Clearly outlining and deciding upon territories and quotas is a vital part to any sales organization’s long-term success. In a subscription business, it is about more than just deciding which sales representative looks after which territory, but about its impact on how and when you engage with your customer to ensure theirs and ultimately your success.
For start-ups, the game is simple: hone in on the lowest-hanging fruit in your target market, and don’t bite off more than you can chew.
Using a shotgun approach to sales is a definite temptation; entrepreneurs generally start businesses because they see a huge market opportunity. Picking a focused sector of the market may seem counter-intuitive, but it’s a discipline whose reward is traction. Broad success across an entire market yields a lot of single data points, begging prospect questions like “so you have one customer in my industry. What does that prove and why should I care?” Once substantial traction is established within one small sector, sales efforts can build on that to expand to neighbouring sectors. Where SPM and TQM can help, is providing the entire organization with visibility to this target market in a meaningful and deliberate manner to drive real results. TQM gives you the ability to align, collaborate and measure the success of your go-to-market strategy across marketing, business development, sales and ultimately the entire company.
Start-up businesses leverage TQM solutions to:
- Increase ability to align market opportunities to territory for all members of the go-to-market team (marketing, business development, sales, technical sales, etc.).
- Alert you to the need to change/shift models based on success, growth and the addition of new resources.
- Gain the ability to model territories and create coverage models based on new information gained every month/quarter. This is especially critical during periods of high growth.
- Manage the growth and changes across all your teams in a seamless manner without resorting back to “experts”
In this stage, businesses’ need to start implementing a hunter / farmer model to properly manage their existing accounts, sharing quota with sales managers and other support staff who work alongside the direct sales team.
Part of a growth business’ retention strategy involves ‘farming’, which means hiring people whose job it is to keep customers happy, engaged, and willing to expand how much they spend with you. Sales managers and other support staff work alongside the direct sales team to implement channel-specific incremental sales and marketing strategies to keep customers happy while adding extra revenue. This improves retention, but overhead costs can climb.
Introducing more staff that need to be incentivized also more or less doubles the complexity of territory management. How do you reward account managers for keeping customers sold? Do outside sales get some reward as well? What does the outside salesperson’s customer relationship look like once an account manager is introduced? The answers to these questions depend on a multitude of factors including what you’re selling, its value, its complexity and the cost of customer acquisition. Your ability to model the numerous options in a meaningful manner will help you gain the buy-in and velocity you will need to manage this shift effectively across the entire company.
Growing businesses, leverage TQM solutions to:
- Derive quotas based on both top-down methodologies for new account hunters and bottom-up methodologies for existing account farmers.
- Ability to model not just the territory/coverage assignments, but directly tie that to how you want to use your compensation dollar across twice as many teams.
- Logically group territory definitions based on position, role or account type, such as new or existing accounts.
Maturing businesses should implement tools like statistical analysis to optimize the mix, now that establishing territories and quotas has become far more complex with different geographies, more accounts, an extended product mix and a growing network of partnerships.
As businesses mature, they layer onto pure sales efforts with marketing teams, solutions engineers, channel partners and other players. Another thing that mature companies do is segment the direct sales team by focus, e.g. enterprise, strategic and SMB. The objectives are to fine-tune products, tailor offerings for specific sectors and improve the customer experience. One unhappy by-product of this is greater complexity in sharing funds—whether that’s commissions, profit or some other way of ascribing monetary kudos for a job well done.
Linking quotas to true productivity on an individual level is a difficult tasks, given a large sales force. Modelling is more complex and there are additional data points to take into account. Enter statistical analysis. Assuming that a company has historical sales data for a given territory, sales management can conduct statistical analysis on additional methods of calculating true potential, such as businesses within the territory sorted by type and gross sales. Several methods like this one can form an index useful for quota allocation and allow you as a leader to begin to truly understand your sales capacity and build a team that predictably delivers the results expected on both the top and bottom line
Maturing business leverage TQM solutions to:
- Base territory capacity calculations on any number of drivers, such as white space and market penetration rates and renewal and expansion rates.
- Allocate and dynamically adjust quotas based on any data scenario, such as historical actuals, current forecast and future plan.
- Understand and leverage your true sales capacity across many metrics including market opportunity, sales skills, maturity of customers and products.
A complete Territory and Quota Management solution should provide organizations with a dynamic and intuitive solution to model, administer and analyze their account and territory assignments and quota plans. It can increase sales potential by optimizing territory coverage and alignment, increase the motivation of the sales team by aligning quotas with market penetration and potential and improve customer satisfaction by better managing account assignments.