Types of Sales Territories: A Complete Guide with Examples & Best Practices

Sales territory design is one of the most powerful yet underrated levers in driving revenue performance. When territories are structured well, they give teams focus, fairness, and accountability, ensuring that every rep knows where to invest their effort. 

According to the Alexander Group, organizations that optimize their territory design can achieve 10–20% higher sales productivity.

Without clearly defined boundaries, even the best sales teams struggle. Reps overlap on the same accounts, workloads become uneven, and high-potential regions go untouched. These inefficiencies not only create internal friction but also lead to missed revenue opportunities and poor customer experiences.

This guide breaks down the different types of sales territories, complete with examples and actionable frameworks, to help you identify which model best aligns with your business goals. Whether you’re scaling a SaaS team, managing channel partners, or expanding into new markets, understanding territory design is key to sustainable growth.

Before we dive into the different types, let’s start with the basics: what exactly is a sales territory?

What Are Sales Territories?

A sales territory is a defined market segment: geographic, industry-based, or account-focused, assigned to a sales representative or team to ensure balanced coverage and accountability. Its purpose is simple: to divide customers and prospects strategically so every rep has clear ownership, measurable sales goals, and fair opportunities.

At its core, territory design helps companies reduce overlap, improve focus, and maximize revenue potential. Territories can be defined by location, such as cities or regions; by customer type, such as SMB or enterprise; or by product line or industry vertical. The structure you choose depends on your sales model and market complexity.

For example, a SaaS company might divide its sales team by industry, assigning one group to healthcare clients and another to fintech. This not only builds specialized knowledge but also ensures tailored communication and faster deal cycles.

Sales territories act as the blueprint for resource allocation and performance tracking. When designed well, they balance workload, align incentives, and improve customer experience.

Why Do Companies Use Different Types of Sales Territories?

Types of sales territory define how companies divide markets, regions, or customer segments to balance workload and maximize revenue potential. Sales managers assign territories based on geography, industry, account size, or product line. 

Each model helps optimize coverage, improve quota attainment, and ensure fair opportunity distribution. Modern territory planning uses data analytics and AI-driven tools to align resources with demand and boost performance. Choosing the right type of sales territory supports scalable growth, better customer reach, and efficient sales management.

Companies adopt different territory structures for a few key reasons:

• Fairness and Focus: Balanced territories help prevent overlap, giving every sales rep equal opportunity to succeed.
  
  
• Specialization: Industry or product-based territories let reps build deeper expertise, improving engagement and conversion rates.
  
  
• Efficiency: Clear boundaries reduce time wasted on duplicate outreach and streamline reporting.
  
  
• Strategic Alignment: Different structures support different goals: geographic models help expand coverage, while account-based ones deepen customer relationships.
  
  
• Scalability: As teams and markets grow, flexible territory design ensures resources are distributed evenly and can adapt to new business priorities.

Ultimately, no single model fits every organization. The right territory design depends on factors like market size, product complexity, and sales strategy.

Different business needs call for different structures. Let’s break down the core types of sales territories companies use today.

Core Types of Sales Territories

There’s no universal formula for structuring sales territories. The best approach depends on your business model, product type, and sales motion. Here are the most common types of sales territory, along with when and why they work.

1. Geographic Territories

Geographic territories divide sales regions by location, such as city, state, region, or country. This is one of the oldest and most straightforward models.

• Best for: Businesses with physical presence needs or field-based sales, such as construction, FMCG, or real estate.
  
  
• Benefits: Builds stronger local relationships and simplifies travel planning.
  
  
• Challenges: Market potential can vary widely; one region may be dense with opportunities while another is sparse, creating an imbalance.

For instance, an FMCG company might assign one sales manager to the Northern US and another to the South, ensuring localized focus and quicker market response.

While geography is the most traditional approach, many businesses today prefer to organize territories by industry for greater expertise and tailored engagement.

2. Industry or Vertical Territories

Industry-based territories segment the market by sector, such as healthcare, finance, retail, or manufacturing.

• Best for: B2B organizations with solutions tailored to specific verticals.
  
  
• Benefits: Encourages specialization; reps develop deep knowledge of regulations, decision-making patterns, and pain points unique to their industry.
  
  
• Challenges: Can lead to uneven territory sizes if one industry has more opportunities than others.

