The future of designing sales territories in SaaS is not geo-based territories. The future of sales territory design is dynamic books.
Why aren't geo territories the right model for sales teams now and in the future? Well, let's start by talking about how long geo territories have been around, and why we started using them in the first place.
Where did geographic sales territories come from?
The canonical book on territories was first published in 1919, and was called Modern Salesmanagement.
Some of our favorite quotes from the book are below. And remember, this is from 1919 - the year women got the vote - so don't expect much in the way of gender equality here.
"Small wonder, then, that the matter of territory is constantly bothering salesmanagers. Some salesmanagers have an old-fashioned inclination to dismiss the matter rather lightly with the old saw, 'It's always the man and not the territory.'"
Guess what? That "saw" was old in 1919 and it's even older in 2023. But we still hear it... a lot. We tend to fall into the trap of thinking that no matter what accounts they're given, a good sales rep will mine gold there. But the reality is that bad territories limit even the best reps' potential. A bad sales rep territory plan will make good reps go bad. Bad territories are a waste of quota capacity.
"Common fatal errors are (1) assigning a salesman too much territory; (2) having salesmen criss-crossing each other's territory because of 'personal' customers; (3) working territory spasmodically and spottily."
Sound familiar? Piling on accounts to already-overloaded reps as we cut headcount. Turning territory planning into a political game and letting reps choose their targets. And what sales manager hasn't had to try to coach reps to systematically work their books?
"The old fashioned way of dividing sales territory was roughly by states. Progressive firms have found this to be unsatisfactory because, as a rule, a state is a section of a country, formed years ago on an arbitrary basis which has no bearing whatever on the sales situation."
He goes on to recommend ever smaller boundaries, down to counties or towns: "A small unit is best." The reason is clear - you can combine small units together to create the most efficient coverage areas. Guess what? In 2023, we have the technology to get to the smallest unit of all: the account. Mr. Fredrick couldn't imagine the ability to have the technology to be able to separate the account from the physical location, but we can. Because as he said, geographic boundaries are arbitrary and have no bearing on the sales situation.
100 years of unimaginable change later, we're still fighting the same battles and using the same old saws. We can do better.
Why is dynamic books the future of sales territories?
A forward-looking territory model addresses all these issues: matching quota capacity exactly to the market, driving effective coverage down to the account level, and removing political calculations that get in the way.
And of course, that's why we're championing dynamic books and building what we're building at Gradient Works.
For most SaaS companies, along with a host of other kinds of companies, geographic territories just don't make any sense. With a traditional model, some reps get sales territories with so many high-potential accounts they can’t talk to them all, while other reps starve in a territory plan with low potential.
That results in:
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Attainment imbalances: Not every rep gets the same chance for success
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Change challenges: It's almost impossible to keep territories balanced as team composition changes
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Missed opportunities: Inadequate TAM coverage means the company misses out on potential deals
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Painful planning: Endless spreadsheets and meetings take so much time
Traditional sales territories are unfair to reps and they leave pipeline on the table. We have the tools now to do it better.
With dynamic books, accounts are dynamically distributed to reps based on account fit and intent and rep capacity. The highest potential accounts are always being worked, and rep books stay balanced.
Here's a quick video that shows you how a dynamic books model works:
Dynamic books addresses a lot of the challenges brought on by static geographic territories. That includes:
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Balanced books: Every rep has an equal shot at hitting quota because their books stay dynamically balanced with high-potential accounts
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Focused reps: Sellers have small books with only the highest-priority accounts, so they can stay focused on the prospects most likely to convert
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Full TAM coverage: Automated distribution means that whenever a new account becomes eligible, it's immediately assigned to a rep to work
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No more manual effort: Save RevOps time on manual distributions and painful planning
For more about dynamic books, download our free introduction to how it works, how you can start to implement it on your sales team, and more.
