Sales territorystudy 2023
Structure of field sales | Procedure and planning parameters | Organization
The field sales force is the most cost-intensive form of sales. It is therefore important for companies to use resources in a targeted manner and avoid wastage. At the same time, outside sales is not only a cost factor, but the company's most important sales driver. Our studies, which are carried out at regular intervals, aim to identify trends and developments for territory structuring and management.
If you examine past studies and the experiences of our sales territory planning experts, it becomes clear that many companies are reducing their parallel sales lines in keeping with the “one face to the client” strategy.
This means that outside sales has a broader product and service portfolio and therefore requires more time with individual customers. To ensure more effective visits, territories need to be reduced in size, which automatically leads to shorter travel distances. This means that although there are fewer sales lines, there are usually more territories.
In this context, however, we also observe that companies are expanding or even implementing new hierarchical levels. This applies to both regional representatives and support lines, such as inside sales teams.
According to our study, despite the high costs, almost half of all surveyed companies have a sales force of more than 50 employees.This result demonstrates the importance of sales reps in the company, which in our opinion will continue to exist into the future.
€100,000 per employee per year x 50 employees= investment costs of €5 million= €150 to 200 per visit
(Assumption: average 3 visits/day)values can vary greatly depending on the industry.
decrease
stay more or less the same
increase
Although around 50 percent of companies still plan according to the acute need for action, the development compared to our past studies shows that this is declining in relation to those who plan on an annual basis or even more frequently.
However, if you examine the reasons for the territorial adjustments or re-planning, it becomes clear that the main reasons for optimization are not only the desire for effective market cultivation – and therefore proactive planning – but often also the staff situation or restructuring in the company.
This means that we are increasingly forced to make territorial adjustments in response to changing HR and business concerns, even though proactive planning would of course be much more successful.
If I could visit one more customer per month on average, that would mean:
12 customers a yearx 50 sales representativesx €1,000 average turnover= €600,000 more turnover per year
However, together with the shortage of skilled workers, it presents sales managers with more and more challenges. But which of these challenges are currently the greatest in companies?
For many, the greatest hurdle is still determining the parameters that must be considered for planning, followed by the question of how I can validly evaluate my territories and how to implement territory optimization.
When considering the importance of planning criteria, in addition to sales figures, potential data is the most common parameter taken into account. This is consistent with the information from previous studies. However, more and more companies are using external information, such as market data or potential addresses, while the proportion of companies that use their own potential estimates from the sales has declined sharply. But this is also related to a growing and broader market or potential data offer.
The subject of acquisition has changed in many industries: The acquisition of potential customers everywhere at any price was replaced by potential-oriented acquisition in order to use resources in a targeted manner.
The importance of sales figures remains an important parameter in territorial adjustments, while the consideration of employees' places of residence is becoming significantly more important.
This is consistent with our experience, as companies inevitably have to take into account where employees live. Good accessibility and short routes to customers are essential in order to work effectively – and are also essential for employee motivation.
The shift in planning criteria priorities means that companies are reviewing their customer segmentation more frequently and combining more criteria. The utilization of employee capacity is always kept in mind.
Around half of those surveyed need a few weeks to restructure the sales structure from the initial idea to implementation. This is similar to the experiences of our territory planning coaches. We recommend starting territory optimization three to four months before planned implementation.
Once the territorial structures have been adapted and field force planning has been optimized, it is important to ensure a good flow of information. This also means that territorial changes are explained transparently and employees receive good “start-up help” in their new territory.
While the majority of companies still communicate with simple assignment lists and territory maps, one in six respondents already works with interactive maps or dashboards and one in four respondents provides their sales reps with targeted maps in order to move in the territory in a potential-oriented manner.
In practice, many companies even make recommendations to the outside sales specifying which regions can be omitted due to low potential.
Transparent communication of the structural change to employees gives the company the chance to maintain it in the long term. Through fair, balanced and transparent territory planning, the sales representative is given the opportunity to reconcile their new role with a “modern job profile.”
With regard to planning on an international level, we find that countries are planning more independently again. Only every third company plans centrally for all countries.
However, practice often shows that although the countries are responsible, central support functions have the territory planning expertise or the knowledge of the relevant tools.
By the last quarter at the latest, it will be high time that you deal with your current situation and take a closer look at your sales force territories. What are the strengths and weaknesses in your sales structure, where is there still unused potential and how can you optimally exploit this?
Our checklist shows you what needs to be done in each phase of territory planning.
from all industries
110 participants
Survey period: April to July 2023
