When the going gets tough, the tough get going.

Joseph P. Kennedy (1888-1969), US politician, businessman,
and father of President John F. Kennedy

As sales professionals, we earn our living in difficult times today.  According to research conducted by Sales Benchmark Index, 27% of salespeople now fail to generate enough revenue to cover their costs. Another survey conducted by Watson Wyatt indicates that more than half of companies in the US (53%) have reduced the size of their sales force this year.  And CSO Insights predicts that more companies will let more of their low-performing salespeople to trim operating costs.

The natural reaction of most sellers and their managers to this kind of environment is to follow the adage of JFK’s father, and “get going”.  In other words, they take a deep breath, roll up their figurative shirtsleeves, and work harder: more cold calls, more marketing campaigns, more promotional mailings, more emails, more time in social networks, industry events, networking meetings - anything that might reveal one of those precious golden nuggets: a real, qualified lead for potential business.

Certainly, increasing general selling activity to increase results seems logical.  Raise the level of effort to put more into the top end of the funnel, and more business should result at the bottom, right?  But this model of sales productivity is based on a flawed assumption: that if you just raise the amount of prospecting activity, you’ll find enough leads to fill your pipeline, and therefore acheive your goal. 

Why is this a flawed assumption?  It assumes an unlimited quantity of every sales professional’s most precious resource: time.  If you’ve ever lost your car keys, your eyeglasses, or your TV remote control, you do not start your search by calling, emailing and writing any person that may know what your missing item might look like.  Yes, you might get lucky with such frenetic activity, but it would consume a lot of time and effort, and likely would produce only frustration and stress. 

There is a better way.  If we are looking for something we’ve lost, a wise person first takes a little time to think about where they might have lost it, and begins their search there.  Looking first in the most likely places to find something generally produces results faster than trying to search everywhere.  So it must be with finding new sales opportunities — most of us know this “think first, then act” strategy as territory planning.

When the going gets weird, the weird turn pro.

Hunter S. Thompson (1937-2005), American “gonzo” journalist and author

If you’ve been assigned a set of accounts to cover, what is the most effective and efficient way to do so?  Amazingly, many salespeople take the “look everywhere” approach to territory coverage, and just pick up the phone, or jump into a car, train or plane, and start making cold calls.  Or even worse, they sit back and wait aggressively by the phone, waiting for the latest marketing campaign to “do it’s thing”. 

These approaches may actually work in prosperous times, when budgets are fat and people are ready to buy.  When there are big schools of fish in the ocean, casting a wide net catches more than using a spear.  But when times get tough, and the number of opportunities dwindles, then salespeople need to think of themselves more as sports fishermen, looking to hook the select awesome opportunities. That means thinking about where that kind of opportunity is most likely to lurk, then pursuing it there.

Effective Territory Planning

To find the best fishing grounds in your territory, there are two dimensions you must consider: business potential and customer relationship.

First, what are the accounts that have the highest potential for doing business with you?  This may seem like an obvious question, but it’s one that many salespeople overlook, because they don’t know how to assess that potential.

Think about what an ideal prospect looks like for you.  The best way to do this is to consider the kinds of problems that your product or service solves.  If you sell banking management solutions, for example, what kinds of problems do your solutions solve for bankers?  Once you identify the principal problems that you can address, then consider the attributes of customers that would gain the most from solving those problems.  For example, would big banks, with lots of assets, benefit more than smaller banks, or is it the other way around? 

Your objective is to develop a profile of three to five criteria of the ideal prospect for your solution.  These critieria should be identifiable and measurable - if you select a qualitative criteria such as “likes to buy from companies like mine”, then you will have a difficult time in objectively assessing the business potential of different accounts.  Selecting observable and discoverable criteria, such as size of company, number of employees, industry, and other objective characteristics will make your assessment easier and more useful.

You don’t need more than a few criteria for this exercise.  In fact, selecting more than three to five simply raises the amount of effort without improving your results.  The trick is to select the few most important criteria, not every characteristic that might be helpful or interesting.

