Most of our clients want to talk about growth. Very often the first place they look is external – What new channels could we sell through? What new products should we emphasize? Are there additional partners we can tap into?
That’s all well and good, but what we find more often than not is that internal factors are a much more serious constraint. These factors can run the gamut from how resources are structured and/or allocated, broken internal processes between departments that support sales and the sales function itself, or misaligned incentive compensation plans. Recently, however, we have come across many cases of territory inequities. Below are the most common situations.
Too Many Accounts
- When we work through our analyses, we sometimes find sales people with 100+ accounts, particularly if the organization also has a commission-based incentive plan – When talking with the reps, the old tried and true rules reign, and they are only actively calling on about 20 percent, leaving the other accounts in a passive, “respond if needed” status.
Too Much Territory
- Territories that are too large to be handled effectively by one sales person are also quite common. In our rep interviews we often find that reps will only call on customers within a certain distance of their home base to avoid overnights, or will only go to customers if they are clustered – e.g., a particular city. When we complete our analyses, we often find there is a lot of money left on the table for your competitors to take, and sometimes the analyses show that the territories simply are not profitable – This is particularly true for the northern and western states where population centers and potential customers are scarce.
Too Much Territory Imbalance
- Sometimes we will discover that there are two or three tiers of territories, with the tenured, seasoned reps getting the good territories through active account acquisition over the years, with new sales people and the rest being stuck with dregs, leading to frustration, disillusionment, and eventually turnover – It also goes back to the “too many accounts” quandary with viable growth accounts not being actively pursued, because the tenured rep simply has too many to manage.
Fixing these challenges is relatively straightforward from a theoretical perspective but often difficult to implement from a people perspective. Solutions range from covering smaller or more remote accounts by a different channel (e.g., distributors) or sales force (e.g., telesales), creating new territories that balance the larger and smaller accounts with a more manageable number, or develop an actively managed web strategy. The first step, however, is to generate awareness and acknowledge that the challenge exists and is hurting the business.
Are your territories well-designed and equitable?