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VALUE: JOHN WARRILLOW

Sales territory is a company asset Add to ...

You've been doing most of the selling for your company. One day, you decide to recruit your first salesperson. After weeks of interviewing, you hire the salesperson you hope will finally get you out of being your company's chief revenue officer.

The first day on the job, your new sales rep turns to you and says, "So, who do you want me to call on?"

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Your natural reaction is to say, "Anyone who will buy. The world is your oyster."

But before you hand the entire world over, remember that your sales territory is actually an asset of the company. You, not your reps, need to decide who gets to call on which prospects for three reasons:

1. Sales territory: Easy to give, hard to take back

Once a salesperson feels entitled to something, it is very hard to take it away.

Divide your market up into sales territories (by geography, industry, size of customer, etc.). If you'd like to be a $5-million business one day, and you think it is reasonable for a rep to generate $500,000 in orders, create 10 territories (10 × $500,000 = $5-million). Make it clear you are giving your new sales rep one of your 10 territories and that the company will continue to recruit for the other positions.

If you want to reward the salesperson later on by opening up more territory, that's fine, but know that, once you give it, you'll risk losing the salesperson if you ever try to take it away.

2. The cream off the top

Almost every company enjoys some inbound leads. They come naturally through word of mouth or in response to your advertising. If you have a single sales rep who gets all of the inbound leads, that person could spend an entire day just taking the cream off the top.

The more successful your business becomes, the more inbound leads you'll get, and the easier your salesperson's job will get.

Soon, you may end up paying a lot of money for someone simply to take orders.

The reason you hire professional salespeople - and pay them handsomely - is for them to cultivate sales territory. You want them tilling the soil, planting seeds, watering and eventually harvesting the crop, not just swooping in and picking the fruits of your company's labour.

Inbound leads are an asset of the company. If a lead comes from a territory where there is a sales rep assigned, in most cases it makes sense to have that rep work the lead. However, if the inbound lead comes from vacant territory, you may want someone else on your team to take the order without involving your salesperson.

3. The competition effect

As soon as possible, you want to hire a second salesperson. Salespeople thrive on competition, and even just one other rival holds a sales rep accountable. Plus, with only one, you're never totally sure if the results your salesperson is achieving are acceptable. With two, you start to figure out a minimum level of performance.

It can be exciting to hire your first salesperson. The prospect of finally getting yourself out of the selling stage can lead you to do whatever it takes to make your first rep successful.

Remember, however, that you're paying someone to cultivate leads, not just administer them, and that, like a child's allowance, it is much easier to give a sales territory than to take it away.

Special to The Globe and Mail

John Warrillow is a writer, speaker and angel investor in a number of start-up companies. He is the author of Built To Sell: Creating a Business That Can Thrive Without You, published by Portfolio Penguin.

Follow on Twitter: @JohnWarrillow

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