The Territory Split That Broke the Quota Model
A B2B industrial-supplies firm has 12 outside reps covering four regions. Last year the eastern region was split in two: the two new territories were carved by county lines drawn from a legacy map, not by account density. Six months later, one rep (Territory A) is at 118% of quota and the other (Territory B) is at 54%. Investigation shows Territory A inherited three national accounts that renew annually with almost no selling effort, while Territory B holds 340 small accounts averaging $9,000 annual spend and a 40% churn rate. Both reps carry the same $1.4M quota. Territory B's rep has the highest call volume and activity metrics in the region. The sales manager must decide how to fix the situation before year-end without demoralizing either rep.
1. Diagnose why the current quota-and-territory design is producing this outcome, and identify the specific design flaws.
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The symptom (one rep at 118%, one at 54% with identical quotas) points to territory potential being unequal while quota is equal. Three design flaws:
- Territory carved by geography, not potential. County lines ignore account density and value. Territory A's three national accounts may represent a large share of its $1.4M quota with near-zero acquisition cost; Territory B's 340 small accounts require high effort per dollar.
- Quota set without workload/opportunity adjustment. Equal quotas across unequal territories reward the rep who inherited annuity revenue and punish the rep doing the hardest selling. This is a classic equity failure that destroys motivation.
- Activity metrics measured without outcome weighting. Territory B's rep has the highest call volume but is judged on a revenue number the territory cannot realistically produce, so effort is invisible in the scorecard.
The manager should recognize that Territory B's 54% may be at or above what the territory's potential supports, and that Territory A's 118% is largely inherited, not earned.
2. Recommend a corrective action plan for the remainder of the year, distinguishing what can be fixed now from what must wait for next year's planning cycle.
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Fix now (in-year):
- Rebase quotas prospectively for the remaining period using a potential-based index (e.g., historical revenue × account count × churn-adjusted opportunity), not retroactively - retroactive rebasing erodes trust.
- Separate inherited base revenue from new-business quota in the scorecard so Territory A's national accounts don't mask selling performance and Territory B's effort is credited.
- Assign a transition credit or SPIFF to Territory B for net-new logos to offset the structural disadvantage.
- Coach Territory B on account triage: with 340 accounts at 40% churn, the rep cannot cover all of them; segment into A/B/C and reallocate coverage (inside sales, digital) to the tail.
Fix next cycle:
- Rebuild territories on a potential index (revenue potential, account count, workload), not county lines.
- Set quotas from territory potential with a stretch factor, not a flat number.
- Add a coverage model so small accounts are served economically.
Communicate the why to both reps: the goal is a fair contest, not punishment.