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.
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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Filed under: Sales 3.0