How to Create an Effective Sales Territory Plan: Step-by-Step Guide

If you want to put your sales reps in a position to succeed, then you need a cohesive sales territory plan. A great sales territory plan will help your organization get the most out of platforms like Salesforce. 

By implementing such a plan, you can also zero in on high-value sales targets, capitalize on territories with the best sales potential, and increase overall profitability.

With all that being said, creating a territory management plan can seem like a monumental undertaking, especially if you have never developed such a strategy before. Fortunately, facilitating territory alignment via a plan is far easier than you might expect.

As part of our efforts to help sales managers overcome the challenges of the modern commerce ecosystem, QBIX Analytics has created this comprehensive guide to creating an effective sales territory plan. Read on to learn more.

What Is a Sales Territory Plan?

Before we reveal how to create a sales territory plan, it is important to understand exactly what a plan is and what it should include. 

In simple terms, a sales territory plan guides your sales reps when they target prospective customers. Specifically, this plan will help them target the right regions in order to maximize the efficiency of their sales efforts.

Due to its name, most people assume that a sales territory plan divides up a region into various geographical segments. For instance, a company operating within a large metropolitan area may create a separate sales territory for each zip code. 

While this is a common approach, sales territories can be segmented using many different data points other than geography. For instance, you can create sales territories based on the type of customer you want to target, sales potential, or virtually any other relevant factor.

After you have created a plan, you can assign sales reps to areas that align with their knowledge, experience, and capabilities. This tactic will improve the purchasing experience, set the stage for long-lasting client relationships, and maximize your return on investment (ROI) on all sales and outreach efforts.

Why Sales Territory Planning Is Critical to the Success of Your Sales Team

Sales territory planning can have a positive impact on every stage of the buyer’s journey. Additionally, a great territory plan offers countless benefits to both your sales reps and your company as a whole.

Help Sales Reps Work More Efficiently

When sales reps can focus their energies on a specific territory, they will waste less time learning about market segments and participating in administrative processes. 

Instead, they can devote the lion’s share of their time to engaging with clients and closing deals. This focus will allow them to hit sales targets without logging in an unsustainable number of work hours.

Improve Resource Allocation

Ideally, you want to assign your top sales reps to your highest-value accounts. Territory sales planning makes this possible.

When you know who your most valuable accounts are and where they are located, you can closely monitor territory-specific performance. If a particular territory is underperforming, you can make the adjustments necessary to correct this deficiency.

Boost Employee Morale

Sales territory planning allows you to create balanced territories. In turn, this ensures that you are not overworking your sales reps. Ultimately, this will lead to improved employee morale, which will also help you reduce attrition rates and retain top talent.  

Increase Targeting Capabilities

One of the biggest advantages of sales territory planning is that it allows you to precisely target high-value accounts or regions. You can divide territories based on any number of criteria. After you have created these territories, you can then precisely target the prospects within those regions.

Provide Better Service

Sales territory planning gives you the opportunity to align sales reps with current and potential clients based on the rep’s knowledge base and skill set. 

The purchasing experience is enhanced when clients are matched with sales reps who understand the challenges they are facing. This approach will improve your company’s brand image, assist with client retention, and increase the average lifetime value of your clients.

How to Build a Sales Territory Plan

If you are ready to create your own sales territory plan, we recommend that you leverage the following seven steps:

Step 1: Evaluate Your Business Objectives

Why does your business exist? Who do you serve? What are your key business objectives for the next year, three years, and five years?

By answering the above questions and other introspective inquiries, you can gain a better understanding of where you want to take your company over the next few years. Your short and long-term business objectives should guide you as you navigate the following steps for your sales territory planning.

Step 2: Define Your Ideal Client or Prospect

While every client or prospect will possess a set of unique qualities and traits, you will find that many of your customers share a few key commonalities. By identifying what these commonalities are, you can create ideal client or prospect personas. 

For example, you may find that the majority of your high-value clients operate within the same industry or a closely-related sector. In this scenario, it is safe to assume that most future clients will also operate within one of these sectors.

Step 3: Determine TAM

The term “total addressable market” (TAM) refers to the total number of potential customers that match your definition of an ideal client. TAM would represent your revenue-generating ceiling if your company were the only game in town. No company can capture its TAM unless it has no competitors.

For comparison, your “serviceable available market” (SAM) refers to the number of prospective customers that your company could realistically capture using available resources and reach.

When creating your plan, you should determine both your TAM and SAM. Additionally, you should subdivide your SAM into several smaller target markets. These target markets will be the various territories identified in your plan, but more on that in step 5.

Step 4: Analyze Your Current Market Standing

Once you have arrived at the halfway point of the territory planning process, it is time to analyze your current market standing. Essentially, you want to determine how you stack up against the competition.

One of the best ways to do this is to conduct a strengths, weaknesses, opportunities, and threats (SWOT) analysis. When performing this analysis, make sure to gather feedback from your sales reps, marketing team, and other departments within the company. 

By doing so, you can gain actionable insights from various perspectives. You can then leverage this information to improve your market standing.

