Since January 1st, your top 3 sales reps have all left the company. The one that actually completed his Exit Interview put it bluntly:
“My quota has been unrealistic for 5 quarters. I’ve brought in new business in new verticals. I’ve filled my pipeline with qualified leads. Still, there’s no chance of hitting my kicker this quarter. Simply put, my LinkedIn Network is more valuable to the competition.”
It sounds like your comp plan is not working. But does the issue go even deeper? These strong reps may not be in the right territories calling on the right accounts. It may be time to assess whether your territories are optimally designed.
Determining the number of accounts, prospects and total potential for each rep
Creating accurate quotas and comp plans
Getting the best reps in the best territories
In many organizations, territories are designed on historical precedent. Sales Ops may also use intuition to ‘gut check’ whether these patches are fair. But further analysis can be eye opening. There may be unbalanced patches of customers, suspects, opportunities, spend potential and geography. Here are 5 steps for designing your territories.
Step 1: Segment customer base and analyze market potential
Organizations that have conducted analysis of their territories first segmented their customer base to understand the market. To do so, they relied on 4 pieces of data:
Customer Master Database – You need to know the current accounts, where they are and what they are spending.
Complete set of Opportunity records – What opportunities are in the pipeline and what is the total potential?
Complete set of Lead records - What is at the top of the pipeline?
Third party suspect database – How large is the market for your product or service? What is the potential for organizations that have been touched?
Needless to say, the more accurate your Sales Force Automation data the better.
Step 2: Rank your talent
With these 4 inputs you can assess the true potential of your market. The next step is to look at your sales reps. Ask the following questions:
What was revenue attainment per rep last year?
How much potential is in their territory patch?
How many current customers and opportunities are in their patch?
How many ideal company prospects are located in their territory?
Stack rank the reps based on these criteria. You will need this data later to ensure the top reps are in the best territories.
Step 3: Map customers and prospects
Determine where each prospect and customer is located. Choose locations where the buying center would be located (typically HQ). Determine what each account is currently spending and the workload required to service the account. This is also the time to consider your sales org structure. How many of those accounts are Enterprise, Key Accounts and SMBs? What types of reps will be calling on each account?
Step 4: Create territories
You can now create territories and assign relative quotas and compensation packages based upon realistic potential. Consider the number of customer accounts and their potential spend. Do the same for prospect accounts. Finally, think about the workload required in each territory.
Step 5: Review territory map
Take the sales rep stack ranking you created in Step 2. Are the top reps managing the territories with the top potential? You may need to move reps into new territories. You need to ensure the best people are managing the best territories. You may also need to add and subtract accounts based on analysis.
You’ve now realigned territories and the right reps are managing them. Your resource allocation is optimized. The benefits will be realized in three ways:
Balanced territories allow for better customer coverage and equal opportunity – The organization will realize its true revenue potential
Aligned territories enable greater selling time and reduced travel – The reps will have more time to sell
Provides confidence in quota setting and compensation plan (with accelerator payments) – Both the organization and the rep will see the benefits.
There are many causes of rep turnover in a sales organization. In our experience, most cases like this are due to misaligned territories. A strong territory design project relies on properly deployed account segmentation. These two in combination will allow your top reps to flourish. They will bring the revenue in and be compensated for it. Keep your top talent by giving them the territory to make the number.