For example, a SaaS company offering compliance software might assign dedicated reps to banking and healthcare clients, ensuring nuanced conversations and faster deal cycles.

Sometimes, it’s not about who the customer is but what they’re buying; this is where product-based territories come into play.

3. Product-Based Territories

Product-based territories divide responsibilities based on product lines or categories. Each rep focuses on selling one or a few specific products.

• Best for: Companies with diverse product portfolios, such as medtech or manufacturing firms.
  
  
• Benefits: Reps become product experts, improving credibility and upselling potential.
  
  
• Challenges: Customers may interact with multiple reps from the same company, which can lead to confusion or overlap.

For instance, a medtech company might assign one team to surgical instruments and another to orthopedic devices, ensuring focused selling expertise in each segment.

In many organizations, territory structure depends not on the product or industry, but on the size and value of the customer.

4. Customer or Account Size Territories

This model segments potential customers based on company size or deal value, typically divided into SMB, mid-market, and enterprise tiers.

• Best for: SaaS and B2B companies managing a wide range of client sizes.
  
  
• Benefits: Enables customized strategies, enterprise reps can focus on complex deals, while SMB reps handle high-volume accounts efficiently.
  
  
• Challenges: Requires accurate data on account potential and periodic reviews to avoid imbalance.

For example, Salesforce’s enterprise team manages Fortune 500 accounts, while another team focuses on small and medium businesses with shorter sales cycles.

For companies dealing with high-value clients, a more personalized approach often works better, such as entering named or strategic account territories.

5. Named or Strategic Account Territories

In this setup, individual reps are assigned specific high-value or strategic accounts, regardless of geographic location or industry.

• Best for: Enterprise and account-based marketing (ABM) strategies.
  
  
• Benefits: Builds long-term relationships and deeper account understanding.
  
  
• Challenges: High dependency on a small number of accounts, making pipeline diversification crucial.

For instance, an enterprise SaaS provider might assign one rep exclusively to manage Microsoft, ensuring close alignment with their procurement and IT teams.

For organizations selling through multiple routes, like direct, retail, and distributor, territories are often structured by sales channel.

6. Channel-Based Territories

This model organizes territories based on sales channels, such as direct sales, distributors, partners, or e-commerce.

• Best for: Companies with multi-channel distribution models, especially in consumer electronics or manufacturing.
  
  
• Benefits: Allows reps to focus on channel-specific goals, relationships, and margins.
  
  
• Challenges: Coordination across channels can become complex, requiring strong communication between teams.

For example, a consumer electronics brand may have separate sales teams for online marketplaces like Amazon and offline retail partners to manage inventory, pricing, and promotions efficiently.

Many modern companies blend multiple criteria, like geography and industry, creating hybrid territory models that evolve with their market needs.

7. Hybrid Territories

Hybrid territories combine two or more structures to balance flexibility and specialization.

• Best for: Fast-growing companies expanding across regions or verticals.
  
  
• Benefits: Provides scalability and adaptability as business priorities shift.
  
  
• Challenges: Requires careful planning to prevent overlap and maintain accountability.

For example, A company assigns reps based on both geography and industry vertical, ensuring expertise without compromising coverage.

Now that we’ve covered the main territory structures, let’s explore how these models play out across different industries, from SaaS and manufacturing to healthcare and construction.

Examples of Territory Models in Different Industries

The right sales territory model often depends on your industry dynamics, customer base, and go-to-market strategy. Let’s look at how different sectors use tailored approaches to optimize coverage and performance.

1. SaaS and Technology

SaaS companies usually blend account size and industry-based territories to balance deal complexity with domain expertise.

• How it works:
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  • Enterprise reps handle large, multi-region clients with complex implementation needs.
    
    
  • SMB or mid-market reps focus on smaller accounts that require quicker onboarding and shorter sales cycles.
    
    
  • Some teams add vertical specialization (like financial services, healthcare, or retail) to deepen relevance.

This mix helps SaaS businesses maintain personalized engagement while scaling efficiently across markets.

2. Manufacturing

Manufacturers often rely on geographic or channel-based territories, ensuring local coverage and strong distributor relationships.

• How it works:
  
  
  • Each sales manager oversees a region or state, managing local dealers and channel partners.
    
    
  • In multi-product setups, teams may also be divided by product category (e.g., industrial equipment vs. consumer goods).

