Sales Territory Design: Strategies, Models & Best Practices for 2025

When sales teams fall short of their targets, the problem often isn’t the product or the people; it’s the structure behind the sales effort. The way territories are designed plays a pivotal role in whether sales reps succeed or struggle. The right territory design doesn’t just improve performance; it drives growth, motivation, and efficiency.

Sales territory design is the process of strategically defining regions, accounts, or customer segments to ensure every sales rep has a fair workload, clear objectives, and equal access to opportunities. It forms the backbone of any high-performing, scalable sales organization.

An effective territory design goes beyond merely dividing regions; it creates balance. It eliminates overlap, ensures resources are allocated efficiently, and enables managers to track performance with clarity. When done right, it empowers sales teams to work smarter, not harder, by focusing their efforts on the highest-potential areas.

In this blog, we’ll explore why sales territory design is critical for success, how to structure territories effectively, and the proven strategies and models that can help your sales team achieve its fullest potential. Let’s dive into how optimizing your sales territory design can fuel long-term growth and enhance team performance.

What Is Sales Territory Design?

Sales territory design is the process of organizing sales regions, customer segments, or account groups to maximize efficiency, improve customer coverage, and drive business growth. 

In simple terms, it’s about ensuring every sales representative has a fair and balanced share of opportunity, so effort matches potential. When territories are designed thoughtfully, teams work smarter, avoid overlap, and reach more customers with less wasted time.

Effective territory design goes beyond drawing geographic lines. It uses data and strategy to match sales resources with market potential. The goal is to create balance, so no rep is overloaded while another lacks opportunity, and to align territory potential with revenue targets. 

A well-structured sales territory design increases productivity, improves fairness, and ultimately maximizes ROI by giving each salesperson a clear, focused area of responsibility. It’s also useful to understand the difference between territory design and territory planning. 

Territory design builds the structure from the ground up: defining how regions, accounts, or industries are divided and assigned. Territory planning, on the other hand, is about optimization, analyzing performance, adjusting allocations, and refining existing boundaries to keep them aligned with business changes. 

In other words, design creates the blueprint; planning keeps it effective over time.

Now, let’s explore why territory design is crucial in sales management and how it drives alignment, efficiency, and growth across teams.

Why Territory Design Matters in Sales Management

Territory design is a cornerstone of effective sales management. It goes beyond simply dividing regions; it shapes everything from rep performance to long-term growth strategies. 

A well-structured territory system improves efficiency, aligns teams with company goals, and ensures fair workload distribution. Let’s explore how thoughtful territory design impacts your broader sales operations.

1. Fair Distribution of Workload

One of the most common challenges in sales teams is ensuring that the workload is evenly spread out. When territories are designed well, reps are assigned accounts based on capacity, potential, and location, ensuring no one is overwhelmed or underutilized. 

This fair distribution prevents burnout and increases quota attainment because reps have manageable territories that align with their abilities and goals. 

2. Aligning with Business Goals

Effective territory design is key to aligning your sales team with the strategic goals of your business. Whether your focus is geographic expansion, new industry penetration, or scaling current markets, territories must reflect those objectives. 

For instance, if a company plans to enter a new region or target a specific vertical, territory design ensures that resources are directed to the right areas. This strategic alignment allows reps to focus their efforts on high-potential regions, driving growth and ensuring the sales strategy aligns with the company's broader objectives.

3. Improving Customer Coverage & Growth

When territories are poorly designed, reps might end up competing for the same clients, wasting time and resources. A well-structured system ensures that every prospect is covered and no one falls through the cracks, helping businesses expand their customer base and drive consistent growth.

Another major benefit of territory design is the improvement of customer coverage. By clearly defining territories, sales reps can avoid overlap and target the right customers in their assigned areas. This not only increases coverage but also reduces missed opportunities. 

4. Tying to Management Benefits

From a management perspective, well-designed territories offer clear benefits. They help create a predictable sales pipeline, making it easier to forecast revenue and allocate resources effectively. 

