The “Size of Prize” approach to balance Sales Territories
One of the ways to ensure reps have solid results is to balance the allocation of accounts assigned to them. Read: "Everything Starts Out Looking Like a Toy" #222
Hi, I’m Greg 👋! I write weekly product essays, including system “handshakes”, the expectations for workflow, and the jobs to be done for data. What is Data Operations? was the first post in the series.
This week’s toy: an AI model from Anthropic that can control other programs with clicks, keyboard entry, and mouse movement. What could possibly go wrong? Regardless of the risks, this is an AI modality that will get a lot more attention shortly - because it also has great potential. Edition 222 of this newsletter is here - it’s October 28, 2024.
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The Big Idea
A short long-form essay about data things
⚙️ The “Size of Prize” approach to balance Sales Territories
Ever felt the frustration of dealing with unbalanced sales territories? You're not alone. Making sure every sales rep has an equal shot at success is crucial for team morale and company growth. That's where the concept "size of prize" comes into play.
Traditional territory allocation is limited
In an outbound motion where you don’t know about the propensity of prospects to buy, simply splitting territories by geography or by the number of accounts often leads to frustration. Like a “round robin” distribution that simply delivers accounts in turn as they arrive, cutting account territories evenly doesn’t guarantee a “fair” territory. Some sellers might end up with a stack of low-potential accounts, while others get all the high-value ones. This uneven distribution isn't fair and can seriously hurt overall performance and morale.
Introducing the "Size of Prize"
The "size of prize" represents the potential value of each account based on the average contract value of typical look-alike accounts and the expansion value of that account if it converts to a customer. This calculation lets you segment accounts into buckets (A, B, and C grades). With account grading, you can check whether the segmented accounts are distributed equally, giving reps a balanced playing field.
Adding the “size of prize” into the number of accounts in active pipeline will help you to assess if your account distribution is “fair” when fair is defined by the equality of the total expected revenue to be won. Even if few of your accounts are in pipeline at the moment, you’d expect a similar distribution to produce a similar outcome over time.
Challenges in Assessing Account Potential
Determining an account's potential isn't straightforward. In a perfect world you could easily match a new prospect to a current account and declare it an exact look-alike. The best you can do is look at account characteristics, combine them with other factors, and take an educated guess.
For example, to match a prospect that looks like a early-stage B2B saas company marketing their software to midmarket companies, you might start with a company formation date. You might layer on a website ranking or firmographic details like the number of employees they have or their current revenue. It also makes sense to see if you have any customers in common or if the overall copy and style of their website is similar to current prospects.
But these are superficial account grades. You also need to know if you have qualified buyers and if you’ve reached the right number of customer contacts to be in the position to make a sale.
All of this data is messy and unstructured and decays over time.
What makes it easier to assess the size of prize?
There are a few ways to build a machine that ingests, enriches, qualifies, and categorizes accounts according to the size of prize. You’d know it as a data factory or as continuous automation.
You need to collect, clean, score, and validate data on accounts to produce a reasonable estimate of the account’s potential. But just because an account is in ICP (ideal customer profile) range doesn’t mean that they are ready to buy.
Size of prize is one lever in helping you understand the distribution of accounts among reps. Think of it as the denominator in creating the top of funnel target that you will have for each rep. It doesn’t do a great job of qualifying that account as being in market right now for what you’re selling.
It does help you assess whether each rep is starting with a similar playing field so that you can measure their results against each other.
What's the Takeaway? Incorporating the "size of prize" concept and grading accounts lets you understand whether your account allocation is consistent across your team. This method balances territories not just by the number of accounts but by their potential value.
Links for Reading and Sharing
These are links that caught my 👀
1/ Intro to AI Agents - I spent some time this week with this course on Multi AI Agents with Crew AI. You don’t have to be a programmer to see the promise of this technology. It opens up GTM workflows that cannot be automatically orchestrated today and makes it possible to run them autonomously. The biggest innovation? It’s a lot like writing prompts, with the added wrinkle of writing them for a team of agents having different roles.
2/ Just in time GTM - Brendan Short writes about “micro-campaigns” - a way to build a go-to-market motion for a small group of contacts. This experimental approach makes it possible to reach different prospects without retooling your entire GTM. The upside? It’s a style of outreach that could really benefit from AI researchers.
3/ Help your teammates - Here’s a simple way to improve the communication flow in your organization. When you receive a question, make sure it’s answered with a warm handoff. It seems simple (it’s the right thing to do, especially in a public Slack channel).
What to do next
Hit reply if you’ve got links to share, data stories, or want to say hello.
The next big thing always starts out being dismissed as a “toy.” - Chris Dixon