Is your salesforce organized for the past or for the future?

# 57 August 2018

gammal karta

We frequently find companies that have organized their sales force based on what the customer potential was in the past, and not adapted to what the current – and future – market looks like.

Reasons for this could be many. In some cases, the market has changed gradually, and the company has simply failed to notice the difference. An illustrative example is the manufacturing company where the majority of their customer base has moved from the Nordic countries to Southeast Asia, but where they have kept the Nordic sales force intact.

In other cases, companies have set up a sales organization based on an idea of geographical coverage rather than market potential. ”We shall cover all parts of Sweden”, or ”we shall be present in all the Nordic countries”.

An explanation for why organizations are slow to adapt could also be that sales people are reluctant to let go of their customers even though the purchase potential is not there anymore.

How do you organize sales territories in order to cover the market in the best possible way? We have seen successful companies approach the issue this way:

  1. Obtain current information about the market and the potential customers.
  2. Make an analysis of which customers are worthwhile to approach with a field sales force. Base it on customer potential rather than what they currently buy for.
  3. Complement the analysis with input from the sales people. There are some factors that don’t show up by just crunching the numbers.
  4. Create sales territories based on where the potential is. This could mean that customers are moved between sales people, and that there will be more – or less – sales people in some geographies.
  5. Finally; introduce a process where you balance and align the sales districts every year. Thereby you will continually review the market potential and the sales people get used to changes in their customer base, e.g. by letting go of unfruitful customer relations.