Sales Territories

December 3, 2010

Q: Do you have any suggestions for dividing existing sales territories when adding a new sales position?

A: This is a common dilemma and one that generally causes conflict. Too often, there isn’t criteria previously established to determine how a sales territory is divvied up — whether by geography, vertical market, technology or even named accounts. And, I have yet to meet a good sales person who believes he can’t handle his existing customer base. This dynamic leads to a tough decision for managers; sitting idle on new opportunities or responding too slowly to customers aren’t good options, so the manager is faced with a big decision.

One of NSCA’s most successful member companies does it this way. They have every vertical market defined by the number of venue-specific units per account rep. That includes hospital beds, classrooms, population, etc. They make it clear to the staff that, upon market conditions and management discretion, they will adjust those numbers annually. Their sales people know this and understand it as a condition of their employment. That firm adds and reduces staff according to strategic account penetration and proven benchmarks. Conversely, the companies that seem less structured in regards to their sales force seem to face the most problems. I’ve seen a very casual approach that generally seems discriminatory, by the seats of your pants, or that the manager was reacting to a sudden spike in sales. This approach will typically drive away good sales people. Limiting a good sales person’s ability to earn more while balancing the success of the company is no easy task and should be well thought through.

First and foremost, I suggest open communication with existing staff. I would set criteria for existing markets and new markets, existing accounts and new accounts, etc. Try to be as fair and equitable as possible. Look at it both from their perspective and the company’s perspective. This is one of the hardest decisions you will face as a manger of good sales people. — CW

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