What is Territory Planning?
Territory planning is the process of dividing the market into manageable segments that sales teams can target more effectively. This strategic division is based on various factors, including geographic location, industry, company size, and potential revenue opportunities. The goal is to maximize sales efficiency and coverage while minimizing overlap and ensuring that sales reps have a clear focus and achievable targets.
How to Create Territory Assignments
Creating effective territory assignments is both an art and a science. It requires a detailed understanding of your TAM and distribution strategy, coupled with insights into your sales team's strengths and capabilities.
Let’s revisit our fictional BenAdmin company, ‘BenefitBoom’, from part 1. As a reminder, we are targeting self-funded employers with 100-5,000 employees (which we estimated to be a $630mm market opportunity, using data from BenefitFlow).
As for distribution strategy: given the nature of our solution, we know we are very much an ‘in scope’ vendor for benefits brokers. However, we are still establishing credibility with certain brokers, so we’ll also be going direct to employer for certain high-value accounts. With this in mind, let’s dive into our Territory Planning:
Step 1: Segment the Market
Given my distribution strategy will have a heavy broker focus, I need a sense of which brokers have the most exposure to my target market. Using BenefitFlow, I can filter down to my target market and generate a sorted view of the brokers that work with self-funded groups with 100-5,000 employees. I’ll want to export this view so that I can perform the next step of the analysis.
Step 2: Isolate the Largest Pockets of Opportunity
After exporting the broker office data from BenefitFlow, I can sort my list to visualize which cities (and regions) have the most opportunity. It looks like 30-40% of my market opportunity is handled by broker offices located across 20 cities. For example, New York City, has 38 office locations that serve 649 self-funded clients that are between 100-5,000 employees. The takeaway: your team doesn’t need to chase every single broker across the U.S.! There are thousands of brokers and office locations and a more focused approach will almost always outperform a ‘shotgun approach’.
Next, we’re going to roll up this data to our current sales territories. I can see a fairly even split across the South, Northeast, West, and Midwest. Now it’s time to map our sales team to the market opportunity.
Step 3: Map Team to Territories
I currently have 10 quota-carrying sales reps, distributed across geographies accordingly:
In this example… I’m running some simple math to understand the market opportunity per sales rep, across a range of metrics. It looks like our team is over-indexed on the Northeast region and under-indexed on the West Region. Across high-priority target cities in the West Region (San Francisco, Denver, etc.), there are 1,355 potential clients up for grabs… but we only have 1 sales rep positioned there. Looks like my next hire is going to be based out West!
As for the Northeast region, the opposite may be true, however, it’s important to consider potential explanations. For example, if our competitive positioning is better in that market, we may have higher win rates which could support outsized investment in the territory.
Once I consider any rebalancing that needs to be made, we also need to set the ‘rules of engagement’ within each territory. To use the South region as an example, we may decide that our most experienced rep will cover the newer markets in Texas (Houston and Dallas) and the other two reps will split the other target cities.
The Bottom Line: Setting these assignments is about 1) considering how the market opportunity is distributed and 2) having a keen understanding of the strengths, weaknesses, and preferences of your team.
Step 4: Set Clear Objectives and Metrics
The last step is establishing clear sales targets for each territory and any specific goals related to market penetration or distribution channel development. In our newer markets of Houston and Dallas, there may be a lead time on seeing closed won accounts, so we may opt for metrics such as “# of broker meetings” and/or “# of broker-led employer introductions”. In more established sales territories, focusing on something simpler, such as “closed revenue per rep”, may be more appropriate. In either case, these metrics should be a) aligned with the overall sales strategy and b) easily measurable.
Next Steps
With territory assignments in hand, your team is now equipped to tackle the market with precision and purpose. However, having a plan is just the beginning. In the next guide, we'll delve into how your team can operationalize these territory assignments, utilizing a tool like BenefitFlow to identify prospects, understand their needs, and tailor approaches for maximum impact.