How to Create a Sales Territory Plan
The Sales Territory Planning Process
Creating a sales territory plan is one of the most important things a sales organization does. It determines how your team operates, how accounts are covered, and how performance is optimized.
But most sales teams don't have a clear process for creating territory plans. They wing it. They assign territories based on gut feel. They don't balance workloads. They don't optimize for performance.
Here's a step-by-step guide to creating a sales territory plan — from market analysis to territory assignment and optimization.
Step 1: Define Your Market
Before you can plan territories, you need to understand your market.
Identify Your Total Addressable Market
What to do:
- List all potential accounts in your market
- Include accounts by geography, industry, size, or other relevant factors
- Use data sources: CRM, marketing databases, industry reports
Why it matters: You can't plan territories without knowing your market. Define your total addressable market first.
Analyze Market Distribution
What to do:
- Analyze geographic distribution — where are accounts located?
- Analyze industry distribution — what industries are represented?
- Analyze size distribution — what's the mix of small, medium, and large accounts?
Why it matters: Market distribution informs territory structure. It helps you decide whether to use geographic, industry, or account-based territories.
Evaluate Market Potential
What to do:
- Estimate revenue potential by geography, industry, or account size
- Identify high-potential segments
- Understand market trends and growth
Why it matters: Market potential determines territory value. It helps you balance territories and prioritize coverage.
Step 2: Analyze Account Potential
Not all accounts are created equal. Some have more potential than others.
Evaluate Account Value
What to do:
- Assess account size (revenue, employees, budget)
- Evaluate product fit and buying potential
- Consider current relationship status
- Factor in industry and market trends
Why it matters: Account value determines territory potential. You need to balance territories by potential, not just account count.
Segment Accounts
What to do:
- Segment accounts by potential — high, medium, low
- Segment by industry, size, geography, or other factors
- Create account tiers or categories
Why it matters: Segmentation helps you balance territories and assign accounts strategically.
Calculate Territory Potential
What to do:
- Sum account potential for each proposed territory
- Ensure territories have similar potential
- Adjust as needed to balance
Why it matters: Balanced potential ensures fairness and equal opportunity.
Step 3: Determine Territory Structure
Choose the territory structure that fits your sales model.
Geographic Territories
When to use: When geography matters — local relationships, travel requirements, or regional differences.
How to structure:
- Divide by regions, states, cities, or zip codes
- Consider travel time and costs
- Account for regional market differences
Pros: Simple, clear boundaries, easy to understand.
Cons: May ignore account potential, harder to balance.
Industry Territories
When to use: When industry expertise matters — complex solutions, industry-specific needs, or specialized knowledge.
How to structure:
- Divide by industry verticals — healthcare, financial services, technology, etc.
- Consider industry-specific requirements
- Account for industry growth and trends
Pros: Enables specialization, builds expertise.
Cons: May create imbalances, ignores geography.
Account-Based Territories
When to use: When account relationships matter — enterprise sales, strategic accounts, or relationship-driven selling.
How to structure:
- Assign specific named accounts to specific reps
- Consider account potential and rep capacity
- Balance by account value, not just count
Pros: Focuses on key accounts, enables deep relationships.
Cons: May create imbalances, requires careful assignment.
Hybrid Territories
When to use: When multiple factors matter — complex sales environments or diverse markets.
How to structure:
- Combine geography, industry, and account-based approaches
- Balance multiple factors
- Optimize for different needs
Pros: More flexible, can optimize for different needs.
Cons: More complex, harder to manage.
Step 4: Balance Territories
Balance territories for fairness and performance.
Balance by Account Potential
What to do:
- Calculate total potential (revenue opportunity) for each territory
- Ensure territories have similar potential
- Adjust as needed to balance
Why it matters: Equal potential ensures fairness and equal opportunity.
Balance by Account Count
What to do:
- Count accounts in each territory
- Ensure territories have similar account counts (when potential is similar)
- Adjust as needed
Why it matters: Similar account counts help balance workload.
