Lets Talk Coverage
by Dr. Rick Johnson
No Sales Person ever wants to give up accounts. When I carried a bag, sales territories were defined geographically. We owned every account in that geographic area. Of course, that was in the old days. My daughter calls it the days of Black & White Television. In reality, color television came out when I was still only seven years old. But in the days when I was a field sales rep, the 70’s & 80’s, a sales person got a chunk of geography and you were told this is your patch of dirt. You go out and you farm the territory and you build the business.
However, for the most part, if you are going to grow your territory it has to grow by taking market share from the competition. Territories today need to go from being geographically defined to being key account assignment defined. So, in other words, when you use the term, “territory” today, you’re not referring to a patch of dirt and the sales person does not own every account. You should be referring to a group of assigned accounts. Ask yourself the question — “How many accounts can one sales person effectively call on?” REALLY!
Territory Planning: Normally, territory planning as a sales person involves looking at prior sales to territory accounts. It’s strictly historical data and that’s not good enough. Sales people must reach another level of granularity, in terms of buying influences and the total number of potential customers in the territory. This isn’t complicated or tricky but here’s what most of us have — most of us have this list of accounts and we want to sell more. We want higher gross profit (GP) so we go back to the manufacturers and ask them to give us an extra discount. Let’s buy a rail car of this stuff. Right? So our territory plan starts from that premise.
Territory planning is fundamentally a time management problem. For you to really get a grip on how to design territories and again we’re looking at piles of accounts, you need the right answers on higher GP, manufacturer negotiations, pricing, inventory management and market share growth.
Here’s what should happen…there should be a balance in every field sales guy’s territory between account maintenance, account development, and prospecting. Now let’s define the differences. Account maintenance is a relationship with accounts that you are already getting a maximum share of their spend. You are just servicing the customer; keeping the customer happy.
Growth accounts are those accounts that you are doing a fair amount of business with but you are not getting a maximum share of their spend. These are your targeted penetration accounts. This is where the majority of your growth is going to come from.
Prospecting is essentially trying to find an opportunity where you have no volume and it may or may not have potential so there’s a constant churning. What you’re trying to do with prospecting is look at the movement and buying influences in your industry. You may be in an industry that requires a lot of prospecting or you may be in an industry that requires a lot less but every sales person has to do some level of prospecting.
That doesn’t mean the field sales people go out making a bunch of cold calls and use of 20-30 or 40% of their time. Typically leads get qualified by inside sales first, appointments can even be set up and field sales go out to determine potential and begin building a relationship. You are always looking at where the buying influence’s moving. That’s what prospecting is.
Change is powerful — many sales people have very little flexibility in their mind set and they think they’re doing a really great job by always having the same call frequency. The key objective is to allocate time to opportunities for increase instead of existing volume. A sales person may be growing their sales but if the growth rate is far less than the potential for growth, are they really doing their job? Is the territory too large for one sales person?
Maximize Coverage: Sales management must analyze territories with their sales people and determine if the company is getting maximum coverage based on the market potential. Forget the concept of each territory being a patch of dirt and the sales person assigned that territory as being the owner of every account that resides within it. That’s old school thinking. If you want to maximize your sales effectiveness and increase market share, think coverage. Again, how many accounts can one sales person effectively call on and still function as a demand creator instead of a demand fulfiller. Perhaps you have territories where the potential for growth is so high it would warrant adding a junior sales person based on account assignment that can develop and nurture additional business within that geographic footprint and actually create new self-sufficient territories that produce market share growth.
Think about it. No sales person ever wants to give up accounts or territory. This is true even in cases where they don’t even know all the accounts. After all, one or two of these accounts might buy something by accident and they want the credit. It always amazes me when I ask sales people how many accounts they handle and the answer is 100 or 150 or even more. Realistically, they will even tell you that they can’t possibly call on all of them. Just as realistically many of them don’t warrant a face to face personal call. However, that does not mean we should ignore them. Big accounts were once small and chances are there are some of those accounts that really have great potential and they are not being called on.
As sales management, do your homework; figure out the real potential of those accounts. If there are 100 plus accounts but they don’t warrant face to face contact you can still set up a proactive inside sales program to maximize coverage and increase business. If there is a lot of potential within those accounts, shake up the territories using the assigned account concept. Experiment with the junior sales person concept. Start with a prototype program in a high potential select territory to start with. A side benefit of the junior sales concept is the development of bench strength for the future. It also allows you to do some pruning without the traditional sales dip that normally occurs when a territory is vacant while you find a replacement rep.
Rick Johnson is an expert speaker, wholesale distribution’s “Leadership Strategist”, founder of CEO Strategist, LLC a firm that helps clients create and maintain competitive advantage. He can be contacted at rick@ceostrategist.com. ◆