Are your best-performing reps truly your most talented, or are they simply the beneficiaries of opportunity-rich territories? It’s an important question. If your territories aren’t well balanced, revenue production won’t necessarily equate to selling skills – a disconnect which has an impact on everything from employee retention to best-practice documentation.

“Imbalanced territories create over- and underperformers, regardless of talent,” observes Ken Kramer, director of product marketing for TerrAlign. In a recent Webinar, “Optimizing Sales Territories: Planning Approaches to Unlock Productivity in 2010,” Kramer pointed out that overloaded territories will overproduce, and you’ll have to pay out accelerators for that overproduction, increasing your compensation costs. Similarly, underloaded territories will underproduce every time, regardless of a rep’s talent.

“There may well be cases where there simply aren’t enough opportunities in a territory for a rep to make quota no matter how hard he or she works,” says Kramer. “The rep will miss quota and be perceived as one of your bottom performers, but his or her potential can’t be reached because of lack of opportunity.”

Kramer says there are a couple of red flags that indicate unbalanced territories: If reps are turning over all the time in the same territories, if managers are afraid to touch the territories of their top producers, if 30 percent of the reps make 70 percent of the sales, and if revenue is more important than market share, chances are you need to realign your territories. The market share issue is important because in territories where there are so many opportunities that reps can simply cherry pick the best ones, you’ll probably find your market share is lower than in territories where reps have to work overtime for every dollar.

So how do you begin balancing things out? Start by balancing the workload among all your reps. Kramer defines workload in the context of time — the duration of a client visit plus the time it takes to get there. So if you need to visit a client once a month for an hour, and it takes 30 minutes to get there, that’s 1.5 hours of total workload. Most organizations target an average of 33 or 34 hours of workload per week. The remainder of the 40 hours allows for sick time, vacation time, training time, and so on.

One organization that sought to balance its territories created a spreadsheet of workload across all its territories and made a startling discovery: The lost opportunity in its over-capacity territories was equivalent to having 10 percent of its territories empty. And at the same time, it had under-capacity territory equating to 10 percent of its reps. After reallocating work more evenly, the organization saw a $40 million boost in revenues and an increase in market share without adding any additional reps.

When you first begin to balance territories, it’s important to analyze your data with the assumption that all your reps are equal. Build territories from the ground up based on capacity, and build them around customers — not sales reps — so you have a level playing field. Then set quotas proportionally on the opportunities in each territory. When you level the playing field like this, you’ll attract reps who stay longer because they know everyone has an equal shot at making quota. In turn, you’ll find out who your real stars are. It might not be the ones you think.

For more information, visit www.terralign.com.