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Five Steps to a Successful Sales Territory Plan

Territory planning can take many shapes and forms. This usually depends on if your sales organization uses a defined book of business for salespeople, or a separate “hunters” and “farmers” approach with sales development reps and account executives. At Salesforce, our goal is to set up each of our reps for success. In order to accomplish this, a number of strategies must come into play. As you build and fine-tune your strategy for sales territory planning, keep the following five key steps in mind.

1. Find your North Star.

Every company wants to grow. Early-stage companies want top-line sales growth; mature companies need bottom-line growth to return profits to shareholders. In the context of territory planning, how do you pick the right strategy across these different goals? Ask yourself: Is your organization looking to grow sales, ensure employee retention, or generate profit? I know: The answer is usually all of them. However, the truth is that picking a singular focus will align the planning process so it always ties back to your goal. This is your North Star.

Once you have determined your North Star, the next steps fall into place. For example, if the goal is 20% top-line growth, investing in talent is critical. Adding more sales reps is a simple way to accelerate toward your sales goals.

2. Determine the go-to-market strategy.

There are many ways to skin a cat — and this is also true in determining a go-to-market strategy.

If your sales team is B2B, then your growth opportunity might be in the enterprise market. But keep in mind that the rewards are often delayed, with long sales cycles, and are more expensive with senior-level salaries and travel budgets. Alternatively, you could add headcount in the small-business segment, which requires less expensive resources (both in salary and travel). However, it does require a well-tuned marketing engine to drive that long tail of small wins.

There is no silver bullet. But — similar to how Wall Street hedge funds use financial engineering — your go-to-market plan should invest in different areas and then constantly fine-tune the mix for the best return.

At the end of the year, our sales strategy team tries to determine how much more headcount should be added to reach our company sales goal. If you first organize by geography, company size, or revenue, the resulting go-to-market structure has many cascading effects. Those first decisions will ultimately change the makeup of the accounts in a territory, the number and type of supporting resources, the management structure, and quota.

At the same time, it is important to keep an eye on your long-term go-to-market plans. Short-term planning assumptions are cleanly defined (that is, new business sales) and will happen with a certain degree of confidence. However, longer-term plans become complex and build assumptions on top of assumptions that can quite easily detach from reality. A good framework to remember is think ahead but keep it simple.

3. Build capacity over time.

Hiring is a critical component in planning territories. There is always a time factor in hiring, including how long it takes to recruit, onboard, and get results from a new hire. There’s also the matter of understanding your annual sales goals and whom you can afford to hire and when.

For example, a fully ramped enterprise rep could generate $2 million in sales per year, but take 18 months of onboarding. Alternatively a fully ramped small-business rep could generate $400,000 in revenue per year and only take three months to be up and running.

Understanding the budget is just as important as the sales goal here. The enterprise and the small-business reps both add a lot of value in the example here, but their sales capacity comes online at different times. It’s crucial to have the right blend of the two so you can get the quick returns, but still have the strategic revenue.

4. Collaborate with sales managers.

There is an art to designing a territory; it’s not just all about the data. Collaborating with sales managers is an important step here. Beyond the obvious joint buy-in, the actual territories are much more balanced and provide a more thoughtful outcome.

I remember designing a new team in Chicago and the data suggested the need for a large headcount investment in the middle-market business (above small business, but below enterprise). My sales counterpart knew that the organization did not have enough internal talent to promote to these roles and suggested a brilliant alternative. Thinking along a multiyear plan, we did two things. We dialed down the headcount to ensure the team would succeed and be a destination that talent would seek out the next year. Also in that first year, we invested more in small-business reps to ensure there was a full bench the following year. This type of collaboration with sales managers not only builds trust, but also leads to better outcome and ultimately sales teams’ successes.

5. Level the playing field.

As you design different sales teams, it can be tempting to use clean geographic lines, such as “West versus East.” However, there might be more opportunity based purely on geographic lines.

To combat this, my team continuously revises our approach to understand the amount of opportunity in any given account. By implementing a metric of opportunity by sales region, you can balance territories on meaningful metrics of where sales will likely occur the next year — and not just based on location. As a result, everyone has an equal shot.  

Once you even the playing field, it is critical that sales managers have the same number of reps on each team. So when you are going to evaluate two managers, you know that both have the same opportunity — and capacity. Apples to apples comparisons are the best way to measure results.

Similar to how Wall Street hedge funds use financial engineering — your go-to-market plan should invest in different areas and then constantly fine-tune the mix for the best return.”

Brian Galgay | Director of Sales Strategy, Salesforce
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