Here’s what you don’t want: unnecessary travel costs, concentrated efforts in areas with low returns, or a lack of attention on your highest revenue-generating clients. Andris Zoltners of Northwestern’s Kellogg School of Management estimated that sales-productivity costs including territory re-alignment in America totaled $500 billion per year. Such costs caused by inefficient practices can be avoided with the right tools and methods for executing successful territory management and allocation.
The most useful tool of all? Data.
When your sales begin to expand and your field representative count grows past 10 or 20, it’s time to collect and evaluate client data to efficiently allocate sales territories. Such territories can no longer be simply defined by number of customers in a given geographic area. In fact, the most important metrics to measure according to Inc contributor, Tim Donnelly, are revenue and cost of maintaining client relationships. The costs can be measured by average interaction time which includes travel time, face-to-face time, phone call minutes, etc. By measuring these two metrics against each other, you can see each client’s cost to revenue ratio and prioritize them based on profitability for your company. You may even decide to drop clients if the costs for one client consistently exceeds the revenue you generate from them.
Pooling and crunching numbers from so many sources using pen and paper is highly conducive to error and tends to be inefficient. Instead, companies can now turn to technologies like field activity management software to compile and analyze the data. When data collection and analysis goes from taking hours of mental labor with high human error rates to taking seconds with little to no error, it becomes clear that such technology is worth every penny.
Once equipped with the right technology to prioritize your clients, you can strategically define and allocate certain territories to your field representatives. But your work doesn’t end there. Review and evaluation of territories is key. Perfecting territory management is not something that happens overnight. It takes a lot of patience and diligent observation of the ever-evolving market. Realigning territories should happen when necessary and logical, but should not happen more than once per year. Client retention is largely based on each client’s relationship with your company, and you can’t expect a relationship to grow when the face of the company is constantly changing for the client. Switching up territories too often can undermine the hard work of your field representatives as well, making them feel discouraged and less motivated. Additionally, territories should not be redefined based on the quality of a sales representative, but rather better sales representatives should be assigned to territories with high-priority clients; although these problems can be avoided by having a consistent, well-thought out hiring process. Phil Brennan, president of Analytics in Focus, says “You have to monitor it but if you continually tweak [territory alignment] you are shooting yourself in the foot.” Once you become savvy at detecting and forecasting trends, you may not have to realign more than once in a three to five year time period.
By utilizing field activity management software to identify what each client means to you and proceeding to group clients into territories, your field productivity will grow, and both client and representative satisfaction will increase. To learn more about territory management, check out our free Territory Management Template Toolkit below.
This article was syndicated from Business 2 Community: Allocating Field Territories: Why And How?
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