By Ahmed Chowdhury
VP, Foursight
Why?
If you type “Territory Segmentation” on a Google search and search for in-depth content behind this topic, the first few pages are dedicated towards product-specific solutions. To learn more, you go past their paywall. To get anything truly insightful, you usually have to dodge pop-ups, surrender your email, and practically agree to name your next pet after their product, just to access the good stuff.
A lot of what we do in Revenue and Sales Operations is institutional knowledge; feel yourself lucky if you worked under some of the best CROs and RevOps leaders to hone in on your talent, but seldom is that the case. Most of the time, we learn as we go.
This is my attempt to share what I’ve learned over the last 15+ years working with some of the best in the industry: Alex Shootman, Dennis Dresser, Raj Verma, Bobby Jaffari, Tobias Muellner, Andrew Sinclair, to name a few.
If I had a dollar for every single time I’ve heard my sales team say, “My territory is wrong”, “My territory data is bad,” or my sales leaders say, “ I don’t have the time carve the territory”, or simply not put the effort in to help design the territories, I’d be a rich man. It’s pretty common to hear the sales team gripe about their territories being off, and sales leaders say territory planning doesn’t get enough attention. Honestly, they’re not entirely wrong. This is a recurring issue that needs addressing.
The fact is there’s never a single source of truth. In order to have ‘cleaner’ accounts and prospect data, a RevOps leader must have a data governance and enrichment strategy, period! Another great topic for another day.
Over the next several weeks I will be releasing a 4-part series on “Territory Segmentation” focusing on the theory, territory optimization [fit & intent], data preparation & segmentation modeling, CRM prep, and ongoing maintenance.
Theory
Territory segmentation optimizes sales effectiveness by dividing Serviceable Addressable Market [SAM] into manageable, focused areas. It allows for:
Alignment between Sales Coverage
and Strategic Growth Plans
Ensures territories are thoughtfully designed to support revenue targets, reflect quota assignments and align with rep capacity planning.
Improved
Market Coverage
Ensures prospects in SAM are addressed without overlaps or gaps.
Increased
Sales Productivity
Reps concentrate on a smaller patch, more defined set of accounts with better fit and intent, leading to deeper relationships and higher conversion rates.
Enhanced
Customer Experience
Tailored sales approaches based on specific territory characteristics.
Better
Resource Allocation
Optimizes the deployment of sales personnel and other resources.
Data-Driven
Insights
Facilitates performance tracking and identification of areas for improvement.
Key Elements of Territory Design
- Geographic Boundaries: Defining physical areas based on zip codes, cities, or regions.
- Industry Verticals: Segmenting by specific industries to enable specialized knowledge and sales tactics.
- Account Size/Potential: Categorizing accounts based on revenue, employee count, or estimated deal size.
- Product/Solution Focus: Aligning territories with specific product lines or solutions.
- Sales Rep Skills/Experience: Matching reps with territories that align with their expertise.
- Whitespace/ Expansion Potential: Considers untapped opportunity within existing accounts or markets to prioritize growth areas.
Territory Optimization
So what is Territory optimization and how does one go about optimizing their sales territories?
“To truly understand how to segment and optimize territories, organizations must analyze their customer base first.”
Territory optimization refers to the process of designing, assigning, and managing sales territories to maximize efficiency, productivity, and revenue generation.
The goal of territory optimization is to create balanced, manageable territory patches that allow sales teams to effectively target and engage with customers and prospects in a given region, industry, or account type.
To truly understand how to segment and optimize territories, organizations must analyze their customer base first. Customer segmentation plays a vital role in driving sales efficiency, personalization, and revenue growth by enabling them to better understand their target audience and develop tailored strategies for each segment. Once this is done properly, it allows organizations to create a look-alike model and layer on top of their prospect data and evaluate fit.
Ultimately, the goal is to build two key components to optimize:
- Account Scoring: Account scoring is a method of assigning a numerical value or rating to customer accounts within a territory based on firmographic and technographic data. This score, which can be represented as revenue potential per account, helps sales teams prioritize their efforts, allocate resources efficiently, and focus on the most promising opportunities. Key factors considered in account scoring include company size, industry, technology infrastructure, and budget.
- Account Reach: Account reach is a method for determining an organization’s penetration within an account by analyzing various engagement and interaction metrics. These metrics can include the number of marketing qualified leads (MQLs) per account, opportunities created within an account, third-party intent data, and product analytics. By assessing account reach, organizations can identify opportunities for deeper engagement, cross-selling, and strategic partnerships within their existing customer base.
In the next part of this series, we will dive deeper into account scoring, customer segmentation, and eventually how to bring it together to score accounts in a meaningful way. This can ultimately help drive equitable patches across the sales org. Eventually, the right strategies help drive sales performance and bookings growth.
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