Sales territories, by nature, are based on geography. Unfortunately, too often they are imbalanced. Some areas are underserved, whilst, others are saturated. Sales people spend too much time driving and not enough time in front of customers. The result is poor morale, low productivity and lost revenue.

We will discuss within this white paper the benefits of optimizing and aligning your sales territories.

Benefits of Sales Territory Optimization

• Focus on new sales opportunities while preserving existing accounts.
• Identify areas of high opportunity and low penetration.
• Increase sales by reaching more customers and prospects
• Serve customers by aligning resources to meet their needs.
• Retain sales people and reduce recruitment costs by creating equitable territories.
• Reduce travel time and associated costs.

The Benefits of Sales Territory Optimization through opportunity alignment

Aligning sales territories is an important initiative and can lead to many benefits for a business. Good territory alignment will;

Increase sales and customer coverage - when territories are properly aligned, issues of under- and over-capacity are reduced or eliminated. Each territory is created allowing the sales person to reach and spend time with the greatest number of high potential customers, thus increasing sales. 

Reduce travel time and associated expenses - Due to the geographic nature of sales territories, better alignment means less travel time to reach customers. Less time spent in the car means more time spent with customers, thus more time for selling. Other associated expenses such as fuel and accommodation are reduced as well. 

Create competitive advantage - This benefit of sales territory alignment is often overlooked. However, if you have better coverage in your territories, you can reach new opportunities faster than your competitors, again leading to increased sales.

Generate equity and morale - nothing can be more discouraging to a sales person than to see a colleague milking a highly profitable territory while they're stuck servicing an area with low potential. Properly aligned territories provide a more equitable distribution of accounts, level the playing field in terms of achieving rewards, and boost morale among sales people. In addition, sales people stay longer, thus lowering the costs associated with new recruitment.

When to Align Sales Territories

Many companies conduct a yearly review of sales territories. The year's performance may or may not lead to a change in the shape or makeup of the sales territories. However, a number of situations should compel you to embark on a sales territory alignment initiative, including:

• If your sales territories are based on historical data rather than potential for sales. 
• If you have a new or changed sales team due to acquisition, merger, partnering or restructuring.
• If your company is launching a major strategic initiative and sales staffing is not matched to it
• If your sales team has experienced significant changes over a short period of time.

Each of these situations has the potential for decreased productivity, missed customer opportunity, and confusion and competition among sales people. Sales territory alignment can help rectify all these situations.

Most successful sales territory alignment initiatives follow a proven process similar to this:

Analyze current territories, sales force composition, compensation plans, target markets, customer locations and market penetration. 

Assess existing territories to find underserved or saturated areas based on the number of customers and prospects in each territory, and analyze how easily they can be reached by your sales force

Determine the number of territories needed based on your criteria for realignment. Criteria can include equitable distribution of leads or workload, account assignment, number of sales people, travel time, location of distributors, and other variables relevant to your business. 

Rank and align territories, optimizing them at multiple levels. For example, territories that rolls up into districts, districts into regions, and so on. 

All of the above key performance indicators are vital to your budget process and individual sales person's targets and objectives.