Sales territory structures often suffer from inefficiency. Even with regular territory re-alignments, territories tend to ‘drift’ away from optimum. Over the course of a year, up to 50% of sales territories could become 20% too large or too small due to cumulative drift. Furthermore, attempts at improving efficiency through episodic re-alignment typically incur a significant cost due to ‘disruption’ of existing customer relationships and the need to form new ones.
The impact of inefficient territory alignment is significant: compared to the average territory structure, consistently maintaining an efficient territory alignment yields 2-3% incremental revenue for the average organization. The impact can reach 10% incremental revenue for some organizations, depending upon industry and market situation. This white paper explores why efforts at territory alignment fail to make necessary changes while incurring significant disruption costs, resulting in ongoing sub-optimization of account allocation and real opportunity cost in terms of foregone sales.