May27
How To Design Effective Sales Territories
Posted by Nick in Corporate Sales Training | 2 Comments
File under sales territories
The Best And Most Effective Sales Territory Designs
My first sales territory was single building in New York City. Fortunately for me that building was The Empire State Building. I started at the top and worked my way down the stairwell. It’s much easier to walk down the Empire State Building than to walk up it.
Today, let’s explore options when it comes to designing effective sales territories. I’m talking about pure vanilla sales territories so let’s leave Key Accounts, Major Accounts and National Accounts out of the equation. I want to look at the pros and cons of the sales territory design options available to sales managers.
Geographic Sales Territories
Most sales territories are based on geography. There are two major benefits found in geographic sales territories. The first is Time Management. Windshield time is greatly reduced because opportunities and accounts are concentrated in one area.
The second benefit of geographic sales territories is reduced account conflict. Salespeople can’t argue over accounts because an account is either located in the geographic territory or it’s not. Conflict can arise over sub locations so always base ownership on the location of the Home Office.
There is a major downside to geographic sales territories. Since all opportunities are protected, a “hungry” sales rep is locked out of them. Also, networking leads and account referrals may have to be turned over to the salesperson that controls the geographic territory.
Vertical Territories
Vertical territories are based on industry. The benefit is that you develop industry application specialist. This sales territory design is effective because it improves consultative selling strategies. Prospects enjoy working with industry experts.
There are some downsides to Vertical Sales Territories. Travel time increases and there is always a possibility that a solid sales rep will get assigned to a vertical market that is experiencing difficult times. In addition, it is difficult to assign every industry to different salespeople so some industries may not get covered.
Open Sales Territories
Open sales territories are, in reality, no sales territories. Anyone can sell anything anywhere. Open sales territories are effective because they benefit aggressive sales reps. Everyone is working in a “you snooze, you lose” environment.
I see many benefits to Open Sales Territories. High sales activity gets rewarded. However, you need firm and consistent rules concerning when and how a salesperson can claim involvement in and ownership of an opportunity.
There are some downsides to Open Sales Territories. Account conflict will defiantly increase. Open Sales Territories generate a lot of “I was there first” arguments. In addition, time management decreases because sales reps start driving up and down the entire county.
As you can see, designing effective sales territories is no easy task. I urge you to consider what it is you hope to accomplish with your sales territory designs. Here is a quick sales territory guide for you.
- Less Account Conflict – Geographic Sales Territories
- Increased Sales Activity – Open Sales Territories
- Improved Consultative Selling – Vertical Sales Territories
I hope you now better understand the pros and cons of the different sales territory options.
To your sales team’s success!
Nick
Other Sales Training Articles Of Interest
What It Takes To Succeed In Sales
The Sales Process Is The Only Key To Sales Success
Training In Sales For Beginners
How To Sell Technology, By Nick Moreno
Key Performance Indicators For Sales Reps
Cold Calling Tips And Advice For Serious Salespeople
There are 2 Responses So Far »
Comment by Zdena on 15 July, 2009:
What are the experiences with “protected accounts” and how to incorporate them into an open sales territory?
Thanks for your input.
Comment by John on 15 July, 2009:
I am not fully aware of your situation but in general, I am not a supporter of Protected Accounts. I think it is best to reward aggressive reps. An account should be protected only after a rep secures a successful first appointment. The sales manager must conduct monthly account reviews to insure progress is being generated. If not, the account is no longer protected.
Good luck with your territory plans.
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