Balance by Workload
What to do:
- Estimate workload — calls, meetings, travel, admin
- Ensure territories have similar workloads
- Consider rep capacity
Why it matters: Balanced workloads prevent burnout and optimize performance.
Balance by Rep Capacity
What to do:
- Assess rep capacity — how many accounts they can manage
- Consider rep experience, skills, and preferences
- Match territories to rep capacity
Why it matters: Territories that match rep capacity optimize performance.
Step 5: Assign Territories
Assign territories to reps strategically.
Assess Rep Capabilities
What to do:
- Evaluate rep experience and skills
- Consider rep strengths and preferences
- Assess rep capacity and workload
Why it matters: Right rep-territory fit improves performance and satisfaction.
Match Reps to Territories
What to do:
- Match rep skills to territory requirements
- Consider rep preferences and strengths
- Ensure rep capacity matches territory workload
Why it matters: Good matches improve performance and satisfaction.
Communicate Assignments
What to do:
- Clearly communicate territory assignments
- Explain territory boundaries and accounts
- Set expectations and goals
Why it matters: Clear communication prevents confusion and conflict.
Step 6: Document the Plan
Document your territory plan for clarity and reference.
Create Territory Maps
What to do:
- Create visual maps showing territory boundaries
- Include account assignments
- Show geographic or industry coverage
Why it matters: Visual maps make territories clear and easy to understand.
Document Account Assignments
What to do:
- List all accounts assigned to each territory
- Include account information — name, size, industry, potential
- Update CRM with assignments
Why it matters: Documented assignments prevent confusion and disputes.
Define Territory Rules
What to do:
- Define territory boundaries and rules
- Explain how conflicts are resolved
- Set expectations for territory management
Why it matters: Clear rules prevent conflicts and confusion.
Step 7: Review and Optimize
Territory planning is ongoing, not one-time.
Set Review Schedule
What to do:
- Schedule regular territory reviews — quarterly or annually
- Review as markets change, accounts grow, or reps change
- Adjust as needed
Why it matters: Regular reviews keep territories current and optimized.
Monitor Performance
What to do:
- Track territory performance — revenue, pipeline, activity
- Identify imbalances or issues
- Adjust as needed
Why it matters: Performance monitoring identifies optimization opportunities.
Optimize Continuously
What to do:
- Adjust territories based on performance data
- Rebalance as markets change
- Optimize for performance and fairness
Why it matters: Continuous optimization improves performance over time.
Common Mistakes to Avoid
Here are common mistakes to avoid:
Balancing by Count Alone
The mistake: Balancing territories by account count without considering potential.
The fix: Balance by account potential (revenue opportunity), not just count.
Ignoring Rep Capacity
The mistake: Assigning territories without considering rep capacity.
The fix: Consider rep capacity when planning territories.
Not Reviewing
The mistake: Creating territories once and never reviewing them.
The fix: Review territories regularly and adjust as needed.
Creating Overlap
The mistake: Having multiple reps cover the same accounts.
The fix: Minimize overlap and create clear boundaries.
The Bottom Line
Creating a sales territory plan requires:
- Define your market — Understand your total addressable market
- Analyze account potential — Evaluate account value and opportunity
- Determine territory structure — Choose geographic, industry, account-based, or hybrid
- Balance territories — For potential, count, workload, and capacity
- Assign territories — Match reps to territories strategically
- Document the plan — Create maps, document assignments, define rules
- Review and optimize — Monitor performance and adjust continuously
Why it matters: Good territory planning enables coverage, minimizes conflict, and optimizes performance.
Common mistakes: Balancing by count alone, ignoring capacity, not reviewing, creating overlap.
The sales teams that succeed aren't the ones that wing territory planning. They're the ones that follow a clear process — analyzing markets, balancing territories, and optimizing continuously.
That's how you create territory plans that enable performance — by following a structured process and optimizing continuously.