This model helps maintain supply chain efficiency, manage logistics, and ensure steady customer support.

3. Healthcare and MedTech

In healthcare, sales reps need specialized knowledge of medical products, regulations, and purchasing processes.

• How it works:
  
  
  • Territories are often product-based (e.g., surgical instruments, imaging devices, or pharmaceuticals).
    
    
  • Larger companies use hybrid structures combining geography with hospital size or specialty.

This ensures consistent engagement with doctors, hospitals, and procurement teams while adhering to regulatory guidelines.

4. Real Estate and Construction

Real estate and construction firms typically use geographic territories, since success depends heavily on local presence and site familiarity.

• How it works:
  
  
  • Sales reps or consultants are assigned by zones, districts, or urban clusters.
    
    
  • Some companies add client type segmentation: residential, commercial, or institutional projects.

This structure helps build stronger local networks and manage on-ground operations effectively.

5. Retail and Consumer Goods

Retail brands, especially those with national footprints, often use channel-based or regional territory models to streamline operations.

• How it works:
  
  
  • Teams manage retail chains, distribution hubs, or e-commerce platforms separately.
    
    
  • Each territory’s strategy may differ by seasonality, customer behavior, and market demand.

For example, a fashion retailer might assign one team to manage online marketplaces while another focuses on franchise stores in major metropolitan areas.

6. Financial Services

Banks, insurance firms, and fintech companies typically use industry or account-size-based territories to manage large, high-value relationships.

• How it works:
  
  
  • Enterprise teams focus on corporate or institutional clients.
    
    
  • Regional managers handle retail customers or small business accounts.
    
    
  • Some also use product segmentation, like loans, investments, or credit products.

This ensures each client segment receives specialized attention aligned with its financial needs.

Understanding how industries adapt their territory models sets the stage for success, but how do you know which model fits your business best? Let’s explore the factors to consider when choosing a sales territory structure.

How to Choose the Right Territory Type for Your Business

There’s no one-size-fits-all approach to sales territory design. The right model depends on your company’s sales process, customer base, product type, and growth priorities. The goal is to ensure coverage efficiency, fair opportunity, and alignment with your broader business strategy.

Here’s a simple framework to guide your decision.

1. Start with Your Go-To-Market (GTM) Strategy

Your territory model should reflect how you sell and to whom.

• If your motion relies heavily on local presence (e.g., construction, real estate), a geographic structure makes sense.
  
  
• If you sell specialized products to distinct industries, vertical territories are more effective.
  
  
• For enterprise SaaS or B2B firms, account-size or named account models align best with customer value tiers.

Tip: Always design around how buyers purchase, not how your teams are structured today.

2. Assess Market Coverage and Opportunity

Analyze your customer distribution and demand concentration using CRM and market data.

• Identify high-potential regions, industries, or account clusters.
  
  
• Look for gaps where coverage is low or competition is high.
  
  
• Use heat maps or AI-based territory optimization tools to visualize imbalances.

Goal: Each rep should have a balanced mix of opportunity, neither overloaded nor underutilized.

3. Factor in Sales Team Structure and Skills

Your model should match your team’s strengths and specialization levels.

• If you have experienced industry experts, assign vertical territories.
  
  
• If your reps thrive on fast-paced, transactional sales, account-size or geographic models may fit better.
  
  
• For hybrid or growing teams, start simple and evolve the structure as expertise deepens.

Tip: Keep reporting lines clear; overlapping responsibilities create confusion and rep friction.

4. Align Territories with Business Goals

Territory design should directly support your revenue, expansion, or retention goals.

• For market expansion → Geographic or hybrid models help penetrate new areas.
  
  
• For customer retention → Named or account-based models drive deeper relationships.
  
  
• For product adoption → Product-based or vertical territories ensure focused selling.

Remember: Your territory model should evolve as your goals shift, from acquisition to growth to retention.

5. Continuously Monitor and Optimize

The most effective companies treat territory design as a living system, not a one-time setup.

• Review performance data quarterly.
  
  
• Rebalance territories when workloads or opportunities shift.
  
  
• Gather rep feedback to uncover friction points or overlaps.
  
  
• Use analytics tools to forecast territory potential and make data-backed adjustments.

Outcome: A territory model that scales with your business; ensuring fairness, efficiency, and continuous growth.

