If you receive errors when attempting to view this white paper, please install the latest version of
Adobe Reader.
"Unlike other CRM software, the
SAP Customer Relationship Management (SAP CRM) application,
part of the SAP Business Suite, not only helps you address your short-term imperatives – to reduce cost and
increase your decision-making ability – but can also help your company achieve differentiated capabilities in
order to compete effectively over the long term SAP has helped best-run companies in more than 25 industries to achieve excellence in all aspects of customer relationship management."
Source : SAP
Aligning Sales Territories to Enhance Sales Productivity: Improving Customer Relationships in a Tough Economy
Sales Productivity is also known as :
Sales Productivity,
Sales Effectiveness,
Business Social Software,
Increase Retention and Productivity,
Increase Sales Calls,
Increase Sales Revenue,
Sales Productivity Info,
Sales Strategy Productivity,
Sales Analytics for Sales Productivity,
Improve Sales Effectiveness,
Evaluate the Sales Productivity,
Sales Productivity Secrets,
Time Management Sales Productivity,
Sales Productivity Tool,
Sales Productivity Resources,
Sales Effectiveness Productivity,
Improving Sales Management,
Productivity Performance Compensation,
Better Sales Planning,
Drive Sales Productivity,
Sales Productivity Integrated Sales,
Optimizing Productivity,
Tackling the Sales Productivity,
Key Factors Sales Rep Productivity,
Get Info on Sales Productivity,
Innovative Sales Productivity Tool,
Sales Productivity Boost,
Secure Sales Support Site,
Faster Sales Team Tools,
Maximize Sales Productivity,
Business to Business Sales,
Interest in Sales Productivity Tools,
Improve Productivity Cut Costs,
Sales Productivity Checklist,
Sales Force Training Sales,
Sales Force Management,
Sales Productivity Solution.
Particularly in the midst of a challenging economy, balanced sales territories contribute
to acquiring, growing, and retaining long-term and profitable relationships with
customers.
Executive Summary
Optimal Deployments Leverage Analytics,Change Management
Decisions about
territory
management
directly affect customer
relationships and the
ability to tailor the
company's approach
to various market
segments.
Even when times are good, sales force effectiveness
commands
management attention: after all, the success
of the sales force is integral to profitable growth. But in a
tough economy, retaining customers and reducing costs
become paramount, and thus sales force effectiveness
truly takes center stage. Managers today are rethinking
all aspects of sales force investment and deployment,
including
hiring, selling-process design, training, compensation,
quota setting, and performance management.
Executives are also rethinking territory
alignment - especially when there are
great variations in sales volume, productline
adjustments, and company mergers.
In fact, decisions about territories may
matter most of all. The sales force represents
a substantial expense, and effective
deployment can be crucial to advancing
revenue and profit. Decisions about
territory management directly affect
customer relationships and the ability to
tailor the company's approach to various
market segments. Salespeople tend to
be resistant to change; they have existing
relationships with their accounts
often developed over years. Territory
realignment can make a big impact
on the motivation, compensation, and
turnover of the sales staff, as well as
many other aspects of sales operations.
Optimizing territory alignment is not
simple. Nonetheless, with the right
set of tools, companies can overcome
organizational and process obstacles.
They can leverage analytics to cultivate
a deep familiarity with opportunities
and potential within their markets. They
can better understand their sales teams
and customers and execute a closedloop
alignment cycle that embraces
strategically relevant metrics and sound
change management principles. Moreover,
by focusing on an approach that
balances territories in the context of the
range of end-to-end processes involving
the sales force, companies can better
use resources to improve performance,
enhance customer relationships, and
achieve profitable growth.
The Importance of Balancing Sales Territories
Shaping Customer Relationships and Competitive Position
By properly aligning
sales territories, firms
can support company
strategy by ensuring
that revenue opportunities,
product portfolios,
and customer needs
match the capabilities
of the sales force.
Sales territory decisions - like judgments
about marketing promotions and Web
channel design - are strategic choices
that help define a company's relationship
with its customers. However, unlike
many customer-facing investments that
can be expanded or halted at will, sales
forces and their territories cannot be
easily reconfigured. Therefore, in a difficult
and rapidly changing economic
environment, companies must pay
close attention to competitive signals,
market fragmentation, product proliferation,
and other factors. In this way, they
can be proactive in making sure that
their sales territories remain balanced
and aligned with corporate strategy.
What happens when territories are misaligned?
Customer accounts and prospects
are not covered adequately. Sales
staff will try to cherry-pick accounts.
