What Is Territory Planning in Sales?
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 sales organizations organize their teams to maximize coverage, minimize conflict, and optimize performance.
Most sales organizations do territory planning, but many don't understand what it really is or why it matters. They create territories based on geography alone, ignore account potential, and don't balance workloads. They end up with territories that don't work.
Here's what territory planning is, why it matters, and how it works for sales organizations.
The Definition
Territory planning is the strategic process of:
Dividing your market: Breaking your total addressable market into manageable segments — geographic regions, industry verticals, or named accounts.
Assigning to reps: Giving each sales rep responsibility for a specific territory — a set of accounts, a geographic area, or an industry vertical.
Optimizing for performance: Balancing territories for potential, workload, and capacity to maximize coverage and performance.
Why it matters: Territory planning determines how your sales team operates. It affects coverage, conflict, and performance.
Why Territory Planning Matters
Territory planning matters because it affects everything — coverage, conflict, performance, and satisfaction.
Coverage
What it means: Territory planning ensures every account is covered. Every prospect has a rep assigned. Every opportunity has an owner.
Why it matters: Without territory planning, accounts fall through the cracks. Opportunities get missed. Revenue is lost.
How it works: By dividing your market into territories and assigning them to reps, you ensure comprehensive coverage.
Conflict Reduction
What it means: Territory planning minimizes conflict. Clear boundaries prevent disputes. Reps know their accounts. There's no confusion about ownership.
Why it matters: Without territory planning, reps compete for the same accounts. Customers get confused. Deals get lost.
How it works: By creating clear territory boundaries and assignments, you prevent conflicts and confusion.
Performance Optimization
What it means: Territory planning optimizes performance. Territories are balanced. Reps have equal opportunity. Workloads are manageable.
Why it matters: Without territory planning, territories are unbalanced. Some reps are overwhelmed. Others are underutilized. Performance suffers.
How it works: By balancing territories for potential, workload, and capacity, you optimize performance.
Rep Satisfaction
What it means: Territory planning improves satisfaction. Reps feel treated fairly. They're motivated to perform.
Why it matters: Without territory planning, reps feel unfairly treated. They're demotivated. Turnover increases.
How it works: By creating balanced, fair territories, you improve satisfaction and retention.
Types of Territory Planning
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.
Example: Rep A covers the West Coast. Rep B covers the East Coast. Rep C covers the Midwest.
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.
Example: Rep A covers healthcare. Rep B covers financial services. Rep C covers technology.
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.
Example: Rep A covers Account X, Y, Z. Rep B covers Account A, B, C. Rep C covers Account D, E, F.
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.
Example: Rep A covers West Coast healthcare accounts. Rep B covers East Coast financial services accounts.
Pros: More flexible, can optimize for different needs.
Cons: More complex, harder to manage, requires more planning.
How Territory Planning Works
Here's how territory planning works:
Step 1: Define Your Market
What to do: Identify your total addressable market — all potential accounts in your market.
Why it matters: You can't plan territories without understanding your market.
How it works: List all potential accounts. Analyze market distribution. Understand market potential.
Step 2: Analyze Account Potential
What to do: Evaluate account potential — size, industry, revenue opportunity.
Why it matters: Account potential determines territory value.
How it works: Assess account size, industry, and potential. Segment accounts by potential.
Step 3: Determine Territory Structure
What to do: Choose territory structure — geographic, industry, account-based, or hybrid.
Why it matters: Territory structure affects everything.
How it works: Choose structure based on your sales model. Define territory boundaries.
Step 4: Balance Territories
What to do: Balance territories for potential, count, workload, and capacity.
Why it matters: Balanced territories ensure fairness and optimize performance.
How it works: Calculate potential. Count accounts. Estimate workload. Assess capacity. Balance accordingly.
Step 5: Assign Territories
What to do: Assign territories to reps strategically.
Why it matters: Strategic assignments improve performance and satisfaction.
How it works: Match reps to territories based on skills, experience, and capacity.
Common Territory Planning Challenges
Here are common challenges:
Balancing Territories
The challenge: Balancing territories for potential, count, workload, and capacity.
Why it's hard: Multiple factors to consider. Trade-offs to make.
The solution: Use data. Calculate potential. Estimate workload. Assess capacity. Balance systematically.
Managing Overlap
The challenge: Preventing overlapping territories and conflicts.
Why it's hard: Boundaries aren't always clear. Accounts may fit multiple territories.
The solution: Create clear boundaries. Assign accounts to specific reps. Minimize overlap.
Keeping Territories Current
The challenge: Keeping territories current as markets change.
Why it's hard: Markets change. Accounts grow. Reps change.
The solution: Review territories regularly. Adjust as markets change. Optimize continuously.
The Bottom Line
Territory planning is:
- Dividing your market — Into geographic, industry, or account-based territories
- Assigning to reps — Giving each rep responsibility for a specific territory
- Optimizing for performance — Balancing territories for potential, workload, and capacity
Why it matters: Territory planning affects coverage, conflict, performance, and satisfaction.
Types: Geographic, industry, account-based, or hybrid territories.
How it works: Define market, analyze potential, determine structure, balance territories, assign to reps.
Challenges: Balancing territories, managing overlap, keeping territories current.
The sales organizations that succeed aren't the ones that skip territory planning. They're the ones that plan territories thoughtfully — balancing for potential, minimizing conflict, and optimizing for performance.
That's what territory planning is — the strategic process of organizing your sales team to maximize coverage, minimize conflict, and optimize performance.