Sales territories do not need to be split by geographic location, although this is a common practice. They could also be determined by account type, customer profile, or industry vertical. Well-designed, strategic sales territories don’t just put fences around the accounts that individual salespeople can contact. It also helps to build expertise for the industries that generate the most revenue, which improves customer relationships based on trust and familiarity.
In this article, I draw on my experience of managing a sales territory in the public sector vertical. I cover exactly how to execute sales territory planning and management that keeps your team and your customers in mind. You’ll also get best practices for sales territory design, alignment, and the rules of sales territory engagement.
Table of Contents
- What is a sales territory?
- Sales Territory Management Best Practices
- Sales Territory Alignment
- Building a Sales Territory Plan
- Sales Territory Design
- Sales Territory Management
- Remote Territory Management
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What is a sales territory?
A sales territory is traditionally thought of as a geographic region, but I don’t define a sales territory by the areas on a map. A sales territory can be an industry vertical, a customer profile, or an account type.
The goal of a sales territory is to target a specific market using a streamlined sales strategy that efficiently delivers resources to sales teams, enabling them to close deals within that market. Territories are assigned to a specific salesperson or sales team with the most experience at supporting that group of people.
When I worked for OpenText, they had well-defined commercial sales territories that were primarily defined by geographical boundaries. Yet for the legal, engineering, public sector, and energy verticals, they had industry-defined territories. Since the company offered specialized solutions for these industries, they had sales, marketing, and service personnel who had a significant amount of experience working with organizations in these industries.
I worked in a public sector sales territory where we had industry principals who were former high-ranking government executives. They knew how to navigate complex government purchasing practices and the shortcuts and pitfalls that can make or break deals. Their lived experience allowed us to provide the best possible service and streamline sales processes.
How you structure, define, and distribute the territories you work with has massive implications for your organization’s sales efficiency and bottom line.
For example, most of our team was based in Ottawa, where the federal government is, while I was in Toronto, where I could manage opportunities with our largest provincial government and the largest city government entities.
A strategic sales territory design, exceptional territory management, and sales territory alignment are the building blocks of a successful sales territory plan. Next, I’ve provided some perspective on how to do them right.
Building a Sales Territory Plan
How you go about building a sales territory plan depends on your business and whether you’re established or not.
Importantly, you need to know your priorities before you start building the plan.
Sales managers building a sales territory plan for a startup will likely need to lay the foundations by working with the company owner to understand key priorities and parameters.
For example:
- Ideal customer profiles, including decision maker personas.
- The addressable geographical market.
- Target industries.
Pro tip: For startups, focus on a subset of industries that the company’s solution addresses and a limited geographical market.
For an established company, talk to the executive leadership team to understand what the goals are for the sales territory realignment.
For example, are they looking to:
- Increase sales revenues across the board.
- Build pre-launch awareness or early adopter successes for new products and services, and focus on net new customer acquisition.
- Prioritize customer face time to retain lasting relationships, or high-touch outreach via digital and contact center channels.
- Expand their market into new territories, or retract and refocus on companies in their key industries.
- Align sales coverage to optimize coverage for new product or service offerings.
Pro tip: For established companies, focus on aligning territories around strategic goals. You can conduct a fit-gap analysis (more on that below) to spot overlaps, underserved markets, or inefficiencies in your current structure.
The Steps to Build a Sales Territory Plan
1. Define SMART goals.
Once you’ve defined your priorities, you need to know whether or not your sales territory design is moving you closer to achieving them or not. To help measure success, you set SMART goals.
SMART goals should address each of your priorities.
Smart goals are:
- Specific
- Measureable
- Attainable
- Relevant
- Time-bound
For example, a SMART goal might be:
“Increase sales revenue in the Northeast U.S. territory by 15% over the next 12 months by reallocating two experienced reps to focus on mid-market accounts in the technology sector, while maintaining current customer retention rates.”
Let’s see how this goal is SMART.
