In the world of sales, success can often boil down to two key business processes: territory management and quota planning. These are two pillars that companies use to help them maximize their sales by allocating resources in the most effective way.
Territory management is the process of dividing up the market of buyers into manageable chunks, and quota planning is making sure each sales representative has a target to aim for. While both are important, they are different concepts.
Territory management is all about ensuring that each sales representative has enough leads and customers to work with. It’s about making sure that each salesperson, and the entire sales team, can sell as much as possible. Quota planning, on the other hand, takes a different approach. Instead of focusing on leads and customers for their territory, managers focus on motivation and commitment from their sales force. The result should be more revenue than before the system was implemented.
The goal with territory management is not just narrowing your reps focus, but also maximizing team-wide success through smart resource allocation. On the other hand, quota planning focuses on meeting predetermined goals and rightsizing opportunities so that reps are motivated to win.
A major difference between quota planning and territory management lies in the goals for each: territory management focuses on allocating resources to maximize team potential, whereas quota management focuses more on maximizing individual potential. However, managing territories and quotas are closely related and are typically planned in parallel.
Here are some ways that quota planning and territory design work together:
- Top-down goal setting. By breaking high-level goals down by region, sub-region and individual patches, assigned quotas in aggregate will indicate the feasibility of your sales plan.
- Bottom-up Total Addressable Market sizing. With an accurate picture of in-account potential, organizations can set better quotas and size their territories more accurately by calculating Total Addressable Market across all accounts.
- Data speaks volumes. Smart managers can ease the pain of “new year, new plan” conversations by showing the quota math supported by prior year results, growth assumptions, territory assignments and performance expectations.
In addition, the two processes work together operationally. Territory management helps determine where you need more coverage or help, while quota planning can help you figure out which employees need extra support to meet their goals. When these systems work together effectively, they support a cohesive strategy for meeting company-wide objectives.
Territory management needs to be planned, coordinated and executed by the sales organization in order for it to succeed. Without a well-designed territory map that aligns with quota goals, your business may not reach its full potential because you underserve customers in active territories or demotivate reps whose quotas are too high.
Where Next for Territory Management and Sales Quota Planning?
Without a platform to manage both of these essential functions; the whole sales planning process is in danger. Territory management and quota planning need each other to function optimally and help businesses, sales teams and their individual contributors produce at maximum capacity!
A well-implemented Sales Performance Management platform will help you build a strategy and make informed choices based on reliable data and market intelligence.
Find out more about how you can transform your business’s territory and quota planning processes by contacting us today.