THE SPIKE THEORY – A SALES TERRITORY PLAN

When it comes to a sales territory plan, I am a big believer in first creating a vision of where you want your business to be a year from now, two years from now and beyond.  Creating your vision, a sales territory plan that highlights your key accounts first is where a solid sales territory plan begins.  I devote a full chapter to this developing a sales territory plan in Closing the Whales.

Unless I am mistaken, most sales managers like for their salespeople to begin consistent production sooner rather than later.  Every salesperson knows that small sales normally have the shortest sales cycles.  Mid-size orders normally have sales cycles somewhat longer, and the very big deals have long, complex sales cycles.  The key in a sales territory plan is to invest your time proportionally, balancing a good mix of small, medium and large opportunities.

The spike theory.  Back when ice covered most of North America, I worked for a company that sold small office machines.  Some business and government offices had one or two of these type machines.  Some had dozens … even hundreds!  A good day’s work would produce an average of one machine sale per day.  On my first day on the job I inherited a sales territory plan that had well over 1,000 machines installed, a typical territory for that business.  Many of those machines were aging and replaceable.  Good prospects! As I created a sales territory plan, my visionary ambition convinced me that a sales territory plan designed to double the average sales per day only needed one added wrinkle.  I called it the spike theory.

Here is how the spike theory works.  I watched how the other salespeople responded to prospect inquiries, how they handled repeat business from steady clients and how they pursued new accounts.  With those solid habits, they averaged closing one machine per day.  I had no interest in a sales territory plan that would yield one machine sale per day.  So I created a sales territory plan that would put the odds of closing in my favor way over double that of the other salespeople.  The added wrinkle to the plan: a spike opportunity at least once a day.  It was simple.  Every Saturday I came to the office and scoured my customer and prospect list until I had identified at least one spike opportunity for each day of the coming week, a spike opportunity consisting of an order of at least ten machines at one whack.  So I created a sales territory plan that called for me to emulate my fellow salespeople, my buddies in the office and replicate their rate of success.  But in addition, I focused with great intensity on the spike theory: which numerically gave me a shot at 50 additional machine sales each week, if I closed every opportunity that I listed.  Multiply that times 50 weeks per year.  Wow!  That comes to a potential of 2500 more machines than a sales territory plan averaged in our office.

The problem with my spike theory was identifying a spike opportunity for every business day.  Then an experienced sales pro gave me an idea.  He counseled me on the fact that nearly all machine sales come from one of four sources: new accounts, add-ons, replacements or upgrades and finally from organizations that change their business based on new technology.  He went on to say that a machine sale could be from a combination of those sources.  Bingo!  I got it!  And I did double the average sales in our office: in fact more than doubled.  That is the spike theory and in the right environment it works. It should be part of every sales territory plan.

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