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Understanding Changes in the Territories and the Marketplace That Impact PerformanceUnderstanding Changes in the Territories and the Marketplace That Impact PerformanceOne of the great challenges is to determine the proper interval between evaluations—monthly, quarterly, or annually. This is of particular importance in today’s business environment, where change is an ongoing event. Both the salesperson and the sales manager must have a continuous tap on the pulse of the territory to determine what impact any specific or combined change might have on performance results. Some areas of potential change might include:
If you see a drop-off in sales, don’t just jump to the conclusion that the salesperson is not performing to his or her potential. The truth might be that he is required to work harder than the others just to deliver at the reduced delivery rate. Listen to him when he tells you about his challenges and try to understand the meaning behind the words, not just the words themselves. His insights are very valuable in the forecasting and planning process because he has a sense of customer intimacy that no one else in your organization has. As you evaluate performance, be realistic. What is the potential of the territory you assigned to this particular salesperson? Can the territory really produce what you want it to? Some territories have minimal turnover of customers, steady economies, and a fortunate shortage of competitors. Other territories may have just the opposite: chaotic turnover of customers, lousy or inconsistent economies, and a wealth of true and perceived competitors. Some territories may be like a blank piece of paper where the sales professional is looking to develop new prospects, while others have all the existing highly valued customers they can afford. How can you evaluate a salesperson’s territory? Work with your team members to develop a territory configuration that is fair and defensible. One technique I particularly like uses a customer matrix based on two areas of importance— existing value and potential value. It is an expansion on one originally developed by a friend of mine, Michael Hunter, a world-class consultant out of Atlanta, Georgia. Over the years, I have made a few modifications to it, and it now looks like Figure 7-3. Like our other charts, this valuable tool has several steps to successful completion. Let’s take a look at them. Step 1: Determine the value of all existing customers within a territory. This is easy. Just talk to your accounting people for last year’s sales results. After you get all of the figures, segment them into four groups from smallest to largest. For example, are they in the lower twenty-fifth percentile? Or are they in the twenty-sixth to fiftieth percentiles, and so on? Place them in the grid from right to left. Step 2: Next, let’s determine the value of potential customers in a territory. This step is a little more challenging, but it can be done in a variety of ways. One method is to determine how much of your product or service a prospect currently buys from the competition or would buy from you if he knew he had a need for your product. Another method that I actually prefer because of its ability to make your salespeople much smarter about their customer base is to construct a characteristics map. In this activity, you determine the common characteristics of all your top customers in the existing revenue category. Perhaps it’s growth rate, number of employees, technology usage, leadership style or culture, distributed or centralized purchasing model, margin or profitability attainment, globalization activities, regulatory environment, or any of a large number of other possibilities. Identify as many of these characteristics of a top customer as possible. Next, look at the prospects or potential customers in a territory and determine what percentage of these characteristics they possess. If they have 25 percent or less of the characteristics, they fall in the bottom row on the matrix. If they have 26 to 50 percent, they fall in the next row up. If they have 51 to 75 percent, they fall in the next to the top row. If they are a real winner, and have 76 percent or above, they are in our top matrix row. What you end up with is customers (existing and potential) spread out across a territory-specific matrix. This helps you determine whom the salesperson should be calling on to achieve specific results. For example, to grow a territory you had better be investing the largest percentage of time with those customers showing in the highest potential value boxes (identified by the number 1 in Figure 7-4). If maintaining your relationship with your most valued customers is the right behavior, sales representatives must focus on the boxes with the highest existing value customers (also number 1s). Step 3: Collaborate with your sales professionals on such a matrix. This should give a reality check on the territory, plus it can be used as an evaluation tool for call planning and for determining how the salesperson is spending his or her time. Here are some suggestions: First, focus on call plans. Doing so will help your sales-people make their numbers needed for short-term objectives, as well as positioning with higher level prospects for the development of accounts that have future sales potential. By definition, these companies or customers are the ones that will give you the greatest return on invested time. Next, focus the calling plans on the second tier of boxes (identified by the number 2 in Figure 7-5). These accounts should only be scheduled for contact after making sure that the previous group of customers in the top tier are all taken care of. Your salesperson’s effort here should be to move them into a higher existing revenue value or a higher potential value box. Finally, we come to the customers that show up in the lower right quadrant. shown in Figure 7-6. Studies have shown that our sales personnel spend 70 to 75 percent of their time in this area. Why? Because these folks have all the problems, and salespeople love to be problem solvers. A second reason may be that our salespeople have known them the longest since, in many instances, they were given these less important accounts when they first started out. These folks might have been the only customers who would open their doors for them. But it’s a trap. Remember, by definition, these are not low revenue–high potential customers and prospects. They don’t have much potential at all. Even if we did make a sale, it is very unlikely that it would ever be worth as much as an upper left quadrant sale. Find some way of selling to this lower quadrant that does not waste the time of your highly professional salespeople. Give these customers a catalog or an inside telemarketing telephone number. Maybe they could be better serviced through an agent or distributor. Any way other than a method that eats up the valuable time of your team members. A final note on this lowest tier: Once a year, ask your sales personnel to take another look inside and see if anything has changed. It may be that some historically lower tier accounts have been acquired by a bigger company. Maybe they developed a new technology to increase their success. Maybe the leadership has changed and the new team plans to move them up the competitive ladder quickly. If so, they deserve to be moved out of the lower tier 121
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