How you, as a territory manager, create a strategic sales territory is far from a one-size-fits-all strategy. Your sales territory should be a physical or spatial representation of a customer base that matches the expertise of your sales team. It requires a deep insight into both your customer and sales team.

It requires getting out of the weeds and getting comfortable with trends, sales enablement tool development, and generally supporting your team as they relate to their territory. That means being an advocate to those who you manage while staying clued into any indication that customers are not being served. It’s a delicate balance that requires a lot of active listening.

Obviously, your ultimate goal is to encourage healthy growth for your company’s sales. And the good news is many of your responsibilities can be made easier with the right definitions and sales strategies in place. So let’s get into it.


How do you define your sales territories?

A sales territory divides up your customer base amongst your sales team. Geography is a common way to divide up sales territory, but how you define your territory depends heavily on your business. It may not make sense for you to divide up your regions geographically. Some other ways to assign territories include:

  • Account types
  • Audience segments
  • Referral source
  • Products purchased
  • Industry

For example, if your salespeople spend almost no time in physical meetings, but more through phone and email, you probably don't need to work geographically. An exception to this will be if you need to work in different time zones that require your salespeople to communicate at different times.

The work required to create the right sales territory is well worth the effort. In one survey of 100 organizations, those with an effective territory design had a 14% higher sales objective achievement on average. The same study found that ineffective companies had 15% lower success than the average.

If you already have a sales territory in place and are still not hitting the goals you would like, it’s worth taking a look into redesigning. Research by Harvard Business Review found that businesses showed a sales increase of up to 7% by redesigning their territories.

Don't be afraid to take a step back and reconsider your territory if it does not measure up to your expectations. It probably means you’re leaving money on the table if you choose to ignore them.


Are your territories well-balanced?

Balance is key to creating the right sales territories, and it is delicate. Stray too far one way or the other, and it could spell doom for your sales team.

Sales territories run into most of their troubles when they are either over- or underserved.

An overserved territory dedicates more sales reps to an area than there are real prospects. Your salespeople will have nothing to do and likely won't be able to meet their quotas. In addition, other territories will probably suffer because of the increased (yet needless) cost to maintain the overserved territories.

Many businesses fall into this trap. According to one recent study, 72% of agencies admitted they commit a disproportionate amount of resources to high-profile clients. This can be a costly mistake for your company, though. HubSpot found that nearly half of the companies that they surveyed reported a loss of at least 11% through client over-servicing.

An underserved territory, on the other hand, will also create problems for your company. You will lose out on potential sales when your sales can’t properly take on their leads in an area. Sales reps will be too tempted to take on too much, which will leave your customers dissatisfied.

A well-balanced territory, though, means that your sales reps can spend more time making sales and less time feeling demoralized by the lack of fairness. They will be motivated to compete with each other instead of comparing their situations. The right sales territory strategy will help you achieve this ideal.


What does an effective sales territory strategy look like?

While you may know that a balanced sales territory means more for you and your business, you may be at a loss as to how to create the right sales territory.

Although it might seem easy to recreate another business' sales territory, it’s important to remember that what works best for one company might not work for you. Instead, you need to take the time to understand your customer and the sales process.

Photo by Sylwia Bartyzel on Unsplash

Here are five steps that can help you create the most effective sales territory strategy for your company:


Step 1: Get back to basics with customer data.

To understand how to divide up your sales territory, take some time to get to know your ideal customer and who you want to reach.

Start by looking at the customers, prospects, and leads that you already have. Divide your customers into three groups:

  • Your top-tier customers, who require the least amount of effort to get a sale.
  • Your second-tier customers, who need some work but are worth the effort.
  • Your third-tier customers, who might need more than they are worth.

Laying out these customers into groups, you can make sure that you are targeting more customers like the first-tier customers. Analyze them to find common characteristics between them.

For example, do they typically convert online or in-person? This can let you know exactly how you want your sales reps to be spending their time. How long do they usually take to convert? Understanding your sales cycle will also help direct your sales tactics.

You will want to note more than where they are located to get the right territories. Some additional questions to consider:

  • What are their pain points, and why are they drawn to your product or service?
  • Which of your products and services are doing best?
  • What events lead to a customer purchasing from you?
  • Conversely, what events seem to discourage them from purchasing?
  • What is your conversion rate?

The goal is to find trends in the market and within your customer base. Once you identify underlying themes, you can start to create a better sales territory that can serve their needs.


Step 2: Analyze your sales team.

