Sales Territory Management Guide: Steps and Strategies for Sales Teams

There’s a popular saying- ‘When in Rome, do as the Romans do.’ This isn’t just a travel tip but also an effective strategy to unlock your sales team’s potential. 

In sales, customer segmentation is of utmost importance, and building sales territories is even more important. Sales territory management is a process of dividing the customer accounts into specific areas and assigning them to different sales teams. 

Most sales reps are of the impression that whether the sales territory really matters to them. Assigning the sales territories to your sales organization leads to improved sales efficiency and productivity. 

In this blog, we’ll talk about the benefits of sales territory management, the steps to create a plan, and the best practices to build an effective sales territory management plan. 

What is Sales Territory Management? 

Sales territory management is a process where the sales team divides the customer accounts into specific groups like geography, industry, size, or needs. It involves creating a detailed plan, organizing, and directing the sales activities within these territories. 

The primary goal of territory management is to boost the efficiency of the sales teams by customizing the strategies specific to a region. 

A good territory plan balances workloads, sets fair targets, and gives customers one consistent point of contact. It also streamlines routing and scheduling for field sales teams to produce clean data to track revenue, win rates, and pipeline health.

Types of Sales Territories for SaaS Companies

Sales territories for SaaS companies are divided into several areas depending on the region, products, and buyers. Let’s look at the type of sales territories for SaaS companies: 

1. Geographical Territories

A geographical territory model divides the market by physical location, such as countries, states, cities, or regions. In this setup, each sales representative or team manages the leads, accounts, and prospects in a defined geographic boundary.

This method is most relevant for businesses selling physical and high-value digital products. 

For example, a SaaS platform offering logistics management software supports effective sales and service. The company could assign one team for the U.S. East Coast, another for the U.S. West Coast, one for Latin America, and another for Asia-Pacific. 

2. Industry-Based Territories

In the industry-based territory model, sales ownership is organized by verticals. Reps specialize in particular industries, including healthcare, fintech, retail, education, etc. This requires reps to be deeply knowledgeable about industry-specific problems, regulatory regimes, purchasing cycles, and competitive pressures.

Consider a SaaS company that offers data analytics and compliance tools. It might have one team focusing on healthcare organizations, another team for financial services, and another for education. 

Since the problems and requirements vary by industry, this specialization lets sales reps speak the language of the industry, understand pain points, and position the software credibly.

3. Customer Type Territories

This model divides territories based on the type or size of customer, purchase behavior, or lifecycle stage. Sales teams can tailor their strategies to various market segments, including small & mid-market, startups, public sector, and private. 

A SaaS CRM vendor might assign one sales team to focus exclusively on small businesses. Another team may handle mid-market firms (50-500 employees) needing more integrations and customization. A third team might serve enterprise customers (hundreds to thousands of users, complex contracts, many stakeholders).

Each team’s sales strategy, pricing, onboarding, and support will differ accordingly.

4. Product Type Territories

Product-type territories divide sales responsibilities according to individual product lines or services. This structure works particularly well for companies with a broad and varied portfolio, as it allows teams to specialize in one area rather than spreading their focus too thin.

Here, the sales team uses various knowledge sessions, product demos, and syncs with product teams to learn about it. This knowledge allows them to communicate value more effectively, handle technical questions with confidence, and provide tailored support to customers.

For example, suppose a SaaS vendor provides both a basic project management tool and an advanced AI-driven forecasting analytics module. The sales organization might have one territory (or team) dedicated to the project management product, another for the AI forecasting add-on, and yet another for a bundled suite. 

Reps focused on the advanced product would become experts in data science, predictive modelling, SLAs, etc., and could more effectively sell to clients.

5. Channel Sales Territories

Some SaaS businesses sell both directly and via partners (resellers, system integrators, OEM partners, affiliate networks). In a channel territory model, certain reps or teams are responsible for developing and managing those indirect sales channels rather than end customers directly.

For instance, a cloud infrastructure SaaS might sell its core service through its own sales team, but also rely heavily on technology partners and systems integrators in certain regions or industries. 

6. Named Accounts Territories

Named Accounts Territories means assigning high-potential or high-value customers to particular reps or teams who are accountable for deep growth, retention, and expansion of those accounts.

As an example, consider a SaaS provider of large-scale IoT platforms. They might have a few strategic customers, each with complex deployment and long-term scopes. One sales rep may be specifically assigned to manage “Acme Telecom,” another to “Global Manufacturing Corp,” and so on. 

Benefits of Sales Territory Management 

A well-implemented sales territory management plan provides a strategic value for the businesses. Here are the benefits of having sales territory management: 

1. Improved Sales Efficiency

A clear territory streamlines sales efforts by reducing overlap and eliminating wasted resources. With each sales rep assigned a specific region, efforts are focused on the right prospects, which minimizes the risk of missed or duplicated opportunities. 

