How Many Sales Territories Does a Device Launch Need?

Fewer than most founders plan. In my space, a handful of territories in the right cities covers a large share of the national procedure volume. And the people who will eventually buy your company no longer ask for 30 territories. They want proof in a small number of markets.

So the real question is not how many territories you can afford. It is how few you need to prove the product sells, gets adopted and stays.

How do you decide where the territories go?

I map them by procedure volume, not by state lines. Each territory is a three-hour driving radius around a city where the procedures actually happen. Then I look at how much of the country's volume each set of territories covers.

In cardiovascular and endovascular work, four well-placed territories can cover close to half of the national volume. Eight takes you well past half. After that, each new territory adds less coverage and a lot more cost. When I modeled 16 territories, coverage went up, but not by much compared with what it cost. That is why I usually treat eight as a sensible place to start in my space. Your numbers will differ by therapy, so run the map for your own procedures.

The reps also have to live in the territory. This is not a job for virtual reps working from home. They need to be in the cases and in front of the staff, so the territory has to be real geography with a real person in it.

Why do acquirers want fewer markets now?

Because they are buying proof, not coverage. When I talk with strategic buyers, they tell me they don't care about 30 territories anymore. They want a small set of markets showing three things:

• New logos. New hospitals and new accounts.
• Deep adoption. More physicians and more cases inside each account.
• Retention. Customers still buying over 24 to 36 months.

One buyer put it simply. He would rather see $6 million of strong, retained revenue than $25 million he isn't sure will still be there when he takes it over.

There is also the cost side. Putting 30 territories in play is a $30 million to $50 million conversation. A focused launch is a very different raise, and a very different amount of dilution.

When should you add more territories?

Only when two things are true: someone is funding it, and you know the number you are trying to hit.

I always ask founders to work back from the real goal. If going from eight markets to 12 brings in $2 million more, what does that do to your exit? Is it worth the extra people and the extra raise? Sometimes the answer is yes. Often it is a plan that feels good but doesn't change the outcome.

If you want to test a new market before committing to it, you can try it with contract reps first. If the data says the market works, then you build a full territory there.

What mistakes do founders make with territories?

• Planning national coverage on day one because it looks impressive in a deck.
• Drawing territories around where reps happen to live instead of where the volume is.
• Counting coverage but not tracking adoption and retention in the accounts they already have.
• Adding markets before the first ones are working.

Where should I start?

Pull procedure volume for your therapy by city. Draw a three-hour drive around the strongest centers and see how much of the country a few of them cover. Choose the smallest set that gives you real coverage and that you can fund for two to three years. Then build your plan around new logos, adoption and retention in those markets, because that is exactly what a buyer will look at.