Smart sales territory planning isn’t just a box to check—it’s the foundation of hitting (and exceeding) revenue goals! By defining, balancing, and optimizing territories through better territory management, sales teams can align reps with the right sales opportunities, ensuring no potential goes untapped.
What is Sales Territory Planning?
Sales territory planning is a critical element of sales management and overall sales success. It involves creating defined and balanced sales territories, customizing sales activities to maximize sales potential within each territory, and managing sales performance on an ongoing basis.
Territories can be defined based on factors such as geography, industry, company size, and even historical performance, as well as key metrics like Annual Recurring Revenue (ARR) potential.
Business insight found that sales organizations with well-planned territory carving while also designing and optimizing sales territories can see a 10%-20% increase in sales productivity.
When done correctly, territory planning creates a fair and productive environment for sales reps, ensuring that each rep has an equal opportunity to meet their sales quota, while driving growth and efficiency across the entire sales organization.
Read more: The Ultimate Guide to Territory Balancing
By providing balanced sales territories, companies can create specific revenue targets and strategies to increase sales productivity and efficiency in each region with precision. Good territory planning ensures that all sellers have an equal opportunity to hit their number, which keeps them motivated and on target.
Smart Territory Planning = Higher Quota Attainment
Balanced sales territories are the key to setting reps up for success. When opportunities are distributed fairly, every sales rep has a real shot at hitting their targets—no more lopsided workloads or missed potential. And in today’s remote-selling world, relying solely on geographic territories just doesn’t cut it. A data-driven approach ensures territories align with business goals, leading to stronger sales performance.
Why It Matters:
- Fair territory distribution keeps reps focused on high-value deals.
- A well-structured approach boosts productivity and delivers more predictable results.
- Clear, transparent territories prevent conflicts and keep motivation high.
Sales reps thrive on competition, but unclear or unbalanced territories can lead to frustration, conflict, and even turnover. When reps feel confident they have a fair shot at success, they’re more engaged, motivated, and committed to driving revenue. Strategic territory planning isn’t just about organization—it’s about building a sales team that wins together.
How to Create a Sales Territory Plan
The first step in sales territory planning is aligning with your company’s overall goals and defining your ideal customer profile. This step will guide your territory design, ensuring that reps are aligned with the right type of accounts. For example, if your goal is to increase market share, your territory plan should focus on targeting new accounts with high growth potential.
On the other hand, if your goal is retaining customers, your plan should prioritize expanding within existing customer segments.
A useful tool in this process is the BCG Matrix (Boston Consulting Group), which classifies accounts into four types:
- Cash Cows (High market share, low growth): These accounts may have limited new opportunities but provide reliable revenue.
- Dogs (Low market share, low growth): These accounts are difficult to work with and often require more effort for minimal returns.
- Question Marks (Low market share, high growth): These opportunities require thoughtful evaluation, but can yield high rewards if targeted correctly.
- Stars (High market share, high growth): These accounts represent the best opportunities for aggressive sales strategies.
Figure 1: BCG Growth Matrix (Boston Consulting Group)
Once you classify accounts based on your company’s strategy, you’ll need to answer critical questions like:
- Are you expanding into new markets or industries?
- Has your product or service offering changed?
- Are you targeting a specific company size this year?
- How important is expansion revenue to your growth strategy?
Read more: Sales Territory Mapping 101: An Expert’s Cheat Sheet
Common Sales Territory Planning Criteria
When dividing territories, it’s essential to balance multiple criteria based on your business objectives. There is no one size fits all approach and most organizations will follow a hybrid model. You may decide to simply divide the categories evenly across your team. Or you may target one segment of the matrix, such as Cash Cow accounts, with a new product and assign reps and overlay resources accordingly.
Common factors to consider include:
- Geography: Traditionally, territories have been divided geographically, especially when in-person sales are required. However, as remote selling becomes more common, many organizations are shifting to data-driven criteria to ensure alignment with corporate goals.
