Sales territories play a crucial role in building an organized and efficient sales process. In today’s competitive market, success doesn’t just depend on having a great product or a talented sales team, it depends on ensuring that the right reps are targeting the right customers in the right areas. By dividing responsibilities clearly, whether by geography, industry, or account type, territories help ensure balanced workloads, reduce internal competition, and improve customer coverage. When designed well, they give sales teams the focus they need to build stronger relationships, close more deals, and contribute to overall growth without stepping on each other’s toes.

Let’s consider how companies like Salesforce or Coca Cola manage their sales operations.

Salesforce divides its sales teams by industry, company size, and region to ensure focused outreach.Coca-Cola relies on tightly defined geographic territories to maintain consistent presence in local markets around the world. In both cases, clearly defined territories enable reps to drive maximum results by building strong customer relationships and avoiding internal competition.

Let’s explore how to design and manage sales territories better, shall we?

What is a sales territory?

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What are the types of sales territories?

Now that you know what a sales territory is, let’s understand how they are structured.

Sales territories can be structured in several ways, depending on a company’s products, markets, and strategic goals. Choosing the right type of territory is essential for optimizing coverage, minimizing overlap, and aligning your sales approach with customer needs. Here are five common ways to define sales territories:

Geographic sales territory

Geographic sales territories are the most traditional and widely used method, where territories are defined based on physical locations such as cities, states, regions, or countries. It's ideal for businesses with location-based services or when proximity to the customer is important. For example, a rep may be responsible for the entire West Coast or just a specific city.

Suitable for: Regional coverage, field sales, and companies with large physical markets

Customer-based sales territory

Customer-based sales territory is assigned based on customer type or account classification. This allows sales teams to tailor their approach based on customer needs, lifecycle stage, or value. 

For example, a SaaS company like Salesforce might assign separate reps to handle new leads, existing small-to-medium business (SMB) customers, and enterprise-level key accounts. Each rep develops expertise in managing specific customer segments whether it’s onboarding new users, upselling to current customers, or nurturing long-term strategic partnerships.

Suitable for: Account management models, relationship-driven sales, and customer retention

Industry-based sales territory

Industry-based sales territory is defined by the industries or verticals that your business serves like healthcare, education, finance, or manufacturing. Sales reps become subject matter experts in their assigned sectors, allowing for more relevant conversations and solutions.

For example, a software company that sells to both healthcare providers and financial institutions might have separate sales teams for each industry. This ensures that sales reps have specialized knowledge and can address the unique needs of each sector.

Suitable for: B2B sales and companies targeting multiple verticals

Product-based sales territory

Product-based sales territory is one where sales reps are assigned to specific products or product lines. This is useful when the product portfolio is broad or highly technical, requiring reps to have in-depth product knowledge.

For example, a tech company like Cisco might assign different reps to handle enterprise networking equipment, cybersecurity solutions, and collaboration tools. Each rep becomes a specialist in their product area, enabling them to better address customer needs, answer technical questions confidently, and close more sophisticated deals.

Suitable for: Companies with a diverse product offering or technical sales environments.

Channel-specific sales territory

Channel-specific sales territory is organized by the sales channel such as direct sales, partner/reseller channels, or online platforms. Each rep or team focuses on maximizing sales through their designated channel.

For example, a company like Microsoft might have one team managing large enterprise customers through direct sales, another team working exclusively with value-added resellers (VARs), and a separate team optimizing sales via its online store. This structure allows for tailored strategies and better relationships within each channel, ultimately driving more focused growth.

Suitable for: Multi-channel sales strategies or businesses with a strong partner ecosystem.

What is sales territory management?

What are the benefits of sales territory management?

• Better sales focus and productivity
• Balanced workload distribution
• Enhanced customer coverage
• Higher conversion rates
• Scope to scale without disrupting workflows
• Easier performance tracking
• Better resource allocation

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What is the sales territory design process?

Designing effective sales territories isn’t just about drawing lines on a map; it’s a strategic process that ensures fair workload distribution, maximizes market coverage, and aligns sales efforts with business goals. Let me tell you how to go about it step by step:

Define your business objectives

Start by clarifying what your sales territory design needs to achieve. Are you looking to increase market penetration, improve customer retention or reduce travel costs? The objectives will shape how you organize your territories whether by geography, product, customer type, or sales channel.

Analyse your market and customer base

Gather data on your customers such as location, industry, buying patterns, revenue potential, and existing relationships. Segment them by value or type to identify where your best opportunities lie. This step helps you understand market potential and spot underserved areas.

Assess sales team capacity

Take stock of your sales team’s size, strengths, and specialties. Consider individual performance metrics, industry expertise, and geographic limitations. The goal is to match reps to territories where they can be most effective.

Pick the right territory type

Based on your business model and the insights gathered, choose a territory structure that fits best. Sometimes, businesses use a hybrid approach depending on their complexity.

Map and design territories

Using CRM data and mapping software, start drafting the actual territories. Make sure each has a balanced mix of potential, existing customers, and workload. Avoid overlaps and gaps, reps should clearly know their boundaries and whom they’re responsible for.

