It’s Time for Annual Territory and Quota Planning – What Are You Going to Do Differently This Year?

As a sales leader this time of year, you have a lot on your plate. As you approach Q4, it is the time of year to evaluate your territory and quota design. Territory design exists to balance customer requirements and revenue expectations from leadership while considering sales rep workload to grow revenue. According to Harvard Business Review,

“Research shows that optimizing territory design can increase sales by 2% to 7%, without any change in total resources or sales strategy.”

You may worry that too much emphasis on quota prevents strategic thinking, and at the same time, you may find yourself thinking: “We sell through multiple channels, not just outside sales. Do territories even matter anymore?”

Is Virtual Selling the New Normal?

In recent years, you may have noticed a trend. Sales reps are spending less time conducting in-person visits to customers, and customers like it that way. Research has shown that virtual selling is on the rise, and according to  A Salesforce survey of more than 2,900 sales professionals worldwide,

“60% of reps report an increase in virtual meetings over the last three years. There are three times as many sales reps who now spend less time with customers in person than there are those who spend less time with them virtually.”

This trend is coupled with the increased spend on technology for inside sales reps which is a result of buyers becoming increasingly more comfortable buying digitally with limited or no face-to-face involvement.

Reps Need Different Skills When Selling in an Omnichannel Environment

You may be asking yourself: “If reps can meet with their customers anytime, anywhere, why do territories matter?” Well, let’s think of territories as a group of accounts assigned to people, not just a patch of dirt. It is the “people” aspect here that is crucial. According to a Harvard Business Review study, despite the trend to switch to an inside sales model, businesses still value the relationships built by outside sales reps. The study interviewed sales leaders like yourself, and 98% responded that the characteristics inside and outside salespeople are significantly or somewhat different. One participant stated,

“Outside sales requires far more emotional intelligence, situational awareness, and planning. Our inside sales, while equally demanding, requires persistence, research, and back end work.”

While some of the process work can be done remotely, there is no replacement for a rep who can guide a buyer through the emotional side of buying. When thinking about territory design for the coming year, take a good look at your sales org, and the trends that you have seen first-hand. Use our Territory and Quota Design Guide to uncover the important factors in setting your territory. The results may surprise you.

Once You Have a Plan for Territory Design, How Do You Tie in Quota?

In planning for the upcoming year, you may find yourself needing to evaluate quota as well. Quota setting is a delicate and tricky balancing act. Many sales leaders take the approach of slightly modifying the previous years’ quota and calling it a day. This is because they are afraid to rock the boat and cause their A-players to look for other jobs.  SBI has created this guide to help you look for trigger events, where it would be a good idea to review your quota setting process.

Territory design feeds directly into quota setting. You need to evaluate both .in order to ensure your success. Blindly setting quotas without the proper territories in place may lead to an imbalance in opportunities, and you will see your reps consistently missing their number. If you were to redesign territories without properly adjusting quota to match, you would see your reps growing increasingly frustrated with the new setup. Quota setting and territory design are some of the most challenging aspects of your annual planning. Check out SBI’s guide to learn about most common failures in quota setting, and how to avoid them.

How Do You Know You Are on the Right Path?

How do you know the decisions you have made are the right ones? How do you measure the success of your new territory and quota plan? One way to measure success is to benchmark yourself against your peers. Take a look at your revenue to cost-of-sales. Are you above or below your competitors?  Your sales process itself is also a goldmine for KPIs that give you insight into the success of your team. Throughout the entire sales process, you should have a good understanding of your conversion rates, win/loss rate, and your sales rep activities (such as customer interactions, demos, etc.). If you don’t feel like you are tracking the right KPIs, or you are not certain in this year’s territory and quota design, don’t panic. SBI has helped hundreds of clients with their territory and quota design.