Territory Planning: A Complete Guide for Sales Teams

What Is Territory Planning?

Territory planning is the process of dividing your market into geographic, industry, or account-based territories and assigning them to sales reps. It's how you organize your sales team to maximize coverage, minimize conflict, and optimize performance.

Most sales teams do territory planning, but most do it poorly. They create territories based on geography alone, ignore account potential, and don't balance workloads. They end up with territories that are too large, too small, or too unbalanced.

Here's a complete guide to territory planning for sales teams — how to do it right, what to avoid, and how to optimize for performance.

Why Territory Planning Matters

Territory planning matters because it determines how your sales team operates. Good territory planning enables coverage, minimizes conflict, and optimizes performance. Bad territory planning creates gaps, conflicts, and inefficiency.

Coverage: Good territory planning ensures every account is covered. Every prospect has a rep assigned. Every opportunity has an owner. There are no gaps.

Conflict reduction: Good territory planning minimizes conflict. Clear boundaries prevent disputes. Reps know their accounts. There's no confusion about ownership.

Performance optimization: Good territory planning optimizes performance. Territories are balanced. Reps have equal opportunity. Workloads are manageable.

Why it matters: Territory planning is foundational. It affects everything else — pipeline generation, deal velocity, rep satisfaction, and team performance.

Types of Sales Territories

There are several ways to structure sales territories:

Geographic Territories

What it is: Territories based on geography — regions, states, cities, or zip codes.

When to use: When geography matters — local relationships, travel requirements, or regional differences.

Pros: Simple to understand, clear boundaries, easy to assign.

Cons: Ignores account potential, doesn't balance workload, may create conflicts.

Industry Territories

What it is: Territories based on industry verticals — healthcare, financial services, technology, etc.

When to use: When industry expertise matters — complex solutions, industry-specific needs, or specialized knowledge.

Pros: Enables specialization, builds expertise, improves messaging.

Cons: May create imbalances, ignores geography, harder to balance.

Account-Based Territories

What it is: Territories based on named accounts — specific companies assigned to specific reps.

When to use: When account relationships matter — enterprise sales, strategic accounts, or relationship-driven selling.

Pros: Focuses on key accounts, enables deep relationships, optimizes for account potential.

Cons: May create imbalances, requires careful assignment, harder to scale.

Hybrid Territories

What it is: Combination of geography, industry, and account-based approaches.

When to use: When multiple factors matter — complex sales environments or diverse markets.

Pros: Balances multiple factors, more flexible, can optimize for different needs.

Cons: More complex, harder to manage, requires more planning.

How to Create Sales Territories

Here's how to create sales territories:

Step 1: Define Your Market

Identify your total addressable market:

• Total accounts in your market
• Geographic distribution
• Industry distribution
• Account potential

Why it matters: You can't plan territories without understanding your market. Define your market first.

Step 2: Analyze Account Potential

Evaluate account potential:

• Account size (revenue, employees)
• Industry vertical
• Geographic location
• Current relationship status
• Product fit

Why it matters: Account potential determines territory value. Balance territories based on potential, not just account count.

Step 3: Determine Territory Structure

Choose your territory structure:

• Geographic, industry, account-based, or hybrid
• Based on your sales model and market

Why it matters: Territory structure affects everything. Choose the structure that fits your sales model.

Step 4: Balance Territories

Balance territories for:

• Account potential (revenue opportunity)
• Account count (number of accounts)
• Workload (calls, meetings, travel)
• Rep capacity (time and skills)

Why it matters: Balanced territories ensure fairness and optimize performance.

Step 5: Assign Territories

Assign territories to reps based on:

• Rep experience and skills
• Rep capacity and workload
• Rep preferences and strengths
• Territory requirements

Why it matters: Right rep-territory fit improves performance and satisfaction.

Territory Planning Best Practices

Here are best practices for territory planning:

Balance for Potential, Not Just Count

The problem: Many teams balance territories by account count alone. This creates imbalances — one rep might have 100 small accounts while another has 50 large accounts.

