Blog · Territory, capacity and quota planning
How to compute the potential of a sales territory from data the company holds, current revenue plus the gap at norm across the accounts in it, plus the universe accounts not yet buying valued at the segment norm, why that beats a market-size estimate for assigning quota, the identity that keeps territory potentials summing to the company's, and a worked comparison of two territories with the same revenue and very different potential.
Two territories each produced four million dollars last year. One has ninety accounts, most buying near the norm, in a region where the universe is nearly all customers already. The other has forty accounts, half of them well below norm, in a region with two hundred universe accounts that have never bought. Same revenue, and the second territory is worth three times the first. This guide sets out territory potential from the company's own data, and the identity that keeps it honest.
Per territory:
Potential = current revenue + Σ current accounts' gap at norm + Σ universe accounts' value at norm
Where:
Gap at norm = segment norm for the account's size − current revenue, floored at zero Value at norm for a universe account = segment norm for its size × a stated realisation factor
Account identifiers only.
Σ territories' current revenue = ledger revenue Σ territories' potential = company potential
And every current account and every universe account is in exactly one territory. An account in two fails it and is listed; it is the commonest cause of two reps claiming one prospect.
| Territory A | Territory B | |
|---|---|---|
| Current accounts | 90 | 40 |
| Current revenue | $4.0m | $4.0m |
| Gap at norm, current accounts | $0.6m | $2.1m |
| Universe accounts not buying | 12 | 210 |
| Value at norm, universe, at 30% realisation | $0.3m | $5.4m |
| Potential | $4.9m | $11.5m |
| Quota at 45% of potential | $2.2m | $5.2m |
Same revenue. Territory B's rep has a book with room and a region with prospects; territory A's rep has a mature book and almost nothing new to win. Equal quotas would be unfair to one and unchallenging to the other, and the potential figure says by how much.
Universe accounts are estimates twice over: the norm is applied to a size figure from a list, and not every prospect converts. The realisation factor discounts them, is stated on the report, and is the same for every territory. It is the company's judgement written down, not a hidden assumption.
Potential from market size. No accounts; no defence.
Universe and current accounts blended. The estimate and the fact carry the same weight.
Norms from a benchmark. The gap is someone else's.
Accounts in two territories. Both reps count the prospect and the company's potential is overstated.
Quota not tied to potential. The mature territory's rep is a hero and the growth territory's rep is behind, for reasons that have nothing to do with either of them.
Mapped once, the ledger, the customer master, the universe file and the norms produce potential per territory, its three components and the identity every plan cycle. Covirage builds this from the exports as they are. The territory planning solution describes the setup, and the compare two plans guide covers what to do with the potential once two territory designs are on the table.
A market-size figure for a region describes everyone's opportunity and no account in particular. Territory potential from the ledger and the universe file is made of accounts a rep can visit, and the quota set on it can be defended account by account.
The accounts in the territory that could buy: a purchased list, a public register, or the company's own target list, with a size field so the norm can be applied. It is stated as a source on the report, and universe accounts are shown separately from current accounts because their value is more of an estimate.
Quota is a share of potential, the same share for every territory or a stated share by tier, so that two reps with the same quota have the same reach. Potential is the denominator that makes quotas comparable, and the identity that territory potentials sum to the company's is what makes the shares add up.