Round Robin versus Territories
Keep it simple with Round Robins initially and then use more of a hybrid model as you evolve to a point where Territories make the most sense.
When I joined Tonic.ai at the beginning of 2022, they had a Round Robin system for giving first meetings to AEs. There were 8 AEs at the time and whenever a first meeting came in, it would go to the next person in the queue. I had only worked with territories during my time at Cloudera and Oracle. At those companies, there would be AEs and regional teams responsible for different geographic areas and all the accounts in those areas. The accounts might be divided up between the AEs by size or industry but when a lead was generated for those accounts, it went to the person who owned it.
At Tonic, we were moving to East and West Teams, creating an Enterprise segment, and more than doubling the Sales team so at that size and complexity, it becomes much harder to do round robin since there are multiple rules and people involved. So we moved the team to a territory model where they had all the accounts in specific a geographic area.
When should you use Round Robin vs. some sort of Territory model to assign accounts and opportunities to your AEs?
Round Robin Benefits
The best reason for Round Robin is that it gives equal opportunity to each AE on the Sales team. They all have similar amounts and types of opportunities (good and bad). Here are the benefits
It’s simple to manager. You can use a Google Sheet to track or set it up in your CRM.
All the AEs get the same number of opportunities handed to them (outside of what prospecting they do on their own)
It’s a good way to judge effectiveness of each AE. If you’re selling a very technical product and one person has the Bay Area while another has the mid-west, the first person is going to be drowning in good opps while the second is going to be scratching for a few not-so-great opportunities.
It’s very easy to add new AEs and keep it fair for everyone. If you have 2 AEs and add a third one, they each get the same number of new opportunities
New AEs can hit the ground running. They will get opps as soon as you are ready for them to take their own. No delay as they start to prospect and develop their own.
You can scale SDRs and AEs separately. If the SDR meetings are round-rosined, it goes to the next person in their list
No need to figure out how to split up territories until you have more scale and data to best determine it.
My preference at an early stage company is to use round robin until the Sales Team gets to a certain size - usually 10+ AEs. If you haven’t had to break down by company size or some geography at that point already, you should begin to think about doing a more hybrid model (probably because you will be looking to have 2 teams at this size).
Hybrid Model
A Round Robin model won’t work once you start getting to a certain scale, which is why most mature companies have Territories. There are also benefits in segmenting accounts based on size or industry, which you often see with larger companies as well.
You don’t have to switch right over to a Territory model as you begin to scale - you can evolve into that. In fact, you might even do this when you go to 2 AEs. Maybe 1 was covering Commercial but your second AE was hired to cover Enterprise accounts so you have 2 “territories”.
For example, you could have a couple of Enterprise AEs and a couple of Commercial AEs - let’s say 1K employees is your dividing line. When new opportunities come in, figure out whether it’s Commercial or Enterprise and then round robin based on that. That might even evolve to where you have East/West and Commercial/Enterprise, so 4 teams and it’s just divided up that way.
Territory Model
There is no exact time on when to do this but you’ll start to see some coordination issues popping up and if you’ve used the Hybrid model, it will just slowly evolve into a full Territory model.
I won’t talk about the intricacies into figuring this all out since we’re primarily focused on early-stage companies here.
Some Other Considerations
Let’s talk about some other considerations where the above ideas don’t fit.
In Person Meetings
Since COVID, a lot more meetings have moved virtual that used to be in person. However, there are still companies that frequently require meeting face-to-face. Those might be for larger opportunities or companies that just typically have in-person presence (e.g.: manufacturing). In those cases, you want AEs more geographically close to their prospects. Until you get to scale, you will probably have to fly people to most meetings but you still would rather have people closer. If you’re in the US, you might start with an East and West AE and then move to Northeast, Southeast, Central, and West.
Extremely Targeted Market
If your target market is so small (let’s say total possible customer list is <1K) then you might want to just start with more of a Territory model. In that case, you’re probably selling a much higher ASP product and it’s likely there will be a lot more in-person meetings anyway.
Outbound
I’m not a big fan of Round Robin for outbound. It creates issues because multiple AEs/SDRs might reach out to an account (not a good look) and the bigger issue is how you handle it if someone comes inbound at a later point.
This is for another post, but I’m a strong believer in assigning accounts for outbound efforts when you have multiple AEs/SDRs. It all comes down to being super tight on the ICP, which should be owned by the company and not individual AEs. There is value in letting AEs and SDRs be creative in how they find leads but like I said, I’ll cover that in another post.