- Specific: “Increase sales revenue in the Northeast U.S. territory.”
- Measureable: “15% growth.”
- Attainable: “By reallocating two experienced reps to focus on mid-market accounts in the technology sector.”
- Relevant: The whole goal is tied to business goals.
- Time-bound: “Over the next 12 months.”
2. Define your market.
To effectively set up territories, sales leaders must first understand the environment of their business. There are numerous ways for a business to define a market. Factors could include geography, size, consumer demographics, competition, and more. But starting with internal company factors is key.
Take a look at your company’s core values, goals, and revenue. Which segment of your customer base is most aligned with these and generating the most revenue for the business?
Once you identify who this group is, look for similar niche markets that your sales team could tap into. For example, if your most profitable customers are in the consumer packaged goods sector, consider targeting niche sectors within this industry, such as food & beverage or health & beauty products. These could become new territories for your business.
Know what is unique to your business and prioritize based on what your climate demands. Targeting a profitable market segment as its own sales territory will lead to lowered overhead costs, increased sales, and reduced customer churn.
3. Assess account and territory quality.
After you’ve identified the perfect target market for your sales territory, you’ll need to evaluate the value of each account within the market. The measurement could be either quantitative or qualitative, depending on the product or service your business offers.
For example, a beverage company might rank the value of its accounts by net profitability. In contrast, a company that relies heavily on customer recommendations could focus on accounts that are more likely to provide a referral for their company.
By determining the value of each account, you can prioritize each one in your sales territory planning. That way, your sales team understands which accounts are reflected in their quota metrics and can give these accounts the attention they deserve.
After assessing the quality of each account, it’s time to determine how qualified the territory is as a whole. As with the accounts’ values, this process is subjective based on different business needs and priorities.
Continuing with the consumer packaged goods example, if you have a food & beverage territory and a health & beauty territory, you may realize that each has different sales cycles, churn rates, and even repeat purchase patterns. These are just a few examples of factors that could affect the quality of a sales territory.
Internally, you may decide that the sales cycle is the biggest determinant of territory quality and use this factor to rank each one from highest to lowest. A shorter sales cycle for the health & beauty territory could mean a quicker ROI for your team, so you could rank health & beauty as a higher quality territory than the food & beverage territory.
To get a better picture of territory value, include your sales team in these discussions. After all, no one knows the territories better than the reps who work within them each day. This way, you can assign the appropriate reps to maximize the potential of each territory.
4. Run fit-gap analysis and competitor research.
Once you’ve defined your market and account, the next step is a fit-gap analysis. The goal here is to spot inefficiencies that are holding your sales team back.
For example:
- Territories have too much overlap, causing multiple reps to engage with the same customers.
- Markets with little or no representation, so potential revenue opportunities are untapped.
- Territories with higher than average churn, longer sales cycles, or lower customer acquisition.
These inefficiencies are easy to come by. I’ve experienced it firsthand at OpenText, and their commercial sales territories were well-defined and among the best of my experience.
At OpenText, territory conflicts arose only occasionally, and it was when an inbound lead or RFP was assigned incorrectly. For example, many North American utilities are government-owned, even though they appear to be commercial enterprises. Sales territory “rules of engagement” were controlled by where the organization’s primary funding comes from, be it taxes, customer purchases, or bill payments. Those lines are blurred for utilities because they have multiple revenue streams.
Pro tip: Through fit-gap analysis, you spot inefficiency and solve it. When OpenText recognized overlapping territories, the sales team made decisions on an ad-hoc basis, based on what was best for the client and which team had the highest likelihood of winning the business.
Finally, look at competitors and review how they’re dividing their marketing and territories.
How do you find that out?
You can start with research, but the real insights can come from former customers or former competitor reps who now work for you. These people carry valuable information about how competitors manage their sales territories.
Evaluate your company’s alignment with your territories outside of sales. Do you have marketing, customer service, or product management experts that you can align with your sales reps by territory?
