Sales Territory Management

What is Sales Territory Management?

Sales territory management describes the process where sales reps are assigned specific customer segments — or “territories” — to target with their sales efforts. Geographic location, company size, industry, and product-related business needs are all examples of sales territories.

The main purpose of sales territory planning is to create a fair and effective system for sales reps — one that maximizes efficiency and profitability. When done right, sales territories are designed in such a way that:

• Prospects in each territory are abundant enough to make it worthwhile for sales reps.
• The territories are divided up so no one rep is overworked or underutilized.
• Similar customer profiles enable reps to create their own sales methodology and refine it over time.

Sales territory management becomes increasingly critical as companies scale their sales operations. While it might not be top of mind for a startup, it will be essential the minute they begin building out their sales infrastructure.

Synonyms

• Sales territory planning
• Sales management

Types of Sales Territories

A sales territory could technically be any group of prospects that share a common trait or characteristic, but they’re mostly based on geographic location. Here are a few types of sales territories that businesses commonly use:

• Geographic-based territories: Physical locations like cities, states, regions, and countries.
• Industry-based territories: Specific industries the company serves, such as healthcare, education, or retail.
• Product-based territories: Different products a company sells, such as software tiers, hardware, or niche services.
• Size-based territories: Based on company headcount or revenue (small business vs. mid-market vs. enterprise).

Sales managers that oversee field sales teams take this concept a step further by drawing out visual territories in one of four shapes: circle, wedge, hopscotch, or cloverleaf.

• Circle: An evenly-dispersed territory that offers plenty of prospects.
• Wedge: A narrow, elongated slice with a mix of rural and urban prospects.
• Hopscotch: Territories spliced into multiple circles to maximize efficiency and minimize overlap between reps.
• Cloverleaf: Divided into four “petals” for more balanced coverage, most common in industrial markets like B2B manufacturing.

Why Effective Sales Territory Management is Important

Assigning sellers individual territories drives sales productivity by making it easier for them to create repeatable and scalable selling strategies.

From a leadership standpoint, assigning reps territories allows for better supervision and coaching, as managers can more easily track reps’ progress in specific areas. And when sellers work with similar customers regularly, they get better and better at understanding and responding to their needs, which leads to higher close rates and sales quota attainment.

Territory management is valuable to sales organizations for the following reasons:

• Increases reps’ focus and efficiency. By assigning specific territories to each rep, they can focus their efforts on the most promising prospects.
• Maximizes sales coverage. With a clear understanding of how to engage each sales opportunity, reps are more likely to cover all prospects in an area more quickly and give them the content and solutions they’re looking for.
• Improves sales team morale. Reps feel more secure and motivated when they’re “protected” by their own territories, which improves the selling experience and helps them hit sales targets.
• Reduces customer churn. When reps understand customers better, they can pair them with the company’s products they’ll actually benefit from, rather than selling to make a sale.
• Reduced operational costs. The costs associated with onboarding and managing disparate sales activities are much lower when reps focus on one area each.
• Better customer experience. 83% of B2B buyers say personalization influences their buying decision, and reps with territories are better positioned to provide tailored solutions and recommendations.

How to Design a Sales Territory Plan

Like most initiatives, successful sales territory management starts with a plan. Businesses need to refine their sales strategy and goals, and then use that information to create a territorial design.

Define Target Market and Customers

Who are your ideal customers?

Defining your ideal customer profile (ICP) is a critical first step in sales territory planning because it helps you determine whether a territory is large enough to pursue, how many reps you need to fully capitalize on it without oversaturating, and what types of selling activities are most effective in that area.

Your ICP is based on core customer attributes, such as:

• Location
• Team size
• Industry
• ARR/MRR
• Business challenges
• Reasons to buy
• Business model
• Decision-maker characteristics

It helps to look at your current customers when you’re crafting your ICP. Looking at sales data, you’ll realize some customers have proven more profitable than others.

Create buyer personas based on different customers in your ICP, and start looking for ways to segment them into distinct categories or territories.

Delineate Clear Territories

Once you have your ideal customers figured out, start to create a territory map.

