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Three Trends that Will Affect Territory Optimization in 2013

Cabrera_newToday's blog post is by Christopher Cabrera, CEO of Xactly Corporation, the industry leader in sales compensation automation.

 

Last year alone, quota attainment plummeted by 25 percent, even as quota targets rose by 33 percent. Several factors likely contributed to this statistic, but doubtlessly, unrealized territory potential is one of them.

Your approach to territory planning has a significant impact on your sales team’s performance – particularly if you’re planning to increase your sales quotas and head count in 2013, expand your product road map, or attempt to penetrate new verticals.

Historically, territory management involved distributing responsibility and revenue potential across different geo-territories to manage your sales force’s incentive potential and overall cost and productivity. But sales territory design is no longer what it used to be. Here are three current trends in sales that will dramatically impact how you can optimize your sales territory plan in 2013:

  1. Social proximity is replacing geographic proximity for territory planning. As the importance of personal connections fuels the meteoric growth of such companies as LinkedIn (an Xactly customer), the effectiveness of preassigned geo-territories shrinks. Buyer 2.0 wants to do business with people he or she knows and trusts, whether directly or indirectly. Expect to see social territories grow in popularity and ROI at the same time that geographic territories disappear.
  2. Mobile devices are now the norm, not the exception. Fewer than five years ago, one in every 10 people owned a smartphone. Today, we’re surprised when one person in 10 doesn’t own one. While this trend represents an unparalleled opportunity for your sales team to provide concierge-level service anywhere at any time, it also signifies your sales team’s expanded expectations, which include the ability to view their up-to-the-minute sales performance and exactly how they stand to benefit from potential deals. What are you doing to meet those expectations?
  3. Transparency is fueling demand for smarter incentive planning. As leading organizations embrace increasingly flat org charts, social media tears down the walls between the executive boardroom and the sales bull pen. In the same way that sales leaders must meet increasingly aggressive revenue targets, sales reps expect big incentives more than ever as payback for star performance. You need to allocate your territories to distribute incentive potential equally across your team.

Follow these three steps to harness these trends and integrate them into your territory strategy.

  1. Know which territories you’re making the most money in and why. Examine your territory performance and drill into the best practices of your top performers, your product mix, incentive structure, and more.
  2. Know the impact of possible changes before they go live. There’s a lot to be learned from your historical quota attainment. There are also big potential payouts if you reorganize your territories around what-if scenarios that you test before you implement big changes.
  3. Understand your sales-data story. Using robust, real-time sales data, you can test and troubleshoot different solutions before you implement them.

Of course, reorganizing your territories for these trends is no easy task, but with the right strategy, you can prime your sales team to land on its feet and not on its face.

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