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4 Methods to Divide Sales Territories

4 Methods to Divide Sales Territories

Find out the 4 methods to divide sales territories.

4 min read

Writer

https://ghost.scalestack.io/content/images/2022/04/Mateo.jpg

Mateo Bilbao

scalestack

4 Methods to Divide Sales Territories

Information about the writer

Sales & Marketing head at Scalestack

Sales territories are really important when it comes to getting results in sales. If you do not segment your territories properly, you make mistakes when you are approaching them and you end up selling your offer to someone who is not that interested in what you have to say, or maybe is interested in something else. That is why it is so vital to divide sales territories properly and in a smart way.

In this blog, we will discuss how to divide sales territories and a few plans to work it through so you can apply them to your company.

What are sales territories?

Sales territories are the determining areas for which a single sales rep or group of salespeople are responsible. That defined area can have different characteristics, different shapes, and forms. It is true that not every sales territory fits a neat geographic structure. Depending on the size of the territory, there may be one person handling all the area’s clients. If it is a large territory, it would be smarter to have several salespeople handling the matter as well as a sales manager sharing the responsibility.

Historically, sales territories tend to follow established geographical shapes. The sales reps might have probably worked in certain states or known that they “owned” the area starting from a particular point in the territory. Nonetheless, today, territory management has evolved and become more complex than it used to be previously. Although it may be harder to create balanced territories, the results are usually worth the investment.

Why use sales territories

As companies grow, they start needing to divide up accounts in a more manageable way. Sales territories provide clear-cut boundaries. That way, there is no confusion about which sales rep works with which client, which also avoids any misunderstanding. These are some pros of using territory sales.

Sales territories prevent under-servicing. When a salesperson is stretched too delicate, client relations tend to suffer. Orders tend to slip through the cracks. There might not be enough time to follow up on leads, and calls end up being unreturned. Under-servicing can have a snowball effect because the more reps make mistakes, the further behind they fall and the worse the service.

They also control over-servicing. It is obvious to say that not one client enjoys being ignored, though it is also known that they do not like being disturbed all the time either. A sales rep who is only in charge of a few accounts ends up being too aggressive just to make a livable commission, and that is counterproductive, as well.

Dividing Sales Territories

They motivate and help to boost morale. Giving a salesperson its own territory establishes ownership and therefore generates pride and a sense of self-esteem because they are the ones who are in charge of their piece. Now it is their sole responsibility to make sales happen and they are less dependable on other factors. They have a quota to meet and leads to generate and nurture. Of course, by the end of the month, they are going to have to explain their progress to their superiors, but they have more freedom of movement and do not have to consult about everything to make a call.

Territory sales keep talented salespeople content. In every job, it is an awful feeling to fall short of your goals. But given the fact that in sales everything translates into numbers, failure is more evident. Even worse is when that happens because you were not given the opportunity to succeed or to move freely. Balanced sales territories make sure to give everyone a chance to maximize their compensation in order to keep everyone happy and feeling deserving of their accomplishments.

4 Methods to Divide Sales Territories

  1. Population

It is advisable that you split your target audience by population to ensure a fair distribution of customers and leads for your staff.

If one sales team only has a small portion of the downtown area given its high population density, another one can have a large geographic area in the suburbs because their number of people is more spread out. There is no one perfect way to divide territories, remember.

2. Geographic location

Defining territories based on the physical location of buyers is a straightforward method for identifying sales areas and distributing them to your team. Some examples of geographic territories are countries, regions, states, store radius, etc.

One benefit of using geography to define territories is its practicality. Geography is consistent and has physical boundaries that are easy for any sales rep to recognize. Take into consideration the population, size, and customer demand differences between the territories when geographically dividing as a strategy.

3. Niche

When selling products and services that apply to numerous industries, try to create territories based on the client's niche. Assigning salespeople to serve a particular category of the client gives them the space to develop extensive knowledge in their niche, create targeted marketing content and provide high customer service. This strategy is ideal for companies that are selling to multiple market segments with minimal overlap.

For instance, a business that sells office supplies may have one only team that specializes in working with educational institutions while another team can work exclusively with law firms. Each niche territory has specific office supply needs, and the sales teams need to be able to easily address their industry focus.

4. Company size

Dividing up territories according to company size brings predictability of contract size and a lot of segmentation. Categorizing companies by size prevents coverage gaps, whilst also making it more accessible to assign the right rep to the right account.

Although sometimes it can be difficult to find reliable information about company sizes, there are tools to do it. Using sales history to predict future potential is a smart way to go at it, but there is a lot to choose from.