Size Matters

In a sales organization, size matters and more is more, right? Wrong.

All over the world sales managers are getting it wrong. They're looking at the wrong indicators, rewarding the wrong people, allocating the wrong number of the wrong accounts to the wrong account managers in the wrong places.

They're running marketing campaigns which target the wrong people with the wrong products, in the wrong place at the wrong time. They must be, or all the sales guys would be busting their quotas...but they are not. Far from it.

Why is that?

Just yesterday I was sitting next to a group of sales guys in my local coffee shop - one was bragging to his friends about how he had just been given an extra 300 accounts - he thought that his lucky numbers had come in. Chances are they did not. How can one person do a good job of looking after more than 300 customers? And more to the point, what kind of thought process made somebody believe that the way to improve a poor performer was the addition of 300 more accounts?

Sales managers should be asking better questions, so rather than allocating huge territories to an individual they can allocate the right territory to an individual.

So what does right look like? Start with value. Size a territory based on the value of the potential business that a good sales person could achieve. Keep the number of customers to something reasonable, where the sales person has a chance of meeting them all, and building a meaningful set of relationships. Allocate accounts which are within geographical reach of the individual. If long journeys are required then the chances of success diminish and costs go up.

More, more, more: it isn't always the answer when it comes to sales territories:

Often this requires sales managers to be brave and cut the size of a territory. A global bank I’ve been working with recently decided to cut territory sizes from more than 200 down to 30 accounts. Initially this was not popular, but the bank had been through an analytical process where they correctly sized the market, and designed bespoke territories for individuals. They took into account geography and existing relationships, and built a value-based approached that radically simplified the lives of the sales people.

And guess what? The sales revenue increased significantly.

Magic? No. Rocket science? No. Common sense? Yes. And an analytical approach to territory design, based on real-world data, and a solid knowledge of the market.

How do you get all of this information into one place in order to start making sensible decisions? I know a company you can talk to.

Photo credit: dalvenjah via / CC BY-SA

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