Sales Territory Design Basics for Getting Started

What Should My Sales Territory Design Criteria Be?

Your first questions should be: “How many territories do I need?”, and “What characteristics does each territory need to have?” How you determine the size and number of territories is a function of your business model. Territory size can be based on population, projected sales volume, customer locations, drive time or distance, number of households – any of a wide variety of business or demographic data. You can use your own data or we can help you get the data you need.

Then What?

That’s the tricky part. Building territories that meet your design criteria and that also have clear and unambiguous boundaries is where mapping comes in. You can use political geography (states, counties), postal geography (ZIP codes, carrier routes), U.S. Census boundaries (tracts and block groups), or major roads.  Maponics has the unique ability to blend these approaches and build territories that are easily understood and can be modified as your business grows and your needs change.  Our sales territory mapping process may answer many of your question.

See below for more information about each of these boundary options. We also have a page with more details comparing postal to census geographies for territory definition.

Political geography (such as state and county boundaries) has the advantage of being immutable. States, of course, have a wide variety of sizes and population densities.  Many companies divide the country up into larger, multi-state sales regions before subdividing those into territories. Counties have roughly equivalent areas, but their population and business densities vary widely. For instance, your business model might require Cook County, IL (Chicago) to be divided into five territories, whereas an equivalent territory elsewhere in Illinois might encompass half a dozen complete counties.

Postal geography carries undeniable advantages. ZIP Code areas are convenient for mailing purposes and for assigning new leads; their size is roughly determined by population density, and in general their boundaries cling to roads and municipal lines. It also seems simple to define a territory by a list of ZIP Code numbers.

The problem with using ZIP Codes is that they change. Every month there are hundreds of small changes to the nation’s ZIP Codes as new roads and houses are built. Every year there are hundreds of large changes: new ZIP Codes are added, existing ones are split up, or just renamed.

This level of change requires constant vigilance and frequent redefinition of territories. We updates our postal boundaries on a frequent basis. But you may want to think carefully before committing to a boundary option that requires regular updates.

Census geography possesses few of the above drawbacks – but census divisions can be obscure.  The US Census Bureau has divided the whole country into manageable geographic areas used for taking the decennial census. Counties are broken down into Census Tracts. Census tracts – roughly the size of ZIP Codes, but drawn to have approximately equal populations – are further subdivided into block groups, and then even to smaller census blocks for the purposes of managing the census. Their boundaries remain relatively constant over time – subject to revision only every ten years or so – and because they are population-based, it is slightly easier to create territories that cover equivalent numbers of households. The drawback?  Census boundaries are arcane – you don’t find them on many existing maps, so describing them to others can be difficult.

Major roads are the principal thoroughfares by which one gets from one area (a town, a section of a town, a neighborhood) to another.  They are defined primarily by road classification and traffic count, generally being “known” to everyone in an area.  A territory that uses major roads as its boundaries is unlikely to be or ambiguous, the roads will appear on any street map, and by choosing the right major roads you can create territories of almost any size, population density, or demographic. Major roads also don’t change, except over a long period of time – and even new developments tend to be served by the existing major road network.

Better Sales Territory Design Can Improve Profits

We often get calls from people who are not satisfied with their existing sales territories, either because they invested in complicated, ill-serving software, are referring to an outdated printed map or simply have never had the luxury of using resources developed specifically for territory management. At Maponics, we are passionate about helping people visualize the information they need to be successful. 

Maponics’ sales territory design services involve intelligently balancing territories and creating maps and reports that sales people can use in the field. Done properly, this saves your business money on lost productivity and ultimately increases revenues per sales person.  But don’t just take our word for it - researchers at Northwestern University’s Kellogg business school have studied the sales ramifications of not using intelligent territory design and mapping.

Sales Territory Alignment: An Overlooked Productivity Tool (PDF)
(A. Zoltners with S. Lorimer)
The Journal of Personal Selling & Sales Management , Summer 2000, Vol. XX, Number 3 (pp. 139-171)

Authors’ Summary:  Sales force productivity is a hot topic. Sales managers, like managers in most areas of business, are feeling the pressure to "do more with less." The focus on productivity of sales forces is warranted, because they cost American companies over $500 billion a year.

Sales territory alignment is one of the most frequently overlooked sales force productivity areas. Many sales forces are losing millions of dollars each year because of territory imbalances. Well-managed companies are overcoming the main obstacles to good territory design by using a cogent process to realign territories. This process ensures that consistent, objective criteria are used to evaluate alignment needs, yet recognizes the importance of incorporating local management judgment.

Download the full article (PDF)

Want to learn more about why to choose Maponics? Visit our sales territory design page. Want to understand our process of working with you better? Read our page discussing the Maponics sales territory design, creation and mapping process.

Questions? Request More Information or a Sales Territory Price Quote Or Call a Mapping Expert  at 800-762-5158

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