When reps have balanced territories and are clearly focused on high-value prospects, sales managers gain better visibility into performance. This clarity allows for more accurate performance tracking and resource allocation. 

Moreover, sales reps who feel their workload is fair are more likely to stay motivated, which reduces turnover. A strategic territory design leads to higher morale across the team, fostering a sense of fairness and transparency. 

In summary, territory design in sales management is essential for creating a well-organized, efficient, and motivated sales team. By balancing workloads, aligning with business goals, improving customer coverage, and boosting team morale, territory design sets the stage for sustainable success and growth.

Now, let's dive into the sales territory design process to provide a clear, actionable framework for structuring your territories and aligning your sales teams with your company’s strategic objectives.

Sales Territory Design Process (Step-by-Step)

Designing effective sales territories is a strategic process that requires careful planning, data analysis, and regular adjustments. 

A well-structured territory design not only ensures fair distribution of accounts but also helps align sales efforts with broader business goals. Here’s an actionable framework for building a sales territory design process that can drive performance and growth.

1. Define Objectives

The first step in any sales territory design process is to define clear objectives. What do you want to achieve with your sales territories? Your objectives will guide how you design your territories and how you allocate resources. Some common goals include:

• Market Coverage: Expanding into new regions or verticals to ensure all potential customers are reached.
  
  
• Revenue Growth: Prioritizing high-value customers or markets to increase overall sales and profitability.
  
  
• Retention: Ensuring that territories are structured to maintain long-term relationships with existing clients, increasing customer loyalty.

By clearly defining your objectives upfront, you’ll create a blueprint that supports your larger sales strategy and helps you focus your resources effectively. 

For example, if your goal is revenue growth, you might design territories around high-value accounts, focusing your efforts where the greatest potential for revenue exists.

2. Segment Customers

Once you have clear objectives, the next step is to segment your customers. This helps you understand where to allocate your resources for the best results. Customer segmentation can be done in various ways, depending on your business model and objectives:

• Geography: Dividing territories based on regions, cities, or countries.
  
  
• Industry: Grouping customers by their industry type (e.g., healthcare, technology, finance).
  
  
• Company Size: Targeting small, mid-market, or enterprise-level clients based on their revenue potential or complexity.
  
  
• Buying Cycle: Assigning territories based on the buying behavior and sales cycle of different customer segments.

Effective segmentation helps ensure that each sales rep has a manageable and well-defined territory that matches their expertise and capabilities. 

For example, if you have a strong team of industry specialists, you may choose to segment territories by industry verticals, allowing each rep to become an expert in their specific market.

3. Collect & Analyze Data

The next critical step is to collect and analyze data. This is the foundation of your sales territory design process. Without data, it’s difficult to make informed decisions about where to allocate your resources. Key sources of data include:

• CRM Records: Analyze historical customer data, including past sales, buying behaviors, and customer demographics.
  
  
• Sales History: Review past sales performance across different regions, segments, and rep territories.
  
  
• Whitespace Opportunities: Look for gaps in coverage or underserved regions where there may be untapped potential.

By using data to inform your decisions, you can avoid arbitrary decisions and instead focus on regions and customer segments that present the greatest opportunity for growth. 

For example, if sales data reveals that a certain region has been underperforming due to a lack of focus, it might be worth reallocating resources there to boost sales.

4. Choose Design Models

Once you have your objectives and data in hand, it’s time to choose the right territory design model. The model you select should align with your goals and available resources. Common models include:

• Geographic Model: Dividing territories based on location. This is one of the most straightforward approaches, ideal for businesses with clear geographic regions.
  
  
• Industry-Based Model: Assigning sales reps to specific industries or verticals, allowing them to develop deep expertise in their market.
  
  
• Named Account Model: Assigning high-value accounts to specific reps, focusing on larger, strategic clients.
  
  
• Hybrid Model: Combining multiple models (e.g., assigning enterprise clients by industry and smaller accounts by region) to balance the benefits of both approaches.

