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Restructuring Territory| How to Lessen the Tension

Restructuring territory

Restructuring territory happens when the company is growing or when new products or services are added. Along with growth and new adds can come conflict and frustration with your team as they feel their territory shrinking. Here's how to resolve some of those feelings.

According to Harvard Business Review, there can be a sales increase of up to 7% purely through territory redesign, so it makes sense that companies would want to restructure territories. To make sure your salespeople are well taken care of when you do have to restructure territories, try doing these five actions.

Do Your Research

Do your research for potential markets. You need data to be able to structure and restructure your territories. Whether that's the number of businesses, prospects, current clients in your territory, or population, it would be best if you had a way to understand what's in the market.

If you tell a salesperson, "Good news, I'm giving you 11 states but, those states are South Dakota, North Dakota, Idaho, Montana, etc." All your salesperson hears is, "I'm giving you a territory where no one lives." You, as the sales leader, need to be able to back up your findings with research and TAM - Total Addressable Market.

What is the total availability in each market? Is there room to grow, is it already tapped, or is it greenfield (have no presence there)? There is a huge difference between having all of New England, and already having 90% of the market versus going after California and having no business there. Make sure to use TAM when you are dividing up the territories.

Create More Territories

Creating more territories than salespeople is always a good idea. Say you have eight salespeople, create 12-15 regions. Then tell your people that they are in charge of territories 1 & 2. That lets the person know you trust them to cover two, but that one could potentially be given to someone new.

This way, the sales leader is setting an expectation early, but also creating space, so when they eventually do hire more salespeople, it's already predetermined.

Listen To Your Team

Bring in your all-stars and hear what they think. Display your data, explain your TAM, discuss what you're thinking, and then ask. Ask your salespeople what's important to them. Ask your big players what you're missing? What do they think? What have they seen? What do they want? What do they want to make sure that they get to keep?

If your top person says something like, "I don't care so long as I have Boston." Then take that into account. Once you show them the new breakdown of territories and they see that they lost a few but, you did indeed give them Boston, they will know that you heard them. They got what they wanted, and chances are they will be happier with this new change.

Show them the money

This is probably the biggest one. Sit down with your salespeople and help them develop a plan on how they are going to hit their goal. If they had ten states, and you're taking away five, yet their goal of one million stays the same, then showing them where the opportunities are and how they can go after their refined territory is vital. Show them your data, research, their current clients, and most of all, how they get new ones. Most salespeople will be okay with the change as long as they see a path to hitting their goals and making the money they want to make.

After the initial sit down, reset expectations. Explain that when the company grows, you'll be doing this again. There was one example we encountered where a salesperson was taken off all their accounts and assigned to just one major account that nobody was taking the time and effort to pursue. It was a huge account, and at first, that salesperson wasn't thrilled. After the sales leader showed the salesperson all the divisions, locations, opportunities, and gave them complete ownership of the account, that salesperson blew it out of the water in a pretty short period.

It's all in the proof. Showing someone that there is opportunity goes a long way.

Have a Transition Plan

This is the area that most sales leaders struggle. Most salespeople want to know what happens to the accounts that they have worked on and developed but, are no longer part of their new territory. Because they see it as you're taking things away from them and messing with their income - there's going to be a lot of tension.

Some of the most common tactics with old accounts are:

  • You just lose them. That's just the reality and there’s nothing you can do about it.
  • You get 90 days to close the deals, and then they transition to the new salesperson.
  • You get to keep them as long as you stay in contact with them.

We believe just cutting off accounts isn't fair. You will absolutely run the risk of losing salespeople or accounts with that move. We understand the 90-day rule gives them time to wrap things up and allows you to track their progress, but inevitably there will be a deal right at the finish line on day 93, and it seems unfair that the salesperson doesn't get credit so be prepared to address those scenarios. We don't like "staying in contact" tactic because all you get with that is a bunch of "check-in calls," and the salespeople are not really developing the account. They are often just protecting their turf.

Instead, we recommend that you sit down with your salespeople and explain you understand that they have developed these opportunities. Anything that is in stage X or above is yours (you decide the logical stage where it makes sense NOT to hand it off). You can work them until they are done. However, anything below stage X isn't that far along yet, so those go to the new salesperson. Most salespeople are okay with that move.

With those stage X and up accounts, the sales leader will check in every couple of weeks to make sure things are progressing and that the salesperson isn't just protecting it. If they are moving, great. Let them keep them. If you are consistently checking and those opportunities are stalled, most salespeople will be good with you transferring the opportunities that are not moving. This approach almost always seems fair to the salesperson, and you can actually build more loyalty than if you had used one of the more common restructuring tactics.

In The End

Restructuring territory almost always causes salespeople frustration. However, if you do your research, set expectations early, listen to what they have to say, show them the opportunities and create a fair and open transition plan, then it will go a lot smoother.

About Gary Braun

Gary is a founder and co-owner of Pivotal Advisors. He has worked for 20+ years as a salesperson and sales leader. Gary has been a guest speaker for many groups such as Vistage, Allied Executives, CEO Roundtable, Sales Management Association, and more. If you want to find out more about Gary check out his profile here.
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