Best Practices for Creating and Maintaining a Winning Sales Territory Plan

Sales territories.. They give every sales leader heartache. How do you build them and how often should you revisit them? Let’s dig into those details during this episode of Closing Time. Thanks for tuning into Closing Time, the show for Go to Market Leaders. I’m Dave. Osborne, chief sales officer at Insightly. And I’m joined by Brad Rosen, president of Sales Assembly. Welcome to the show, Brad. Thanks. Great to be here. So, Brad, back in the day, life was pretty straightforward when it came to territories, right? You got a map and you just drew up different geographies that made sense. But times are changing,. In the era of more remote work, is that even a realistic approach or, how should leaders be thinking about this? Yeah, I guess no more Yellow Pages. You know, I’m just like, all right, take letter H. But yeah,. I mean, I think it is very different. And I do think what’s interesting is it’s almost like the pendulum swung and I feel like it’s sort of starting to swing back a little bit. But I think a lot of times when we thought about territories when we started to look at remote work and folks living in different places, especially reps living in different places, we kind of throw that out the window and said, Well, let’s just make sure that we have potentially equitable books and making sure that everything makes sense from like a time zone perspective. So I do think time zone is actually a very big deal, right? We don’t want necessarily someone handling New York when they’re on the West Coast because they’re not waking up for potentially 3 hours after your prospects and customers are. So that’s definitely something to keep in mind. And when we think about going to see customers, that that’s stopped for a long time. But I do believe that that’s actually an advantage right now if you’re going to see customers, prospects, and having meetings. I think it’s a lot easier to turn off of tools to ghost people to do all these things that like ideally are not happening, but it’s easier to do when you don’t have a relationship with the person. You haven’t met them, you don’t know about what makes them tick, what they enjoy doing, about their family, things like that. When you build a relationship with someone, you have a lot better opportunity to help them through their challenges and problems and you’re going to keep, you know, the hopefully the business relationship going. So as far as territories,. I do think it’s important to think about how can we at least create pockets where if you want to go visit a certain city or a certain place, you’ll have a handful of meetings to be able to do that. And I also think that is very challenging these days because your prospects and customers are also in different places. So just because your headquarter says you’re in New York City, your VP of Sales or your head of finance could be in Bozeman,. Montana, or Jacksonville or like anywhere we don’t really know. So are you breaking up your territories by headquarter, by where your target buyer is? There’s a lot of different factors to consider. For sure, And it also has something to do with the corporate maturity of your business, right? If you’re a startup, like I think about territories, there’s somewhat of like a spectrum. If you’re a startup, maybe you’re more on the wild, wild West side. Where you don’t need as much rigidity to hire deploying territories versus if you’re a much more mature company or a public company, perhaps you’re at a point of certain scale where you need to have very defined territories, right? Defined guardrails. So when I think about that, there’s a lot of ways people approach it, when you’re trying to segment accounts. We talked about geographies. There’s also a vertical approach. You know, you could do named accounts if you’re up to it and you have the. RevOps team to support it. There’s dynamic territories is a new way that people are doing it. So if you’re going about doing this, what factors do you consider when carving that up? First,. I would use your current data if you can. If you have enough data and you’re confident in the data. Right. Let’s understand exactly where our best customers are coming from. And not just like most customers, like the most customers are in the city, but when we say best customers, we’re talking about conversion rates and how long it takes them to get through the sales cycle on average, how much they’re paying, are they retaining? Are you able to upsell them? Those are your best customers, right? Like there’s more that goes into it than just I can sell them really quickly. So I would take all of that into account and then I would start to look at the different factors, like you said, that probably make somebody a good candidate. They’re in your target ICP. Maybe they’re in an industry or a company size that makes sense to you, potentially a geography. And then we start to look at the product folks who maybe integrate with a different solution or have, like they have Salesforce or so they have HubSpot or they have Insightly or they have all these other tools like which one is right for me and my prospect. I want to make sure that I’m focused on those folks because they are going to be better to sign up. And so when you’re talking about equating different books and making them equitable, I typically say like you can start with what you think is right. You’re typically not far off with the top three or five different focal points. Now, if you really want to go deep, you could start to run a regression model and you can do that. I think that’s very valuable. But what you are typically going to find is like the 3 to 5 that you thought were really important. Those are obviously typically show up high and then there’s probably like two or three or four other factors that you didn’t think about that might play into making the books equitable. Absolutely. So maybe a trick question for you, but it’s kind of one of those chicken and egg kind of thoughts, Brad, so are the best reps the best because they have the best territory, right? Like I know a lot of sales leaders