Communicate and train your team

Once the design is ready, communicate it clearly to the sales team. Explain the logic behind the new structure and provide training if needed, especially when transitioning reps to new segments or regions.

Implementation and monitoring

Roll out the new territory structure and closely monitor the first few weeks or months. Keep an eye on KPIs like revenue per territory, lead response times, and customer feedback to see if adjustments are needed.

Refine whenever necessary

Territories aren’t static. As markets shift, customers grow, and your team changes, revisit your design regularly. Rebalancing territories based on data ensures that your structure stays efficient and aligned with your business goals.

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What are the tools for sales territory management?

Now that you’ve understood how to design sales territories, let’s read about the tools needed for effective sales territory management.

CRM

A customer relationship management software is the backbone of most sales organizations, and plays a significant role in territory management. A good CRM helps you track customer interactions, assign leads based on territory rules, and measure rep performance across different regions.

Example: Salesforce, Superleap

Mapping software

Territory mapping tools help visualize territories geographically and identify overlaps, coverage gaps, or opportunities. These platforms often integrate with CRMs to show where customers and leads are located, allowing for smarter planning and better rep routing especially in field sales.

With features like heat maps, zip code targeting, and drag-and-drop territory building, these tools make it easy to create balanced, data-driven territories.

Example: Map My Customers, Badger Maps, Maptive, eSpatial

Data analytics platforms

To manage territories well, sales data is insufficient, you need insights. Analytics platforms help you analyze performance by territory, identify high-potential segments, and forecast revenue opportunities. When combined with CRM and mapping tools, data analytics can uncover patterns that might otherwise go unnoticed.

These platforms also support scenario planning so you can model different territory structures and predict their impact before making major changes.

Example: Tableau, Microsoft Power BI, Looker, Domo

Which KPIs help assess team performance within sales territories?

Revenue per territory

This refers to the total revenue generated by each sales territory. This metric helps evaluate how much business a territory is driving and how effectively it’s being managed.

Quota attainment

This refers to the percentage of sales quota achieved by sales reps. This evaluates how consistently reps are meeting/exceeding their targets.

Lead conversion rate

This refers to the number of leads that convert into customers in each territory. High conversion rates indicate that reps are skilled at closing deals in their territories.

Sales cycle length

Sales cycle length refers to the average time it takes from initial contact with a lead to final sale in a territory. The shorter the sales cycle, the faster a rep can close deals and vice versa. This metric helps identify inefficiencies in the sales process.

Customer retention rate

This refers to the percentage of customers who continue to do business with you over time within each territory. A high retention rate indicates that your sales reps are creating strong, long term customer relationships while a low retention rate indicates need for improvement.

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ROI box------

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How to optimize resource allocation within territories?

• Allocate experienced reps, higher budgets, and support resources to high-opportunity territories, while using simpler strategies in lower-potential areas. 
• Within each territory, segment accounts by value and prioritize accordingly.
• Regularly analyze sales performance, rep capacity, and deal velocity across territories. If one rep is overwhelmed or another has too few leads, rebalance workloads by shifting accounts or support resources accordingly.
• Play according to your sales team’s strengths. Assign reps to territories where they have industry expertise, language skills, or established relationships.

What are the challenges in sales territory management?

Uneven territory distribution

One of the most common problems is the creation of imbalanced territories either in workload, opportunity size, or geographic reach. Some reps may have more high-value accounts or denser markets, while others are left with low-potential areas, leading to performance gaps and morale issues.

Solution: Use data-driven planning tools to balance territories based on potential revenue, customer count, or workload. Regularly assess if territories still align with market conditions and rep capacity.

Overlapping territories

When boundaries aren't clearly defined, multiple reps may target the same leads or accounts, leading to internal competition, confusion over ownership, and poor customer experience.

Solution: Clearly define and document each territory whether it’s geographic, industry-based, or account-specific. Use CRM systems (like Salesforce or Superleap) to automate lead assignments and avoid duplication.

Lack of reliable data

Territory planning depends heavily on accurate data. Without good insights into customer locations, sales performance, or market potential, it's easy to make decisions based on assumptions, which can result in missed opportunities.

Solution: Invest in data analytics tools and keep your CRM up to date. Use heat maps, customer segmentation, and historical sales trends to guide territory planning.

Resistance to change

Sales reps often become attached to their territories. When changes are made, especially if accounts are reassigned, it can lead to friction, decreased motivation, or even attrition if not communicated and managed properly.

Solution: Communicate changes transparently, explain the reasoning behind them, and show how they support team and individual growth. Offer support during transitions and involve reps in the planning process when possible.

Scalability issues

As your company grows or shifts strategy (e.g., launching a new product or entering a new region), your territory structure may need to evolve too. Adjusting territories while keeping performance stable can be tough.

Solution: Design your territory structure with flexibility in mind. Leave room for growth and revisit your plan regularly to ensure that it continues to align with your goals.

Misalignment between sales teams

Effective territory management often involves collaboration between sales, marketing, and operations. Misalignment between these teams such as targeting different customer segments can dilute the impact of your efforts.

Solution: Involve cross-functional teams in the territory planning process. Sync your territory strategy with marketing campaigns and operational logistics to ensure smooth execution.

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Template for quick territory planning

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