Great sales people are control freaks – they are also very territorial. Like a male Elephant Seal they will defend their territory and breeding rights with a lot of noise and a fight.
Yet – to grow you must establish the correct coverage map that insures that your company will be able reach the (TAM) Target Available Market at a reasonable cost structure. If you practice cell division correctly the Embryo of your startup company will grow into a person and then reproduce on their own…if you get it wrong…well... you know what happens.
When is the right time to split a territory?
- The number of opportunities being worked (forecasted) is greater than the ability of a team to accurately cover them
o Regular sales forecast reviews or visits indicate a lack of coverage by absence of specific information
o Deal loss rates increase
- The revenue you believe you can get within x months (factor in top line benefit/ margin benefit/ marketshare ownership) justifies the investment.
o Data Domain subdivided territories and doubled or tripled revenue in the combined patch within 6 -9 months.
- Geographic Distance to 25% or more of gross pipeline is greater than a 2 hour effort from reps home
o Lets face it – windshield time is unproductive
o People tend to have highest social and business networks near where they live
o The cost of travel equates to the cost of another sales team. This happens a lot in a young company.
- Large Metro or IT Buying markets are under represented
o For example – we do a million a month in San Diego and 200k in Los Angeles with a single rep based in San Diego.
At Data Domain we experimented with channel enablement to cover under represented markets. However, until I placed a rep in geographic market, revenues would not flow predictably. Remember – VARS and Partners are not in the business of driving your growth…they are in the business of driving margin dollars and customer satisfaction.
I warn you that the bite of a rep during a territory split can be difficult. Hence it is best to set expectations early. When I hired a sales person I told them, “if you do your job well we would be splitting their territory 1-2 times per year or more”. If we did not split something it was typically a reason to look at that particular reps performance. All of our early reps had stock in the company and a ton of pride and hope for the business – they bought into the greater good story.
My recommendation on handling split transitions is to be quick about it. We often let a rep hold an advanced stage deal till the end of the quarter or give them partial credit if the deal closed within the business quarter of the new rep. Thus the new rep would immediately have a pipeline and the old rep was incented to close what was in his or her pipeline quickly. If you let the old rep hold on forever – expect the new rep to fail and the pipeline to age rapidly as old rep focuses on their new smaller region.
Just remember if your job is easy at a start up – you picked the wrong company.
Hard is good (I know what most of you are thinking).
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