What is Sales Territory Design?

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What is Sales Territory Design?

Sales Territory Design is the process of designing territories that are the most profitable and optimized for your business. Every company that deals with anything location based can benefit from a new updated sales territory. If you own franchises this can help you map out all of your locations and then pick new ones to add to your portfolio. If you have sales reps this process will allow to map out their territories and make sure they aren't driving to accounts that are outside the bounds of their own territories. The ultimate goal is to boost your sales and profits.


If you haven't mapped out your sales territories in a few years then you should really get to it fast. There could be dozens of issues in your current sales alignment. Maybe two neighboring sales reps have completely different sales potentials, one might have the ability to generate 5 million in sales and the other only 2 million. This is a huge blow to employee moral because the sales rep with the lower sales potential may not have any chance of meeting sales targets which means that their bonus will be much smaller for the same amount of work.


History of Sales Territory Design


What did companies create and design sales territories before software packages like AlignMix came to existence?


Back in the day it was common for a sales rep to be assigned a state or a city and they were in charge of only that area. At times the sales reps were even allowed to create their own sales territories. But, as you can see that would only work until a certain point and eventually you would have sales reps overlapping territories and they would be calling on the same client. This became an issue and a solution was found; draw out the territories on a map.


When companies realized they needed a better system for creating and designing sales territories they turned to the most ideal situation, make a map. In the beginning many clients would simply use a blank map and then use colored pencils or crayons to color each territory by hand. This process became more and more complex as they tried to mathematically balance each territory. They would then have to calculate an index by hand for each territory and then keep track of the total as they added/subtracted zip codes from a territory. Now you can see what a pain that would be if clients shut down shop or new clients were added to a territory. You would then have to go through and add/subtract these details from a territory to make sure the territory was still optimized and balanced.


Then came mapping software that would create territories based on zip codes and automatically let you know if a territory is balanced or not. The gold standard for such mapping packages used to be Microsoft Map point, but it has been discontinued. It's its place we have created AlignMix 2016, a complete re-write from older versions of AlignMix. We aren't the only sales mapping package on the market, but we feel that we are one of the best (we might be a little biased).



What's the Point of Sales Territory Design?


The obvious reason for creating optimized and balanced sales territories is to boost profits. This is done by creating balanced sales territories giving each sales rep an squal chance at reaching sales targets with then leads to a boost in moral which of course leads to higher efficiency and then more profits. Decreasing drive times for sales reps cuts costs and then boosts sales. Taking into account geographic barriers and reassigning certain accounts to other territories optimizes the territory  which can lead to an increase in the company's bottom line.