Territory builders
This is a draft of an article to be released on SaaSSales.io
Building territories is the economical art of balancing the need to optimize revenue output while also maintaining a harmonious culture internally. Recently, I served as an instructor for Sales Assembly’s Revenue Operations certification. The subject matter I was tasked with was “Building Territories”. Whenever the annual planning cycle comes around or when an incremental team member joins the team, Sales Operations is asked to develop new territories.
Do it right and you’re a hero: a territory carver.
Do it wrong and you’ll hear it from the field: a territory butcher.
It has never been a finer time to be a revenue engineer.
So let’s talk about a framework to architect useful territories for your business.
Foundational considerations
When building territories there are three fundamental principles to consider.
Establish your priorities (choose from six dimensions)
Align with your strategy
Use empirical data to support your recommendations
Core Six Priorities
There are several glide paths to choose from when developing territories. In certain industries, sales reps bring a “book of business” with them. High Frequency Traders move from one firm to the other with multi-million dollar buyouts. Rather than an outreach sales approach, the acquiring firm is performing a pseudo-M&A. In that case, a reputation-based territory approach makes the most sense. Enabling new sales reps from the ground up would take too long. The calculus of acquiring that book is so much easier.
Door-to-door selling such as selling solar panel installation would benefit from either a geographical approach or a reseller channel. Solar City leveraged Home Depot by establishing branded booths inside each of their stores. On top of that, they canvassed neighborhoods block by block. A five digit zipcode (for those in the USA) or even a nine digit zipcode territory makes the most sense.
Here is a quick glance at these priorities:
Group 1
Equitable distribution
Reputation and relationships
Transaction velocity, round-robin
Group 2
Geographical reach
Named/strategic accounts
Industry verticals
A simple exercise
For first-time territory cutters it helps to create a simple 2x2. Let’s say for example on one axis you set equitable distribution from group 1 and industry verticals from group 2. From here, data is going to play a key part in ensuring that the expected revenue from said territories will lead to equitable distribution. Inbound lead distribution and measuring deal velocity for outbound deals in each industry will be critical factors in deciding how to cut.
Let’s say in this example you have three winning industries: high technology, finance, and healthcare. These are industries that thrive on highly educated workforces. Intellectual capital is an advantage. Other industries are slower to adopt this new, fancy product/service. If that’s the case, these three industries would be your “A” industries. Everything else would fall under either “B” or “C”. Below is an example of how one might decide to cover these accounts:
A: dedicated industry territories
B: distributed by another dimension
C: free for all
Much like in baseball, a sales opportunity can be considered a type of pitch. Your team of players have an aggregated batting average on those types of pitches. Let’s just say for argument’s sake that the company win rate is a blended 12%. But for these three industries the company is batting at 20%. Sales operations and sales management will want to agree on a metric that will showcase that the territories have equitable distribution. One metric of doing so is to look at the variance of each territory against the average expected revenue output of a territory.
Align with your strategy
Territories become powerful forces when they align your business strategy. A few desired strategies might include:
Move upmarket or move downmarket
Penetrate into new verticals
Enter new geographical market
A startup that wants to move upmarket may choose an entirely different territory schema for the accretive accounts. For its existing business perhaps they opted for a geographical based approach. But by moving upmarket they had to refactor their entire product from the ground up. Additionally, the process of building rapport and navigating longwind corporate decision making labyrinths is just plain new territory for them. They’ve considered moving to a named accounts approach by hiring directly from their competitors. The hope is that the ramping period is shortened and that their existing relationships within the industry will lead to more introductions in a shorter time.
Leverage your data
We could go really deep into talking about data stewardship as its own topic. But let’s focus on the basics of working with your data.
Simply put, let’s ensure that you have access to data. Secondly, enrich and refine the data so as to increase the amount of signal. If your signal-to-noise ratio is low with your dataset then you’re at a serious disadvantage. Leveraging third party data enrichment services or building sophisticated web scrapers can help with this. From here I suggest building out a few data models. It’s always helpful to show up with a few options for your stakeholders. A little bit of column “A” or column “B” shows that you’ve put in the work and examined the problem from a few angles.
Beyond the data
Going beyond the numbers to show the human aspect of the new territories is critical to achieving buy-in from your stakeholders. Talk about the “why” with your new territory changes. Then talk about the “how”. This is where the data model comes in. Then talk about the following:
Domino impacts: who else will be impacted? Account Managers? Field Marketing?
Account rules: what are your rules of engagement at the account level? How will subsidiaries be handled? What happens in the event of an HQ relocation? A merger?
Holdover rules: what happens to accounts that are infight with an opportunity with another teammate? How long will that rep have rights to sell into that account?
Be practical and considerate in how you build out your territory program. Many ways to skin the cat.
Closing remarks
As you’re going through your planning for next year consider taking a step back to see how your process aligns with the three fundamentals of territory building. Take some time to go through a few mental exercises around what matters to your organization. Should you consider recutting your territories or adopting brand new hybrid models? Perhaps it’s not the approach but rather the practical aftermath of change management. Territory building is never easy, but hopefully you’re one step closer to that Master Carver title you so rightfully deserve.