aligning sales territories: new approaches for optimizing ...€¦ · • to balance territories...

Proprietary & Confidential Copyright 2008-2014 2014 Sales Force Productivity Conference

15-17 September, Atlanta, Georgia

Sales Force Productivity

Conference 2014

Aligning Sales Territories: New

Approaches for Optimizing Productivity

1

Ken Kramer

VP Sales & Marketing

TerrAlign


Ken Kramer

VP Sales & Marketing

TerrAlign

2


Agenda

Fundamentals of territory design optimization

End-to-End territory management process

Case Studies, Trends, Best Practices & Recommendations


Objectives of Optimizing Territories

To create territories…

• that are balanced with regards to a strategic metric

• where workload/opportunity requirements are equivalent to

rep capacity

• that are geographically configured to enable reps to work

efficiently

• that help reps maintain relationships with accounts

• that are equitable with regard to work, opportunity and

quota


Difficulties in Designing Territories

• History

• Newton’s First Law of Motion

• Are people who are setting the territories determining the right balancing metrics? Does Capacity come into play?

• Spreadsheets vs. Maps

• Collaboration & Intelligence

• Thousands of possibilities

• Changes, approvals and more changes

• Is this how Ops should spend its time, or field managers?

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Why Re-Align

• To balance territories based on

a combination of opportunity,

workload, account/prospect

information and geography

• Expansion or reduction of

sales force caused by new

competition, new products,

mergers/acquisitions

• To manage on-going Territory

management or modifications

due to new customer

acquisition, personnel changes


Benefits of Optimizing Sales Resources

• Increase sales and profits by 4% to 12% by full resource utilization

• Reduce travel costs on

average by 10%-15%

• Ability to identify over and

under-achievers and reduce

turn-over

• Equitable territories lead to

the ‘right’ quota and incentive

plan, and therefore

motivated, focused sales reps


Agenda





The Broader Process

Segment Size AlignCall

PlansIntegrate


The Broader Process


PlansIntegrate

Segment Your Accounts so you can Segment your Reps


Segmentation and Targeting

Segmentation aids targeting

• Which accounts receive sales calls

• How many sales calls do they receive

How will sales effort affect customer behavior?

• Products purchased

• Quantity purchased

Factors

• Type of account

• Competitive position

• Potential


Response Analysis

Segment

Relate effort to results

• Effort expended (call history)

• Results achieved (sales history)

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

0 1 2 3 4 5 6

An

nu

al

Sa

les

# of Calls

Response by Potential


Optimization of Reach and Frequency

Maximize return on investment

• Return in sales

• From investment in sales calls

Response analysis estimates

• Sales

• Resulting from a given number of sales calls

• Across a specific segment of accounts

14



15

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10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

0 1 2 3 4 5 6

An

nu

al

Sa

les

# of Calls


A

B



16

-

10,000

20,000

30,000

40,000

50,000

60,000

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80,000

90,000

100,000

0 1 2 3 4 5 6

An

nu

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les

# of Calls


A

B



17

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

0 1 2 3 4 5 6

An

nu

al

Sa

les

# of Calls


A

B



18

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

0 1 2 3 4 5 6

An

nu

al

Sa

les

# of Calls


A

B


Travel Time vs. Reach and Frequency

Sales effort (work) is more than the number of calls

Work = frequency x (duration + travel)

Within a segment, accounts with high travel time

• Have a lower ROI

• Must deliver more sales per call vs. average account

• Might be less attractive than lower potential accounts

• Might be better covered by inside sales

19


The Broader Process


PlansIntegrate

How many Reps do you need for each Segment?


Sales Force Sizing

Optimization of reach and frequency

• Estimates maximum revenue

• For a given amount of sales effort or for a given number of salespeople

Optimize sales force size by

• Optimizing reach and frequency

• For various sales force sizes

• Finding the difference in revenue produced

• Choosing an acceptable return on investment



22

-

10,000

20,000

30,000

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50,000

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0 1 2 3 4 5 6

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nu

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Sa

les

# of Calls


A

B



Segment Accounts

Average

Calls

Average

Revenue

Effort

(Reps)

Revenue

(000)

A 4,815 4 85,000 79 409,275

B 5,185 1 17,500 21 90,738

Overall 100 500,013


Sales Force Sizing

Sales Force Size Revenue (000)

Incremental

Revenue per

Salesperson

80 455,000

90 480,000 2,500,000

100 500,000 2,000,000

110 515,000 1,500,000

120 525,000 1,000,000

130 530,000 500,000

Proprietary & Confidential Copyright 2008-2014 2014 Sales Force Productivity Conference25

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

-10 +10 +20 +30

Change in Sales Force Size

Incremental Revenue per Salesperson

Sales Force Sizing

Proprietary & Confidential Copyright 2008-2014 2014 Sales Force Productivity Conference26

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

-10 +10 +20 +30

Change in Sales Force Size

Incremental Revenue per Salesperson

Sales Force Sizing


The Broader Process


PlansIntegrate

Optimally Align Territories to Maximize Rep Capacity


Territory Alignment

You’ve determined

• How many salespeople we need

• On which accounts they will call

• How often they will call on those accounts

• How much time each of those calls will require, including travel time

specific to the account

Now, we can create territories


Territory Alignment

A territory is a job description

• It requires one salesperson

• To call on a set of accounts

• With a recommended call frequency

• To produce an expected amount of revenue

Work = frequency x (duration + travel)


Territory Alignment

A good territory:

• Is balanced with respect to other territories

- It requires the full effort of one salesperson, just like the other territories

