Guide to Sales Territory Management & Quota Planning


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The annual territory and quota planning process can be time consuming and fraught with challenges. Sales leaders must find a way to keep Executive Teams and Sales Reps happy and motivated to take on the coming year!

Do you find yourself buried in excel spreadsheets, sifting through various databases, and frantically trying to consolidate numbers into a plan that makes sense?

Simplify your planning process with this sales territory management & quota planning guide. You’ll find guidance on:

-The ROI of territory & quota management
-How to understand your current process
-How to understand your historical sales performance
-How to understand the value of your territories
-Creating account plans & reconciling them against overall corporate goals
-How to automate the planning process

Published in: Business, Technology
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Guide to Sales Territory Management & Quota Planning

  1. 1. Guide to Territory and Quota Planning © 2013 CallidusCloud - Proprietary & Confidential
  2. 2. Guide to Territory and Quota Planning Contents Part 1 3 What is Territory and Quota Management? What is real territory and quota management? Why do companies need to automate territory and quota? The return on investment of territory and quota management Part 2 4 5 7 8 Getting Started Getting Started Understanding your current process Understanding previous performance Understanding territory values Creating territories Reconciling your plan against overall corporate goals Part 3 9 9 11 13 14 14 15 Conclusion Why CallidusCloud Territory and Quota? Part 4 16 17 Contact Learn more © 2013 CallidusCloud - Proprietary & Confidential 18
  3. 3. Part 1 What is Real Territory and Quota Management? © 2013 CallidusCloud - Proprietary & Confidential
  4. 4. Guide to Territory and Quota Planning Part 1 04 What is Real Territory and Quota Management? Every year you begin the all too often painful process of planning for the next year and researching how territories should be defined to maximize opportunity and align with sales capacity. You have to you have to determine how to distribute quotas throughout those territories to ensure you hit your revenue targets. However, in many cases these two practices are not aligned. It is important to take into account all of the data available to you to understand how territories and quotas need to be aligned. Too many companies dive into their territory and quota planning process lacking a true understanding of all the different data points needed to determine how territories and quotas can be aligned to impact sales results. Territory Management should enable sales to ensure they are putting their efforts into the right accounts. Properly segmenting customers and prospects based on historical data, product saturation, competitor saturation, and where marketing dollars are being spent, geographically, by vertical all need to be taken into consideration, however they’re often left out of the planning process because the data isn’t available. In addition, customer coverage, controlled selling time and expenses, and customer relationships also need to be balanced. This is the basis of real territory management which leads territories being optimized for maximum revenue potential and distribution of attainable quotas. Distributing quotas needs to take into consideration the accurate value of territories, in order to allow companies to translate budget guidelines from finance into credible targets for sales. By doing this companies are better able to align quotas to their business objectives to ensure revenue targets are reached. Moreover, realistic quotas, based on accurate territory evaluation will motivate sales to reach their objectives and reduce turnover by eliminating demoralizing, unattainable goals. Many companies are unable to inherently link territory and quotas. By understanding the actual potential of a territory you can more equitably assign sales quotas and increase revenue by ensuring your reps are selling into the right accounts. © 2013 CallidusCloud - Proprietary & Confidential
  5. 5. Guide to Territory and Quota Planning Part 1 05 Why Do Companies Need to Automate Territory and Quota Management? The annual territory and quota planning process can be a time consuming lottery. Responding to changing market conditions or the inevitable sales rep turnover is slow and difficult. Ensuring coverage aligns with the strategic growth objectives set by the CEO is often times at best a gamble. It’s a gamble because critical metrics like market penetration, historical performance, and pipeline are spread across multiple systems, spreadsheets, or simply don’t exist. The result is territories end up wrongly valued and quota uplifts are smeared across the sales force like peanut butter on toast, without taking into account the actual territory potential. © 2013 CallidusCloud - Proprietary & Confidential
  6. 6. Guide to Territory and Quota Planning Part 1 06 Approximately 90% of companies assign quotas to the sales force, yet quota attainment is often less than 50%. Quota attainment is generally used as a barometer of an organizations success, as such, if the reason for low quota attainment can be attributed to a poor quota setting methodology, then fixing the process will give a better gauge of successfulness, l eading to insights in how to obtain significant performance improvements. While there are several factors that go into determining why quotas aren’t hit; under or overvalued territories are often key. A territory and quota management system takes the gamble away. Territories are optimized and evenly distributed based on accounts, customers, and value. As a result, reps are more productive because they’re focused on precise targets instead of making guesses on account potential. Smaller territories will have smaller more attainable quotas and larger territories will have larger more aggressive quotas, leading to higher motivation and morale. © 2013 CallidusCloud - Proprietary & Confidential
  7. 7. Guide to Territory and Quota Planning Part 1 07 The Return on Investment of Territory and Quota Management Discussing how to align territory values and distributing quotas appropriately wouldn’t be complete without determining the ROI. Research the Aberdeen Group conducted indicates that Best-in-Class firms see results: Best-in-Class companies use quota planning technologies more frequently than under-performing firms. The strongest sales teams place more weight on a carefully estimated region or market opportunity and specific rep achievements in determining challenging but achievable sales quotas. Best-in-Class firms balance the realities of sales incomes and goals. Additionally, a CSO Insights study recently found that 70.3% of companies will be changing the number of sales reps they have next year versus this year. Think about what that means if your company is one of those 70.3%. When adding sales reps territories have to redefined to ensure every rep will have enough pipeline to hit their quota. That means reviewing how territories are distributed today and where improvements should be made. Are you prepared? Research has shown that poorly aligned territories can effect revenue. A report by Andris Zoltners and Sally Lorimer found that they cost between 2 to 7% of sales in their paper: Sales Territory Alignment: An Overlooked Productivity Tool. Gartner estimates that optimized territory and quota plans will lead to a 5% increase in revenue. Additionally, you’ll see an increase in productivity from reps, who are focused on a clear list of accounts and have an attainable quota. © 2013 CallidusCloud - Proprietary & Confidential
