9 Drawbacks to Relying Solely on Geography for Sales Territories

Using geography for territory management is a lot like playing the game RISK. In both scenarios, the objective is strategically allocating resources to maximize control over territories. But even in RISK, location isn’t enough to leverage power and secure ultimate domination. Just as players measure the strategic importance of different territories in the game, sales managers must evaluate the potential of various regions based on customer demographics, purchasing power, and competition. 

Geography provides a fundamental framework for organizing territories. However, the lack of visibility on crucial factors and geography means that sales teams can’t measure how territories are performing until it’s too late to change the outcome. 

“When sales territories are out of balance, organizations spend too much money and time on low-potential customers, while spending too little on high-potential customers,” says Steve Silver, VP and principal analyst at Forrester. “As a result, sales organizations can leave millions of dollars in lost productivity unrealized.”

With that in mind, let’s discuss nine drawbacks to relying solely on geography for sales territories, then go over an example of breaking the habit and achieving success.

9 Metrics to Know

These nine metrics often bite the dust when managers rely solely on geography to make inroads on sales leads. 

  1. Market Dynamics: These include factors like consumer behavior, purchasing power, and competition intensity. For example, neighborhoods within the same geographical area can have vastly different consumer profiles and buying patterns.
  2. Resource Allocation Based on Sales Potential: Geography-centric territories can lead to inefficient resource allocation, with some territories being over-served while others are under-served.
  3. Cross-Selling Opportunities: Sales teams might overlook opportunities to bundle products or services to maximize revenue within a territory.
  4. Customer Preferences: Ignoring customer preference variations can result in mismatches between products offered and customer preferences, leading to suboptimal sales performance.
  5. Customer Focus: Sales representatives might focus on servicing accounts based on their location rather than their value or potential to the business.
  6. Scale: Scaling sales operations requires a more strategic approach, considering factors beyond geography, such as market size, growth potential, and distribution channels.
  7. Market Segmentation: Effective sales territory planning requires considering demographic, psychographic, and behavioral factors to tailor sales strategies to specific customer segments.
  8. Flexibility: Geographically defined territories may need more flexibility to adapt to changing market conditions or business priorities. Sales organizations may need to consider other factors beyond geography to reallocate resources or adjust territory boundaries.
  9. Customer Experience Impact: Serving customers solely based on geographic location may overlook opportunities to provide personalized experiences tailored to their preferences and needs. Effective sales territory planning should optimize the overall customer experience.

Geography is a foundational factor for territory management. However, to mitigate bias and maximize sales effectiveness, businesses should complement geographic territory planning with data-driven insights, customer segmentation, and market analysis to ensure that resources are allocated strategically and equitably across all potential opportunities.

Case Study: Balancing Territory Management

When a multibillion-dollar global IT solutions provider realized that imbalanced territory planning was making it difficult for its senior salespeople to manage their time between different-sized accounts, they knew they needed to move to a system that provided a clearer view of customer profiles for a more accurate view of the time required for outreach, with forecasting to keep the sales team on track. 

“We were trying to make sure that we could segment our whole customer base and balance our customer base against our internal resources,” explains John Shaffer, who managed Zones’ sales operations team when it decided to implement Fullcast into its tech stack.

After implementing Fullcast, the sales team optimized its time, guided by detailed territory planning, better coverage and capacity management, and faster, data-driven growth opportunities. 

“To establish a more effective sales territory strategy, it’s essential for leaders in our industry to gather a thorough dataset on customers and prospects,” says Jim Rich, area general manager North America for Board International. “This data can then be used to develop a sophisticated scoring algorithm that considers factors such as customer demographics, company characteristics, location and revenue potential.”

While geography sets the initial framework, overlooking critical factors can lead to missed opportunities and interfere with RevOps teams’ ability to adapt and optimize real-time performance.

Like in RISK, where location alone does not guarantee victory, sales teams must consider customer demographics, purchasing power, and the competitive landscape to manage territories effectively. By incorporating a holistic approach beyond geography, sales teams can proactively adjust strategies and ensure long-term success in territory management.

We Can Help

Fullcast was built for RevOps leaders by RevOps leaders to bring together all of the moving pieces of our clients’ sales go-to-market strategies and automate their execution. We seamlessly connect go-to-market planning activities with tactical sales execution, enabling your operations, sales, finance, and customer success teams to make continuous adjustments in response to real-time strategy changes. From territory management to performance tracking, we operate with speed, agility, and AI-powered automation. 

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Fullcast was built for RevOps leaders by RevOps leaders with a goal of bringing together all of the moving pieces of our clients’ sales go-to-market strategies and automating their execution.