The Truth About Vertical Sales Territories

In my 25-year journey building sales teams for 8 startups, the question of whether salespeople should operate in vertical or geographical territories has been a persistent debate. Opinions abound, but what happens when you put it to the test? In this exploration, I share insights gained from a real-world experiment that challenges conventional wisdom.

The context matters;

• our product had an ARR of about $5k,
• a sales cycle of less than 45 days, and
• catered to SMBs.

Using a sophisticated scoring system for account distribution, things were going well until one astute sales leader proposed a hypothesis: Would creating Vertical Sales Territories based on industries improve conversion rates and quota attainment?

For two months, we tested this hypothesis with 10 reps solely focusing on accounts from specific verticals (the Test Group). The result? A surprising revelation that challenges the common belief.

The Result: In our environment, the Vertical Sales Territories did not show a significant improvement in conversion rates or quota attainment. While it didn't hurt our performance, the expected boost in the test group compared to the control group didn't materialize.

Understanding Sales Territories: Let's start with the basics. What exactly is a sales territory? It's a defined geographical or vertical area assigned to a salesperson or team. The debate often centers on whether structuring territories based on industry verticals (Vertical Territories) is more effective than traditional geographical divisions.

FAQs:

Q: What is a sales territory? 

A sales territory is a defined area, either geographically or vertically, assigned to a salesperson or team.

Q: What is territory sales? 

Territory sales refer to the sales strategy of dividing markets into specific areas to be handled by individual salespeople or teams.

Q: How to manage a sales territory?

Effective territory management involves strategic planning, clear goal-setting, and regular evaluation of performance metrics.

Q: How do you define sales territory? 

A sales territory is defined by the specific geographic or vertical area assigned to a salesperson or team for prospecting and selling.

Q: What is a sales territory considered to be? 

A sales territory is considered a dedicated area where a salesperson or team focuses their efforts to acquire and manage customers.

Conclusion:

If you're leading a sales team, there's no one-size-fits-all solution. Our experiment challenges the notion that Vertical Sales Territories universally lead to improved performance. The key takeaway is to consider the unique dynamics of your product, target audience, and sales cycle when deciding on the most effective territory management strategy.

Free Sales Leadership Resource: If this exploration resonated with you, dive deeper into the intricacies of sales leadership with my collection of 10 free sales leadership guides. Download them here.