The Importance of Territory Sizing & Planning for Manufacturing and Distribution
For manufacturing and distribution organizations, sales territories form the foundation upon which success is built. Inefficient territory planning can lead to account executive attrition, reduced sales team performance, and a decline in market share.
Therefore, manufacturers need to treat territory sizing and planning as a key strategic initiative. When executed correctly, sales teams have the best possible chance of meeting and exceeding their quotas.
1. Establish your Total Addressable Market
The Total Addressable Market (TAM) is defined as the number of available prospects and customers in your market. To get this number, manufacturers need to first know the location, size, industry, and revenue of their prospects. There are several ways to go about obtaining this data: it can be accomplished manually by looking at online directories and even social media, or with the help of AI-enabled tools such as Salesforce.
Your TAM is like a map of opportunity for your business that shows you the path to growth. It also helps you prioritize: while there are many paths to growth, understanding your TAM will ensure you take the most direct route there.
2. Segment your customers correctly
Successful territory sizing and planning begins with market segmentation. Manufacturers need to address the entire market so that they can pursue the biggest deal that will make the most revenue in the shortest period of time.
Using Salesforce, manufacturers can begin by identifying regional segment lines for their markets. Next, company size by employee count is used to further narrow segmentation rather than revenue, as the number of employees is the most accurate predictor of account complexity. Then, industry grouping is applied based on customers’ required product solutions or expertise. Finally, manufacturers can use Salesforce’s data and analytics tools to quantitatively analyze their segments and find the segments that offer the highest revenue potential.
3. Don’t let your plan revolve around geography
While geographic distribution works in certain situations, it isn’t the be-all-end-all and is highly dependent on your organization. If you manufacture highly specialized products by region, it may make sense to have sales reps distributed based on geography. However, suppose you manufacture products that have little regional relevance. In that case, it might make more sense to assign accounts to sales staff based on other factors, such as company size or buying habits and segmentation you have identified through data analysis.
4. Include sales teams in the decision-making process
It takes a large team of highly skilled salespeople who work well together to land and close big deals. Additionally, sales are often the people most impacted by territory planning. Therefore, buy-in from sales is critical for manufacturers looking to leverage new technology for territory sizing and planning.
Involving sales will reduce friction caused by shifting territories, as well as boost team motivation. But to do this effectively, communication is critical. Open discussion is critical to learning about what’s happening on a day-to-day level, as well as for your sales team to understand what insights are leading to territory changes.