Identifying the criteria for the highest potential accounts is a good start to territory planning, but equally important is assessing the level of customer relationship in your assigned accounts.  Experienced salespeople know that selling to current customers is generally easier than trying to break into new accounts - you can leverage existing relationships and your level of understanding of the account should be higher. 

Think about the criteria that determines the level of relationship you have with customers in your territory.  (If your territory doesn’t include any current customers, then this part of this exercise doesn’t matter, and you can skip it.)  Is it the amount of business they have done with you in the past few months or years?  Is it the rank and title of the contacts you have developed, with executives being more valuable than staff contacts?  Is it the customer’s satisfaction ratings?  Develop a list of three to five objective criteria for determining your level of relationships with customers in your assigned territory.

Now, evaluate each account in your territory, assigning a score (using a 1-to-5 or high-medium-low scale, whichever works best for you) for each criteria in your business potential and current relationship lists.  If you don’t know enough about the account to assign a score to a criteria, leave it blank.

Total up your scores for business potential criteria and for current relationship criteria, and create a chart of your territory, plotting each account’s relative position for your two totals.  Now you can segment your territory into three useful groups.

1. “Alpha” accounts - these are the accounts that have the highest business potential scores.  Note that it does not matter what the score for customer relationship may be - if they have high business potential scores, both current accounts and new accounts fall into this segment.  This is because the sales behaviors that you should execute to create business in high potential accounts are the same, regardless of the level of relationship you may have.  Certainly, it may be easier to sell into current customers, but too many salespeople rely too much on those relationships and take shortcuts in their sales process.  Better to treat every high potential account the same, and thoroughly execute a complete sales process to win their business.
2. “Beta” accounts - these are accounts with the highest current relationship scores, but not the hightest business potential scores.  These are current customers with whom you want to maintain a strong relationship and leverage that into incremental or recurring revenue.
3. “Delta” accounts - essentially, these are the accounts that are “left over” after segmenting alpha and beta.  They are all the accounts in your territory that have low business potential and little relationship with you and your company.

Now you can determine how best to spend your time covering your accounts:

• Alpha accounts are where you should spend more than half of your time in targeted business development activities.  These are the accounts you research in depth.  You should use that research to develop effective initial value propositions and business development prompters to stimulate interest and create new latent opportunities.  If your pipeline is lean or empty, you may spend as much as 100% of your time in alpha accounts.  By focusing your efforts on your highest potential accounts, you have the best chance of finding the big fish.
• Beta accounts are where you should spend less than half of your time, and your efforts should be to maintain relationships and sell incremental or recurring revenue business.  Our research shows that too many salespeople send the majority of their time “servicing” existing accounts - while this over-investment of time may improve the level of relationship with those accounts, it is unlikely to generate a commensurate level of sales.  If these accounts did have high potential for new business, they would be in the alpha segment!
• Delta accounts should receive very little, if any, of your selling time.  Instead, find highly leverageable ways to cover these accounts: field marketing activities such as e-mail campaigns, seminars, nurture marketing programs, web conferences, social network connections, and traditional marketing efforts like direct mail are the best way to raise awareness and interest in delta accounts.  In other words, don’t ignore these accounts, but invest as little time as possible in direct selling activities here.
• Whenever anything significant changes, re-evaluate your segmentation.  If a delta account responds to a marketing campaign and says “I’m interested”, respond, review and reclassify them as either an alpha or beta, or qualify them out and keep them in delta status.  If a beta account begins a new initiative, you might bump them to alpha status.  Remember that your segmentation determines the amount of direct selling time you will assign to that account - your time is your most limited, most precious sales resource, and should be guarded carefully.

For more information about SPI’s Targeted Territory Selling program, which includes tools and methods for effective territory planning as described above, click here.  This program is also available as an on-demand e-Learning program.

Good luck and good selling!