With competition in the sales industry constantly increasing and becoming ever more intense, it is critical for organizations to adopt sales management best practices that help you achieve more with your sales resources and maximize revenues across your entire sales force.
Enter Ken Kramer, the Executive Director of Sales and Marketing at TerrAlign. The TerrAlign Group delivers some of the best market solutions for sales resource optimization and sales territory management to help sales organizations really get the most out of their resources. We recently had the pleasure of speaking with Ken on a variety of topics including what sales resource optimization actually means, challenges and best practices of territory design and sales sizing, and where the sales industry is trending over the next 5 years.
I try to distinguish between optimization, analysis and management. Sales Resource Optimization is about optimizing the resources that you have and maximizing the capacity of every rep across your entire sales force. From a tech standpoint, I believe a lot of people use the word optimization when they’re simply analyzing data or trying to manage things. We actually have algorithms in our product that will produce optimal territory design coverage models. We do have the technology to get you to that 90% threshold.
Regardless of times being good or bad, everybody’s always trying to do more with what they have. People were coming to us saying “We need to cut our sales force from 250 to 220 reps but we don’t want to lose revenue, what do we do?”
We have to optimize their model so they’re still bringing in the same accounts, the same revenue, with fewer resources. When things are bad, companies realize they need to do this. When things are good and companies are growing, everyone’s patting themselves on the back. What they don’t realize is they could still be doing it 10% better than that, in all likelihood.
2) What are some of the best practices of sales territory design and management?
Analytics surrounds all these best practices in the front-end and the decision-making after.
- Balance out the similar metrics that are involved with compensation plans, specifically with territory design. Build from the ground-up, as opposed to creating regions, and go down because mathematically you’ll have less options
- Build around customers, not sales reps. Customers stay longer and reps WILL stay longer if they have a design territory. A lot of people come to us and say this rep has been with us, we want to build a territory around them. We have the ability to fix a center point wherever we want, we can put one where the rep lives and build a territory around them but it’s not recommended that you do that.
- Involve the field managers in the alignment process. Typically, we’re working with sales operations and potentially VPs of sales initially to design the first kinds of territories and the system will come up with an 80 or 90% solution. Then we recommend pushing that out to the field managers to tweak and change. As long as they stay within the guidelines, then they can apply their local knowledge to the territory. The process of introducing change into the sales force will go a lot smoother if the field manager knows what is going on and why.
3) What are some challenges in territory design and management?
I think the challenge from an end-user perspective is they have to realize that it’s an issue first. Beyond that, they need to understand what the right metrics are to use and then have the right tools to be able to optimize it.
4) What are some of your strategies on sales sizing? How should sales VPs go about this if they don’t have a tool like TerrAlign?
Metrics play in very tightly when you go through a sizing exercise. You need to know what the right number of visits is for each account. Once you have that information – the right number of visits, the duration of these visits – you’ll understand the total workload behind servicing an account. If you visit an account 5 times instead of 4, what’s the incremental benefit going to be? Is the gain higher for that vs. visiting a different account twice? You need to determine that. The sizing is very tightly involved in the entire process. It ties in with the reach and frequency and based upon that, you can determine how many reps you need to accomplish those calls. Based upon that, we design the territories that will help achieve that.
Most companies have simply gone through an evolution process. Somebody designed it at some point in time, likely using spreadsheets and a map on the wall. Over the years, Google Maps or some basic mapping program arrived, so people can see there their accounts are, print maps out. We’ve seen clients with sticky notes with things written on them scattered all over map printouts. For the most part, it just became a case of evolution. “OK, we need to add a rep, we have this starting point, let’s shift some things here and a little bit there.”
When we talk about optimizing territories, we’re talking about balance – putting the same amount of something in each territory so each rep has the same opportunity to succeed. Most industries, especially outside of high-tech, reps are servicing an account. To be successful, they know they need to see these accounts once a week, one a month, for 15 or 30 minutes. We can figure out when that should be and figure out a workload. We can optimize so reps are spending more time selling and less time driving.
5) What key metrics and KPIs do you think are important to track for today’s Sales VPs?
Reach and frequency is critical – how many times are you servicing accounts? How long are those visits? We obviously incorporate drive time in that as well to determine how long it would take to service an account and a territory. In different industries, it will change. The key metrics that I check is how many cold calls, how many emails, how many contacts you’ve made. It really depends on what industry and what your objectives are. If you’re dealing with hunters who aren’t managing accounts, it’s all about leading indicators. If you’re dealing with account management, you’re talking about the number of visits and duration.
6) What do you see the sales industry trending in the next 5 years?
I think what’s great is 20 years ago, the only companies who had sales operations were pharma companies. Now, more companies see the value in sales operations and systems and tools and processes and training to be able to make your sales reps as effective as possible. That’s a lot more pervasive now; it’s not just a sales manager’s job.
I think what’s happening is we’re finally getting to the point where people are looking at sales strategically, as opposed to just tactically. I think people are looking at how do we improve the performance of every rep, performance of the entire sales force, and looking at the optimization and the performance factors as opposed to just the tools that you use to go out and do your job every day. It’s another place within the organization where people are looking and asking how do we do this better than everybody else in the industry. We don’t just have the best product – that’s not going to cut it anymore – but we need the best people and processes with the selling skills and approach to get the most out of resources we have. Sales has definitely started making that turn to being one of the strategic levers that companies have.
More about Ken Kramer
Ken Kramer joined TerrAlign in 2006, and manages Sales & Marketing efforts inclusive of direct sales, strategic partnerships, and outbound marketing efforts. Prior to TerrAlign, Ken held senior management and director level positions at leading enterprise software vendors in the CRM, Sales Performance Management, ETL and GIS markets for vendors such as Siebel Systems (now part of Oracle), Centive, Ascential Software (now part of IBM) and MapInfo. Ken has an MBA from Rensselaer Polytechnic Institute and a Bachelor of Science from Bryant College. Visit www.terralign.com to learn more about the company and Sales Resource Optimization.
Connect with Ken on LinkedIn.