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June 27, 2022

The Tale of Jake: Improving Sales Rep Retention with Good Territory Management

Dharmesh Singh

Founder

Improving sales rep retention with territory management

Jake was the best sales rep in the company. He worked long hours, driving hundreds of miles a day to reach customers, propelled by a mix of premium gas and red bull. Other reps had the established named accounts. Jake had everyone else. Through tremendous effort and sheer willpower, he turned that scrappy territory into a growth engine. 

At one point, out of the blue, the company announced a merger of two previously separate organizations. It was announced that two sales teams would be merging under the leadership of a newly anointed VP who would oversee the new, global sales team with hundreds of reps and a few levels of middle management. There was no talk of layoffs, but people generally dislike uncertainty and some people panicked.

Perhaps you have known someone like Jake – he was incredibly intense and focused. The minute the reorganization was announced Jake stopped selling and started thinking about how to keep his job. He spoke to everyone in the management chain. Unassuaged, he managed to finagle a meeting with the new sales VP. Jake was not one to beat around the bush. The meeting lasted five minutes. Jake basically asked the VP “do I have a job here or not?” Of course the unspoken answer was “yes,” Jake was a top performer. It’s hard to imagine a scenario in which the company would eliminate star sales people like Jake. But the VP didn’t know Jake. He had only just taken over the combined team. He thought it inappropriate to offer assurances when decisions had only just begun to be discussed let alone finalized. Territory assignments would take weeks of meetings, many late nights pouring over spreadsheets and a big presentation to the GM. The VP gave Jake a diplomatic and non-committal answer.

Jake was an avid and skilled poker player. He felt that he had been dealt a hand and had to respond. He was also a person who is predisposed to action even when patience might better serve.

Jake left that meeting feeling like he had asked for a reasonable assurance and had been given an unsatisfactory response. He feared being laid off. Even if he remained, he believed he would operate under a cloud of uncertainty. He had spent months cultivating a vibrant sales pipeline that was going to pay off shortly. The new sales VP could easily move his precious accounts to someone else who would reap the rewards Jake felt were rightfully his. Jake doubted that anyone would go to bat for him with the new VP. With fear, uncertainty and doubt swirling through his mind, Jake resolved to seek his fortunes elsewhere. He reasoned that he could earn a living if the territories were fair and transparent. Being a sales person of exceptional ability, he found a position at another company in short order and was gone. 

People like Jake don’t grow on trees. For starters, Jake was finding opportunities that no one else could. By losing Jake, the company likely gave up significant profit and growth. It’s really worse than that.

On average, half of salespeople meet their quota so the company actually had to hire two sales reps to backfill Jake, who was a consistent quota buster. The company paid 25% of salary (each) in fees to a recruiter, totaling 50% of a sales associate’s annual base salary.

It takes about six months to hire a new sales rep. A bad hire costs the company millions of dollars and significant aggravation. It takes new reps 6-8 months to learn the accounts, understand the nuances of the company’s value proposition and build relationships, during which time the customer accounts were less productive than they could have been. Let’s not forget the burden that is placed on managers. The sales manager has to screen, interview, hire and train a new sales rep. Every minute spent on these activities is NOT spent growing the top line. Conservatively speaking, Jake’s departure cost the company $1-2M.

Sales employee turnover is among the highest of any function. Sales people live and die by their quota. The average tenure of sales people is less than 2 years. In a recent survey, 68% of sales reps reported that they plan to look for a new job. Depending on your industry, sales turnover ranges from 15% to 35%.  Imagine you are the leader of a 100-person sales organization with 20% annual employee churn.  Turnover could be costing you as much as $20M per year. Let that sink in.

Consultants will tell you that the way to retain salespeople is through soft methods: career growth, employee engagement, building camaraderie, and recognition. These methods may somewhat help, but sales people are pragmatic. Bottom line, they want a fair quota with minimal uncertainty about the future. A salesperson who is confident in their abilities will thrive under these conditions.

If Jake’s company had been able to provide immediate answers, he would have remained in  his position. The company needed a way to clearly and decisively realign the territory map so that sales reps could receive their new marching orders and get back to closing deals.

If Jake’s company had been a Fullcast customer, the situation would have gone down differently. With Territory Management software, the process of assigning territories would have been cut from months to days. Fullcast enables users to quickly organize accounts into segments/territories, assign sales targets/quotas and balance human resources. Fullcast instantly updates your CRM with the new Go-to-Market (GTM) plan without requiring weeks/months of manual configuration and error correction.

Jake would have received his updated territory assignment immediately, eliminating the uncertainty and doubt. Further, using Fullcast, the Sales VP would have accessed metrics showing Jake’s performance. He would have known how valuable Jake was to the organization and would have treated him as such.

Companies can’t predict when change will disrupt their revenue operations plan, but they can put systems in place to quickly and seamlessly navigate changing business conditions. Territory management agility can help companies reduce uncertainty for sales reps, boosting top line growth by reducing costs associated with turnover. 

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Territory management agility can help companies reduce uncertainty for sales reps, boosting top line growth by reducing costs associated with turnover.

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The Tale of Jake: Improving Sales Rep Retention with Good Territory Management

Territory management agility can help companies reduce uncertainty for sales reps, boosting top line growth by reducing costs associated with turnover.

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Improving sales rep retention with territory management