For example, a SaaS company might use a hybrid model, assigning enterprise accounts to reps with industry expertise while focusing on smaller clients in different regions for easier access and management.

5. Balance Workload & Potential

The balance between workload and potential is one of the most critical aspects of territory design. You need to ensure that no rep is overburdened with too many high-potential accounts, while others are underutilized with less valuable clients. Achieving this balance requires careful consideration of factors such as:

• Account potential: Does the account represent a high revenue opportunity, or is it a smaller, less demanding client?
  
  
• Rep capacity: Does the rep have the time and skills to manage a larger territory or high-value accounts?
  
  
• Geography: Is the territory’s size manageable in terms of travel and customer engagement?

Balancing these factors helps ensure that each sales rep can perform at their best and meet their targets without feeling overwhelmed or underutilized. 

For instance, a rep who is assigned large enterprise accounts should not be expected to manage a massive territory, as this could reduce their effectiveness.

6. Implement Tools

To streamline the territory design process and improve efficiency, it’s essential to implement the right tools. Modern tools can automate and enhance your territory planning, making it easier to create data-driven designs. Some valuable tools include:

• Mapping Tools: Software like Salesforce Maps helps visualize territories, identify gaps, and optimize routes for sales reps.
  
  
• AI-Based Analytics: Tools that use artificial intelligence to analyze customer data, sales trends, and market conditions, enabling smarter territory decisions. 

For example, a mapping tool can help visualize territories by regions and customer potential, making it easier for sales managers to spot opportunities and adjust territories quickly. These tools also help automate routine tasks, allowing sales reps to focus on selling.

7. Monitor & Adjust

Sales territory design isn’t a one-time task; it’s an ongoing process. It’s important to monitor the performance of your territories regularly and make adjustments based on key performance indicators (KPIs). Some KPIs to track include:

• Quota Attainment: Are reps meeting their sales targets within their assigned territories?
  
  
• Coverage Rates: Are all customer segments being adequately covered?
  
  
• Sales Cycle Length: How long does it take for a sale to close in different territories?

Regular monitoring helps you spot areas where territory design might need adjustments, ensuring your territories stay aligned with business goals and market conditions. 

For example, if one territory consistently underperforms despite high potential, it may be necessary to reassign accounts or redistribute the workload.

Tools like Everstage can help track these KPIs in real-time, providing transparency into sales performance, automating commission calculations, and keeping reps motivated with clear visibility into their progress. Regular monitoring ensures that territories stay aligned with business goals and market conditions, maximizing sales performance across your team.

Next, let's explore the territory design models, where we’ll look at different approaches to structuring territories, helping you choose the model that best aligns with your business needs and sales strategy.

Territory Design Models to Consider

When designing sales territories, selecting the right model is crucial for aligning your sales strategy with business goals. The model you choose should reflect your objectives, whether that’s market coverage, revenue growth, or customer retention, and make the most of available resources. 

Here, we’ll explore several common territory design models, their pros, and their cons to help you decide which one works best for your organization.

1. Geographic Territories

Geographic territories divide sales regions based on physical locations, such as regions, cities, or states. This model is often the simplest to implement and works well for companies with a strong regional presence or a geographically dispersed customer base.

Pros:

• Simplicity: Geographic territories are straightforward to define and manage. Each rep is responsible for a specific area, making it easy to allocate resources and track performance.
  
  
• Clear Coverage: This model ensures that no regions are left underserved, providing clarity in assigning territories and avoiding overlap between reps.

Cons:

• Uneven Opportunity: The primary downside is that customer potential can vary significantly across geographic regions. 

A territory in a densely populated urban area may have far more sales opportunities than one in a rural region, leading to imbalanced workloads. This can affect motivation, as reps in lower-potential areas may struggle to meet targets, while those in high-potential areas may become overloaded.

This model is best for businesses with a clear geographic focus or those that sell products that require local presence, such as retail or construction equipment. However, it can become inefficient if customer distribution is highly skewed.