It’s important to create territories where the total addressable market is large enough for reps selling into it, but not so large that it’s overwhelming or too competitive.

Most sales territory management strategies start by breaking down territories by geography, such as a region of the country. As they build out sales infrastructure, they add company size, product or service interest, and other criteria to their map.

When delineating territories, make sure they’re well balanced for reps in terms of size/complexity and resources needed to effectively cover them.

Also consider the distance from one territory to another. The more overlap they have between territories, the less efficient your sales process will be.

Determine Team Member Strengths

The strengths of your team members are tied to a few critical indicators:

• Sales performance
• Years of experience
• Years with the company
• Industry knowledge
• Geographic familiarity

These metrics can help you determine which territories would be best for each of your reps. Some sales orgs (particularly those that partially sell in-person) benefit from having professionals located within the particular region, while others will prioritize industry experience or sales history when assigning reps to territories.

For companies with tiered pricing, assigning seasoned sales professionals to the enterprise segments and reserving emerging market roles for newer reps ensures the best sales talent is assigned to the highest-stakes deals.

Set Territory Goals

Territory goals are the ideal accomplishments from your territory management plan. They include tangible business objectives, such as:

• Increased revenue
• Improved win rates
• Higher retention rates
• Revenue growth from new market entry

Terrirory goals define what a successful initiative. They should be measurable and achievable within the allotted timeframe. They should also be consistent across all territories to ensure fairness and eliminate competition among reps.

An example of a goal would be: “If we grow revenue in New Territory X by 25% YoY, our territory plan was successful.”

Setting territory goals helps leaders attribute the right KPIs and sales activities to them, which they’ll have to later on in the process.

Design the Territory Plan

With clear goals outlined and well-understood team member strengths, it’s time to create your sales territory management plan.

1. Start by mapping out the territories according to criteria you’ve already identified, such as geography, company size, product interest, and industry verticals.
2. Assign team members to their respective territories based on their skill sets and experience levels.
3. Make sure to include a detailed overview of each territory’s performance goals and KPIs. This should include the revenue targets for each representative as well as specific customer goals related to churn, retention rate, CLV, and CAC.
4. Build a plan of action outlining the strategies reps need to use to reach their assigned target objectives. This could include activities like virtual calls, face-to-face meetings, and email outreach.
5. It’s also a good idea to build out an incentive plan to reward reps for reaching or exceeding their goals or establish rewards for those who exceed them.
6. Get buy-in from the sales team and work with them to refine the territory plan.

For effective territory management, sales leaders must also build in regular reviews and adjustments. Check in with reps, review their performance data, and make changes as needed.

Set and Monitor Sales KPIs

No sales territory management plan is complete without a way to quantify and measure progress toward goals. Businesses already measure sales KPIs on a macro level, but there are a few additional ones for territory-specific metrics.

Common goals for each territory include:

• Total revenue
• Monthly/quarterly quota attainment
• Number of demos booked/delivered
• Average deal size
• Average revenue per account
• Lead response time
• Lead conversion rate
• Sales cycle length

In addition to these, managers should also consider other factors — such as the size of each territory, its demographic makeup, and expected customer growth or declines in the region — when setting sales goals for reps in their territories.

Sales managers will also look at historical KPIs that compile over time and indicate the overall success of sales territory management initiatives.

These include:

• Customer churn
• Customer retention rate
• Customer lifetime value (CLV)
• Customer acquisition cost (CAC)

These metrics give insight into how often territory assignees engage the right prospects, how well they’re meeting the customer’s needs, and how long they can maintain relationships with them. This tells upper management whether or not they’re using the right sales strategy or if the territory is even worth pursuing long-term.

Sales Territory Management Best Practices

Sales leaders should remember the following best practices when implementing territory management plans:

Provide Training

Training might not be possible with a brand-new territory management initiative, especially if its among the first few implemented in a budding organization. Still, sales leaders can do a few things to ensure their reps have the skills and knowledge they need.

Focus on developing their people management, negotiation, problem-solving, and customer service skills.

Introduce products and services, define the target customer base, and provide tips on effective sales strategies. The more reps know about their territory, the better they can plan for successful outcomes.