struggle with this. Should the best AEs get the best territories or do you think it’s better to have evenly distributed accounts across the team? That’s a tough question. I actually, I made a post about this a little while back, But let me say this. I understand the premise of the best reps, should get the best accounts because in theory you have the best chance of closing, which should drive the most revenue. I think the downstream effects of that are really challenging. One, it’s really hard to to, like you said, determine is that because of the accounts that they’re the best or is that because they’re actually the best? And if you’re giving someone not as good accounts, then obviously, like if someone has the best account, somebody doesn’t have the best accounts, how do you measure their performance? You probably have to adjust their quotas. And are you doing that in a equitable fashion? But I would most importantly say, like the culture that that drives I think is challenging. It’s a very dog eat dog culture and you’re now competing against your peers to become that best, to get the best territory. And so you’re less likely to help somebody out, to root them on to try and get them to their quota so that you can both go on club together like there’s a lot of benefits to having equitable books and hopefully allowing for collaboration and teamwork. And so I think that that outweighs, in my opinion, the ability to give the best reps the best books. And that makes it much easier to understand performance management. If everybody’s supposed to have this virtually the same territory, then like how are we performing against each other? That’s easier to equate. It does not mean no,. I want to be perfectly clear. That doesn’t mean that there aren’t other opportunities for top reps, right? So that could mean if we’re testing out the enterprise market, maybe they’re the ones that get to test it out if we’re selling mid-market right now, or if there are certain inbound opportunities from a big client that comes through one of our executives, maybe they get the chance to to kind of take that deal and run with it because we feel good about what they’re doing. We want to reward that positive, you know, we want to reward that the production of the top rep. So I do think that there’s ways to reward the top reps to get more out of them, but still ensure that everybody has an equal opportunity to hit their goals, to make money and to continue to progress their career. Completely agree. Side note for any reps, high performing experienced, AEs out there, interviewing for a new job. Make sure to ask about your territory. That’s right.. Before and in the negotiation. I think it’s a critical part to like how they’re setting you up for success, right? Yeah. What’s this territory?. It’s a hard thing to balance. Is it a new territory? Am I taking over for somebody else? How picked through has it been? Because as we were scaling, we would always put aside one or two books, you know, depending on how many folks we were looking to add to the team in that time period for new folks. But a lot of companies don’t do that. They just say, Well, we have six people on a team. We’re going to build six territories. Now what happens in the seventh comes in. Either they get lower accounts based on the scoring model or you have to start ripping out from other reps and that becomes messy. So I agree, what’s my territory? Who had this territory before? What was their attainment? All those questions.. And if they can’t answer those questions? That’s probably an answer in of itself. Yeah, that’s a flag. I mean, similar to, you know, if you’re sales leader interviewing for a new job, you want to understand the context. Is this a backfill for someone that you let go? Is this a net new? If you’re an 80, you should want to know similar context about the territory that they’re projecting that you inherited. Yeah, right. Exactly. Is it net new? What is the context there? Because I mean, could be a great company, great product. But if it’s kind of a piecemeal territory, it could be a tough road to hitting your number. So, you know, as leaders, this is not a topic that we like to address often. We often think of territories as like a set it and forget it. But realistically, that’s not going to cut it. So can you talk a little bit about the redistribution frequency? Like how often should we be reevaluating books of business? Yeah, first, I’d like to say that I do think reevaluating and redistributing books is a healthy practice. I think that like a new voice, potentially new ideas, new tactics, things like that can a lot of times spur conversations that weren’t happening in the past. So I do think that there’s a benefit to that. So I do think you should not just set it and leave it for three or four years or something. I don’t think most people do that. But like just saying, if you were like, I probably wouldn’t. You also have to think about your sales cycle length. So if your sales cycle length is three months, you’re probably a general rule of thumb, like 2 to 3 X, what your sales cycle length is. Give it a few turns here, right? So if your sales cycle length is three months. You probably need 6 to 9 months at least of sitting in the book versus if you look at an enterprise deal that maybe takes a year, you can’t give just a year to sell that deal like you would basically sell nothing and then you got to go start all over again. So you probably need two or three years with that book to really be able to dig in and do it the right way. So you want to find a multiple that works for you kind of in that range and then go find redistribution. One thing about redistribution that I found helpful in the past, allowing for what we called keeper accounts, making sure that folks that are making traction, maybe they’re on a ten or five yard line of certain accounts, you don’t want to just go rip that out. I think that’s bad for obviously your rep, but it’s also bad for the customer. They’re really close. They’ve had good conversations. Maybe they have a good relationship with this rep and now you’re changing it like that’s not a good