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Friday, May 14, 2010

Sales Territories

A protégé called and asked for my ideas on organizing sales territories. It was a false alarm as her bosses already had a plan, and it was a lot worse than their previous setup.

Traditionally, we divide sales territories by lines of business, geography, or method of presentation (size of customer). All three methods are creating increasing liabilities in an internet connected world with public reputations.

Segregating lines of business – Every company I know is trying to reload their customers to purchase a broader range of their offerings. Upselling and cross-selling are usually less expensive than creating new accounts, and a broader reliance on our products creates a more stable customer.

Geography – Numbers runners have their own city blocks for weekly collections. That started before 1900. Concern about the cost of long distance calls and travel for multimillion dollar sales is antiquated. Today, I have customers on three continents and have had a succession of national territories. Remember that story of the prospect going to someone else because they didn’t like the rep?

Method of presentation – Let’s figure out the presentation that creates the most highest margin accounts and integrate that presentation to every channel we can. Then cannibalize it every quarter.

Key Accounts – Every time I have seen one sales representative responsible for a customer, the customer is well served when the rep is flourishing, poorly served when the rep declines. Getting key account responsibility usually marks the beginning of decline. We band together in organizations to provide better service. Why do we keep that advantage from our customers? Top competitors won’t.

The truth is, setting sales territories is an attempt to control the sales force and the customers. It is not an optimal use of time for management. I had one manager take away several million dollars in completed sales saying he was “load balancing the team.” Many of those sales were subsequently repudiated.

Setting customer responsibilities should be done by the same people responsible for purchasing from your organization – the customers.

We can’t have faceless reps any more. Each rep needs to develop a public competency that will appeal to their customers and attract prospects. That starts with knowing everyone who buys in your accounts and making it easy for your existing accounts and future accounts to find you. That might include social media, but it starts with basic sales shoe leather tradecraft. Doc Searls, who started “Markets are conversations,” a decade ago, has a brilliant post today that reputations are not brands.

The purpose of arranging sales responsibilities is to maximize sales and margins. That means delivering the best experience to customers and prospects. When it is done right, it is blatantly obvious to everyone who cares.

Can I get an Amen?
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