  8. 8. Part 2 Getting Started © 2013 CallidusCloud - Proprietary & Confidential
  9. 9. Guide to Territory and Quota Planning 09 Getting Started Part 2 Territory and quota planning requires doing some research to get the data you need to make strategic decisions. This data might be in your CRM system, other SFA systems, or maybe even ERP systems. Having access to the people responsible for these systems will help as you gather data. However, the reality is that this data is often tribal knowledge, so interviewing key stakeholders may be your best bet. Understanding Your Current Process The first step in optimizing your territory and quota setting process is to understand your current process. This means finding out who is responsible for the process today. This might be you, and depending on the size of your organization there could be several other people across departments that are involved. Start by understanding who designs the territories and sets the quotas, as well as who the final approvers are. Who are the owners across departments: © 2013 CallidusCloud - Proprietary & Confidential
  10. 10. Guide to Territory and Quota Planning 10 Who are the approvers across departments: Part 2 As you begin to understand who the players are in your organization, the next step is to determine how territories are currently segmented and valued in your organization. Check all that apply for both how you segment, and how you value territories today: Segmenting Territories Geography Region State Zip code Area code Company size Enterprise Mid-Market SMB Other segments Products Industry Install Base New Business Potential © 2013 CallidusCloud - Proprietary & Confidential
  11. 11. Guide to Territory and Quota Planning 11 Valuing Territories Part 2 Metrics Past performance of reps Revenue from install base Pipeline Marketing campaigns Product launches Market saturation Product saturation Total addressable market Understanding Previous Performance The values of territories on the previous page are the critical piece. This is how we’re going to determine how territories should be distributed. However, this requires data. Collect everything you can regarding past years opportunity and pipeline data in your CRM or other systems. For each territory in your organization, determine determine the following four metrics and start comparing how each territory is performing. Obviously every company has a different number of territories, you may need to do this exercise for several different sales organizations and there may be dozens more territory segments. © 2013 CallidusCloud - Proprietary & Confidential
  12. 12. Guide to Territory and Quota Planning 12 Understanding Previous Performance Part 2 Territory Individual attainment over the last year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 © 2013 CallidusCloud - Proprietary & Confidential Revenue generated over the last year Current pipeline for the next fiscal year Annual cost to serve territory
  13. 13. Guide to Territory and Quota Planning 13 Understanding Territory Values Part 2 Once you have an idea of performance in the past year, you need to start looking at how territories are valued. This requires a bit of research, but it’s a critical piece to make sure you’re maximizing the opportunities available to you. Compare the total addressable market – both your install base and your potential customer base to historical performance to see if you’re on track to optimize territories appropriately. Territory 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 © 2013 CallidusCloud - Proprietary & Confidential Current Customers Potential Customers Historical Performance
  14. 14. Guide to Territory and Quota Planning 14 Creating your territories based on value Part 2 Now that you’ve valued territories you can see where things are working, and where territories might need to be readjusted to get the most out of them. This requires working closely with sales managers to ensure they and the reps see the value in reorganizing territory distribution, but with the data you’ve gathered, it should be a win-win. Reconciling Your Plan Against Overall Corporate Goals Now that you have the data you need, or most of it, you have to ensure you have the ability to hit corporate goals. This often requires involving sales managers, after all, they’re the ones that know their teams. Things to consider: Sales capacity – do you have the right number of sales reps in each region to hit your goals? Enablement – do the reps you have on board have the right training, coaching, and content to win? © 2013 CallidusCloud - Proprietary & Confidential
  15. 15. Part 3 Conclusion © 2013 CallidusCloud - Proprietary & Confidential
  16. 16. Guide to Territory and Quota Planning 16 Why CallidusCloud Territory and Quota? Part 3 If you went through the pervious steps, you probably found it to be time consuming. Gathering the data you need to make these decisions most likely wasn’t easy because it exists in disparate systems, spreadsheets, or people’s heads. Or maybe the data you needed didn’t even exist at all. Or maybe your territory segmentation is so complex a simple worksheet to gather data isn’t enough to truly process the data you did gather. The sales planning process is something you go through every year. It’s how you plan territory and quotas for the next fiscal year, it’s how you determine sales capacity. Not only that, but adjusting territories throughout the year is something you go through frequently as reps leave and new ones come on board. A territory and quota management system not only takes the gamble away, but it does the heavy lifting for you. Territories are optimized and evenly distributed based on their true value. Reps are more productive because they’re focused on precise targets instead of making guesses on account potential. CallidusCloud’s Territory and Quota Manager gives you actionable data. Improving predictability and ensuring you hit those corporate goals. Quota attainment increases and the field gets their targets on time instead of half way through the year. © 2013 CallidusCloud - Proprietary & Confidential
  17. 17. Part 4 Contact © 2013 CallidusCloud - Proprietary & Confidential
  18. 18. Guide to Territory and Quota Planning Learn More Part 4 Visit: Call: 1.866.812.5244 Email: © 2013 CallidusCloud - Proprietary & Confidential 18