Poor sales performance – Is it the rep, or their territory?

Despite sales leadership’s very best efforts, poor performers find their way into the sales force. Once identified, most leaders are quick to manage them out. However, sales results do not always differentiate high performers from low performers. Occasionally poor territory design can inadvertently cause a good seller to look like a poor performer. Sellers who struggle to attain quota are classified as poor performers, but in reality, their poor territory could be limiting their success. How do bad territories happen, what is the impact, and how can you address it and avoid it?

How Do Bad Territories Happen?

Fear of disruption and favoritism, in a nutshell, explains the majority of instances of chronic bad territory design. Favoritism occurs when a sales organization’s top performers are assigned territories with the highest amount of opportunity, while new sellers are assigned territories with significantly lower opportunity. It’s not uncommon for leaders to become overly enamored by their top performers. And what’s not to like? They killed it for you and helped you make the number. Oh and by the way, they are usually great socially – they become your friends. Keep in mind, they are naturally going to sell internally to ensure they keep the best territories, accounts and lower quotas. Interestingly, once a rep is viewed by leadership as a top performer, it’s hard to move off that thinking. Even if the rep happens to have a bad year, there is a tendency to rationalize the poor results away to reasons beyond the rep’s control.  This mentality leads to a fear of disruption or change and a culture of accommodation.

The Impact Of Setting Poor Sales Territories

The impact, in a nutshell, is reduced sales capacity, as much as 15-25% according to our research and client experiences. When tenured sellers are given the richest territories, they cannot effectively cover all the opportunities they are assigned. Meanwhile new sellers fail at high rates because they are set up to do so with “green field” territories that have little to no existing customer base. This workload imbalance creates another effect called an “in-line job transformation.” Tenured sellers who started as hunters are transformed into farmers over time. Eventually these tenured sellers are so busy managing existing accounts that they have insufficient sales time to close new opportunities. As a result the burden of growth is placed on average to below average sellers. And worse, if these tenured sellers remain in farming territories, while it might be comfortable, they usually become frustrated and leave because they enjoy hunting, or growing a business, not farming. Unbalanced territories lead to stunted growth and increased sales costs and, left unchecked, can result in higher turnover. Unwanted rep turnover is highly disruptive. It saps morale and creates confusion among customers, often leading to unnecessary customer churn.

How to Avoid Bad Sales Territories

In order to eliminate the negative aspects of unbalanced territories, high performing sales organizations embrace a periodic review, usually once a year, of their territories. The annual review process should include the following key activities:

• Develop a workload model and estimate optimal territory workload
• Calculate account and /or territory level potential
• Develop a territory balance index score, which at a minimum includes workload and opportunity
• Identify territories that are 20-30% above or below the average index score
• Rebalance outlier territories

Rebalancing territories effectively increases selling capacity and provides all sellers with equal opportunities to succeed. With balanced territories, when the organization measures performance it can truly identify the high performers. Maybe some of those “low performers” will really shine when given the right ingredients for success. And perhaps some of those “top performers” who happen to excel in the highest opportunity territories are not as good as advertised.