The sales territory distribution strategy you probably should be using might be more difficult to implement and manage, but it would likely yield far more opportunities and closed business.
Problem is, we often choose what’s best for us vs. what’s best for the customer and/or market. Let me briefly explain.
Geographic sales territories are relatively easy to manage, but beyond that don’t make that much sense. Yes, there might be special characteristics about a regional or local market that someone with that knowledge can capitalize on. Field-based sales teams can cut down on travel time and costs, sure, and lead distribution is pretty simple. But from the customer side, geographic territories offer little competitive advantage.
Vertical market territories are a little better, in that they allow a sales rep to gain or leverage a specialization in a particular market’s needs. That’s useful. And lead distribution is similarly straightforward.
But these and other similar territory distribution models fail to take into account the single-most important factor in finding and closing business – relationships.
Twenty, heck even ten years ago, relationships were a difficult thing to measure and leverage. Relationships were in our Rolodexes, our hand-written contact books, and otherwise out of reach of those trying to manage an overall sales effort. Smart salespeople would go so far as to proactively hide their relationships and contacts from others.
Today, our relationships are mostly transparent. Our social and professional networks are documented via LinkedIn, Twitter, Facebook and more.
So why not take advantage of these relationships as the basis for your sales territory distribution?
Have a new lead? Figure out who on your sales team has the best or closest relationship with that individual and/or company. Find someone in your company but outside of the sales organization who knows someone there, or plays soccer with the lead’s wife, and so forth.
All things being equal, relationships win. Even when things aren’t exactly equal, relationships still probably win.
If you’re not quite ready to change your entire territory structure, take a percentage of your addressable market (or even just a handful of inbound leads from a outbound demand generation program) and distribute them based on social proximity. Track these leads separately and watch what happens.
I believe relationships, or social proximity, will soon become the preferred means of distributing leads, territories and opportunities at market-leading sales organizations worldwide.
If you’re already doing this (even with a small percentage of your sales team), please share some of your experiences and insights below.
Matt: I did once give a lead to a reseller because the CEO of my prospect company was passionate about saltwater aquariums, and the rep at the reseller held a similar passion. The reseller won the opportunity, but the installation was a disaster, to put it mildly. I guess right after they compared notes on which coral to use for which type of tank, reality hit the fan.
That’s not to say that other dimensions of connectedness or personal chemistry aren’t worth considering when parsing leads, but there can be assumptions that don’t necessarily stick. With some notable exceptions, one’s college background or sports team affiliations have limited ability for gaining sales traction. In my experience, once you get past the amicable blah-blah, you still have to get down to business. If your “value proposition” isn’t good, well, you’re really not much better than your competitor.
Back to the idea of leads distributed to geographic territory versus industry vertical. I’ve worked both, and while there are advantages to each, there are strong advantages to being located within a physical geography that should not be overlooked.
For brevity, I’l list:
1. Provincial buying mentalities. As one who has sold in the state of Virginia, I can vouch that such mindsets are alive and well. Competitors from out of territory can be considered with great skepticism.
2. Local service. It matters. When proximity is used strategically, a local rep can dominate out-of-towners, who can be run ragged, or bled dry cost-wise, flying from out of town to make sales calls that a local rep can provide in just an hour or three.
3. Local connectedness. Reps who have an established presence–say ten years or more–in local communities often have a well-established network of contacts that they bring to their sales opportunities. If they’ve been active in local organizations (tech council, rotary, local philanthropies, etc.), the affinities that are brought to client engagements can be considerable.
The geographic territory model is far from perfect, but it’s far from obsolete. True that e-commerce, “customer information power,” global sourcing, and the commoditization of some products and services have diminished the perceived value of “buy local,” but a rep in the territory still has some compelling advantages.
I agree with all of this in principal. Honestly, there aren’t a lot of sales territory distribution plans that can’t be made to work if they’re managed effectively. I remember a client once had a lead distribution system based on the first letter of the company name. Weird, but for them it worked not because of how they distributed leads, but how they managed and trained the sales team to do the right thing.