Sales territories are always a hot topic when it comes to managing your sales team. Many times I find that business owners get stumped on the best way to divide up their current and prospective customer base. What is the best way to effectively manage your team and be fair to everyone? Should you have clear-cut boundaries, or take a “free-for-all” approach?
While there are different schools of thought, I tend to favor sales territories that embrace geographic boundaries. This could be as defining as counties or zip codes, but usually geographic territories lend themselves to state lines or sections of the country. There are several tangible benefits to drawing the lines, and here are just a few:
- Overall savings in time and expense
- There is no question about who is responsible for what
- The ability for each salesperson to focus their efforts and build ongoing relationships with their customers
- Ease of networking and hosting or attending promotional events for current and potential new customers
Of course, you can fly your sales reps all across the country to call on folks – but why waste your salesperson’s valuable “face time” by having them sit at an airport gate, waiting for a delayed flight to arrive? Not to mention the added expenses incurred with air or vehicle travel, accommodations, meals and other miscellaneous costs.
When salespeople are given concrete boundaries, they are more likely to excel at business development activities – without the fear of losing a deal to a sales team colleague. In a salesperson’s mind, it is a huge plus to spend time networking, joining numerous business development groups and not have to be concerned about running up against the guy/gal down the hall from them.
In addition, sales territories assigned by geography foster stronger relationships with customers. Think about the opportunity to fill-in for another vendor/speaker who had to cancel at the last minute to do a “Lunch & Learn” meeting, the invite to attend an impromptu after-work gathering, or perhaps round out a foursome for golf. If your salespeople are in their customers’ backyards, they are available to participate in these types of relationship building activities.
The main reason I have encountered to not support geographical territories is the fear that many accounts may fall by the wayside and be left uncovered. Thus, the thought that is it is better to embrace the “free-for-all” theory on territories. However, keep in mind that the right sales management, processes, procedures, reporting and metrics will keep this issue in check.