In my experience of working 12 years in Commercial Excellence for different pharmaceutical companies I have seen this far too often: poorly designed sales territories!
This is a significant issue that impacts sales performance as it means that many individual sales territories are outside of an acceptable range of workload and market potentials (the so-called alignment corridor). Sales managers are often underrating the importance of having well-designed sales territories. The implications of poorly aligned territories are multifaceted. On one side it increases the risks of serving high-potential customers inadequately in territories where workloads are too high. Often in these territories the growth potential can´t be fully realized. On the other extreme there are those territories that do not reunite sufficient market potential and customers causing representatives to overcall on the limited number of customers. This imbalance results in frustrations of sales representatives outside the acceptable alignment corridor as they struggle to establish meaningful call plans. Additionally, the sales representatives with the highest workload might also be confronted with unfairly high sales targets as they need to cover territories with very high potentials. This can cause a downward spiral in terms of team motivation and overall performance.
To avoid this type of problem regular checks on territory workload and potential distributions should be conducted and if too many of them fall outside the acceptable range then action should be taken and territories should be realigned. Modern alignment tools work with digital maps allowing to redesign territories easily whilst making sure that travel efficiencies are maximised. When pinpointing all targeted customers on a digital map and establishing the relationships with the currently assigned representatives it becomes visually clear in an instance which customers should be reassigned to other sales representatives with closer proximity. These insights are of very high value and cannot be achieved when trying to align territories only through a spreadsheet exercise. Once the alignment is finalized with the approval of sales management it is easy to load the newly established brick-to-territory relationship into the CRM system. Often sales management is concerned that realignments will cause too many customer disruptions. To mitigate this concern I would argue that it will be important to monitor and limit levels of customer disruptions at individual territory levels. Also, it will be important to involve first line sales managers into the process so that they provide their market insights when determining the best alignment scenario. When it comes to rolling out the territory changes to the sales force it is very important to communicate clearly the benefits of the changes as many representatives will be able to better serve their customers. It should also be considered to establish a hand-over process where the customers changing "ownership" will be introduced by the incumbent sales representative. Additionally, a short-term adjustment of incentive compensation schemes might be considered for those territories that will be affected by the redesign.
Overall, a well-conducted territory realignment should result in a more productive, motivated sales force that will deliver more meaningful call plans, better serve their customers and ultimaltely drive better sales results. Sales management should not shy away from realignments because if managed properly the upside in terms of sales performance will be significant.
Xeleratio Consulting GmbH
We help Life Sciences executives improve sales performance with innovative best-in-class Business Excellence tools and methodologies . Expertise in Business Excellence has been gained with over 12 years of working in different global and regional roles in the Life Sciences industry.
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