As a result of differences in territory
potential, performance evaluations can
be unfair, morale may be damaged, and
companies may wind up rewarding the
territory instead of the sales rep. The
company will spend too much effort on
low-potential prospects and too little on
more promising opportunities. What's
more, poor alignment puts the organization
at a competitive disadvantage.
Promoting Equity, Enhancing Profitable Growth
On the other hand, by properly aligning
sales territories, firms can support company
strategy by ensuring that revenue
opportunities, product portfolios, and
customer needs match the capabilities
of the sales force. When territories are
well aligned, sales personnel tend to
be appropriately compensated and
motivated. They can quickly follow up
on new leads coming in through various
channels and spend the right amount of
time with customers. They can improve
productivity to address instances when
sales targets are growing faster than
sales teams - and receive feedback
to refine their approach. The upshot is
that companies are more able to satisfy
and retain customers.
Moreover, sales territories that are well
aligned minimize travel time and costs;
less time on the road means more face
time with customers. That can improve
customer insights and deal conversion
rates and help maximize profits. Particularly
in the midst of a challenging economy,
balanced territories contribute to
acquiring, growing, and retaining longterm
and profitable relationships with
customers.
Best Practices for Balancing Sales Territories
A Data-Based, Closed-Loop Cycle
There are many obstacles to sales territory
alignment: a lack of good data, established
personal relationships, resistance
to change, conflicting objectives, and
an entrenched incentive compensation
plan. The combinatorial complexity
alone becomes daunting even for
moderately
sized sales forces: there
are over 14 million ways to assign
15 accounts to 3 salespeople.
Because of these difficulties, and the
many other activities that consume
executives' time, territory management
has traditionally been relegated to a
periodic administrative exercise. Sales
leadership often hands over the data
analysis and interpretation tasks to
others.
However, due to the current
economic strain (resulting in a heightened
focus on profitable relationships
and defense of revenue), companies
are concentrating more often on managing
territories on an ongoing basis
- in concert with quota-setting and
compensation processes. Executives
are finding that they can achieve a good
territory balance when they pursue the
following practices.
Define Territories Clearly and Know Each Market
Company managers should first establish
the territory divisions and hierarchy
that make sense for their business, and
develop a deep understanding of the
sales potential of each territory. The
territory is typically a geographic region
but can also be established according
to parameters such as product line,
industry-specific groupings, or global
account. The territory hierarchy is a
multilevel structure that allows a firm
to segment its sales market, define the
accounts and products that are part of
a territory, and establish sales management
responsibility at the desired level
of granularity. Within each territory, you
should understand the physical and
organizational boundaries, market trends,
and competition - and the actions necessary
to ensure success.
Understand the Sales Teams and Their Customer Relationships
To execute on corporate objectives, it's
essential that sales managers are in tune
with the field. They need to develop solid
insights into each sales rep's capabilities,
experience, performance, internal influence,
and rapport with accounts. This
human element is essential to developing
balanced territories. When realignment
is necessary, understanding each
individual enables sales managers to
better deal with change management,
establish equitable assignments and
compensation plans, and mitigate stress
among salespeople. Further, an appreciation
of individual relationships can
help managers facilitate continuous
communication with customers and
minimize disruption to them.
Plan the Territory Alignment, with a Focus on Metrics
An important step in the planning phase
is determining the criteria for realigning
territories. Revenue potential, historical
revenue, number and quality of leads,
turnover in the target market, and competitive
activity are all key criteria, along
with geographic compactness when territories
are defined regionally. Baseline
measures (often from external databases)
must then be established for these criteria.
You should also develop a benchmark
for comparison across the territories,
and establish the triggers for realignment
(for example, sales growth is less than
market growth). It's important to consider
the potential value of the new alignment,
and thus cost-benefit analyses should be
a factor in any decision. Thinking ahead
is essential: you should develop what-if
scenarios and simulate territory changes
to determine actions that will minimize
territory imbalances on an ongoing basis.
When realignment is necessary, understanding each
individual
enables sales managers to better deal with
change management, establish equitable assignments
and compensation plans, and mitigate stress among
salespeople.
Realignment of sales
staff and accounts
should occur only when
truly worthwhile - when
such actions support
high-level strategic
goals and factor in input
from sales managers
and staff in the field.
Execute the Alignment, Embracing Change Management Principles
Realignment of sales staff and accounts
should occur only when truly worthwhile
- when such actions support high-level
strategic goals and factor in input from
sales managers and staff in the field. In
addition, companies need to consider
the cost of disrupting the sales force
and customers for some period of time.
Once you decide to proceed, execution
is an exercise in change management.
