Sales territory planning: How to optimize and earn more revenue

You don’t want to leave revenue on the table. But that’s exactly what happens with poor sales territory planning.

Imagine your sales team’s completely out of whack” Some are drowning in work, while others twiddle their thumbs. Your best reps are bogged down with trivial deals. Everyone’s stepping on everybody else’s toes. 

You’ll be much more profitable if your systems are dialed in and well-planned.

This article explores how to get the most out of sales territory planning. We’ll explain why it matters, how to overcome challenges, the steps you should take, and the best practices to bring in more revenue.

What is sales territory planning?

Sales territory planning is the strategic process of dividing your market into smaller segments that can be managed more effectively and efficiently than one sprawling territory.

Some factors to consider in your sales territory design include:

Geography
Industry
Market segments
Buyer persona
Current customers
Deal size
Market opportunity
Company size
Behavior patterns

The goal is to align sales reps with the most suitable territories. By balancing their workloads, and matching the right reps to the right types of buyers, you can boost performance and drive more revenue.

Of course, the most straightforward way businesses divide territories is by location. They often have one rep on the West Coast, one in the Midwest, etc. 

But you need more than lines on a map to engage effectively in enterprise sales. Today, businesses can tap into extensive data stores that allow for more strategic thinking. For example, you can harvest insights from Customer Relationship Management (CRM) systems, customer interaction analytics, and predictive sales models. 

Leverage that data and you’ll better understand past performance as well as what buyers prefer and how they make purchasing decisions. 

You can then separate territories by deal sizes or buying cycles. Advanced sales territory plans let you prioritize high-value buyers and assign reps based on where they’ll likely succeed.

Think about a SaaS company that serves both enterprise and small business clients. Rather than geographic territories, enterprise-level clients are given to reps who have experience closing high-value deals. Those who don’t focus on closing deals with smaller businesses.

On the mid-market and enterprise side, we have a similar tiered territory planning, with tiered T1 to T3 territories. The corporate team operates with a combination of named accounts and territories. This approach ensures a balance between coverage and targeted account management.

Michelle Benfer, VP of Sales, HubSpot
Reveal Podcast:5 Tips for remote sales management

Why sales territory planning matters

Sales territory planning is all about strategy. It’s not a haphazard system with unpredictable results. It’s about making decisions that drive team performance and benefit the bottom line. Here’s how:

Pipeline efficiency

A solid territory plan keeps deals moving through the sales pipeline. When reps know their accounts and know them well, they focus on high-value opportunities. They don’t waste time or get bogged down in unnecessary delays. 

That reduces downtime between interactions with buyers. It helps your team’s sales velocity by enabling reps to close deals faster. It eliminates confusion over who’s responsible for what and ensures that sales efforts aren’t redundant. 

Quota achievement

Balanced territories are essential for better individual and team performance. With uneven workloads, some reps struggle to keep up, and others fall short of their potential. 

Careful territory planning lets you segment business opportunities to match each rep’s strengths.

When you do, reps stay motivated and win more often. Their sales territory is balanced and personalized to them, and their results improve. 

Rolling out and managing territories is a hot topic for any sales organization. This is my third year at HubSpot and the third iteration of territories we’ve rolled out. So far, this year’s model seems to be going really well. I oversee North America small business, covering Canada and the US, with around 120 reps. There are a lot of micro territories.

Michelle Benfer, VP of Sales, HubSpot
Reveal Podcast:5 Tips for remote sales management

When your sales team is on the ball, they can meet — and even exceed — quota. That boosts retention, performance, and morale. 

Sales forecast accuracy

If territories aren’t clearly defined, forecasting sales will be complex. Clear and sensible sales zones allow for more predictability and visibility into each pipeline stage. 

When reps can focus on their assigned territories, sales leaders can track what’s happening and identify bottlenecks. It’s easier to predict outcomes and adjust strategies in real time.

No more end-of-quarter surprises and scrambles!

For example, a sales manager might notice several enterprise deals stuck in negotiation. Thanks to the clarity of their territories, they know whether to intervene early and offer additional resources that push the deals forward. As a result, the sales team avoids a last-minute rush to hit their target. The forecast remains accurate throughout the quarter.

5 steps to build a high-performance sales territory plan

To plan your sales territories, you need to craft a strategy. These five steps can propel you to a powerful start that fosters focus, efficiency, and success: 

1. Map out the market potential 

Start by identifying where your best opportunities are. Assess each region, potential customer base, or industry segment.

There are many ways to discover the best opportunities, including:

CRM data
Historical performance
Market trends 

Analyze buyer demand, competition, and which places have the highest revenue potential. Focus on zones with the biggest payoff to maximize your team’s impact.

When looking at your competition, try to find underperforming areas and missed opportunities. 

You can also look at your churn rates as you move forward to see where your shortcomings are. 

2. Segment territories based on behavior

Let’s dive deeper into how to move beyond simple geography. Think about how your buyers behave, how often they purchase, and in what amount.

For example, a software company might divide its sales operations into subscriptions and enterprise clients. Monthly subscribers are smaller but more frequent buyers, requiring more engagement and lead-generation activities. (It’s a numbers game.)

But, larger enterprise clients need more personal attention and nurturing. (It’s a relationship game.) These transactions are less frequent but have a more significant impact. 

Splitting your team into different markets allows each group to do what they do best.

3. Align reps with their territories

Now you’ve seen where the opportunities are and created appropriate territories. It’s time to match sellers to their zones. 

Here are a few questions to ask before you make any decisions:

What are each rep’s strengths?
What relevant experience or expertise do they have?
Who works well together (…and who doesn’t)?
Who excels in fast-paced environments?

Think of the ‘hunter vs. farmer’ salesperson dynamic. Hunters are great at getting out there and closing deals. Farmers build relationships and can play the long game. 

