Sales territory design can help or hurt how well a sales organization does. When you do it well, it can turn chaos into order and help businesses bring in 7% more revenue while also keeping more of their sales reps from leaving. These kinds of numbers usually get people’s attention pretty fast. When you look at it, sales territory design is mostly about dividing up markets into smaller pieces that are easier to manage, where each salesperson can work with the right customers and go after the right opportunities.
The main goals are pretty straightforward – they make a real difference. You want to use your resources in the best way possible and build better relationships with customers while bringing in steady revenue growth. Most sales leaders run into the same basic problem when they try to make sure each rep has the right mix of accounts to work with without any gaps or overlaps.
When territories aren’t set up well, it creates real problems that can hurt your profits. Your reps end up wasting time going after the wrong prospects while your best accounts don’t get the attention they need. Your relationships with customers start to suffer when you have multiple salespeople calling on the same buyer. Your best performers get exhausted from having too much work, while other reps coast along with lighter territories.
Let me walk through how this works and explain why the businesses that do this right always perform better than their competition.
The Main Steps for Territory Design
The first step in any strong territory design process is collecting and reviewing the data. Most teams rush right past this part. Look at different elements like geography, industry types, company sizes, and revenue opportunities from the existing customer base. Also, look at the team’s capacity and past performance to understand what actually works.
A software company might put weight on company size and technology stack when they analyze their data. Meanwhile, a medical device manufacturer probably cares mainly about hospital types and regional health networks. The goal is to find patterns that matter for the particular business.
These patterns drive every successful territory design. Sales teams need specific directions about which accounts they should go after first. Without these patterns, reps waste time chasing prospects that never end up buying. Territory assignments become random instead of strategic.
Once the data is ready, it’s time to break up and map out territories. Most organizations use some combination of geographic boundaries and customer profiles when they create balanced regions. The goal is to set up fair opportunities where each rep has a decent chance to succeed. Perfect balance never happens anyway.
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Territory mapping tools help people see these boundaries and catch issues before they become real problems. Someone might find that one territory has all the high-value accounts while another gets stuck with only small prospects. These imbalances need fixing early on.
When territories are out of balance, it hurts team morale. Top performers get frustrated when they can’t reach their goals, even though they’re working hard. The reps with weaker territories start to resent their colleagues. Revenue takes a hit when strong salespeople start looking for new jobs.
The whole process needs consistent review and adjustment as markets change. Markets change faster than most people think they will. What worked last year might not work now, especially after launching new products or entering new markets.
Ways to Split Up Sales Accounts
Businesses use various ways to divide up their sales territories, and each one performs better or worse depending on what kind of business someone runs. The geographic way is probably the most common way to go about it, and there’s a solid reason why most sales managers start there. It’s pretty straightforward and manageable day to day. Say a manager draws some lines on a map and then tells each rep where they can and can’t sell. This works especially well for businesses like pharmaceutical companies that have to follow all sorts of strict laws that change from state to state.
The industry-based way takes it in a completely different direction. Instead of dividing territories by location, many software firms like to use this strategy because when a rep understands manufacturing, they can speak that industry’s language much better than someone who has to jump between different industries all day long. When reps have this type of expertise, it gives a company a real edge over the competition. The downside here is that reps might end up having to travel all over the place just to visit their clients.
Named accounts are another popular strategy where managers give particular businesses to individual reps to manage. This works best when there are those high-value clients who need someone to pay attention to them all the time. The rep then becomes the expert on that particular account and can build much deeper relationships as time goes on.
These dedicated relationships change the way business gets done between companies and their clients. When a rep knows who makes the decisions at each client company, deals usually move through the pipeline much faster. Plus, the client feels valued because they always get to talk to the same person who already understands what problems they’re dealing with.
The account value strategy tries to balance everything out by looking at how much money each territory could actually bring in. A manager might give one rep a smaller number of accounts to manage if those accounts have massive value, while another rep gets more of the smaller accounts to even it out. Making this balance right takes careful planning, and managers need to keep adjusting as they go. The trick here is that companies want to prevent gaps where nobody covers particular areas, and they also want to prevent overlaps where multiple reps try to compete for the same customers.
When territory gaps exist, companies end up with frustrated prospects who can’t find anyone to help them buy what they need. At the same time, when overlaps happen, sales resources get wasted, and clients become confused when they keep receiving calls from multiple reps. Either of these scenarios can seriously hurt revenue and damage a company’s reputation out there in the market.
How to Match Quotas with Territory
When territories are out of balance, the sales team is going to feel it immediately. Some reps end up stuck with quotas they can’t meet, while others have it pretty easy with targets they can hit without breaking a sweat. This kind of situation creates a lot of frustration, and frankly, it’s one of the main reasons why talented sales reps end up walking out the door.
