Originally Published MX November/December
2001
ADVERTISING, DISTRIBUTION, & SALES
When to Redesign
There are several indications that a company’s territory alignment or its incentive plan may be working against it. Any of the following conditions should suggest to medtech executives that it’s time to revisit the alignment of their sales territories.
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Vastly different
market shares from one territory to the next, particularly if the high-market-share
territories have low overall sales volume. High-potential territories typically
have lower market share than low-potential territories. If high-market-share
territories also have low sales, it is an indication that potential in the company’s
sales territories is not balanced.
Vacant territories top sales-performance charts. This may be due to the
fact that the vacant territories have huge potential and loyal customers. If
the previous sales rep for that territory was earning large commissions because
of the large sales base, that rep was probably overpaid, and the territory is
probably too big.
A long time has elapsed since the last realignment of territories. If
this is true, chances are the company’s markets have shifted. The dynamic
and consolidating nature of the medtech industry’s customers (hospitals,
alternate sites, integrated delivery networks, laboratory locations) ensures
that target markets do shift over time. Territory alignments should adapt to
these shifts.
The product portfolio has changed significantly since the last territory
realignment. Many medtech manufacturers get a significant portion of their
revenues from products less than three years old. If the company has not realigned
(or at least reevaluated) the geographic deployment of its territories recently,
it is likely the territories are not designed to optimize market penetration
for the company’s current portfolio. This is particularly true if the company’s
new products address needs in different markets than its mature products do.
Copyright ©2001 MX