As the strategy solidifies, documentation is important for future sales onboarding — as leaders assign territories to new reps, a knowledge base and internal guidance will ensure faster ramp times, higher productivity, and favorable rep retention rates.

Set Growth Goals and Track Results

Sales leadership needs to monitor the KPIs determined earlier on a micro (per rep) and macro (overarching territory) level.

Looking at territory performance overall helps them identify potential gaps in the overall selling strategy and whether or not they are fillable. For example, if a particular territory collectively exceeds its goals, it’s probably a profitable area to target. Low-performance territories may need to be restructured or reevaluated for potential changes to ensure quota attainment.

Monitoring individual performance underscores problems with the selling process macro trends may not highlight. A high-achieving sales force may be driven by one or two reps — a trend that would indicate high revenue growth and profitability at the macro level but highlights potential team-wide issues and hidden costs.

Each quarter, managers in charge of sales QBRs should go over the results and celebrate wins — as well as identify problem areas. Since reps are the ones doing the actual selling, talking about how they feel about particular territories or initiatives can be more telling than a few numbers and graphs.

Manage Your Sales Pipeline

To effectively manage a sales territory (or a sales force of any kind, for that matter), sales pipeline visibility is a must — it’s the only way to really see what’s going on and where opportunities lie.

A sales pipeline shows sales team members:

• Where in the buying process each customer is
• How long it takes to move them to the next stage
• What percentage of leads convert into deals
• Which products or services are popular in each territory
• Where changes need to be made to increase sales
• Why sellers might be missing their goals

The pipeline gives sales managers a birds-eye view of all team members’ progress. They can easily spot outlying performances, identify trends, and adjust strategies as needed.

Provide Real-Time Data

Real-time data is a product of effective pipeline visibility, among other things. To achieve real-time data, companies need to have an integrated sales tech stack.

Ideally, real-time data won’t involve much manual input, either. Each time a seller and buyer have a touchpoint (e.g., sales quote delivery, proposal sign-off, or a sales demo), the action should be automatically logged into a CRM system for easy access.

Up-to-the-minute data is essential for sales leaders who need an accurate picture of their reps’ activities and where they are in the selling process, which helps not only with sales territory management but also in other organizational areas. With real-time data, leaders can track customer satisfaction levels and customer lifetime values as well as find ways to optimize service for greater customer loyalty.

Use CRM

Customer relationship management (CRM) is at the core of every sales initiative — from the moment a seller first identifies a prospect to the time they stop doing business with the company, CRM logs, tracks, and optimizes every point of the customer journey.

CRM solutions are useful for just about every step of sales territory management.

• Defining target markets and customers. Since customer data is already stored in CRM, leaders can easily segment customers by particular characteristics to optimize territories.
• Mapping sales territories. Rather than “guessing” or going through trial and error, management teams can look at historical data in CRM to logically determine the best areas to draw territories.
• Goal setting. With accurate CRM insights, company leadership will already have a foundational understanding of what constitutes solid, but reasonable sales growth and seller performance.
• KPI monitoring. All necessary performance tracking metrics come from CRM. Managers can configure automatic reports to run at regular intervals and quickly recognize any areas that need attention.
• Making changes. CRM data also shows how reps are responding to changes in territories, strategies, or tactics — helping management make swift decisions if needed.

Since CRM automates otherwise tedious sales activities like data entry, it also ensures an efficient sales motion, which gets the whole team to reach their goals faster.

Leverage CPQ

CPQ software is another essential element of sales territory management because it automates many of the processes taking place during the selling process.

CPQ solutions can:

• Help sellers quickly generate accurate quotes and proposals
• Support reps with product selection, pricing, and discounting processes
• Ensure compliance with business policies and customer regulations
• Get leaders to sign off on new quotes in minutes rather than days
• Automatically apply sales tax and other fees
• Integrate with CRM to keep track of all customer interactions in one place
• Give insights into products that sell well in specific territories or customer segments

With CPQ, reps don’t have to worry about manual errors, which frees them up to focus more on meaningful customer conversations and closing deals. Automating the quoting process also ensures consistent accuracy across all territories — a crucial factor for sales leaders who want to stay in control of their organization’s sales performance.

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