The solution: Balance territories by account potential (revenue opportunity), not just account count. This ensures equal opportunity.

Why it matters: Equal opportunity ensures fairness and optimizes performance.

Consider Rep Capacity

The problem: Many teams ignore rep capacity when planning territories. They assign territories without considering how much work reps can handle.

The solution: Consider rep capacity — how many accounts they can manage, how many calls they can make, how much travel they can do.

Why it matters: Territories that exceed rep capacity lead to burnout and poor performance.

Review Territories Regularly

The problem: Many teams create territories once and never review them. Territories become outdated as markets change.

The solution: Review territories regularly — quarterly or annually. Adjust as markets change, accounts grow, or reps change.

Why it matters: Regular reviews keep territories current and optimized.

Use Data to Inform Decisions

The problem: Many teams plan territories based on intuition alone. They don't use data to inform decisions.

The solution: Use data — account potential, rep performance, market trends — to inform territory planning decisions.

Why it matters: Data-driven planning creates better territories and improves performance.

Minimize Overlap

The problem: Many teams have overlapping territories. Multiple reps cover the same accounts, creating conflict and confusion.

The solution: Minimize overlap. Create clear boundaries. Assign accounts to specific reps. Avoid shared ownership.

Why it matters: Minimizing overlap reduces conflict and improves clarity.

Common Territory Planning Mistakes

Here are common mistakes to avoid:

Balancing by Account Count Alone

The mistake: Balancing territories by account count without considering account potential.

Why it's wrong: Creates imbalances — reps with many small accounts vs reps with few large accounts.

The fix: Balance by account potential (revenue opportunity), not just account count.

Ignoring Rep Capacity

The mistake: Assigning territories without considering rep capacity.

Why it's wrong: Territories that exceed capacity lead to burnout and poor performance.

The fix: Consider rep capacity when planning territories.

Not Reviewing Territories

The mistake: Creating territories once and never reviewing them.

Why it's wrong: Territories become outdated as markets change.

The fix: Review territories regularly and adjust as needed.

Creating Overlapping Territories

The mistake: Having multiple reps cover the same accounts.

Why it's wrong: Creates conflict and confusion.

The fix: Minimize overlap and create clear boundaries.

Ignoring Data

The mistake: Planning territories based on intuition alone.

Why it's wrong: Intuition-based planning creates suboptimal territories.

The fix: Use data to inform territory planning decisions.

Territory Planning Tools

Here are tools that can help with territory planning:

CRM Systems

Salesforce, HubSpot, etc.: Most CRM systems have territory management features. They can help you assign accounts, track performance, and manage territories.

Pros: Integrated with your CRM, familiar to reps, tracks performance.

Cons: May be limited in functionality, requires manual setup.

Territory Planning Software

Specialized tools: Tools designed specifically for territory planning can help you balance territories, analyze potential, and optimize assignments.

Pros: Purpose-built for territory planning, more features, better optimization.

Cons: Additional cost, may require integration, learning curve.

Spreadsheets

Excel, Google Sheets: Simple spreadsheets can work for basic territory planning, especially for smaller teams.

Pros: Simple, flexible, no additional cost.

Cons: Manual work, limited functionality, doesn't scale well.

The Bottom Line

Territory planning is foundational for sales teams:

• Define your market — Understand your total addressable market
• Analyze account potential — Evaluate account value and opportunity
• Choose territory structure — Geographic, industry, account-based, or hybrid
• Balance territories — For potential, count, workload, and capacity
• Assign territories — Match reps to territories based on fit
• Review regularly — Keep territories current and optimized

Best practices: Balance for potential, consider rep capacity, review regularly, use data, minimize overlap.

Common mistakes: Balancing by count alone, ignoring capacity, not reviewing, creating overlap, ignoring data.

The sales teams that succeed aren't the ones with the most reps. They're the ones with the best territory planning — territories that are balanced, optimized, and aligned with their sales model.

That's how you create territories that enable performance — by planning thoughtfully, balancing carefully, and optimizing continuously.