Sales Territory

What is a Sales Territory?

A sales territory is a defined segment of customers or prospects assigned to a specific sales representative. Territories can be geographic (regions, countries), vertical (industries), account-based (named accounts), or segmented by other criteria.

Territory management ensures market coverage is efficient and systematic. Each rep knows exactly which accounts they own and are responsible for.

Good territory design balances workload, potential, and fairness. Poor design creates conflict and missed opportunity.

Why Territories Matter

Coverage:

• Ensures no prospect or customer is neglected
• Systematic coverage of your market
• Clear accountability for every account

• Reps focus on their assigned area
• Reduced conflict and competition between reps
• Efficient travel and resource allocation

• Reps have clear ownership
• Can build territory expertise
• Incentivized to develop their area

• Territory-based quotas are measurable
• Clear performance benchmarks
• Historical data for planning

Types of Territories

Geographic Territories:

• Defined by location (state, region, country)
• Common for field sales and SMB
• Easy to understand and administer
• Challenge: Unequal opportunity across regions

• Defined by industry (healthcare, finance, tech)
• Allows for specialization and expertise
• Higher rep expertise = better sales
• Challenge: Requires industry knowledge investment

• Named accounts or account tiers
• Common for enterprise sales
• Focus on high-value targets
• Challenge: May ignore smaller accounts

• Combination of approaches
• Example: Northeast + Healthcare
• More complex but better balance
• Challenge: Administrative overhead

Designing Territories

1. Assess Market Potential

• Total addressable revenue by area
• Customer concentration
• Growth opportunities
• Competitive landscape

• Number of accounts per rep
• Account complexity and requirements
• Travel requirements (if field sales)
• Activity levels needed

• Similar opportunity across territories
• Balance new and existing accounts
• Mix of easy and challenging prospects
• Consider rep experience and skill

• Room for expansion in territory
• Ability to split as business grows
• Clear process for territory reassignment
• Regular review and adjustment

• Clear territory definitions
• Account lists for each rep
• Handoff processes for transitions
• Regular communication of changes

Territory Management Best Practices

1. Regular Review
- Quarterly assessment of territory performance
- Adjust based on market changes
- Rebalance when needed

2. Data-Driven Decisions
- Use historical data to set quotas
- Monitor territory metrics
- Adjust based on performance

3. Clear Rules of Engagement
- What happens when prospects span territories?
- How are leads distributed?
- Process for territory disputes

4. Rep Involvement
- Get input from reps on territory design
- They know their areas best
- Creates buy-in and commitment

5. Growth Path
- How do reps earn better territories?
- Clear link between performance and rewards
- Top performers get top opportunities

Common Mistakes

• Unequal distribution - Some territories have far more opportunity
• Frequent changes - Destroys rep relationships and motivation
• No clear boundaries - Creates conflict and confusion
• Ignoring market reality - Territories don't match how customers buy
• Political assignments - Favoritism over fairness

Key Takeaways

• Sales territories are defined segments assigned to specific reps
• Can be geographic, vertical, account-based, or hybrid
• Good territories balance workload, potential, and fairness
• Design based on market potential and rep capacity
• Review quarterly and adjust as needed
• Clear rules of engagement prevent conflict
• Link territory quality to performance and rewards
• Good territory design is both art and science