Sales Force Alignment Process
The process that we use for territory alignment has been refined over the course of hundreds of alignments. The process consists of several parts, and the following links describe each of those steps in greater detail:
- Building an alignment database and index
- Using territory mapping software to design territories
- Conducting sales force management field sessions
- Providing sales team with territory maps and reports
If you have any questions or if you would like to speak to us about our sales force alignment services please Contact Us. We also have an additional website specifically for information about territory design services for franchise companies.
Definition of Sales Territory Alignment
Sales territory alignment is known by various names, including: sales force alignment, territory design, sales force deployment, or territory re-alignment. Territory optimization is one of the goals of an overall sales territory planning process. It is one part of sales operations, which also consists of: customer profiling, sales force size, sales force structure, and call planning. In the alignment process, geographical boundaries (or account listings independent of geography) are created to assign work to sales representatives.
Studies show that over 75% of companies are missing 3% - 8% of unrealized sales because their territories are misaligned.
In an effective territory alignment, territories are created using a data-driven and quantitative process that helps sales management achieve their goals. Territory optimization goals include:
- Increasing sales
- Balancing workload among sales representatives
- Reducing travel time (also known as drive time / windshield time)
- Improved customer service through more consistent contact with
the sales force
- Increased motivation of sales force by providing equal incentive
- Separating customer types into groupings according to sales
representative capabilities (i.e. creating a key account sales force
or specialty sales force)
- Proactively address organizational change
- Reduce costs through downsizing
- Modifying territories to account for new product mix
Sales management often conducts territory alignment projects as part of an overall sales territory planning process. The need for territory optimization increases as their business changes, for example, when key customers, sales people, sales managers, products, and competitors come and go.
Sometimes just a small sales territory realignment can have a big impact on sales force productivity.
Sales territory management is a critical and ongoing process to help maximize sales productivity and revenue. Most companies should undergo a sales territory alignment project and create new sales territory maps every three years. Further revisions should be continuous (i.e. before every new hire).
Sales Force Alignment Benefits
There are many benefits of realigning sales territories, including:
- maximizing profits by resizing the sales force
to the optimal size
- increased revenues by allocating effort at accounts
with the highest promotion response (the most
incremental revenues per call)
- more satisfied customers through improved
- higher morale by having workload and incentive
opportunities more fairly distributed
- reduced travel expenses by removing geographic
inefficiencies caused by imbalanced territories
Despite all of the advantages of an improved sales force alignment, changing territories is a disruptive process that has the potential to break important relationships with customers. For that reason, an ideal territory alignment requires the expertise that we can bring to the process to ensure that good relationships are not arbitrarily
A Common Mistake that Hurts an Alignment
If there is one thing that can guarantee that your territory alignment is going
to be unsuccessful, it is this: aligning based on sales. It usually starts during the brainstorming session on what data to include in the alignment database. Someone says that they have sales data easily available. That’s great. Revenue data is a necessary component for measuring market share and identifying the workload levels necessary to support sales. But before you know it, there is someone recommending that sales numbers should be their own component in the alignment index.
There are two problems with this approach. First, revenues are not linearly proportional to effort. If they were, then the law of diminishing returns would not
hold. If that were the case, then the optimal promotional effort for any customer would be infinite. I sincerely doubt that every one of your customers needs a dedicated sales person. Rather, I would bet that the higher a customer’s revenues, the more attention they need, but not proportionally so. Two customers with $10,000 in revenues will need more combined effort than one customer with $20,000 in revenues. As an example, if you need 1 hour of sales support for a $10,000 customer, you may need 1.4 to 1.5 hours of support for a $20,000 customer, not 2 hours. If you make the mistake of aligning based on sales numbers, the territories with your largest customers will have a representative that doesn’t need to show up on Fridays.
The second problem with this approach is that it hurts your future growth. Imagine two identical territories for a brand new field force, each with exactly $10MM in market potential. You hire a representative for each of the two territories. Representative A is great, Representative B is lousy. After a year, Territory A has $2MM in revenues, Territory B has only $1MM in revenues. If you make the mistake of realigning based on sales, you will actually take geography away from
Representative A (your better representative) and give it Representative B (your worse one). If both are balanced at $1.5 MM a territory in revenues, you’re really going to suffer. Your better representative now has a territory with only $7.5 MM in potential and a 20% market share, and your worse representative has a territory with $12.5 MM in potential and a 12% market share. When your better representatives resign because they can’t hit the same incentive payouts as the worse representatives, then the problem gets compounded.
If you are currently aligned based upon sales, the sooner you fix the problem, the better.