Sales territory is a defined group of accounts or geographic area assigned to specific sales representatives. Territories are designed to balance workload, maximize coverage, and ensure fair opportunity distribution across the team. Effective territory design considers factors like account potential, geography, industry, and rep capacity. Well-structured territories enable focused account development, clear accountability, and efficient resource allocation while minimizing conflicts over account ownership and ensuring all prospects receive appropriate attention.
How do you design a sales territory that maximizes revenue potential?
To design a revenue-maximizing sales territory, start by analyzing customer data to identify high-potential accounts based on industry, company size, and buying patterns. Balance geographic considerations with account value, ensuring your top performers have challenging yet achievable targets while preventing excessive travel time that reduces selling hours. Implement clear account assignment rules to prevent internal conflicts, and consider creating specialized territories around industry verticals when your team has specific expertise. Regularly review territory performance metrics (win rates, pipeline velocity, revenue per account) and be willing to adjust boundaries as market conditions change or when certain territories consistently underperform despite capable representatives.
How often should sales territories be reviewed and restructured?
Sales territories should be reviewed at least quarterly to address immediate issues, with a comprehensive restructuring performed annually to align with changing business goals and market conditions. Mid-year adjustments may be necessary when introducing new products, expanding to new markets, or experiencing significant team changes. The review process should analyze territory performance metrics including revenue attainment, opportunity distribution, and rep workload balance. Many successful B2B organizations implement a formal territory governance committee that includes sales leadership, operations, and frontline managers to ensure territories remain optimized for maximum growth potential.
What are the common mistakes companies make when establishing sales territories?
Common mistakes when establishing sales territories include creating imbalanced workloads where some reps are overwhelmed while others lack opportunities, ignoring customer characteristics beyond geography such as industry or company size, and failing to regularly reassess and adjust territories as market conditions change. Companies often overlook the importance of clear boundary definitions, which leads to confusion and conflict between sales representatives competing for the same accounts. Additionally, many organizations make the error of establishing territories based solely on historical data without considering future growth potential or strategic priorities.
