We had two sales reps on the team, closed a round of funding, and started recruiting the next class of 10. But I still had a problem. How do I scale the team, maximize the market, and make sure the reps aren't tripping over each other?

In today's issue, I will teach you how to create a geographic sales territory plan. These work best when the size of accounts and types of customers are very similar, and there is a need for location specialization.

Most venture-backed companies with product-market will face this challenge. You have to be intentional about how you design territories.

Companies often split the country by population, assign the territories, and call it a day. This leads to a loss in productivity, high attrition, and a cost-per-acquisition increase.

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"Sales organizations that thoughtfully design and optimize sales territories can realize 10%-20% increases in sales productivity" - Alexander Group

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When you create effective sales territories, you'll get:

• Increased sales
• Increased productivity
• Increased team morale
• Increased conversion rates
• Reduced cost per acquisition

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Step 1: Calculate your Serviceable Addressable Market (SAM)

Start by getting a count of how many prospects are out there that your company can get NOW. Not how many prospects are out there in total (Total Addressable Market).

For example, if you sell to US Insurance Carriers, there are 5,929 in total. 2,476 of 5,929 are Property & Casualty carriers. Your product only solves a significant pain for large Property & Casualty insurance carriers. There are 32 Property & Casualty insurance carriers in the Fortune 1000.

Your SAM is 32.

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Step 2: Understand the # of prospects a Territory Manager can handle (Sales Capacity)

In enterprise sales, we often overestimate this number. In small business sales, we underestimate it.

We'll use an outbound inside sales team as an example. Map your outreach process, track where the contact rate drops, and decide on sequence length. This process will give you the required daily calls, emails, texts, etc.

Figure out how many calls, emails, texts, etc., a rep has time to do daily.

Now you know how many accounts a rep can work at a time without activities slipping through the cracks.

Step 3: Locate areas with a higher concentration of prospects

It's easy to take the total population and split it into territories. The challenge is that it assumes all territories are equal, and they never are.

Do this instead:

• Chart the locations of all the prospects in your SAM.
• Note pockets of high prospect concentration.
• Note pockets of high customer concentration.
• Split territories based on prospects and current customer volume in a geographical area. Remember, these are only prospects within your SAM.

Step 4: Create the rules of engagement

It's easy to feel we completed the hard work and are ready to launch, but we need to pump the breaks.

Create the rules of engagement to limit future conflict. Below are a couple of examples:
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• Account ownership is based on the location of the company headquarters.
• When a customer submits a referral, that referral goes to the rep that owns the territory, NOT the rep that sold the deal.
• When you change territories, your pipeline and clients transfer to the incoming territory owner. They do NOT transfer with you to your new territory.

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Step 5: Assign, launch, and iterate

With the hard work behind you, you can present the territories with confidence. Give your reasoning behind the layout, and set the expectations on how to proceed.

Block off time in 90 days to check how the territories are doing. Make the proper iterations and know that you're on the path to a fair territory plan. After this, revisit them on an annual basis.

An efficient territory plan will give you the confidence to scale. More than that, you'll have peace of mind that you're maximizing your market.