Who Gets What and When They Get It
The obvious answer to the question, “How many accounts do I have?” is “As many as I can get” — but is that the right answer? How to divide territories/accounts is a challenging and important issue.
The right answer depends largely on who is answering it. For example, all salespeople want more accounts, as they assume it means greater opportunity. Sales managers want maximum account coverage and focus, so they lean toward fewer accounts per salesperson.
Serving in the role of benevolent dictator, the sales leader needs to ensure that each salesperson has enough accounts to have a reasonable chance of making quota. Generally, if a salesperson doesn’t have visibility to potentially 150% of quota, he/she won’t have a chance at making 100% of goal. Therefore, devising sales territories is no small task for the sales leader for various reasons, not the least of which is that the sales leader must be fluent enough with all the accounts to divvy them up properly and fairly.
This leads us to participation rate and its importance. When looking to get acquired, the higher percentage of salespeople that are making quota (or at least coming close to it) shows any acquirer that everyone is contributing (and thus driving a higher exit multiple), versus one dominant salesperson with the rest failing to contribute adequately.
Moreover, a high salesperson participation rate reduces salesperson turnover, which drives higher morale and longer salesperson tenure, which in turn drives more consistent performance (less new rep ramp-up). Finally, when it’s time to expand the sales team (and shrink account lists), hiring into a stable and tenured team is much easier than adding people into a revolving door sales team.
Unfortunately, from a salesperson’s perspective, territories shrink as the company grows; however, when the sales leader properly manages territories, such that expansion slots can leverage under pursued (stale) accounts to build new territories for newly added salespeople, growth continues and territory complaints are minimized.
Ultimately, there are many layers to the challenge of account/territory management for sales leadership. The payoff, though, is that a well managed approach ensures maximum coverage, a high salesperson participation rate and a maximum exit multiple.
The right answer depends largely on who is answering it. For example, all salespeople want more accounts, as they assume it means greater opportunity. Sales managers want maximum account coverage and focus, so they lean toward fewer accounts per salesperson.
Serving in the role of benevolent dictator, the sales leader needs to ensure that each salesperson has enough accounts to have a reasonable chance of making quota. Generally, if a salesperson doesn’t have visibility to potentially 150% of quota, he/she won’t have a chance at making 100% of goal. Therefore, devising sales territories is no small task for the sales leader for various reasons, not the least of which is that the sales leader must be fluent enough with all the accounts to divvy them up properly and fairly.
This leads us to participation rate and its importance. When looking to get acquired, the higher percentage of salespeople that are making quota (or at least coming close to it) shows any acquirer that everyone is contributing (and thus driving a higher exit multiple), versus one dominant salesperson with the rest failing to contribute adequately.
Moreover, a high salesperson participation rate reduces salesperson turnover, which drives higher morale and longer salesperson tenure, which in turn drives more consistent performance (less new rep ramp-up). Finally, when it’s time to expand the sales team (and shrink account lists), hiring into a stable and tenured team is much easier than adding people into a revolving door sales team.
Unfortunately, from a salesperson’s perspective, territories shrink as the company grows; however, when the sales leader properly manages territories, such that expansion slots can leverage under pursued (stale) accounts to build new territories for newly added salespeople, growth continues and territory complaints are minimized.
Ultimately, there are many layers to the challenge of account/territory management for sales leadership. The payoff, though, is that a well managed approach ensures maximum coverage, a high salesperson participation rate and a maximum exit multiple.
If your SaaS company wants assistance making sure you get this right, please reach out to us at dave@moicpartners.com or chip@moicpartners.com
