How to Identify, Select, and Work a New Sales Territory

Ed Miller  

President of SalesEthics

Good salespeople are a passionate bunch. That's generally a good thing, unless they're fighting with each other.

It never ends well. I'm speaking from experience here. I've lived it.

I once had a team of reps who sold new business only. They started with zero billings, and the rule was simple: once an account was on track to reach roughly $50,000 in annual recurring revenue, it moved to a different rep.

The trouble was that nobody waited for the account to get there. The moment someone saw an account heading toward that number, the other salespeople were circling like sharks. "That account's on a good path. It should be mine in ten months anyway, so I'll start now if you don't mind."

Picture the rep who just busted their butts to land that sale. They were counting on a few more months of commission, and all of a sudden it's plucked away from them.

That is a territory problem, and it is a solvable one. A well-designed territory prevents the fight before it starts.

A well-written plan for handoffs protects the revenue when someone leaves. And a method for choosing where to expand keeps you from guessing.

This article covers all three.

Why Does Every Salesperson Need a Territory of Their Own?

I'll start with the simplest rule I know: every salesperson needs a territory that is unique to them.

If two reps believe they have a claim to the same account, it is inevitable that both of them will think the sale is theirs. You do not want to land in that situation.

It puts no one in a good position. The rep who built the relationship feels robbed. The customer gets two people calling and wonders who is actually in charge. And you, the manager, have to make a call where somebody loses.

In one of the largest studies on sales territory design, researchers found that sales managers who took more time to plan out their territories, their assignments to said territories, and all of the rules for managing them ultimately performed better and reported higher job satisfaction.

In fact, territory design had a bigger effect than how well the reps themselves performed. This is one of the main things you control that has such an outsized effect on just about every aspect of the sales process.

This is why I think of territory design as one of the most important aspects of getting your sales strategy in alignment with your business’s overall goals. A clear territory protects the rep who did the work. It keeps the customer from being fought over. It keeps you from having to manage conflict.

How Do You Know What a Territory Is Really Worth?

Two territories can look identical on a map and be nothing alike. One has a handful of large, loyal buyers. The other has a hundred small accounts that buy once a year.

If you give one to Rep A and the other to Rep B, you have not made a fair split, no matter how neat the boundary lines look.

So before you divide anything, find out what each area is actually worth. There is a simple way to do it, and it doesn't take software or AI.

For every customer, ask three questions:

1. Recency. How recently did they buy?

2. Frequency. How often do they buy?

3. Monetary value. How much do they spend?

Score each customer on all three, then sort them into high, mid, and low value.

One caution: a customer who buys rarely can look unimportant when they are, in fact, quite important. A company buying heavy equipment might place a huge order every three years. Weigh all three questions, not just the most recent purchase.

Now you can see what a territory holds. Three high-value accounts and fifty low-value ones is a different job from the reverse. That's the picture you need in front of you before you draw a single line.

How Should You Divide a Sales Territory?

I encourage every manager to think about it in this order.

The question underneath all of it is this: which of your salespeople is the most uniquely trained and talented within that territory or area of need?

Match the territory to the person, not the other way around.

Once you have a design, run two quick checks. First, is it compact? Time in the car is time not spent selling, so keep each rep's travel down. Second, is it balanced? Each rep should get a similar amount and mix of opportunity.

Here's the catch: the two checks pull against each other. The tighter you make the balance, the more driving you add. You can't have both fully, so choose on purpose, write down why, and tell your team.

Fairness is a decision. It isn't an accident.

How Do You Choose Where to Expand?

Expanding into a new area is where leaders tend to rely on gut feel. Use the data you already have instead. Ask these questions.

None of this is exotic. It is the same discipline you use for customers you already have, applied to ground you haven't covered yet.

Why Do the Territory’s Rules Have to Be Written Down, and What Should Be Made Clear for Each Territory?

Whatever design you choose, make sure the definitions are really, really clear. Everyone has to understand them and abide by them.

It boils down to one moment. One rep says, "I think this is my account." Another says, "Nope, I think it's mine." You want to avoid that at all costs.

The way to avoid it is to settle it on paper before it ever happens. That is the main goal: lay all of this out in your policies as clearly as you can, so it is well known ahead of time.

Here's what belongs in writing:

Written rules are consistency in practice.

Your people can predict what you'll do because you decided in advance and said so.

What Happens When a Territory Changes Hands?

A new territory is very often an inherited one. Reps leave. About 22 percent of business-to-business sales reps turn over every year, according to a study in the Journal of Marketing.

That same study followed customers at a large distributor after their rep left. Sales to those customers dropped by double digits over the next year. Who got the accounts made a big difference.

Read that last one twice. Most managers hand the accounts to whoever sold the most. That is not what the evidence favors. It favors the rep who already understands that customer's industry.

One more detail, and it's the one that stays with me: the company in that study had no formal guidelines for how a departed rep's accounts got reassigned.

Not having these things written down as rulesets costs real money. It wastes yours and your customers’ time. It’s just a lose-lose all around. Take the time to plan them out.

If you're the one inheriting the territory

Expect the customers to be cautious. They had a relationship with someone else, and they're likely waiting to see whether you're worth trusting before they buy. Don't read that hesitation as rejection. It's the cost of the transition, and it's temporary.

Ask the departing rep or your manager for whatever notes exist. Put your first visits where they matter most: your high-value accounts. Your scoring from earlier tells you where those are.

How Should a Rep Work a Brand-New Territory?

If you're starting from zero rather than inheriting, the approach is the same in miniature. Map the area. Rank the businesses in it by how well they fit what you sell.

Plan your in-person visits around that ranking, and don't try to cover everything at once.

I'll give you a straight answer on timing: there's no magic number for how long it takes to ramp up in a brand-new territory.

Plan for more patience than your instincts suggest.

Conclusion

Territory design is one of the few places where a manager can prevent an ethical problem before it happens. Here is how the whole thing fits together.

Give every rep a territory that is theirs alone. Divide it by geography, then product, then customer size. Score your customers so each rep gets a fair mix and not only a fair map.

Choose where to expand with the data you already have. Put every rule in writing, especially the one about what happens when a rep leaves. And when a territory changes hands, assign it by fit, not by rank.

If you only do one thing after reading this, make it the last one on the list of written rules. Decide today who inherits a rep's accounts, and put it on paper. Do it before you need it.

Territory design is also a good place for outside eyes. If you're redrawing territories, expanding into a new area, or writing the rules for the first time, SalesEthics can help.

Our Sales Strategy Consulting service is built for exactly stuff like this.