- Historical Performance: Past performance data can be used to understand which accounts, geographies, or products have been high performers. These insights guide where to place higher-performing resources.
- Revenue Potential: Territory assignments can be based on the Total Addressable Market (TAM) or projected revenue potential, ensuring resources are aligned with high-potential opportunities.
- Account Size and ACV: Larger accounts typically have longer sales cycles and require a high-touch approach, while smaller accounts might be more suited for shorter, lower-touch sales cycles.
- Industry: If your company targets specific industries (e.g., financial services, healthcare, or government), territory planning may focus on industry-specific verticals.
- Product Type: Specialized teams may require different territories based on the product they are selling, ensuring each rep is focused on the appropriate product set.
- Propensity to Buy: Some companies segment their accounts into tiers based on their likelihood to buy, and then distribute them across the sales team accordingly.
- Account Score: Combining multiple criteria into an account score simplifies territory balancing and ensures more objective assignments.
- Quota: To ensure fairness, you might adjust quotas based on territory challenges, such as assigning a higher quota to a rep in a high-opportunity area like New York City, or a lower quota in a new market.
Sales Territory Planning Examples
Sales territory planning can vary based on your company’s size and GTM (Go-To-Market) strategy. For example, consider a company with $50 million in annual revenue and sales reps with an annual quota of $1 million each. The company has 50 global sales territories and a team distributed as follows:
- EMEA: 10 reps
- LATAM: 2 reps
- APAC: 2 reps
- AMER: 36 reps
In this scenario, rather than using traditional region-based territories, the company may choose to divide accounts based on specific criteria, like:
- Industry Segmentation: Accounts in the finance sector are distributed evenly across territories because they offer high-value, quick-turn deals.
- Geographic Density: High-concentration areas, such as Manhattan or San Francisco, might receive more attention and be assigned to reps with the capacity to handle them.
- Account Volume: Each territory is limited to 250 accounts, ensuring that reps don’t become overwhelmed with too many accounts to handle effectively.
Challenges in Sales Territory Planning
While territory planning or process planning is vital to sales success, it’s not without its challenges:
- Seller Turnover: What happens when a top-performing rep leaves mid-quarter? Territory reassignment can disrupt plans and impact sales productivity.
- Market Changes: Unforeseen events, such as economic downturns or competitive shifts, can drastically alter your territory planning strategy.
- Manual Processes: As teams grow, relying on spreadsheets or other manual methods for territory planning becomes impractical. This can lead to errors and inefficiencies, especially when planning at scale.
- Data Quality Issues: Territory plans based on outdated or inaccurate data can lead to misaligned resources and missed opportunities.
- Too Many Tools: Using multiple disconnected tools for territory planning complicates the process. When territories change, it’s difficult to keep everything in sync without a unified platform.
Read more: Corporate Planning Tools Don’t Work For Sales Territory Management. Here’s Why:
Benefits of Sales Territory Planning Software
To overcome sales management challenges, many organizations are adopting Territory Planning Software to pinpoint revenue targets. These platforms enable companies to shift from static, annual territory planning to a more dynamic and agile approach. With Territory Management Software, sales teams can:
- Automate territory management: Streamlining the process reduces errors and saves time.
- Adapt to change quickly: With real-time data updates, teams can pivot their strategy quickly in response to market changes.
- Align territories with strategy: Ensure territories are always aligned with your company’s evolving goals.
- Improve quota attainment: Optimize territory design to ensure fair distribution of opportunities and better sales results.
Using Territory Management Software, RevOps teams can re-fresh and re-factor data continuously throughout the year, enabling a continuous GTM planning approach that helps you stay ahead in a competitive market.
A Modern, Data-Driven Approach to Balanced Territory Planning
To overcome the challenges of manual territory planning, consider investing in Territory Management Software to enable a more agile, data-driven, and effective approach. This shift will ensure that your sales teams are aligned with the right opportunities and equipped to succeed in an ever-evolving marketplace.