2. Industry Verticals

In the industry vertical model, territories are based on specific industries or sectors, such as healthcare, finance, or technology. This model is useful for businesses with specialized products or services that require in-depth knowledge of a particular market.

Pros:

• Deep Expertise: Sales reps who are focused on a single industry can build deep expertise, establish stronger relationships with customers, and better understand industry-specific needs and trends. This expertise can lead to higher credibility and trust, making it easier to close deals.
  
  
• Tailored Approach: With a focused vertical, reps can develop specialized pitches and solutions, increasing the likelihood of success in competitive markets.

Cons:

• Imbalanced Workloads: One of the challenges of industry-based territories is the potential for unequal workload distribution. 

Certain industries may have higher demand than others, causing some reps to face a greater workload while others struggle to hit their targets. For example, industries like healthcare or technology may see rapid growth, while sectors like manufacturing may stagnate, leading to uneven opportunities across the team.

The industry vertical model works best for businesses with complex products or services that require detailed knowledge of specific sectors, like B2B SaaS companies or consultancies. However, if industries fluctuate in demand, the model may need to be adjusted frequently.

3. Account Size/Value-Based

In this model, territories are designed around the size or value of accounts. Sales reps are assigned to clients based on the potential revenue or strategic importance of the accounts they manage. Large enterprise clients may have dedicated reps, while smaller businesses or low-value accounts are grouped together in broader territories.

Pros:

• High-Value Focus: This model enables sales teams to focus on high-value clients and prioritize accounts that can drive substantial revenue. By dedicating resources to these high-value accounts, companies can maximize profitability and sales growth.
  
  
• Specialized Attention: Larger clients often require more tailored attention and complex sales strategies. This model ensures that these accounts get the attention they need without spreading sales resources too thin.

Cons:

• SMBs May Be Ignored: Smaller accounts, which may still be important to the overall sales strategy, could be neglected or underrepresented in this model. 

If only high-value accounts are targeted, businesses risk missing out on a substantial number of smaller opportunities that, when aggregated, could yield significant returns.

The account size model is best for businesses with a mix of large and small clients, such as those in B2B sales or enterprise software. However, careful attention is needed to ensure smaller clients are still given adequate resources and attention.

4. Hybrid Models

The hybrid model combines elements of the previous approaches to create a more flexible and balanced structure. This allows businesses to leverage the benefits of multiple models while mitigating their respective downsides.

For example, a company may assign enterprise accounts by industry vertical (e.g., enterprise healthcare clients are managed by reps with healthcare expertise) and small- to medium-sized businesses (SMBs) by geographic region (e.g., SMBs in specific areas are handled by reps in those regions). 

Pros:

• Flexibility: A hybrid model allows sales teams to adjust their approach based on different business needs. It ensures that both high-value accounts and broad market coverage are addressed.
  
  
• Balanced Workload: By splitting large accounts and SMBs, reps can focus on high-value clients without sacrificing regional coverage. This model allows for better workload distribution and can scale as the business grows.

Cons:

• Complexity: The hybrid model can be harder to manage due to its complexity. More coordination is required to ensure that resources are allocated appropriately and territories are balanced effectively. Additionally, combining models may lead to confusion if communication or territory boundaries aren’t clearly defined.

This model is particularly popular in industries like SaaS, where enterprise clients require specialized knowledge but SMBs still represent a large portion of revenue. The hybrid approach allows businesses to focus on both large and smaller customers, depending on their strategic goals.

When selecting a territory design model, consider your company’s strategic goals, customer base, and available resources. 

If simplicity and geographic coverage are key, the geographic model may work best. If your product requires deep industry knowledge, industry verticals could be the way to go. 

For businesses focused on revenue generation, account size/value-based design can prioritize high-value clients, while a hybrid model offers flexibility and balance for businesses that need both market reach and specialized focus.

The right model will align with your objectives and ensure your sales team can work efficiently and effectively, targeting the right customers in the right way to drive sustainable growth.

