Sales Territory Management From A Fractional Sales Manager's Point of View in Dublin & Columbus, Ohio

I am a firm believer that a sales territory is a stand-alone business and that every sales representative must manage the territory as if they were a business owner. Therefore, each territory must become a “profit-making” entity with careful attention to how resources are managed in acquiring new customers and impacting profit.

In the tradition way of thinking, profits are calculated in the following manner:
REVENUE – EXPENSES = PROFIT

The levers available are clear, either increase revenues or decrease expenses or both – but it will not always give the best results. Brad Sugar in one of his many books talks about focusing on 6 key drivers:

1. Constantly expanding your prospecting list.

2. Pursuing and connecting with your Ideal Client.

3. Converting connections into leads.

4. Having a lifetime value mindset.

5. Increasing the dollar value of each sale.

6. Managing to a target profit margin.

These 6 drivers offer a different way of looking at the factors that drive profit by focusing on growth rather than reducing expenses:

1. Expanding your prospecting list. A sales prospecting list represents a salesperson inventory. Unfortunately, this list deteriorates at the rate of 25% per year, people retire, are let go, or change jobs. This list provides a sales representative with the contact information a sales person needs to plan their prospecting activities. Therefore, a sales person must be constantly expanding this list.

2. Pursuing and connecting with your ideal client. This is another critical factor. A sales person must be constantly reaching out and touching those on his list and creating an opportunity to have a conversation. This is one of the most efficient ways to create leads. A lead is a person who has expressed interest in your product or service but has not yet bought from you.

3. Converting connections into leads. Creating leads is a very important step, but until you convert leads into customers – there are no sales to be generated. One of a sales reps most critical measurements is the conversion rate. The conversion rate is the number of people who buy, measured against the total number of leads generated. Two other key measurements are tracking the total number of decision makers reached and the total number of sales closed.

4. Having a lifetime value mindset. Customer lifetime value is the total revenue a business can expect from a single customer account throughout a business relationship. Acquiring new customers is a costly affair. In fact, Hub Spot posted an article by Harvard Business Review that found “gaining a new customer can cost anywhere between 25 times more than retaining an existing one”. This means from a profit perspective it is essential to identify and interact with your existing customers and reduce customer acquisition costs.

5. Increase the average dollar sale. Start with who your targeting – research should be focused on targeting high-value clients who have the capacity to use your product and services throughout their organization. Sales can also be increased by up-selling and cross selling within these accounts. Company brochures and proposals featuring one product should also include an introduction to other products you offer.

6. Managing target profit margin. Profit margins should be set and managed, but when price enters a sales call profit margin it is often ignored. Many companies are tying commissions directly to profit margins and when the margins drop below a certain point – the commission also drops, to keep the sales rep focused on value and not get drawn into a price war.

The fastest and most effective way for a company to realize its maximum profit is to get its pricing right. The right price can boost profit faster than increasing volume. Getting the price right is one of the most fundamental and important management functions; it should be one of a manager’s first responsibilities.

As mentioned, when companies see only two ways to manage the bottom line:
REVENUE – EXPENSES = PROFIT

The focus is on cutting expenses and often hampers the ability to generate revenue. The best way to improve the revenue performance in a territory is to focus on these 6 key disciplines.