Step 5: Identify Sales Territories

At this point in the process, you should be ready to carve up your sphere of influence into various sales territories. Although these territories will be outlined using geographic boundaries, they should be created by analyzing a variety of data points. 

For example, you can divide up territories based on which products are most popular among an area’s client base. Alternatively, you could outline territories based on the audience segments that are most prevalent within each area.

Step 6: Create a Plan of Attack

After you have identified each sales territory, it is time to create a plan to connect with prospects within those various regions. During this phase of planning, set performance goals for each region. Now would also be a good time to determine which sales reps you plan to assign to each territory.

When creating your plan, also set short-term goals for each territory. Generally, it is a good idea to set monthly, quarterly, and annual goals. You can track your progress towards each goal using various key performance indicators (KPIs), but more on that below.

Step 7: Review, Revise, Repeat

The final stage of planning involves three components. First, you must continually analyze sales rep performance data. Analyzing multiple data points will help you measure the efficacy of your sales territory plan.

You should review territory performance on a monthly basis, at a minimum. Depending on the market that you operate within, you may need to review territory and sales rep performance weekly or bi-weekly.

After reviewing territory performance, determine whether your sales plan should be revised. If it should, implement those changes as swiftly and efficiently as possible. Finally, continue to repeat this review and revision process perpetually, consistently building towards better results.

Further reading on creating your own sales territory plan can be found here.

Evaluate and Optimize the Efficacy of Your Sales Territory Plan

It is impossible to measure the efficacy of your plan without tracking KPIs. There are many different KPIs that you could track. However, some of the most commonly used performance metrics include:

• Gross profit
• Total unit sales
• Customer lifetime value
• Total commissions
• Conversion rate

When selecting KPIs, make sure to choose metrics that are relevant to your industry and organizational goals. By doing so, you can gain valuable insights about your sales territory plan and can leverage those insights to improve its efficacy over time.

Territory Sales Plan Template

There are numerous different territory sales plan templates out there. However, many of the most effective ones use a 30-60-90 day approach. This approach divides the steps outlined above into three thirty-day initiatives. When using the 30-60-90 day method, your territory sales plan template will look something like this:

First 30 Days: Complete Steps 1 through 5

That’s right — you should complete steps 1 through 5 in the first 30 days of sales planning. This work means evaluating business objectives, defining ideal customer personas, determining TAM and SAM, analyzing your current market standing, and identifying sales territories in just one month.

As part of this process, you should also determine which ten active client accounts are most valuable to your company. Once you have completed this, explore ways to bolster relationships with these high-value accounts.

Next 30 Days: Implement and Optimize Your Plan

By the time you reach day 31, you should be ready to put your plan into action. However, you might also find that you need to rework your customer personas in order to align with organizational objectives or vice versa. Now is the time to do so.

During month two of sales planning, you will also need to identify which KPIs you intend to track. Programs like Salesforce include built-in tracking tools that make this process incredibly easy. You should also look beyond your top 10 most valuable accounts and examine other prospective clients you want to target.  

Final 30 Days: Leverage the 3 R’s to Optimize Your Plan

During days 61-90, you should be focused on analyzing the efficacy of your sales territory plan. If your plan is meeting or exceeding expectations, analyze performance data and other information in order to determine precisely which tactics yielded these results. 

If your plan is underperforming, determine why and implement changes to get your strategy back on track.

Sales Territory Plan Examples

There are many examples of how you can divide up your sales territories.

For example, you may want to divide territories based on the amount of revenue that they generate. When using this approach, one territory may include only a handful of high-value accounts, whereas another might be home to several dozen accounts, even though the amount of revenue that they generate is approximately equal. 

Therefore, you may need to assign multiple sales reps to the latter territory in order to ensure that their workload is not excessive.

Another approach involves classifying territories based on the types of deals that are commonly struck within that region. For instance, one territory might be home to mostly large enterprise transactions, whereas another is the site of transactions involving small to medium-sized businesses. 

In this scenario, a sales rep that knows how to work out complex enterprise-level transactions should be assigned to the former territory. Conversely, a sales rep with experience closing a large volume of deals would be better suited for the latter territory.

Parting Advice for Effective Sales Territory Planning

By leveraging the proven steps outlined above, you can create your own sales territory plan. In addition to providing assistance with territory management, we can also help with several other integral components of business strategy development and planning, including the following:

• Creating a sales compensation plan
• Improving your sales commission plan
• Sales capacity planning

Contact QBIX Analytics to learn more or download our free territory sales plan template to get started.

FAQs

How Do You Make a 30-60-90 Day Sales Plan?

You can create a 30-60-90 day sales plan by using the steps outlined above. Generally, steps one through five are performed during the first 30 days. Step six is performed during the second month, and step seven is completed during the final 30-day leg of the plan. 

Further Reading

• 5 Tips for Sales Capacity Planning in 2021
• 5 Tips to Modernize Your Budgeting Process in the Age of Covid
• Sales Compensation Terms You Need to Know
• It’s Time to Improve your Sales Commission Plan
• Customer Attrition Models: Tips & How to Improve Churn