Best Practices for Designing Sales Territories

Designing effective sales territories goes beyond theory; successful territory design requires a mix of data-driven decisions, fair distribution, and flexibility to adapt to changing markets. 

Here are some tactical best practices to ensure your sales territories are structured for maximum efficiency and performance.

1. Use Sales Data, Not Assumptions

One of the most critical best practices in territory design is to base your decisions on data, not gut feelings or assumptions. Your CRM system, market research, and historical sales data should be your primary tools for building territories. Relying on intuition can lead to imbalances; some reps might be overloaded while others have too few opportunities.

Key data points to consider include:

• Sales History: Analyze past performance across regions to identify high-potential areas and those that need attention.
  
  
• Customer Demographics: Understand customer behavior, industry trends, and buying patterns to allocate resources effectively.
  
  
• Market Potential: Use market research and whitespace analysis to find underserved areas or emerging markets that could benefit from targeted efforts.

By leveraging data from your CRM and market research, you ensure that territories are aligned with real customer potential rather than assumptions. This data-driven approach helps improve territory design, enabling reps to focus on the most promising leads and increasing overall sales efficiency.

2. Ensure Fair Opportunity Distribution

A key to successful sales territory design is ensuring fair opportunity distribution across all reps. The last thing you want is a situation where some territories are overloaded with high-potential clients, while others are left with low-value accounts. This imbalance can lead to frustration, poor morale, and missed opportunities.

To avoid a "rich vs. poor" territory divide:

• Balance Potential & Workload: Ensure that each rep has a territory that provides a reasonable chance for success. This means not only looking at the number of accounts but also evaluating their potential for growth.
  
  
• Consider Account Value: Assign high-value clients to reps with the expertise or capacity to manage them, while still ensuring reps in lower-value areas have an adequate number of clients to reach their targets.

A fair distribution helps motivate your team by giving everyone a clear path to success, regardless of where they are positioned. A well-balanced structure also ensures that every opportunity is captured and nurtured, maximizing revenue across all regions.

3. Keep Flexibility for Growth

The market and business needs are constantly evolving, so your territory design should not be static. Flexibility for growth is essential to ensure that your sales team can adapt as the company expands, enters new markets, or shifts focus.

• Reassess Annually: Territory design should be evaluated on a regular basis, typically at least once a year. This helps address changes in customer behavior, market shifts, or product updates.
  
  
• Adjust for Business Shifts: If your company pivots or enters a new market, your territories will need to adapt. If you introduce new products or expand into different regions, territories should be realigned accordingly.

By allowing room for growth and regular adjustments, you ensure that your sales territories remain effective as your business evolves. This adaptability helps keep your team aligned with organizational goals and prevents inefficiencies from building up over time.

4. Communicate Changes Clearly

Transparency is essential when it comes to territory design changes. Sales reps are often resistant to change, especially if they feel it’s unfair or lacks clear communication. To avoid pushback and ensure smooth transitions:

• Be Transparent: Clearly explain why changes are being made and how they align with business objectives. When reps understand the rationale behind design decisions, they’re more likely to accept them.
  
  
• Involve Sales Reps in the Process: Engage your sales team in conversations about potential changes. This involvement helps them feel heard and gives them a sense of ownership over their territories.
  
  
• Offer Support: Provide training and resources to help reps adjust to their new territories. This support can include guidance on managing new regions or accounts, as well as providing additional tools for efficiency.

Clear and transparent communication helps reduce resistance, ensures smooth transitions, and keeps morale high. When sales reps understand how and why changes are being made, they are more likely to remain motivated and focused on their targets.

By following these best practices for designing sales territories, you ensure a structured, fair, and efficient approach that aligns with both business objectives and sales team goals. 

Examples of Strategic Territory Design in Action

Understanding how to apply sales territory design strategically can significantly boost your sales team’s efficiency and effectiveness. Below are examples of how businesses can practically apply territory design principles to improve performance, drive growth, and achieve better coverage.

1. Splitting Territories by SMB vs. Enterprise

One of the most effective ways to optimize sales territory design is by segmenting territories based on customer type, specifically distinguishing between SMBs (Small and Medium-sized Businesses) and enterprise accounts.

