What is sales territory mapping?
On its face the term “sales territory mapping” seems pretty straightforward. You have sales territories that you’re plotting out on a map. But to really appreciate the strategy involved in sales territory mapping, it’s important to understand how territory mapping has evolved over time and what it looks like today.
The most important thing to remember is that territory mapping is the foundation of your overall customer segmentation strategy
Back in the days before complex B2B sales were as prominent as they are today, geographic parameters were the primary factor in sales territory planning. While geos still play a major role in most organizations’ territory plans these days, there are many more layers that can be built into a territory plan — industry, company size, etc. But before jumping to all the different inputs for a territory plan — the most important thing to remember is that territory mapping is the foundation of your overall customer segmentation strategy.
So, territory planning is the art and science of understanding where your customers are and how to best reach them on their buying journeys. The flip side of this, of course, is that territory planning is the art and science of dividing up your entire market so that your team can effectively sell into it. Further, for sales reps, their territory is a book of potential business — which equates their opportunities to have a productive and profitable year. With that context, the map is, essentially, the medium for the larger segmentation strategy. (And, if you use a territory mapping software, it provides an interactive experience and way to carve and do what-if planning as you build your plan.)
Why do you need sales territories?
When companies are smaller, the most common way of assigning accounts to sales reps is to use a round-robin approach. Anecdotally — we’ve heard of some organizations who, in their early days, assigned accounts to reps in alphabetical order. And for smaller sales teams, this can work just fine. Disputes can easily be solved by the manager, and the sales efforts can progress.
Unfortunately, a round-robin system breaks down as soon as you start to scale. The primary reason for this is that scaling implies growing your outbound selling motion. When you transition from primarily inbound to a focus on outbound, it becomes critical to give sales reps a book of business. From a sales rep’s perspective, this is a guarantee that they have a fair chance at earning a living. From a business perspective, territories are key to creating efficiency and measuring success.
Here are three key ways territories create efficiency and ways to measure success:
- Goal setting — Part of the process of creating territories is to set targets. By analyzing the size of the market and creating your sales models, you set goals for new sales, expansions, renewals, etc. (More on where target setting falls in the territory mapping process later in this article.) Once these metrics are set and agreed upon with the field sales team, they become the benchmark for determining how effective your team is. On top of that, once you have a reliable forecasting model, these metrics allow you to know precisely what you need to do in order to meet revenue goals.
- Teaming — in complicated solution sales, most organizations have multiple different roles involved in the sales process. There are a variety of colors and flavors of role responsibilities and titles, but what really matters is how you group these people together to maximize their effectiveness. For example, if you have one SDR who services a pool of AEs, you may end up creating an ineffective sales team if they aren’t able to collaborate effectively. On the flip side, you can experiment with groupings — what is the best way to combine your XDRs, sales engineers, pre-sales teams, etc. to provide the most seamless experience for your prospects / customers? Aligning your teams around your territories allows you to do comparison across your entire market to understand what combinations and permutations of teams lead to the best results.
- Vertical specialization — The extent to which this plays into your territory plan largely depends on the type of product you are taking to market. The bigger your TAM is, the more likely that you will want to include verticals as a component in your territory planning. Selling into the federal government, for example, is entirely different from selling into a B2B SaaS company. By allowing reps to develop specialized knowledge around buying behaviors in a specific industry, you save your team time and energy, letting them close deals quicker and provide better service to your customers. Again, this also provides a metric for measuring success — what are the impacts of vertical specialization on your sales motion and how can you maximize the efficiencies that this can create?
How do you begin to create a sales territory map?
Obviously, this is something you could write a book about. Here, we’re just outlining a general process that we have found works well for most organizations. Before diving in, it’s also worth having a higher-level discussion with your team and leadership about how you want to approach this process, so that you can optimize it.
- Analyze buying patterns and look for differences. To do sales territory planning well, you need to do this analysis anew every year. You don’t necessarily want to say, well last year, we carved our territories according to Geo first and then public, private, and healthcare, the end. What if, for example, there’s a burgeoning market in the industrial agriculture vertical and they have unique buying patterns that don’t align with any of the previous territory structure you set up? Some things will likely remain the same, but the key is to approach it with new eyes.
- Rank the differences according to what has the biggest impact. Again, there are probably assumptions that Geo will be one of the top-ranking territory dimensions. But beyond that, taking a critical eye to your analysis and carefully identifying your primary territory dimensions is going to be key to getting the rest of the process right.
- Find accounts and prioritize them by doing a market analysis. The method you choose will vary according to the size of your sales team, size of your market, and amount of competition. Here’s a quick refresher on TAM, SAM, and SOM. The goal here is to find all of the accounts that you feel like you can go after, prioritize in some way according to feasibility, and then plot them all out on the map.
- Carve, balance, carve, balance, carve, balance. This is where it starts getting messy and where you need to be ready for an iterative process. Some key things to factor in during the carving process are: (1)Where do you currently have reps? (2) Where are the accounts located? (3) How do the placement of reps and accounts align? When it comes to balancing, for each territory, keep an eye on: number of accounts, account scores of each, open pipeline, number of opportunities created the previous year
- Get feedback — both bottoms up and tops down. The directionality of sales planning varies highly from one organization to the next. (For example, does it start in finance or in sales?) But the key here is that it’s worth it to go through the full feedback loop. If your organization starts the planning at the top, there’s no way that your ops team can know, for example, that one major prospect in EMEA is actually just a few months into an 18-month contract with your competitor and so, for the current fiscal year, they aren’t really an opportunity.
How do you move from planning to execution?
The last piece of mapping territories is communicating with reps about them. If you want your territory planning process to be respected and effective, it’s critical to establish that prospects and customers are tied to territories — not to reps. If territory planning, as such, is newer at your organization, this requires a whole change management process. This is also why you can build out (and explain!) how you will use holdouts, exceptions, etc. to address any accounts that transition from one territory to another. And, of course, it’s important to always be ready to adjust your territory plan as the market conditions shift, so that your movement from planning to execution is as seamless as possible.