Consider sales styles and how they line up with buyers’ expectations. Use performance data to crack the code on where individuals thrive. 

You can also rotate reps through different territories to keep things fresh over time. 

4. Set performance goals and create feedback loops

Next, establish clear and realistic goals for each territory. Look at your market and any historical data to set initial quotas. These should be challenging but achievable.

Consider a mix of sales goals based on both outcomes and sales activity. For example, you could set standards for closed deals and the number of demos delivered. 

Set smaller weekly or monthly targets to engage reps and bring in small wins. Make sure enablement deploys training to help your staff reach their targets.

None of your performance goals should be fixed. You should always create feedback loops to see how sales roll out, and adjust as needed. 

Lastly, reward your team on an ongoing basis. Don’t just wait until the end of the quarter or year.

Move the Middle: Turn your B-players into A-players – Gong

5. Continuously refine based on data

Like anything else in business, sales territory planning is never a one-and-done task. Once things are up and running, you need to monitor them closely. 

Luckily, you can mine a slew of performance data if you have the right platform — one that’s backed by AI. Identify what’s working and where you’re off-course. Feedback is crucial, so create a culture of constant reviews from buyers and sales reps. 

Create sessions where reps can share challenges and ideas within their territories. 

Ask yourself the following questions:

Are there seasonal changes or patterns?
Which areas need more or fewer resources?
What trends are emerging?
Which accounts are at risk of churn and need attention?

Best practices for optimizing territory plans

When you’re ready to improve your sales territory management, incorporate these best practices, as together, they form a proactive approach to driving growth: 

Master clear communication with your team

Effective communication is at the heart of sales territory planning. Changes to territories can easily cause confusion and frustration if you don’t handle them properly. 

Don’t simply communicate the changes; also clarify why they’re being made. If there’s a broader company objective at play, inform your reps. 

Frame these discussions around how the new structure affects the company and the reps. That builds buy-in. Make sure your reps know whether the changes affect commission structures, streamline workloads, or create long-term stability. 

Also, don’t spring changes on your reps. Give them ample time to make transitions and adjustments. Ensure smooth handoffs and maintain client relationships through any changes. 

Adapt territories to external factors

Today’s markets are dynamic, and territories should reflect those shifts. 

If competitors pull back in a region, it may open up new opportunities. If they’re gaining traction, you might need a new sales strategy.

Economic trends like inflation, market downturns, and new regulations can affect customer spending. 

Lastly, a critical external factor is your buyer. Understand where they are in their buying journey. Notice trends in buyer preference and pay attention to broader shifts as well, such as pushes for sustainability or supporting local business. 

Use a sales automation platform

Sales automation platforms offer real-time insights. They’ll help you track territory performance and monitor reps’ activities. They can identify issues before they become bottlenecks, and ensure that you can spot struggling regions early and intervene. 

They also monitor lead generation and deal velocity in real time. If you see that a high-potential region isn’t delivering results, you can place an experienced rep there or boost coverage. 

There are applications for AI in sales and territory planning as well. 

It can enhance territory management by predicting trends, identifying hidden opportunities, and recommending adjustments.

If you want to learn more about how AI in sales can improve forecast accuracy, speak with an expert at Gong today.

Overcoming common challenges in sales territory planning

Finally, let’s cover obstacles that get in your way. Accounting for these challenges at the start of your sales territory planning can give you a leg up on the competition.

Territory imbalance

One of the most common problems is a lack of balance. Performance suffers if some reps are overwhelmed with too many high-potential accounts while others have too few. 

Also, different reps excel in different markets and misalignment hurts success.

Give each rep a mix of high- and low-potential accounts. When you notice an imbalance, don’t be afraid to make changes.

Reps resistant to changes

Sales reps may resist realignments, especially if they hurt client relationships or commissions. According to LinkedIn’s 2022 State of Sales Report, top sellers are more effective because they understand their buyers. It’s natural for reps to want to maintain existing relationships.

Be prepared to demonstrate how the realignment benefits your reps and offer support such as introductions to new accounts. 

Unclear territory boundaries

When boundaries are undefined or overlap, it can lead to unnecessary conflicts. Create buffer zones between boundaries where reps collaborate instead of competing. 

Establish clear rules when accounts transition to prevent disputes. Monitor any boundary overlaps as you go.

Missed revenue opportunities

Having poorly planned territories leaves revenue on the table. Opportunities are overlooked, and deals are missed. 

Assign reps to re-engage accounts with stalled or expired deals, and prioritize territories that have long-term value, not just immediate revenue. 

Run blitzes to have reps find opportunities in overlooked territories. 

Forecasting and pipeline issues

Better forecasts give reps the best on-the-ground understanding of what’s happening in your pipeline and they can even alert you to deals that are about to go off track. Make sure you’re not just looking at data but checking in with your sales team about how sales are progressing.

With data-backed pipeline reporting and more accurate forecasts, sales leaders can close the gap between targets and results. 

Territory realignment timing

Realigning territories at the wrong time can disrupt momentum and result in lost deals. Changing in the middle of the sales cycle is a common problem. 

Instead, plan realignments at the start of a new quarter or during downtimes. You can also roll out changes gradually to reduce disruption.

Power more sales with Gong

Now that you know the steps, best practices, and common challenges in sales territory planning, you can tackle its management more smoothly. 

Remember, sales territory planning requires thoughtful strategy. As you encounter new phases, come back to this article and continue putting its advice in place. It takes time to dial in your processes. 

Book a demo today to see how you can improve forecast accuracy, grow your pipeline, improve business efficiency, and close more deals with Gong’s Revenue AI Platform.

Check out The State of Sales Productivity 2024 for more insights.