How to Apply:

• Identify Customer Needs: Recognize that SMBs and enterprise clients have very different needs, sales cycles, and product requirements.
  
  
• Assign Specialized Reps: Assign sales reps to specific segments based on their expertise. For example, reps with experience in handling larger, more complex deals may focus on enterprise accounts, while others specializing in high-volume, less complex sales may target SMBs.
  
  
• Tailor Sales Strategies: With this structure, reps can focus on strategies that align with their customers' unique challenges, improving engagement and increasing the chances of closing deals.

By splitting territories between SMBs and enterprises, businesses can ensure that enterprise reps have the resources and time to manage complex sales, while SMB reps can scale their outreach efforts. 

This approach can lead to a higher quota attainment and overall sales efficiency. Businesses that use this strategy often see an increase in sales as reps specialize in what they do best.

2. Aligning Territories to Customer Density

In industries like retail and pharmaceuticals, aligning territories with customer density is crucial for optimizing sales efforts.

How to Apply:

• Map Customer Locations: Use data and analytics tools to identify high-concentration areas where your key customers are located (e.g., hospitals for pharma, retail stores for consumer goods).
  
  
• Create Territory Zones: Group these high-density regions together into manageable territories. Reps should be assigned to these areas based on proximity to the customers they are serving.
  
  
• Reduce Travel Time: For regions with fewer customers, consider making territories larger but ensuring that reps can still manage the workload effectively. This reduces travel time and allows reps to spend more time engaging with clients.

By aligning territories to customer density, businesses can drastically reduce wasted time spent on travel and increase face-to-face time with key clients. This is especially impactful in industries where relationship-building is key. 

Sales teams can focus on areas with higher demand, improving both sales productivity and customer coverage. For example, reducing travel time by just 15-20% can lead to an improvement in sales productivity of up to 25%.

3. Sales Territory Redesign for Improved Performance

A common challenge faced by businesses is dealing with inefficient sales territory structures. Often, territories are allocated based on broad geographic areas without considering potential or sales rep skillsets, leading to imbalanced workloads and missed opportunities.

How to Apply:

• Assess Current Territory Structure: Analyze the existing territory design. Identify imbalances where high-value accounts are either over-served or under-served.
  
  
• Redesign for Equity: After identifying these inefficiencies, restructure the territories to balance the workload. Assign high-potential accounts to more experienced reps and ensure that lower-value accounts still get the attention they need without overwhelming the reps.
  
  
• Use Data-Driven Adjustments: Employ tools and analytics to monitor the impact of the redesign. Make adjustments as necessary, using data to ensure that territories remain balanced and effective.

A before-and-after redesign can have a measurable impact on performance. After applying a more balanced design, businesses have reported an increase in sales and quota attainment. Not only does this optimize resource allocation, but it also boosts rep morale by ensuring that workloads are equitable and manageable.

By applying strategic territory design principles in a thoughtful, data-driven manner, businesses can set their sales teams up for long-term success, increasing productivity, improving customer relationships, and driving sustainable growth.

Conclusion

In sales territory design, the key takeaway is simple: a well-structured system creates fairness, boosts productivity, and drives business growth. 

When territories are thoughtfully designed, sales reps can focus on the right accounts, maximize their time, and reach their full potential. However, it’s important to remember that territory design is not a one-time project; it’s an ongoing, iterative process. 

To track the effectiveness of your territory design, tools like Everstage can be invaluable. With Everstage, you can automate commission calculations, gain real-time visibility into quota attainment, and track sales performance across territories, ensuring that adjustments lead to measurable improvements.

Now is the time to evaluate your current sales territory structure. A simple audit or small adjustments can have a significant impact on performance, helping you uncover untapped potential and optimize team resources. 

Ready to optimize your sales territory design and boost your team's performance? 

Book a demo with Everstage today and see how our platform can streamline your process, improve visibility, and drive growth.