How to Optimize Inside Sales Territories
96% of organizations are increasing or maintaining their investment in inside sales. It is a good bet your SVP of Sales is implementing, expanding or considering an inside sales team right now.
Are you prepared to optimize the investment in inside sales? (To learn the latest on why insides sales is on the rise, sign up for our Making the Number Tour here.)
Over the last two months, I have had several in depth conversations with Sales Operations leaders who have been asking, “How do I optimize my inside sales team?” As I started to probe around challenges these organization were experiencing I began to realize it all started with performance conditions. Each organization simply transferred what they were doing with their outside sales team to their inside sales force. (Or, as I like to call it, the proverbial “because that is how we did it before” rationale).
Well guess what? Inside sales is not and should not be approached the same way as outside sales. It requires different equations, metrics and models because the constraints are different.
Where I have seen some of the greatest amount of pain is around territory design. For some reason organizations are thrashing on what to do. So let's walk through my framework around how to optimize inside sales territories.
4 Lenses to Optimize for Inside Sales Territories
Identify Market Opportunity
To effectively design territories, it is critical to identify the potential value of each target customer in the marketplace. The most effective way to do this is to perform account segmentation analysis which gives us the following:
- Identification of all potential customers
- Ideal Customer Profile
- Total Available Market
From these outputs you can assign a potential dollar value to each target organization. This will enable you to design territories where each sales representative has room to sell.
Key Takeaway: ensure equal opportunity in terms of total market potential ($) for each territory.
Evaluate Lead Generation
With the Chief Marketing Offices continuing to build lead generation capabilities, it is Sales Operations' job to understanding the lead flow and destination. To optimize sales territories you need to track:
- How many leads does each territory receive?
- What percent of leads convert into opportunities for each territory?
- What percent of leads convert into closed deals for each territory?
Several weeks ago, I was following up with a sales operations leader. I asked him how the new lead generation system was working. His response was, “It is awesome. However, all of the leads are only going to a half of my sales reps. If I don’t figure something out quickly, we are going to have anarchy.”
After much discussion, we determined that rural territories were not adapting to the lead generation activities as quickly as territories with urban populations. Thus, using the outsides sales territory design methodology wasn’t going to work for inside sales.
Key Takeaway: Monitor lead flow to maximize inside sales selling time.
Establish Buyer Migration
Buyer migration is the process of tracking where consumers of your product/service move throughout their career. The best way to capture this data is through a customer survey or customer interviews. The objective of buyer migration is to understand two things:
- Does the buyer change industries throughout his/her career
- Likelihood of the buyer to move geographic locations
If the buyer of your product/service never changes industries throughout his/her career then it makes sense to align territories to industry because it creates relationships and networks throughout an industry.
Geographic location works in a similar way. For example, let’s say buyers of your product/service typically don’t leave a geographic area throughout their career. It then makes sense to align your territories geographically to leverage relationship development and networking.
Key Takeaway: Monitor your buyer’s career and align your sales force to take advantage of networking and relationship development.
Review Sales Workload
Sales workload is about determining sales rep capacity. Does the rep have enough of a market, time and resources to accomplish his/her goal? The best way to evaluate sales rep capacity is to review the RACI (responsible, accountable, consulted, informed) matrix that should accompany your sales process and conduct a time study. (Sign up for our Making the Number Tour here to get our Time Study tracking tool) During the sales workload review we look for:
- What activities is the sales rep required to perform each day?
- How long does it take the rep to perform each activity?
The sales workload review will determine if a territory is too big, too small or just right. Based upon this evaluation, you can determine if you can add headcount over the course of the year or need to thin out the herd.
Key Takeaway: Conduct a sales workload study to identify sales rep time allocation and capacity.
Call to Action
If your VP of Sales is implementing, expanding, or managing an inside sales force right now it is your job to ensure it is optimized. When reviewing your territory design plan make sure to:
- Identify Market Opportunity
- Evaluate Lead Generation
- Establish Buyer Migration
- Review Sales Workload
I’m offering a free territory design strategy review sessions for Sales Operations leaders. You can reach me here to discuss how you can improve your compensation plan.
Author: Joshua Meeks
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