Chapter 6: Building An Allocation Process And Territory Plan

The benefits of territory planning and account allocation

Effective allocation of resources and territories ensures that sales teams focus on the most lucrative opportunities.

This maximises revenue potential and ultimately contributes to business growth.

A well-structured territory plan also ensures that customers receive tailored and a high-quality service. Personalisation can significantly improve customer satisfaction.

It facilitates the alignment of sales and marketing efforts. It ensures that marketing campaigns target the right audience in specific territories which optimises lead generation and conversion rates.

Growth Advisor Gaetano Nino DiNardi highlighted the effectiveness of this strategy. He said:

‘Account-based attacking styles and sales and marketing collaboration are so important. The amount of engagement you’re getting into these target accounts will probably be the key way to go.’

‘You must find your super high-value strategic VIP accounts and then collaborate across those coordinated attacks.’

Sales teams can operate more efficiently by avoiding overlap or gaps in territory coverage which increases productivity and sales performance.

A structured allocation process and territory plan leverage data and analytics and results in a more strategic approach to revenue generation.

How to create an allocation process and territory plan

1. Define your revenue and operational goals

According to strategic advisor Morgan Ingram, planning is essential:

‘You want to think about the goal you’re trying to hit at the end of the next year. Based on that, then we look at the two to three main things we need to pull as levers to hit that and then what are the habits we need to create to hit those main three things. 

‘Otherwise, you’re going just to be running around mindlessly.’

What are you trying to achieve with this allocation process and territory plan? Understanding your objectives will guide the process.

2. Gather relevant data

A great deal of the strategy behind territory structure is based on product knowledge. But that knowledge can often be misinterpreted through human observation. You must dig into the data to verify or disprove any assumptions.

Collect relevant data, such as historical sales data, customer information, market demographics, and competitor analysis. This data will serve as the foundation for your territory planning.

Try to acquire all accounts that fit your Ideal Customer Profile from a data enrichment source.

3. Assess your sales performance

Examine the number of opportunities initiated by your sales team over a year and the number they successfully closed.

Consider the total number of accounts your sales team interacted with, the portion of these interactions that turned into opportunities, and the fraction that ultimately converted into successful sales.

Analysing these conversion rates and volume metrics will give you a rough estimate of the number of accounts a salesperson should target to achieve their quota.

4. Divide your target market into segments

Analyse your customer base and understand which prospects are the most profitable and lucrative. Understand what these customers have in common and which prospects offer the most lucrative growth opportunities for your company.

Base your segments on location, customer size, industry, and buying behaviour. These segments will help you to create specific territories that cater to the unique needs of each group.

Geographical territories

Geographical territories are the most standardised approach to sales divisions.

Before the rise in remote work and virtual meetings, most salespeople were placed within a reasonable distance of their prospects.

This approach remains relevant for several reasons, as factors such as time zones, languages, and cultural nuances still matter.

Geographical territories are therefore ideal for in-person or remote sellers and align selling styles with regional cultures. They also provide clear territory definitions and allow state or city divisions for multiple reps.

However, there are some restrictions to consider. Limitations in product features might require specialisation in industries not evenly distributed geographically.

Additionally, uneven distribution of accounts can lead to disputes, whilst creating territories without a metropolitan market can set sales teams up for failure.

Vertical territories

Vertical territories offer a different perspective. Analysing historical sales data and company profiles is essential when considering territory division. If patterns emerge, it could be due to a salesperson’s industry expertise or product limitations.

In cases where a product caters to specific use cases and industries, but those industries aren’t evenly spread geographically, it’s necessary to ensure each territory includes at least one major market with a share of these verticals.

This means salespeople gain familiarity with specialised buyer profiles, and industry-specific jargon becomes second nature.

You can also tailor selling processes to industry needs; salespeople can develop an in-depth knowledge of unique product applications.

However, focusing too much on one industry can hinder efforts to sell to new use cases. Segmenting too finely may result in too few accounts for a salesperson to support themselves.

Company size territories

Company size territories make sense when different product lines suit various company sizes or when pricing, expertise, or packaging requirements vary significantly.

This organises accounts in line with your product’s characteristics, meaning markets typically have a relatively even account distribution.

However, you risk boxing a salesperson out of a decent territory by removing the only viable accounts.

Use industry metrics to help shape your territories. These can help identify fast-growing sectors.

5. Determine the allocation of salespeople, marketing budgets, and other resources

Do this for each territory. Consider factors like the potential for revenue, growth opportunities, and existing customer bases.

Morgan Ingram shared a few ways to go about this:

‘Most companies have the top 100 accounts. You must consider how marketing can provide air cover to sales as they go after these top accounts.’

‘Effectively, there are many different ways you can do that. One is to work within pods or 121. Most sales teams will work in pods to reach out to maybe 25 of the top 100 accounts strategically.’

‘Alternatively, in a 121 model where an AE and SDR work together and then work with marketing to figure out how to get into those accounts. It could be inviting them to webinars, events or maybe a special campaign we can run.'

‘That’s the best way that sales and marketing can work together to get the best ROI and conversations. That focused list should be a sales and marketing collaboration.’

Leverage RevOps technology to automate the allocation process. Tools like CRM systems, marketing automation platforms, and analytics software can assist in this process. For example, Salesforce has a built-in territory solution

6. Create a comprehensive plan for each territory

Outlines your sales and marketing strategies, key performance indicators, and the actions required.

7. Regularly monitor the performance of your allocation process and territory plan

Use key performance indicators to assess effectiveness. Make adjustments as needed.

You might measure gross sales, gross profit, total unit sales and returning customers. Make sure sales people are meeting quota, the best sellers are focused on the highest-potential customers and that no current markets are underserved.

Jeff Ignacio highlighted the importance of testing these ratios:

‘You build out your segmentation, your personas and then internally, your capacity models. You know your ratios, your headcount, and your ratios of accounts and business booked to specific individuals. If you get these ratios wrong, you have pretty low engagement stats from your team.’

Closing thoughts

Building an end-to-end allocation process and territory plan in RevOps is an integral part of the SSOT and can maximise revenue and enhance customer experiences and efficiency.

You can create a structured plan that drives business success by defining clear goals, segmenting territories, assigning resources, and implementing technology solutions.