In almost every consulting engagement that our Research, Analytics and Consulting group undertakes, we are tasked with determining whether an asset manager's territories are optimized and, if they are not, how can they be. The designing and structuring of wholesaler territories have evolved significantly in recent years, with managers using a myriad of strategies and each integrating data to varying degrees and at different stages of the process. Our recent “Productivity Insights: National Sales Team” survey investigated the initiatives being prioritized by distribution organizations. The survey reveals that advisor segmentation has remained a top priority for most managers in each of the last two years while territory design and structure have become less important and are prioritized by fewer firms.
Source: SS&C Research, Analytics, and Consulting “Productivity Insights: National Sales Team” Survey 2021
Source: SS&C Research, Analytics and Consulting “Productivity Insights: National Sales Team” Survey 2021
This indicates that more managers are at least beginning to utilize data to develop a key aspect of their sales models; however, it also points to the possibility that some distribution organizations may be hesitant to adjust their territory designs. Truly data-optimized approaches to territory design and structure should incorporate advisor segmentation, wholesaler coverage, activity expectations and compensation, among other factors, into the decision-making process.
The traditional strategy implemented in territory design draws geographic borders of territories, and then the opportunity is assessed within those borders to prioritize buyers and select a list of must-see advisors. Starting with a geography-first approach can result in covering and prioritizing buyers that may not represent your overall best opportunities and do not have as much flexibility when it comes to equalizing opportunity amongst wholesalers.
More modern approaches to territory design leverage data to identify critical distributor relationships, high-value and high-opportunity buyers, engagement preferences, product profitability and opportunity centers, and then, using all of the information available, create territories that align with their firm's top priorities and competitive advantages.
Some organizations choose to eliminate geographic borders from their territory design strategies and instead focus on deploying their salesforce to maximize the distributor and buyer relationships with the largest value and opportunity, regardless of location. This approach can create coverage overlaps in territories, facilitates balancing opportunities amongst wholesalers, and often requires a larger, sometimes channelized salesforce that can adapt if and when a distributor or buyer relationships change.
Other organizations create geographic territories centered on opportunity centers (i.e., major markets), which were identified by weighting the factors previously mentioned, that expand out until hitting either a predefined radius, state border, or another territory. This approach is more commonly implemented, does not require a large or channelized salesforce, and can minimize relationship disruption with distributors or buyers related to product placement or performance.
There is no one-size-fits-all approach to territory design, and with every philosophy or methodology that informs these decisions comes pros and cons. Determining which metrics and factors are a priority to your organization and weighting them accordingly is necessary to optimize your territory design and structure. Optimized territories can mitigate the impact of margin compression, rationalization efforts and changes in advisor business models by focusing the efforts of the sales teams on high-value, high-opportunity advisors they can influence. However, if you are not using data as the foundation to drive any and all territory design decisions you will not be optimizing your distribution resources, efforts or your sales.
For more detail on distribution trends, take a look at our "Untangling the Web: A Practical Approach to Modernizing Asset Management Distribution" whitepaper.
Asset Management, Wealth Management