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5. Establish clear rules of customer and channel management.
If ever there are issues with customer communication, trust erodes fast. You don’t want multiple reps contacting the same customer.
To solve this, you need indisputable rules of engagement.
Your rules of engagement document outlines everything, from who owns which account, how leads are assigned, how renewals are handled, and the exact process for resolving disputes.
When there are clear guidelines, you avoid getting into a mess in front of your customers, as well as internally.
At one point in my career, I was transitioning from an inside sales role to take on field sales responsibilities within the public sector territory. I held onto several deals during the transition, and at first, both business units were forecasting the deals for their year-end, which resulted in inflated expectations. We sorted it out eventually; however, it was an important learning experience about ensuring forecast reliability through transparency.
Your rules of engagement should consider your sales representatives’ strengths, as you want the right reps assigned to the right customers. You must assign reps with the applicable skills to develop and optimize each one.
For example, an excellent sales territory assignment would be assigning a territory defined by large enterprise deals to a rep who has experience closing big deals.
Now, this isn’t to say that as a sales leader you should cherry-pick certain reps to work certain territories. This step represents the opposite. Instead of relegating reps to highly specialized roles to the point of creating silos, you can cultivate an environment of continuous learning. Use the expertise of each sales rep to introduce best practices for each territory so that the team passes on that expertise to other team members.
By strategically assigning qualified reps to accounts, you will empower your entire team to deliver an amazing buying experience for your clients.
6. Review and communicate your sales territory plan.
The steps outlined above will prepare your business to put a sales territory plan into action, but you’ll need to do a final diagnosis of the costs associated with each territory. Analyzing cost metrics will help you, as a sales leader, zero in on specific inefficiencies in the system and solve for them.
There are several ways to identify these industries, but I recommend you start with customer acquisition cost (CAC). By using this metric, you’ll quickly come up with a list of costs associated with prospecting and closing each deal. You can even compare CAC over time, against competitors, or against industry standards to determine what a healthy CAC should be for the territory.
Once your plan is reviewed, communicate it clearly.
Consider all relevant stakeholders who need to be informed about it. Think about employees, customers, partners, and prospects. You want your sales territory to guide your internal team, but it doesn’t hurt to let customers know exactly who their point of contact is.
7. Monitor the final plan.
Rolling out your plan gets everything operational, but the work doesn’t stop there. It’s time to track your performance using the dashboard, reports, and those SMART goals.
Sales teams must monitor key performance indicators (KPIs) to determine whether the plan is meeting its goals.
KPIs might include:
- Revenue growth.
- Customer acquisition cost.
- Customer churn.
- Rep productivity.
Your performance monitoring doesn’t have to be entirely data-driven; ask for feedback from your sales teams and focus groups of customers.
Iterate and build on your sales territory plan.
Sales Territory Design
When finalizing and designing your sales territories, consider the following factors: business need, market demand, and geography. Once you’ve created a preliminary version of your sales territory design, you can assign sales reps to it based on their expertise and interest in the territory.
You can design your sales territories manually, or you can take an automated approach with sales territory mapping software.
Best Sales Territory Mapping Software
1. Maptive
Maptive works best for sales teams that close deals face-to-face with clients. This platform features customizable maps, sharing options, and route optimization, enabling sales territory managers to optimize their territories efficiently.
2. BatchGeo
Mapping existing customers into sales territories can be pretty straightforward, but mapping prospects and leads can be a bit more challenging due to the high volume and speed at which they come in.
Badger Maps eliminates this problem with customizable grouping fields that allow you to group by geolocation and more. Sales total, quantity of sales, and lead qualification are all options for mapping your sales territories with this platform.
3. Badger Maps
When time is of the essence and you need to close deals fast, BatchGeo is your solution. This sales territory design software features tools like Lasso, which allow you to quickly draw territories with a swipe, and route optimization that enables reps to reach each deal faster.
Once your territories are designed using manual techniques or the latest software, you’ll need to manage them. In the next section, I’ll go over sales territory management.