• Doesn’t require less than one salesperson’s effort

- Salesperson’s effort is used on less effective calls or wasted

- ROI is reduced

• Doesn’t require more than one salesperson’s effort

- Salesperson can’t adequately cover his or her accounts

- ROI is reduced

• Respects roads and natural barriers

- Maximizes productivity by reducing travel time


Territory Alignment

0

20

40

60

80

100

120

140

160

% o

f A

ve

rag

e

Work by Territory

Underemployment Missed Calls Productive Work Work Required

Equivalent to 10%

unassigned salespeople

Equivalent to 10%

vacant territories


Territory Optimization

Optimize

• Balance selling effort

• Minimize travel size

• Minimize disruption

Assess fit to existing salesperson locations

• Expansions

• Closures

• Relocations

Fine-tune in consultation with field managers


Territory Optimization

Realignment Evolution

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

Territories

Rel

ativ

e V

alue Current

Optimized

Final

High

Low


Benefits of Optimizing Sales Resources

• Increase sales and profits by 4% to 12% by full resource utilization

• Reduce travel costs on

average by 10%-15%

• Ability to identify over and

under-achievers and reduce

turn-over

• Equitable territories lead to

the ‘right’ quota and incentive

plan, and therefore

motivated, focused sales reps


The Broader Process


PlansIntegrate

Create Call Schedules to Execute on Plan


Call Planning

• Assign calls to weeks or days

• Meet call frequency requirements

• Schedule calls at equal intervals

• Cluster weekly and daily calls geographically

• Balance effort by week and day

• Two basic approaches

o Zones

o Calendars

36


Territory AA254


Territory AA254 (zoned)


Day 1 Day 2 Day 3

ID Name CallsWork (hrs) ID Name Calls Work ID Name Calls Work

11071 Customer 5 1 1.11 11040 Customer 3 1 1.12 10038 Customer 1 1 1.29







9576 Customer 36 1 1.11

8 8.91 7 7.95 7 8.36

Day 4 Day 5

ID Name Calls Work ID Name Calls Work

10895 Customer 2 1 1.15 14430 Customer 7 1 1.11







7 8.04 7 8.05

Sample 5-Day Call Schedule


The Broader Process


PlansIntegrate

Push Territory Definition to ICM and CRM

Proprietary & Confidential Copyright 2008-2014 2014 Sales Force Productivity ConferenceSlide 41

The Integrated Territory Management Model

TERRALIGN CONFIDENTIALCopyright (c) 2014 The TerrAlign Group, Inc. All rights reserved.

www.seriousdecisions.com

http://www.seriousdecisions.com/


Why Integrate

• A Plan is just a Plan until it’s Executed

• Hard to manage sharing of Accounts

• Difficult to properly assign new Accounts/Leads

42


It All Comes Back to the $$$

Set Corp Strategy

Design Comp Plans

Design Optimal

Territories

Allocate Quotas

Calculate Commissions

43

• What’s the Goal?

• How to Motivate Reps to achieve that Goal

• How to Allocate resources to Accomplish Goal

• Ensure the systems know who owns what to calculate

accurately


Agenda





Case Study

45


Benefits of Territory Optimization – Time, Efficiency,

Decision Making

46


Trends

• Salesforce (shocker)

• BI

• Territory Master

• Management v Optimization

• Check In, Activity Tracking, Routing

47


Territory Design Best Practices

• Balance territories on metrics

similar to the ones used to pay

sales commissions

• Build territories from the

ground up with science first,

then local knowledge

• Build territories around

customers, not sales reps

• Base quotas on opportunity

from each territory

• Involve field managers in the

territory alignment process

• Integrate, Analyze, Repeat


Q and A

Please remember to speak into

the microphone – we’re recording!

49


Thank you!

15-17 September, Atlanta, Georgia

Sales Force Productivity

Conference 2014

50


Travel Time Reduction

Optimizing territories reduced travel time creating the

following benefits:

• Travel time reduction

• NE decreased by 5.2%

• SE decreased by 4.7%

• Total savings on mileage = 11,960 miles x $.50 = $5,980

Increased available call hours

• NE increased by 1.6%

• SE increased by .6%

• Total value of increased call hours = $100,000 x 2.2% = $2,200


Over/Under-Capacity Issues and Costs

Optimizing Territories Improves Overall Balance

• Over-capacity means that the reps can’t make all planned calls

• Under-capacity means that reps can make more calls

• Target for each territory is 1,696 +/- 10% hours per year

- 1,526 – 1,866 hours per year


Over-Capacity Issues and Costs

CURRENT ALIGNMENT

6 territories over 110% of target

877 total hours above 110%

Value = $51,733

OPTIMIZED ALIGNMENT

2 territories over 110% target

59 total hours above 100%

Value = $3,466

Improvement of 818 hours and

$48,267

Optimizing Territories Improves Overall Balance

TOTAL ROI

Mileage saving ($5,980) + increased call time ($2,200) + over-capacity

improvement ($48,267) + under-capacity improvement ($43,266) = $99,713


Increased Revenue thru Territory Optimization

Historic Revenue with

Unbalanced Territories

200 rep field force bringing in $400M

(average rep brings in $2M)

Opportunities not being worked is

equivalent to 10% of total capacity or

20 reps

Potential Revenue with

Balanced Territories

Re-Allocate work amongst top and

bottom 20 reps

Increase revenue by up to 10%

Potential $40M incremental Revenue

with no increase in resources

Same Resources - $40M in Incremental Revenue

And Increased Market Share

aligning sales territories: new approaches for optimizing ...€¦ · • to balance territories...

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