There are an infinite number of ways to define sales territories.

Several of the most common are:

• By Geography: This includes defining territories by country, region, state, county, city, zip code, etc.
• By Vertical Market: Examples of vertical markets include Manufacturing, Health Care, and Financial Services. Large vertical markets such as Manufacturing may be divided into sub-markets such as Discrete Manufacturing and Process Manufacturing.
• By Named Account: Accounts are assigned by company name. Large accounts may be further subdivided by geography, division, business unit, etc.

Most companies do not have enough salespeople to accomplish any significant geographic market penetration. Plus, the most effective way for most salespeople to prospect is by asking for referrals. Since referrals can cross geographies and vertical markets, the most effective territory assignment strategy for most companies is Named Accounts.

In a Named Account model, the decision as to whether a salesperson is given "ownership" of an account is usually determined by the following factors:

• Account size (number of locations, divisions, etc.)
• Geographic location of account business facilities
• Depth to which the salesperson has penetrated the account
• Levels (titles) of specific individuals with whom the salesperson has relationships
• Whether any other salespeople have relationships in the account that can be leveraged to good effect

If the assignment of an account to one salesperson is not clearly warranted, you have a number of options. These include:

• Assign multiple salespeople to separate divisions or business units
• Declare a "jump ball", where salespeople compete for the account's business
• A "team" approach, where prospecting activities, sales, and compensation are shared by two or more salespeople

If you take all of these factors into account, you will be able to design sales territories that make the most effective use of your sales personnel.

©2005-2009 Alan Rigg

About the Author

Sales performance expert Alan Rigg is the author of How to Beat the 80/20 Rule in Sales Team Performance, and the companion book, How to Beat the 80/20 Rule in Selling. His 80/20 Selling System™ helps business owners, executives and managers end the frustration of 80/20 sales team performance, where 20% of salespeople produce 80% of sales. For more information and more FREE sales and sales management tips, visit http://www.8020sales.com.

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