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What Makes Territories Unfair

Territory plans are mostly unfair.

Territory plans are unfair to the clients within the territories because they are designed to ensure that the opportunities have coverage, not that the right salesperson is assigned to the right prospect. Territories aren’t built on the criteria of who the best person to create value for the client would be. They’re mostly based on geography, even though geography doesn’t affect what kind of salesperson the client needs to get the best result. That makes the territory unfair to the prospective client.

Territories are unfair to the salesperson for this same reason. If you are a level four value creating salesperson, there isn’t much you can do for clients that don’t need that kind of help. Calling on these clients is unfair because it doesn’t let the salespeople with the best skills exercise those skills. Instead, it requires them to call on prospects who could be served as well by a different salesperson. Worse still, if the salesperson could win a dream client that is one street outside of their territory when the assigned salesperson can’t win it, the salesperson and the client are both hurt by the arrangement. It’s not fair to either party.

The company is often the victim of their own territory plans because their design prevents them from winning accounts that could be won by the right salesperson. This is why geographic sales territories work well for transactional sales, where there is little value creation, but not so much for more complex sales, where value creation is the name of the game.

Segmentation is a better idea. Segmentation gives you a running start at assigning the right sales people to the right opportunities. Segmentation produces a better result than geographic territories because it acknowledges the skill sets that the salesperson needs to win the clients they are calling on.

But even with territories assigned by segmentation, doing the best work possible and producing the best sales results still requires that the right salesperson is assigned to the right opportunities.

Questions

When is a geographic territory the best plan?

What are the limitations of territories designed by geography?

Is it fair to the prospect to let a salesperson that isn’t yet a level four value creator call on them when they need a salesperson with that skill set?

When is segmentation a better plan for covering your dream clients?

How important is it to have the right salespeople assigned to the right opportunity?


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Comments

comments

  • http://www.salesblend.com/ David

    Organizations know they are inefficient at this.  They have competing values.  For instance, many companies give up some of the efficiency they might gain by following your advice for stability in the organization.  What’s a good plan for efficiency in light of stability?

    • http://www.thesalesblog.com S. Anthony Iannarino

      They do? There are no perfect plans, and they all come with trade offs. But defaulting to geography isn’t the best answer. 

  • Guest

    I have never believed in “territory” sales. I have always found that this breeds at a minimum hurt feelings to out and out back-stabbing.

  • David Jenkins

    I can see how this applies to the US – but when looking at European/Asian/Global organisations, often it is important to take geography into account, because it is the simplest indicator of culture and language spoken.

    From experience, I know that Scandinavians are much more open to cold calls than those from the UK. Germans in the auto industry will usually speak great English, but those from Italy will not.

    For this reason, an Italian speaker, despite being one of the better sellers, maybe be assigned to the Italian market (which has less opportunity), because of the reason that no one else can speak with prospects.

    Hence the challenge here is to get the balance right – can you forget the Italian market and focus somewhere else where there is more opportunity? Is it important for the organisation as a whole to have Italian clients? In my case, in the conference industry, it was important to have attendees from the big Italian names, Fiat, Iveco, etc. in order to satisfy sponsors, so in the big picture it made sense to keep focusing on that market.

    In the end I agree that it always makes sense to put the right person on the right prospect depending on their individual skills, but certain circumstances can make this more difficult in practice…. my solution is always to just give every opportunity to me!



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