Exclusive territories for independent reps

Use Exclusive Territories for your Independent Reps to Increase Sales

sales territories and independent reps

I talk with clients every day who struggle with how to lay out territories for their independent rep team. There are multiple ways to do it. We have seen three that seem to produce the most success on a consistent basis.

Exclusive territories can be used to improve your sales and attractive good independent sales reps to represent your products and services. Without offering exclusive territories, you can lose out on some of the best representation opportunities.

1. Geographical

Pretty self-explanatory–a rep will cover anything from a portion of the city, to a section of the state, to multiple states. Any business activity which happens within that territory is automatically assigned to that rep.

Many principals have an issue with giving business to a rep, simply because that person has an exclusive in that territory. The truth is–word of mouth is the most powerful sales tool in existence. So if the rep has been doing a good job, communicating and servicing his active accounts, just the word of mouth throughout the territory can bring in new sales. People who are in the same business congregate and have many discussions throughout the course of a year. This positive word of mouth can be a valuable sales tool.

2. By Business Vertical

In this situation, the principal provides a rep an exclusive to a very specific business vertical. It could be nearly any industry–medical, financial, aerospace, etc. Often a Business Vertical exclusive is combined with a Geographical one as well.

For example, one of our major touch screen manufacturers is working with a rep who has an exclusive to the medical accounts and prospects in the state of California. It has been a very successful relationship with lots of upside for both sides.

3. Named Accounts

This is where the rep calls their own shots. Essentially they are allowed to name in advance the accounts they will be targeting. The number varies depending on the industry and the number of calls it is reasonable for a rep to make. Could range from 20 accounts for high dollar purchases to 100-200 for small scale purchases.

The key is that the rep is actively working with or pursuing these accounts. If no activity is happening within a reasonable period of time, it can be easy to understand why. You can transition the inactive account to another rep, or register the account as “inactive” and replace it with a prospect who may be more receptive to the product line.

Need Help With Your Sales Territories?

I am always happy to discuss this or any independent rep/1099 rep issues which arise throughout the day. This is our exclusive business, and there are not too many situations we have not seen.

All the best! And remember, if you want active 1099 reps by the end of summer/beginning of fall…. the search has to begin today!

Tom MetsaTom Metsa

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  1. Reply

    If there is an exclusive for a sales territory, but the rep doesn’t service a big account – corporate and the distributor does, can commission on the account be cut back?

      • jas
      • July 8, 2019

      You are touching on a potentially contentious area–the concept of “house” accounts. A house account is what you call such an account that the provider takes “in house” and excludes that from the exclusive territory.

      So the idea of cutting back or even eliminating commission on such accounts is a point of debate and can be a sore spot. Such things should be spelled out and negotiated to a fair position for both sides.

      However, in my experience, the tendency for a company to take the premium accounts in house is one of the things that can spoil the relationship between the company and the rep, so it needs to be handled carefully.

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