Growth Strategies

Mark Siders is currently Associate Professor of Marketing at Southern Oregon University. He received his Ph.D. in Management/Marketing from Virginia Commonwealth University. Prior to entering academia he spent over 20 years in the Orthopaedics Industry holding positions including Product Manager, Director of Marketing, Senior Market Analyst and Project Leader – Sales Operations. Dr. Siders continues to provide consulting services to a variety of industries. He can be reached at sidersm@sou.edu.

Setting Goals using Territory Base Size – Myths and Facts

The Fairness Question

One question I get asked frequently is: “Should I use the size of a territory in terms of base dollar sales as a factor in setting sales goals for my sales reps?” What’s really being asked here is a question of fairness. Consider the following scenario: You have two reps, one with a five million dollar base sales and another rep with two million dollars in base sales. Can you fairly ask both reps to grow their sales by one million dollars? You’ve all heard the objection before. The two million dollar rep will claim unfairness in that you are asking him or her for a 50% increase while the five million dollar rep only has to grow by 20%! So, in an effort to be fair you revise your strategy and tell both territories they’ll need to deliver a 20% increase. Immediately the five million dollar rep will be upset because you are asking him or her for a one million dollar increase while the two million dollar rep only has to deliver an extra $400k.

The fairness argument is not limited to goal setting. These situations exist every time someone creates a sales contest in an attempt to stimulate growth: Should the winners be based on dollar growth or percent growth? No matter which you choose someone’s not going to be happy and claim that the rules did not allow them to win.

Conventional Wisdom – The Myth

Most of us can sympathize with the larger reps. These reps have grown...