Are Geographical Sales Territories Dead?

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For decades, geographic sales territories have been a cornerstone of sales organizations. Sales reps have been assigned a specific geographic area to cover with the expectation that they build relationships and generate revenue within that region. However, in recent years, there has been a growing sentiment that geographic sales territories are outdated and ineffective. In this blog post, we'll take a closer look at the history of geographic sales territories, explore the rise of account-based selling and revenue operations, and determine whether or not geographic sales territories are truly dead.

  1. The History of Geographic Sales Territories - Geographic sales territories have been around for a long time. In the early days of sales, sales reps were responsible for selling products in a specific region. They would travel from town to town, setting up meetings with potential customers and trying to close deals. They might even provide a demonstration of a physical product which they carried around in a company-provided car. Before cell phones and the internet, it was the most efficient way to reach customers. Geographic territories divvy’d up work and became the most common way to structure sales organizations. Sales managers could more easily track the progress of their reps, and reps could focus their efforts on a specific area.
  2. The Rise of Account-Based Selling - In recent years, there has been a shift away from geographic sales territories towards account-based selling (ABS). ABS is a strategic approach to sales where sales reps focus on specific accounts rather than geographic territories. Sales organizations are now able to access more information about their target clients, which allows a more tailored approach in productizing and messaging. Instead of a geographic location being the commonality between accounts, reps can now consider things like industry, tech stack, funding stage…etc. These data are often used in combination to asses the quality and potential of a particular customer. Geography can even be thrown into the mix as one of the components used to describe an account.
  3. The Rise of Revenue Operations - Another factor contributing to the decline of geographic sales territories is the rise of revenue operations (RevOps). RevOps is a strategic team that focuses on aligning sales, marketing, and operations to drive revenue growth. RevOps are data and systems oriented in nature. Because of access to more advanced systems and data, RevOps teams often moved away from geographic sales territories and towards a more account-based approach.

Are Geographic Sales Territories Dead?

So, are geographic sales territories truly dead? The short answer is no. While there has been a shift away from geographic sales territories towards account-based selling, there are still many sales organizations that use geographic territories to structure their sales teams. Most sales organizations are trying to ways to better tailor their approach to accounts, which often means deemphasizing (but not entirely removing) geographical components. Instead of owning a set of zip codes a sales rep might now own an account list within a certain timezone. This is easier to manage operationally (hiring is less constrained, maps don’t need to be redrawn), but achieves some of the same benefit as the geo approach.

By focusing on individual accounts rather than geographic territories, sales reps can create a more personalized experience for each customer and tailor their sales efforts to the specific needs of each account. And with the rise of revenue operations, it's likely that more and more sales organizations will move away from geographic territories and towards a more account-based approach.

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