process designed to ensure that your sales team operates at peak efficiency, maximizing both coverage and productivity. There are four key steps to achieve this: data collection and analysis, customer segmentation, geographic visualization and balancing workload.
1. Data Collection and Analysis
Start by gathering comprehensive data on your current customers, prospects, sales performance, and market potential. This data forms the foundation for identifying trends and insights that will guide your territory mapping.
Here are geospatial datasets and tools for territory mapping:
- Precisely boundaries: Enrich your existing data with ready-to-use administrative and industry-specific boundaries to perform territory analyses.
- PSYTE US Segmentation: Understand who your clients are, where they live, and how to target them with geodemographic segmentation. The data classifies segments into 12 lifestyle groups and 63 mutually exclusive neighborhood types. For segmentation in Canada, PSYTE HD is available.
- Precisely Demographics: Collection of demographics, geodemographic, and consumer data covering more than 6.7 billion people for over 140 countries and territories around the world.
- Spectrum Spatial Insight: Solution to gain a 360° view of your market. Spectrum Spatial Insight helps you discover, analyze, and make informed decisions. It’s particularly useful for optimizing and planning network build outs, remodels, relocations, as well as forecasting sales and understanding cannibalization impacts.
2. Customer Segmentation
Leverage the geodemographic data collected in the previous step to segment your customers, based on various criteria such as geography, demographics, buying behavior, revenue and more. By understanding these different segments, businesses can accurately pinpoint opportunities, allocate sales staff more effectively, and enable them to tailor their approach with a deep understanding of who they’re engaging with.
If you want to learn more about segmentation data as a solution for sale territories, watch this on-demand webinar.
3. Geographic Visualization
Use a Geographic Information System (GIS) to visualize your data spatially. This step helps you understand the geographical distribution of your customers and identify high-potential areas. You can make dynamic adjustments as needed and even integrate competitive data, such as visualizing your competitors’ geographic presence.
4. Balancing Workload and Potential
Balance each area in terms of workload, sales potential and travel time if applicable. Ensure that territories are manageable for your sales team, while still providing opportunities to meet or exceed sales targets. This balance is key to maintain team efficiency and maximize overall sales performance.
How Can Korem Help with Sales Territories?
With the most diversified geospatial expert team in North America, Korem offer guidance and geospatial technology to help define and optimize sales territories. We help businesses create sales territories tailored to their unique needs, for various industries like telecommunications, insurance and banking.
We leverage data-driven insights, customer segmentation, and geographic analysis to design territories that enhance efficiency, customer relationships, and sales productivity.
Talk to an expert to explore solutions for your specific needs!
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