experience. So have some number of accounts that those reps can keep. Obviously, everybody gets that opportunity, so it’s equitable, but and then you’d have to make sure that the books are still equitable after that. But I do think finding ways to allow the team to continue to work certain accounts that they feel good about is also just like a really good practice. So Brad, how do you balance that? Because that’s that’s a tricky one, right? Like as in AE and I’m guessing that once upon a time you were an AE as well, like the accounts that you manage. I mean that’s everything to you, I can think in a lot of experiences. I used to get Christmas cards from these customers, right? So losing these accounts was a really tough practice. Right. And now being in the leadership seat, it’s like we understand that we do have to redistribute books, to make sure that we’re scaling the company appropriately. But how do you balance that with, you know, reps that obviously don’t want to lose these accounts, but this is for the greater good of the business? Like what’s what’s your approach or what do you consider when addressing that difficult problem? Yeah, I do think it’s important to think about if you’re switching accounts of current customers,. I think that’s a different practice than if you’re all new business focused. Current customers, We don’t want to disrupt as much as possible. We want to keep consistency there because that’s actually like a very high trigger for a churn is multiple CSMs and different points of contact and losing context. So that’s probably like a whole separate discussion that we could have. But let’s just focus on new business for a minute here. I do think it’s challenging and so that’s why maybe like some of that keeper stuff can help out. But I also do think it’s one of those like things tend to come out in the wash, like you’re going to find really good accounts that you are given. And also what you mentioned around making sure that we believe that everybody has the opportunity to hit quota. So for instance, we brought in those few reps that we talked about before, making sure again that the books are equitable across everybody after, say, a fiscal year and then also thinking about other ways that we can infuse new accounts into those books. So potentially we expanded our ICP, potentially we said each person only had 200 accounts and now we’ll give you 300. So there’s also ways to increase the territory, increase the book size to give larger opportunities. But yes, I think overall you’re probably going to win some and lose some and hopefully you set up the plan and the Territory so that in general folks are winning more than they’re losing or else then there’s probably something that you could do differently. Yeah, it’s a great point. Thanks for calling that out. And I think, you know, another thing that I’ve seen is the common complaint from AEs is just, and this could be more of a side note here. But typically if your company’s growing and scaling rapidly, territories are shrinking. Right. And if your company is maybe not growing as well as you hoped, that’s where territories maybe get bigger. So, you know, keep that in mind AEs, is that every year I hear AE’s complaining, hey, my book is shrinking this and this. Well, that’s because your company’s growing. It’s actually typically a good sign. So don’t be super disheartened by that if that’s the case. So as we think about redistributing books, like what are some of the pros and cons that leaders should be aware of and maybe get ahead of when they’re going about this this process? Yeah, it’s definitely finding out if there’s any reason why you should continue on a certain account. We’ve talked about that enough. I think there’s also probably opportunities to give, we used to allow, and it sounds kind of Wild West out there, but like trades for instance. So if you found an account that you it wasn’t necessarily a keeper, but you know, I really wanted that account or I knew them, if you could find another AE to kind of get that back, you’d be like, Hey, I’ll take this account from that account, kind of a little bit of fun. And then we would check it to make sure that there was still a quality within the book, or at least within reason. But I do think that’s interesting because like I said, this goes back to our discussion about giving the best accounts to the best reps. If you’re in that situation, you’re not trading accounts like that’s not happening, right? Because like your competition, whereas when everybody’s equitable and you’re trying to help each other out, one account doesn’t mean anything to me, but it means it to you that I’ll give you that account. I’ll go after this other one, and then next time, when I want that account, you’ll give me back. So I do think it’s figuring out where are those pain points, where somebody lost a certain account, it wouldn’t feel good. And they feel like they have an opportunity to close that account. So I think that that’s important. I do think it is important to understand if there are opportunities or ways that creating a certain territory would impact the business. So, for instance, if I’m spending some of my time in San. Francisco and some of my time in Chicago, then maybe I should have accounts in those two places, right? As opposed to just one of those places. So I would think about are there opportunities to maximize certain territories for certain reps given their situation as well and maybe even like their backgrounds. So they have a background in a certain industry, Maybe we want to make sure they have that territory of industries and if they have, certain customers that they have a relationship with, there are opportunities for them to to get those accounts as well. So trying to find optimization points is really important. A lot of variables to consider. All right, Brad, well, thank you so much for these insights. Super helpful stuff. That’s all the time we have for this episode. Really appreciate you coming on the show. Yeah, thanks, Dave. It was great to chat with you today. And thanks to all of you for watching. 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