The connection between how territories get designed and how reps get paid actually runs much deeper than most people think. Say a rep has twice as much market opportunity but gets the same quota as everyone else – they’re basically getting paid less for each deal they close. You can see how that would cause serious problems on a team.
When territories are unequal, the problems spread throughout the entire sales organization. The best performers are going to start questioning why they should stay when they see their colleagues making the same money for doing half the work. At the same time, the reps who are stuck in overcrowded territories are already looking for new jobs.
These days, businesses are using data to fix these imbalances before they turn into bigger problems. They’ll look at where customers are located and how much each rep can realistically manage to make sure everyone gets the right amount of work and opportunity. Each territory needs a mix of opportunities without giving anyone more than they can manage.
Organizations that know what they’re doing have moved away from the old way, where everyone gets the same quota. Instead, they’re setting targets based on what’s actually possible in each market and what’s happened in the past. This way, quotas match what can actually be done in each territory instead of just being some random number that headquarters came up with.
The hard part is striking the right balance between pushing the team and keeping things reachable. Push too hard and people will burn out. Make it too easy, and growth will slow down or stop. Most managers don’t understand just how hard it is to find this balance.
The encouraging news is that technology now makes it much easier to keep track of these changes as they happen. Territory sales management, CRM tools, and mapping software help managers see problems coming and make adjustments before everything falls apart.
How Software Changes Territory Management
Sales teams used to use spreadsheets and what they thought was right to split up territories. Well, those days are pretty much over, and the change happened faster than most people thought it would. These days, software shows where customers are on a map and measures how much work each sales rep actually has.
The real difference comes when territories can be changed fast instead of waiting months to make any adjustments. Moving fast matters more than making everything perfect. Say a top salesperson in the northeast suddenly quits, or a new competitor starts selling in your top area. When teams have the right tools, everything can be fixed in a few hours instead of taking weeks to sort it out.
Sales teams stay happy when everyone has a fair amount of work they can actually get done. When deals are lost because territories aren’t set up right, companies can lose hundreds of thousands of dollars while competitors take over markets that should be theirs.
AI tools now do most of the heavy lifting without anyone worrying about it. All the numbers get laid out in plain view, and these systems look at sales data and recommend territory changes based on what’s actually happening. Different ideas can even be tested to see what would happen if certain customers were moved around or another salesperson was brought on.
What’s different is that everything can be adjusted now. In the past, territory maps stayed the same for years, whether they made sense or not. Now changes can be made when markets change or when customers start buying differently than they used to. Say business buyers changed what they wanted during the pandemic. Teams that could change their territories fast were able to keep up while other businesses were stuck with old systems.
Doing territories by hand still works fine for smaller teams that don’t need anything fancy. But once a team gets to a certain size and situations get more complicated, buying the right software starts to make sense pretty fast. Territory software is necessary when making changes by hand starts taking weeks instead of days. A company stops growing when territories stay broken while someone’s still trying to make spreadsheet formulas work.
Design Better Incentives for Your Team
The connection between well-designed territories and sales success is pretty obvious when people see how balanced workloads, thoughtful account distribution, and solid quota planning all work together to create a strong foundation for growth.
The world of territory design continues to change fast as buyer behaviors change and sales models adapt to new market conditions. AI and automation are now changing how we look at market patterns, understand customer behaviors, and track team performance, replacing the old manual processes that most businesses still use. These new tools give sales teams predictive analytics and real-time adjustments that help leaders make better decisions about where to put their resources and how to assign territories. The numbers tell a better story than gut feelings ever could. Businesses that adopt these advances are setting themselves up to stay competitive in the long run.
The best salespeople will burn out from uneven workloads, while weaker performers can hide in comfortable territories. The effects show up in turnover rates and how teams feel about their work.
If someone takes a step back and looks at how operations work now, they might find places where improvements could have the biggest effect on sales performance. The most successful businesses understand that territory design is a continuous process that needs consistent attention and updates. When companies make steady adjustments, they can stop small problems from turning into big ones. Along those lines, solid territory management works best when it’s paired with strong incentive programs that get sales teams working at their highest level.
At Level 6, we specialize in helping businesses grow through a range of incentive programs that work well with territory strategies. If a company wants to improve its sales team’s performance or improve employee morale and happiness, we have the experience to help.
Reach out to us now for a free demo to see how we help high-performing businesses get the most from their ROI and sales performance!
Claudine is the Chief Relationship Officer at Level 6. She holds a master’s degree in industrial/organizational psychology. Her experience includes working as a certified conflict mediator for the United States Postal Service, a human performance analyst for Accenture, an Academic Dean, and a College Director. She is currently an adjunct Professor of Psychology at Southern New Hampshire University. With over 20 years of experience, she joined Level 6 to guide clients seeking effective ways to change behavior and, ultimately, their bottom line.