Research by Alexander Group shows that sales organizations that design and optimize sales territories see a 10%-20% increase in sales productivity.

This structure improves conversion rates, shortens sales cycles, and drives more meaningful customer interactions. 

2. Maximized Market Opportunity

Effective territory management ensures complete market coverage. Without a structured approach, certain regions may be oversaturated while others go underutilized, leading to missed revenue potential. 

Sales leaders can prioritize the high-value areas and capitalize on the opportunities. This approach sets the foundation for scalable growth and long-term market success.

3. Improved Customer Experience

A well-organized territory system allows customers to build long-term relationships with a dedicated sales rep, rather than interacting with multiple representatives. This continuity fosters trust and strengthens customer loyalty, as reps become more attuned to individual client needs. 

Ultimately, this leads to improved satisfaction, higher retention rates, and increased repeat business.

4. Better Decision-Making

Sales territory management equips leadership with clearer data, making it easier to track regional performance and identify areas of opportunity or concern. With insights into each territory’s dynamics, leaders can make informed decisions about resource allocation, goal setting, and sales strategy. 

This approach minimizes guesswork, ensuring that the team’s efforts are aligned with company objectives.

5. Assign Balanced Workloads

Proper territory distribution ensures that workloads are fairly allocated across the team. Without it, some reps may be overwhelmed, while others are underutilized. 

It balances the workload, allowing sales teams to avoid burnout and achieve more consistent performance. This fairness boosts morale and helps keep the team engaged and productive. Study shows that highly engaged employees provide a better customer experience, resulting in a 20% increase in customer satisfaction. 

6. Assign Reps to New Sales Territories

Expanding into new markets requires strategic sales coverage. Territory management makes it easier to assign reps to new regions, ensuring dedicated attention to new accounts. This approach creates a sense of ownership, as each rep takes responsibility for growing the business in their assigned region.

Territory management software like Everstage balances and assigns the territories to the sales reps based on their workload capacity and historical performance.   

How to Create an Effective Sales Territory Plan?

Creating an effective sales territory plan is a fundamental aspect of optimizing sales performance and driving business growth. The step-by-step approach is the difference between a good and a bad territory. 

Below are the essential steps to guide you through this process:

1. Define Your Objectives

The first step in creating a sales territory plan is to clearly define your business objectives. These objectives serve as the foundation for your entire strategy. Without a clear direction, your sales efforts may lack focus and fail to yield optimal results. 

Some key objectives might include increasing market share, expanding into new regions, improving customer retention, and boosting revenue.

Increasing market share focuses on expanding your company's presence in the market by acquiring new customers. Expanding into new regions involves targeting new geographical areas, especially if your company is looking to grow internationally or into new cities. 

2. Analyze Market Data

Once your objectives are in place, the next crucial step is to gather and analyze market data. This data will help you identify the most viable and profitable opportunities within each potential territory. The more data you have, the better decisions you can make regarding how to segment and allocate your sales territories.

Market data might include customer demographics, sales history, competitive landscape, and industry trends. Customer demographics help you understand the key characteristics of your target audience in each region. 

By leveraging this data, you can prioritize areas that have the highest potential for growth and profitability, ensuring your sales resources are allocated efficiently and effectively.

3. Perform Market Segmentation

Divide your target market into smaller groups based on factors such as geography, industry, customer size, or buying behavior. This segmentation gives a tailored approach to sales efforts and ensures that sales reps are targeting the right prospects and opportunities.

Segmentation ensures that your sales reps are not wasting time on customers who are unlikely to convert. Instead, they can focus on high-potential leads and close deals more effectively.

4. Assign Sales Teams

The goal of this step is to match the right sales rep to the right market, based on their expertise, experience, and the characteristics of the territory.

Several factors should be considered when assigning sales teams. Experience and expertise play a key role in this decision. Sales reps who are familiar with a particular industry or region will be more effective in building relationships and closing deals. 

Assigning sales reps based on their strengths ensures that each territory is covered by someone best equipped to succeed. Sales reps who are familiar with the geography or culture of a specific region may have a better understanding of local nuances and customer needs.

5. Set Goals and Metrics

Each territory should come with specific performance goals. These goals guide sales efforts, provide motivation for sales reps, and serve as benchmarks for measuring success. 

Certain KPIs like revenue targets, lead generation goals, customer acquisition, and customer retention are specific to sales teams. Say, if your objective is to build a strong pipeline, you might set goals for the number of qualified leads generated. 

For teams focusing on growth, customer acquisition goals could be set, while territories that prioritize maintaining existing accounts might have customer retention as the main metric. 