Sales Territory Management
Sales territory management is the process of overseeing and growing a specific sales territory. A sales territory manager is responsible for this process. When sales territory management is executed effectively, the accounts within a territory will thrive according to the quality standards outlined in the sales territory plan, ultimately driving revenue to the business.
There are some strides businesses can take to ensure their sales territory management is as efficient and effective as possible. Below are some of the sales territory management best practices based on my experience.
Sales Territory Management Best Practices
- Balance opportunity and responsibility.
- Unlock potential in untapped territories (support and upskill your team).
- Put a stellar sales leader in place.
- Performance tracking and effective CRM management.
- Practice sound cadence management.
- Consistently keep track of your data and customer needs.
- Don’t forget to pursue new leads.
- Don’t set territory boundaries and assignments in stone.
1. Balance opportunity and responsibility.
Some companies reward their top performers with the most lucrative territories, while assigning their newest or underperforming representatives to territories that tend to have lower sales yields.
This can overextend top sales reps and demoralize new hires and struggling sellers.
If top sales reps are consistently rewarded with the prime territories, they may prioritize the largest deals or the ones with the fewest deal-closing obstacles. Other deals may fall through the cracks or get captured by the competition, where they could be closed if territory boundaries were redrawn.
It’s critical to enable every sales rep on the team to work on an equal playing field.
Balancing territories may mean sales reps live in a territory, so it’s simply less time-consuming and more affordable to build and sustain relationships with their target accounts. Assigning territories by industry can also make better use of a salesperson’s experience or education.
2. Unlock potential in untapped territories (support and upskill your team).
Some territories may not appear to have much potential based on past results because they were always assigned to underperforming or onboarding reps. Top sellers can often leverage their experience to generate better results from a territory that wasn’t properly served before.
It’s easy to overlook opportunity if you focus solely on the metrics. Qualitative data might tell you that a territory is underperforming because revenue is down, or costs per acquisition are high, or customer churn is high.
Quantitative data might have a different story to tell.
For example, early in my OpenText career, I was partnered with a senior account executive who helped me learn habits that worked with public sector organizations, and that some traditional commercial sales tactics are counterproductive. Many existing customers and prospects felt like my company wasn’t interested in their business; however, when I invested time and attention in their needs, I was able to secure strategic wins and success stories.
3. Put a stellar sales leader in place.
A sales territory plan is useless when you don’t have the right sales leader in place to guide its execution. This person will be responsible for sales territory development, team management, and stakeholder alignment, so take your time and do your research when filling this role.
Building on my anecdote above, if I hadn’t partnered with that senior account executive who helped train new habits, I may not have been as successful within the public sector vertical.
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4. Performance tracking and effective CRM management.
I learned the value of customer relationship management platforms, such as HubSpot Sales Hub, early in my sales career. I have always found that the more data I capture in our corporate CRM, the more productive my customer conversations and activities become.
And it translated to better results across revenue and customer satisfaction.
I worked for CRM solution providers for several years, and I’ve seen firsthand how effectively sales managers can monitor their team’s individual territories using CRM dashboards and reports. My managers could spend more time advocating for the right resources for my team, and support our sales efforts when they could easily access the context of our sales pursuit activities captured by CRM.
5. Practice sound cadence management.
Proper cadence management (the process of prioritizing, structuring, timing, and conducting account interactions) is central to successful sales territory management efforts. Your reps need to gauge account priority level, group accounts based on that assessment, and determine the best frequency, pattern, and nature of touches between them and contacts.
Cadences will differ from territory to territory. It might take some trial and error, but properly managing territories often hinges upon how you contact the prospects you’re trying to reach within each one.
6. Consistently keep track of your data and customer needs.
Territory management is agile by nature. You can’t expect a specific territory to remain stagnant in how it responds to your sales strategies. Customer circumstances change, and you need to be able to quickly adapt to them.