Once your model is set, the next step is implementing it effectively, defining boundaries, assigning reps, and tracking performance. Let’s look at the best practices for successful sales territory management.

Best Practices for Managing Sales Territories

Designing your sales territories is just the first step; managing them effectively determines whether your plan drives performance or creates friction. Successful organizations follow a data-driven, iterative approach to ensure alignment between reps, revenue goals, and market potential.

Here are the best practices that help you get there.

1. Use Data, Not Gut Feel, for Territory Assignments

Avoid arbitrary splits based on assumptions or legacy regions.

• Use CRM data, customer potential, and conversion history to define territory boundaries.
  
  
• Analyze deal velocity, pipeline size, and average deal value before assigning workloads.
  
  
• Employ analytics platforms or territory mapping tools to ensure equitable distribution.

When every assignment is backed by data, your team trusts the process, and that trust translates into consistent, measurable performance.

2. Balance Workload and Opportunity

A well-designed territory should feel fair, not identical.

• Match each rep’s capacity with the territory’s sales potential.
  
  
• Avoid overloading high performers or under-assigning newer reps.
  
  
• Track indicators like pipeline volume per rep or coverage ratio to maintain balance.

Balanced territories ensure your top performers stay motivated while the new salesperson gets a fair shot at success, creating a healthier, more productive sales culture.

3. Reassess Territories Regularly

Markets shift, product lines expand, and new competitors emerge, territory structures must adapt too.

• Schedule territory reviews quarterly or biannually.
  
  
• Track KPIs like revenue per territory, quota attainment, and customer coverage rate.
  
  
• Make incremental changes to avoid disruption while ensuring agility.

If territories are not adjusted periodically, sales organizations can encounter situations where growth is constrained in up to 20%-30% of territories.

Regular reviews prevent stagnation, keeping your structure responsive, your reps agile, and your revenue steady. 

4. Promote Transparency and Collaboration

Clear communication prevents conflicts and builds accountability.

• Define territory rules and escalation protocols upfront.
  
  
• Document ownership boundaries and make them visible across the CRM.
  
  
• Encourage cross-team collaboration for shared accounts or overlapping regions.

Transparency builds trust, and trust fuels collaboration, especially when teams share borders or customers.

5. Leverage Automation and Territory Management Tools

Manual mapping and updates are prone to error and inefficiency.

• Adopt sales performance management (SPM) tools to automate updates and visibility.
  
  
• Integrate your CRM, territory maps, and compensation systems for real-time alignment.
  
  
• Use AI-based forecasting to detect territory gaps and optimize future assignments.

With Everstage Planning, you can model and visualize territory assignments, simulate coverage scenarios, and align quotas with potential in real time. The platform enables data-driven decision-making, helping revenue leaders optimize regions, rebalance workloads, and project attainment outcomes before implementation.

By linking planning and incentives under one connected ecosystem, you reduce friction, improve transparency, and scale your sales operations efficiently.

6. Link Territories to Incentive Compensation

Territory effectiveness directly impacts quota fairness and earning potential.

• Align compensation plans with the territory's potential to maintain motivation.
  
  
• Adjust sales targets when rebalancing territories to reflect opportunity size.
  
  
• Use historical data to model expected earnings and prevent payout discrepancies.

When compensation and territory design move in sync, you create a system that feels fair, motivates consistently, and sustains long-term sales performance.

Conclusion: Matching Territory Design to Growth Strategy

There’s no universal formula for territory design, only structures that fit specific goals, markets, and growth stages. The most effective sales organizations treat territories as living systems, continuously adapting them to reflect shifts in customer demand, rep capacity, and revenue priorities.

When territories align with your growth strategy and customer base, performance naturally follows. Balanced workloads, fair quotas, and clear ownership drive accountability and motivation across the sales team. And when data guides those decisions, you eliminate guesswork and uncover hidden potential in every region or segment.

But great design isn’t a one-time project; it’s a cycle. As your business evolves, so should your territories. Regular audits, backed by analytics and sales performance data, keep your coverage efficient and your teams focused on what matters most: growth.

Action step: Audit your current territory structure to see if it still fits your strategy. If you’re ready to design data-driven, balanced territories that scale with your revenue goals, Everstage Planning helps you model, simulate, and optimize territories with real-time visibility. Build fair coverage, connect performance data seamlessly, and plan territories that grow with your business.