Regularly monitoring and adjusting these goals ensures that sales teams remain focused, motivated, and on track to achieve success. 

6. Monitor Results

Regular assessment of sales activities and results allows you to adjust strategies as necessary to stay on track toward your goals. Performance monitoring provides valuable feedback that can guide future territory planning.

Another critical aspect of monitoring is building open communication between sales reps and managers. Sales reps can provide valuable insights into the challenges they face in the field, as well as feedback on what is working well. This feedback loop enables sales managers to adjust tactics, reallocate resources, and provide additional support where needed.

10 Best Practices for Effective Territory Management

To get the most out of your sales territory management, consider implementing the following best practices:

1. Set Territory-Level Sales Goals

Ensure that each territory has specific, measurable sales goals. This keeps sales reps focused on their objectives and helps measure their success. Setting clear goals not only provides a roadmap for success but also boosts accountability, ensuring that each rep understands their targets and works toward achieving them. 

2. Prevent Conflict

Overlapping territories can lead to confusion and conflict between sales reps. To prevent this, clearly define the boundaries of each territory and communicate them effectively. 

Clear territory assignments ensure that each rep has ownership over their accounts and minimizes the risk of stepping on another’s toes. This clarity improves collaboration as reps will understand exactly what they’re responsible for and where their efforts should be directed.

3. Prioritize Valuable Territories

Not all territories are created equal. Prioritize high-potential areas and ensure your best sales reps are assigned to those regions. By focusing on the most lucrative territories, companies can maximize returns from high-value markets.

Assigning top-performing reps to these territories also ensures that the most experienced salespeople are strategically placed where they can make the biggest impact.

4. Track Mileage and Expenses

Keep track of sales reps' mileage, travel time, and expenses related to territory coverage. This can help optimize sales routes and reduce unnecessary costs. Tracking these metrics provides valuable insight into how efficiently sales reps are spending their time and resources. 

5. Meet the Needs of Current Accounts while Finding New Leads

Balance efforts between nurturing existing customers and prospecting new leads. Both activities are crucial for sustaining long-term growth. While bringing in new clients is essential, maintaining strong relationships with existing customers helps to ensure repeat business and customer loyalty. 

6. Create a Call Rotation Plan

Develop a call rotation schedule that ensures reps can efficiently cover their territories and prevent burnout. A well-structured call rotation plan ensures that reps are evenly distributing their efforts across different accounts, preventing fatigue from repetitively focusing on a small set of clients. 

Moreover, it can help maintain consistency in contact with customers, ensuring they receive regular attention without overwhelming individual salespeople.

7. Focus on Team Collaboration

Encourage collaboration between sales reps working in different territories. Sharing insights and best practices can benefit the entire team. When reps exchange information about successful sales techniques or the unique challenges of their territories, they can learn from each other’s experiences. 

This culture of collaboration can lead to better overall performance, as reps support one another and collectively optimize the management of their regions.

8. Update Data in Real-Time

Ensure that territory data is regularly updated to reflect the latest information. This allows for quick adjustments and more informed decision-making. 

In today’s fast-paced sales environment, having real-time data on leads, opportunities, and performance is essential for keeping strategies up to date. 

9. Monitor Sales Territory Performance

Track sales performance across territories regularly to identify trends and areas needing improvement. This practice helps highlight which territories are underperforming and why, enabling managers to provide targeted coaching or reallocate resources to maximize effectiveness.

10. Stay Up to Date

As market conditions and customer needs evolve, your sales territories may need to be adjusted. Stay updated with market trends and be ready to adapt your strategy accordingly. Industry shifts, competitive changes, and new product offerings may all impact your territory management approach. 

The Problem with Traditional Sales Territory Management

Traditional sales territory management uses spreadsheets and manual operational tasks to assign territories. This method of territory management lacks the data to empower decision-making. 

Moreover, traditional sales territories are merely guesswork. It fails to target the right customer accounts. Because of this, teams may assign sales territories improperly. While one team gets assigned to a dead territory, the other one is overloaded with work.

These factors contribute to team dissatisfaction. 

According to Forrester, “When sales territories are out of balance, organizations spend too much money and time on low-potential customers, while spending too little on high-potential customers. As a result, sales organizations can leave millions of dollars in lost productivity unrealized.”

Using Everstage for Sales Territory Management

A sales territory plays an important role in improving the sales performance. Whether by geography, industry, customer type, product lines, or other criteria, the key lies in crafting a tailored approach that aligns with the company’s goals and objectives.

Everstage offers a modern approach to sales territory management by assigning balanced territories using historical performance and the capacity of sales reps. Moreover, its AI capabilities automate the territory management with proactive recommendations. 

Book a demo with Everstage to see how this works in practice.