That’s why your reps need to keep records of their sales data in a CRM — making sure you’re keeping tabs on what is and isn’t working for you. Have reps maintain notes from their appointments and keep them on record. Stay abreast of every trend within all your territories to ensure they’re being catered to as effectively as possible.
7. Don’t forget to pursue new leads.
Effective sales territory management isn’t specific to existing accounts. Though this is a crucial component of the process, it’s not the only one. Always pursue new business — one way or another.
That doesn’t mean forgetting about current accounts. You still need to keep them happy — particularly high-volume ones. But if you want to grow your business, you have to consistently pursue new opportunities within your territories. Both types of customers serve an essential function in the health of your business, so both require their fair share of attention.
8. Don’t set territory boundaries and assignments in stone.
Factors such as competition, changing customer needs, and the evolution of your company to keep pace with market fluctuations require that you regularly adapt your territory plan.
Reorganizing your sales territories requires careful planning and transparency to customers, partners, and operations teams. As a partner manager, I once yielded my territory to an onboarding sales rep, thinking there would be many more opportunities to be had in a larger market. Yet my company’s biggest competitor was acquired by Microsoft. Although it didn’t change the value proposition of the solution I was selling, it was more challenging to convince the European partners I was working with than the Canadian and American partners I had built close relationships with.
Remote Territory Management
Not all sales territories require an in-person presence, and there are instances when your reps will have to work remotely. If this is the case, your reps still need to abide by the best practices mentioned above, but in all likelihood, they’ll need to adjust their cadence.
A cadence that rests on in-person interactions will have to change if those interactions can’t happen anymore. It may mean finding a new approach that incorporates more phone time and remote tools, such as video calls.
It might take some trial and error, but you need to find a cadence that is better suited to handle remote interactions — and that might not be the one your reps are accustomed to using.
In addition to adjusting cadence, you may have to adapt your sales territory plan to changes in the market or internally within the company. This is where sales territory alignment comes in.
Sales Territory Alignment
Sales territory alignment is the process by which a company redistributes accounts according to new market trends, industry standards, or business needs. This alignment may result in reducing or expanding territories and aligning the sales team to these changes. Sales territory alignment keeps the sales pipeline healthy and the company profitable.
Sales territory alignment is incredibly important because it presents an opportunity for you to assign territories to your reps based on a range of the team’s most influential factors, such as:
- Strengths.
- Knowledge.
- Experience.
- Cultural backgrounds.
With aligned sales territories, you have better odds of meeting your targets. Sellers can spend less time trying to adapt and learn, and more time pursuing deals.
At IBM, I worked with clients and prospects from North America. Some of my colleagues did their best work with the fast-paced, quick-witted, type-A personalities of companies in northeastern American states like New York, Massachusetts, and New Jersey. Others connected better with more laid-back, pragmatic personalities here in Canada or in the midwestern U.S. Some colleagues had transitioned from working for competitors, partners, or strategic industries. They had skills and experience that were put to best use in territories where they could apply what they knew.
Aligning sales territories in these ways improves sales rep morale, and it also instills trust and confidence with customers, prospects, colleagues, and partners.
As a rule of thumb, I’d plan on reviewing and realigning your sales territories every three to four years. However, if you’re in fast-paced industries like technology, medical sales, or real estate, you might need to do so on an annual basis.
Ready to take the next step and set up sales territories? Try these resources:
- HubSpot’s Sales CRM is built for sales teams who want to grow. It’s enriched with AI, and its reporting will help you track the performance of your team.
- HubSpot’s FREE Smart Goals Template will help you write SMART goals that help you monitor performance.
Final Thoughts
Sales territory planning is about providing clarity to sales teams, streamlining experiences for customers — and importantly — closing more deals.
If you understand and implement the sales territory rules of engagement discussed in this article, you can increase your chances of success no matter the territory you find yourself in.
Editor's note: This post was originally published in June 2021 and has been updated for comprehensiveness.
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Territory Management