Successful territory realignment requires
continuous and clear communication to
all stakeholders - and securing buy-in by
demonstrating benefits to the business
as well as to the individuals involved.
Territory alignment - like any business activity - is most
likely to succeed when there is a disciplined monitoring
of progress against the original objectives.
Monitor Progress, Perform Analysis, and Take Informed Action
Territory alignment - like any business
activity - is most likely to succeed
when there is a disciplined monitoring
of progress against the original objectives.
By leveraging analytics to evaluate
the extent to which measurable
targets are met, you can factor in feedback,
understand the root causes of
outcomes, refine the approach, enhance
simulation models, and take action to
ensure that the new alignment achieves
targeted outcomes.
Achieving Superior End-to-End Sales Process Performance
An Integrated Approach Enabled by SAP ® Solutions
A system that integrates territory management
and a company's customer
relationship management (CRM) solution
can ultimately improve sales effectiveness.
Territory management can be
linked to a vast array of data typically
managed in a CRM solution, encompassing
the your customers, order
history,
products, and sales force -
as well as external data covering market
potential, competitive factors, and
the like. Through integration with CRM,
territory management can be linked to
a broader set of processes, such as
determining revenue forecasts, production
targets, and quotas; managing
sales pipelines; designing incentive
compensation; and developing strategic
plans. By continuously innovating
end-to-end processes, you may well
find that sales territory alignment
delivers
a sustainable advantage.
The Territory Management Features of SAP CRM
The SAP ® Customer Relationship Management
(SAP CRM) application is
integrated with the full array of SAP
solutions covering enterprise resource
planning, supply chain management,
and many others. By incorporating
your territory management processes
into SAP CRM, you can enhance sales
performance throughout the enterprise
because of the central role SAP CRM
plays in sales activities and the lead-toorder
process.
The territory management features of
SAP CRM optimize account coverage
and distribution of sales resources
across clearly defined territories. You
can improve resource utilization with
visibility into assignments and market
coverage and place the right resources
in the right locations at the right time to
optimize team performance. Designed
for real-time use by managers, the
solution facilitates flexible territory definition
with a sophisticated business
rules framework and ability to evaluate
what-if scenarios. In particular, after
defining rules, the user can view on a
single page the scope of the territories
in terms of accounts, products, and
sales areas. Moreover, the solution
delivers high performance, provides
robust security and access control
based on territory assignments, and
delivers data validation reports to allow
monitoring of territory alignments.
Through integration with CRM, territory management
can be linked to a broader set of processes, such as
determining
revenue forecasts, production targets, and
quotas; managing sales pipelines; designing incentive
compensation; and developing strategic plans.
Find Out More
To learn more about how SAP CRM
can help your company align sales territories
to enhance customer relationships
in a challenging economy, call
your SAP representative today or visit
us on the Web at www.sap.com/crm.
CONTENT
- Executive Summary
- The Importance of Balancing Sales Territories
- Promoting Equity, Enhancing Profitable Growth
- Best Practices for Balancing
Sales Territories
- Define Territories Clearly and
Know Each Market
- Understand the Sales Teams and
Their Customer Relationships
- Plan the Territory Alignment, with
a Focus on Metrics
- Execute the Alignment, Embracing
Change Management Principles
- 7 Monitor Progress, Perform Analysis,
and Take Informed Action
- Achieving Superior End-to-End
Sales Process Performance
- The Territory Management
Features of SAP CRM
- Find Out More
50 094 589 (09/04)
©2009 by SAP AG .
All rights reserved. SAP , R/3, SAP NetWeaver, Duet, PartnerEdge,
ByDesign, SAP Business ByDesign, and other SAP products and services
mentioned herein as well as their respective logos are trademarks or
registered trademarks of SAP AG in Germany and other countries.
Business Objects and the Business Objects logo, BusinessObjects,
Crystal Reports, Crystal Decisions, Web Intelligence, Xcelsius, and other
Business Objects products and services mentioned herein as well
as their respective logos are trademarks or registered trademarks of
Business Objects S.A. in the United States and in other countries.
Business Objects is an SAP company.
All other product and service names mentioned are the trademarks of their
respective companies. Data contained in this document serves informational
purposes only. National product specifications may vary.
These materials are subject to change without notice. These materials
are provided by SAP AG and its affiliated companies ("SAP Group") for
informational purposes only, without representation or warranty of any kind,
and SAP Group shall not be liable for errors or omissions with respect
to
the materials. The only warranties for SAP Group products and services are
those that are set forth in the express warranty statements
accompanying
such products and services, if any. Nothing herein should be construed as
constituting an additional warranty.