What is Territory Planning?

Territory planning is the critical process by which sales organizations divide the coverage of prospects and customers between sales teams. Most commonly, sales territories are groupings of accounts organized by common attributes like geography, industry, or company size. Good territory planning achieves three goals:

1. Maximize Sales Efficiency - The amount of time that reps have to sell is finite. Spending that time selling to the most qualified accounts is crucial to hitting revenue targets. You don’t want sellers wasting time on the wrong accounts or data mining.
2. Create Equitable opportunities - If reps don’t feel that they have a chance to achieve quota, it can erode trust. Territory planning is a productivity and retention exercise. You don’t want sellers leaving due to lack of opportunity.
3. Prepare to Adapt - Territory planning provides a structure for changing sales teams to serve changing markets. You don’t want to redo the exercise every time a seller leaves, a new product is launched, or the market changes.

How does Sales Territory Planning Impact Revenue?

According to the Harvard Business Review, optimizing sales territories alone can increase sales by 2 to 7%. Given the return on investment when compared to the effort required to create balanced sales territories, this overlooked task can be a lucrative opportunity for businesses. By focusing the right reps on the right types of clients, sales organizations can maximize productivity, hit revenue targets, and increase rep retention.

Effective Territory Planning in 5 Steps

Territory Planning is a six step process. For different companies, some of these steps are more intensive than others. But the framework holds across industries, sizes, and shapes. A well run territory planning cycle should derive from the target customer and rally the team around serving them.

Step 1: Determine Ideal Customer Profiles (ICP)

In order to approach the market, sales organization need to know which customers to prioritize. You don’t want your reps to waste time cold-calling an entirely remote business trying to sell them office furniture. Sales organizations need to align on the attributes of customers that are going to help them to achieve their goals. These attributes need to be explained in data that can make their way to other downstream processes. The more specific you can be, the more direction you give your team.

An example ICP might be companies headquartered in the USA between 250 and 1,000 employees and are brand owners in the retail grocery sector. C-Level executives should always provide sales and marketing teams with top 10 or top 20 target customer lists to inform this process.

Step 2: Prioritize Accounts & Determine TAM

After the ICP exercise, sales organizations now have a framework for understanding the potential of an account. Teams need to next use these ICPs to prioritize and understand their TAMs. At the end of the day, a TAM is just a list of accounts. By using some simple filtering and scoring with the ICPs, your can rank the accounts in the TAM. This is needed because you won’t be able to reach all of them…so you need to figure out where to focus.

Step 3: Determine Serviceable Addressable Market (SAM)

Now that the total list of accounts is prioritized, sales organizations need to determine how many accounts can actually be covered. There might be 500,000 accounts in a TAM, but only 4 sales reps. The SAM is determined by using rep capacity to whittle down that number into the top accounts to tackle.

Step 4: Distribute the SAM Accounts

The most challenging step in creating balanced territories is to assign the accounts across the sales organization There are loads of variables related to sales organization (rep tenure, existing relationships, compensation…) and their accounts (size, industry, geography, potential…).

Step 5: Implement and Maintain the Model

Once the accounts are matched to reps, they need to be published so that people can get to work. There’s usually some final ‘horse trading’ and cleanup to get accounts out the door. But once the accounts are assigned, the process does not end. Throughout any period of time market shifts will force changes to the ICP and sales teams will change. Companies need to ensure that a process is place to achieve all three of the goals continuously throughout the year.

Territory Planning Software

To achieve the three goals, many companies turn territory planning software like BoogieBoard. These softwares allow businesses to transition from a static approach (usually in spreadsheets) to a dynamic one. Some even use AI to handle parts of the process for you.

By automating sales territory planning, sales teams can get accounts assigned more quickly, cover more efficiently, and keep reps happy. With Territory Management software, data can be updated and revised throughout the year, alleviating the burden of annual territory planning. Businesses that embrace a continuous go-to-market planning strategy lose less time, get quotas out quicker, and generate competitive advantages in their markets.