How many Sales Territories do I need?

Posted by Gary Lavin on Jul 15, 2015 6:54:00 AM

Sales Territories:

Deciding on whether a sales person is successful because they have better selling skills or work ethic versus they just have a great territory can be a challenge. The opposite is also true, are they not making it because the territory just stinks?

Also knowing how many territories you should have is important. Too few and the reps have it easy just waiting for prospects to call in, too many and you're facing a turnover issue as reps struggle to meet quota.

You also may have a mix of major accounts mingled across all territories.


Machines In Field:

The first step in analyzing sales territories is ensuring you have your Machines in Field (MIF) categorized correctly. Use our alert ID923, sample hereto help ensure your MIF is set up correctly including using our suggested Model Categories.

Current MIF Sales Opportunity Value:

We suggest the following formula when determining the value of a sales territory.

Average Selling Price

Because there is so much ‘hair’ on how we invoice equipment (when selling multiple units most of us ‘blend’ the total deal cost across the machines, then we have lease buyouts, service buydowns, rebates, etc etc etc) pulling an average selling price out of eAutomate would be inaccurate.  So you have to have an estimate from your sales team on the average selling price of each model.

Turn Rate

This is the average # of years a model segment machine is in the field before it is replaced based on clicks and features (not necessarily lease end).

We factor that by your Retention Rate.

Retention Rate

For a model segment, do you upgrade/replace 85% of those machines?...60%?...etc).Again segments must be correctively identified per above.

Sales Opportunity Value

Using these three factors, we calculate a sales opportunity ‘value’ for each machine based upon the model category (segment) assigned. The longer a machine is in the field, the more Opportunity dollars it has. The object is to determine the total dollar value of machines in a reps territory that should ‘turn’ in the next 12 months (again not using the lease end date) and from that you will be able to visualize if your territory/account assignments are balanced.  

If you are interested in beta testing this new Sales Opportunity Value process then click here to sign up. This is our alert ID683 - Current MIF Sales Opportunity Value.

Thanks to Tom Callinan with Strategy Development for sharing his methodology. If you are interested in learning more about his sales management processes, you can contact him at callinan@strategydevelopment.com 

In addition, we are testing out some automation behind social engines like HubSpot, let us know if you are interested in this here.

 



 

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