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Using Territory Management to increase sales productivity

Sales force productivity is a hot topic. Sales Managers are under pressure to achieve increased sales with reduced sales expenditure. Having said that, achieving higher sales productivity is quite simple: increase sales and reduce sales costs with your existing resources, right?. So, what is so difficult about it?

Today, sales markets are characterized by stiff competition. Increased product proliferation has given customers a plethora of choices with minimal differentiation; therefore, the threat of competitor and substitute products is higher than ever before. To counter this threat, companies need to acquire, grow and retain profitable customer relationships. The need to segment and focus on profitable customers with strategic / life-time value is at its greatest. So, how can companies effectively counter these challenges and achieve higher sales productivity?

I propose territory management as a solution. With a well defined and balanced territory structure, companies can ensure

  • Optimal coverage of most valuable customers – the right sales professionals to the most valuable customers
  • Optimal coverage of sales territories by dividing sales markets into territories
  • Proper authorization management – ensuring that the user gets the right information
  • Additionally, Territory Management will be an important basis for equitable evaluation of sales rep performance.

Using SAP CRM’s Territory Management, classify your customers on the basis of their importance, or their geographical location, or the products they might be interested in or on a parameter you think is appropriate, or create multiple segments using the above outlined parameters individually or collectively. As an example, you might want to create logical territories for your very high value customers and then create more territories based on geographies to cover the remaining customers. This way, you never lose sight of your most important customers while you try to acquire and grow profitable relationships with new customers. This is truly the power of flexible, rule-based territory definition: you can ensure optimal sales market coverage and thereby increase your sales.

No two territories are the same. Some territories have higher market potential than others. In a territory with higher market potential, a sales rep might cherry-pick a subset of opportunities to meet her quota, while a rep in a territory with lower potential might struggle to meet her target. Such an imbalance might result in companies rewarding reps who are cherry picking their opportunities and penalizing reps who are working in territories with lower market potential. It might also be possible that the opportunities not attended to in a territory with higher potential are more profitable than the ones that were attended to in a territory with lower market potential.

To detect and rectify such imbalances among territories, SAP Territory Management provides simulation capabilities which enable you to analyze what-if scenarios and immediately trigger the right actions to remove territory imbalances and achieve your targets. Thus territory management can help maximize sales with same resources and can form the basis for an equitable evaluation of sales rep’s performance.

By appropriately structuring and balancing territories, companies can ensure the right customers are covered, improve sales, reduce costs, and equitably compensate sales reps – all key components of improving sales productivity.

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  • I thak you for your basuc overview on territory management, you explained the current situation and how the territory management could fill the gap.

    Good work....

    Thanks & Regards,
    Lakshmi Narayana

  • Hi,

    Your blog is good on Territory Management.
    You tried to explain what is there in SAP about the concept and forgotten what is not there and what is required for further enhancement.

    Best Regards,

    • Hello Sathyadev,

      In my opinion, the system is designed in a flexible way to enable customers to use territory management the way they want. It would be great if you could point out any areas that you think need enhancements.

      Thanks and Regards,

  • Hi Kranti,

    You have provided a very nice introduction to the territory management and the various business possibilities.

    Thanks for the same.