Building a Sales Territory Hierarchy

A hierarchy allows you to group different levels of assignment together so that you can view different levels of management. The most common levels of assignment are territories, districts, and regions. These are also the default settings in the AlignMix software. If your three levels are named differently, then you can easily rename them in the software options. If you only use one level of assignment (zip codes to territories) then you really do not need to do anything with the other two levels. If you use two levels, then you can ignore the third and rename that third level “not used”. When you create multiple levels of assignments you will also be able to assign managers to each level, like district or region managers. In the AlignMix mapping software you can create and view each level of assignment as a different map. You can also place sales reps, district managers, region managers, and sales account icons onto each level of assignment that you have created in the software.

Territories

Districts

Regions

Span of Control

The span of control refers to the total number of territories that are grouped together into the next level of assignment (most often this second level is called “District”). If you have 100 territories and ten districts then the average span of control will be 10-1, ten sales territories per district. You can then further assign the districts to regions (if you have a three-level hierarchy). Let us assume you only have two region managers, then the span of control would be 5-1, 5 districts per region. We do recommend discussing with your HR department to see if there are and sales territory management best practices already in place.

When you design your sales territories, it is important to keep in mind what the span of control should be at each level of assignment. As you finalize the first level of assignments you will then need to group those territories into districts (you can then assign district managers to each district). This process is often done together with the district and/or region managers. You also want the span of control to be the same for all the districts. You would not want one manager to have 15 territories and another with 9. Ideally, they should be the same or off by just one or two territories. The same applies at region level. You should not have one region manager oversee 10 district managers, and the other region manger in charge of 2. For optimal productivity and moral the span of control should ideally be between 8 and 11, but this of course also depends on the business that you are in.

1st level of Assignment

The first level of assignment in the hierarchy is the base shape (zip codes, FIPS, Postcodes, municipalities) assigned to a territory. You need to first create this level of assignment before you can move on to assigning sales territories to districts and districts to regions. Even if you import hierarchy data you will need the first level included in that data set, otherwise the software will not know how to assign the base shapes. By default, the first level of assignment is “Territory” if you use a different term like area, district, or region you can change the naming in the options. If you do not have additional levels of assignment, then you do not need to worry about districts or regions. You simply only use the base shapes of Zips, FIPS, postcodes, or any base shape to design your sales territories.

After you design the first level of assignment you can then create and assign a sales representative (sales reps) to each sales territory on the map. This process can be performed manually or via a sales personnel import. Even if you are not using AlignMix as your sales territory design tool you should still be able to assign people to geographies on the map. Most territory alignment software will have a way that you can do this.

2nd Level of Assignment (First Level of Management)

The span of control refers to the total number of territories that are grouped together into the next level of assignment (most often this second level is called “District”). If you have 100 territories and ten districts then the average span of control will be 10-1, ten sales territories per district. You can then further assign the districts to regions (if you have a three-level hierarchy). Let us assume you only have two region managers, then the span of control would be 5-1, 5 districts per region. We do recommend discussing with your HR department to see if there are and sales territory management best practices already in place.

When you design your sales territories, it is important to keep in mind what the span of control should be at each level of assignment. As you finalize the first level of assignments you will then need to group those territories into districts (you can then assign district managers to each district). This process is often done together with the district and/or region managers. You also want the span of control to be the same for all the districts. You would not want one manager to have 15 territories and another with 9. Ideally, they should be the same or off by just one or two territories. The same applies at region level. You should not have one region manager oversee 10 district managers, and the other region manger in charge of 2. For optimal productivity and moral the span of control should ideally be between 8 and 12, but this of course also depends on the business that you are in.

3rd Level of Assignment (Second Level of Management)

Most companies do not go past three levels of assignment (territory, district, and region). This third level is also considered the second level of management because in this case region managers oversee the district managers which are considered the first level of management. You will need to first create the base assignments (zip code to territory, territory to district) to create the third and final level of assignments. Without districts you cannot group anything into regions. If you have territories assigned to regions that simply means you 2 levels of assignment and you should then rename the default terms in the options section in the software. Then during the import process, you will assign zip codes (or and base shape) to a territory and then territories are grouped into region assignments.

Remember to keep the span of control in mind when you are assigned districts to regions. Make sure to have the same number of districts grouped into regions. This will allow you to maintain the same span of control throughout the whole map. Having a region manager in charge of 15 districts and another manager in charge of 5 is not ideal. The first manager has double the workload when it comes to training and managing the direct reports. In this case you would want to shift five of those district managers from the one that has 15 to the one that has only 5 managers. This way each region manager will have 10 district managers assigned to each region.

If the region managers are to cover a large geographic area, then it may be best to have these managers live close to major airline hubs so that they can easily fly to each district from their home areas. As I mentioned above you can place sales territory representatives, district managers, and region managers as icons on any map that you have created in the AlignMix software. Other mapping packages that allow you to create and manage sales territories should also allow you to create these three levels of people assignments.

4 or More Levels of Assignment

If your organization does go to four levels of assignment (area, territory, district, and region) then in AlignMix you will need to create two mapping files. One for area, territory, and district, and a second file for district and region. You first create the first three levels of assignment then build the second file using the district and regions. There may be other sales territory alignment solutions that permit more than 3 levels of assignment but in AlignMix you are limited to just three.

Importing Hierarchy Assignments

Importing your sales territory hierarchy is super easy in the AlignMix software. No matter how many levels of hierarchy you plan to import you will always need the base geography assigned to a territory. The base geography can be Zip codes, FIPS codes, FSA’s, postcodes, or municipalities. The base geography will be different if you are using a different country for your sales territory design. For the purposed of this explanation we will use Zip codes as the base shape. This means that the territories will be created at the zip code level, then territories will be assigned to districts, and districts assigned to regions. To import your current hierarchy, you will need the data in Excel format. In order to import anything, you will need the Zip to Terr assignments (zip codes with the assigned territory). Each of these data sets needs to be in its own column in the Excel file.

1 Level of Assignment

2 Columns of Data required for Import:

Zip Codes
Assigned Sales Territory

2 levels of Hierarchy

3 Columns of data required for import:

Zip Codes
Assigned Sales Territory
Assigned District

3 Levels of Hierarchy

4 Columns of data required for import:

Zip Codes
Assigned Sales Territory
Assigned District
Assigned Region

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