Once you have a good understanding of your customer, it's time to take an in-depth look at your sales team. This allows you to make sure the skills of your reps are truly matching the needs of your territory, as well as guiding your decisions on education, resources, and future hires.

To do this, consider a SWOT analysis to help you create a strong territory plan. Here’s what that acronym stands for and what it means:

S = Strengths

Assess what areas your sales team does well. For example, does your team exceed in in-person demos, or phone and email? How much internal knowledge do they have? Do you have experienced reps who know the product well or create content that provides valuable information to your prospective buyers, etc.? These are all strengths you need to consider.

You also want to take a broader look into what your company has to offer. What advantage does your team have over your competitors? Why are clients turning to you rather than them? How do each of your reps contribute to that?

Also, take some time to consider your assets. Any capital or intellectual property will help you get ahead. Comparing this kind of wealth to the skills of your team members may reveal some interesting new strategies or pitch ideas.

W = Weaknesses

This step can be a bit painful, but it’s essential to know your weaknesses to help build up your company and identify means of growth. What does your business lack? Where does your competition out-perform you, and why?

Also, take an honest look at your sales process. Is there a particular stage that customers seem to lose interest? Are there any bottlenecks or leaks in your pipeline you need to address?

Where are your resources limited? You need to create a territory that minimizes your weaknesses, but you have to understand them first.

A weak salesperson can be damaging to your whole team and company. Avoid the temptation to tailor their territory around them. The constant change in a territory as you try to make it fit the wrong salesperson could upset customers, and potential customers as their point of contact keeps changing.

O = Opportunities

Understanding the opportunities helps you plan for the future while defining territories. Are there any untapped or under-serviced markets? Are there areas with fewer competitors or growing demand?

Is there an opportunity for you to get positive press or build goodwill amongst your target audience? These can all encourage growth in your company.

T = Threats

On the other hand, you also need to look at potential threats to your company. For example, is there somewhere where competition is fierce? Is there a new industry or regulatory standards that may require more time and money from you?

How about negative media or a lack of goodwill? These are all factors that could be damaging to your territory.


Step 3: Set goals for your team and establish quotas.

Any goals set by a sales territory manager should be clear and easy to track. Or, in a word, SMART:

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-based

Create these goals for both your team and individual reps. These goals will give you an idea of how well things are going and if something needs to be changed. A well-set goal will also motivate your sales reps and enhance productivity.

Break down your overall goal into specifics. This is where your first step is most useful. How many opportunities will your team need to achieve the goal? Which regions are best to focus on? Which products will be the most profitable? Drill down to identify specific, action oriented tasks that build up toward larger and larger goals.

Go over your data from previous periods to see what metric-driven goals are realistic for your sales team and assign quotas to support these goals. Your CRM will allow you to do that.


Step 4: Form strategies to meet your goals.

This is where all of the information you acquired becomes practical. It’s in this step you put it all together to match your sales rep to the right territory, or figure out the sales enablement they need to be great.

As a territory manager or leader, your job is to enable your sales team to succeed. Your strategies ensure that everyone is on the same page and have the knowledge and tools to meet their quotas.

Assign your sales reps based on your assessment of their skills and match them according to the territory where it would work best. If your sales rep already has established relationships in a territory, for example, it would be wise to assign them there.

SWOT will allow you to assess where your team needs your help. For example, what does your organization need? Perhaps they need more education in the sales process or better content to give potential clients.

Take a look at your current successes. How can you leverage them? Perhaps you can ask for referrals, or use them as a case study. How will you generate new leads to meet your goals?

Are there external resources you can use to reach your goal? Which sales reps have the information and experience that you need to reach your goal?

These questions can shape your specific strategy to meet the goals you set.


Step 5: Review and track results

Territory management is never truly done. It requires a continual assessment to measure progress. Regular assessments will help you gauge how effective your territory planning is and if it is working for your sales team.

In your review of the territory, consider:

  • Is there a significant difference in sales between your territories?
  • Is there one rep that can barely keep up with leads, while another struggles to meet quota?
  • Is there an underserved territory?
  • What are the costs of each territory?

As your company changes, grows, and offers different products, it might require a re-assessment of the sales territories. Continue to track results to make sure that you are getting everything you can out of your territories.

Luckily, we wrote another article on territory management to stay on top of your territories after you have defined them.


Create More Sales with Better Sales Territories

Sales territory managers that truly understand their customers, sales process, and sales team can create well-balanced and productive sales territories. With the above strategies in mind, you can do just that while also achieving a transparent and fair work culture for all whom you manage. But don’t take our word for it — try it!