Territory Sales Explained: How to Divide and Win in 2025

If you’ve ever managed a sales team, you know how easy it is for reps to step on each other’s toes, chasing the same accounts, focusing on crowded markets, or ignoring entire customer segments. That’s where territory sales come in.

Territory sales is about creating structure in what can otherwise feel like chaos. Instead of leaving reps to figure out where to focus, you define clear boundaries, whether by geography, customer type, industry, or account size. 

The result? Every rep knows their playing field, every customer gets the attention they deserve, and your business avoids wasted effort.

In 2025, territory sales have evolved far beyond just drawing lines on a map. With data-driven tools, AI insights, and smarter segmentation models, companies can balance workloads, unlock hidden opportunities, and align sales strategies with sales goals.

In this guide, we’ll explore what territory sales is, why it matters, the different methods to divide territories, and how to map and plan them effectively. 

What Is Territory Sales?

Territory sales is a sales strategy where a company divides its market into specific segments, such as geography, industry, customer type, or account size, and assigns each segment to a sales representative or team. 

This approach ensures balanced workloads, prevents overlapping outreach, and allows reps to build deeper expertise in their assigned areas, ultimately improving customer relationships and revenue growth.

Common Types of Sales Territories

• Geography: Territories based on regions, states, or even zip codes. Example: one rep manages all clients in California, while another handles the Midwest.
  
  
• Industry or Vertical: Assigning reps by sector, such as healthcare, retail, or education, is ideal for complex industries where deep knowledge matters.
  
  
• Customer Type or Account Size: Splitting responsibilities by SMBs vs. enterprise clients, or high-value vs. smaller accounts.
  
  
• Product Line: Dividing territories based on offerings, e.g., one rep covers SaaS solutions, another handles hardware.

Why Territory Sales Matters

When sales teams are structured around defined territories, they unlock a range of benefits that directly impact performance, team morale, and revenue efficiency. Here's why territory sales isn't just a logistical choice, but a strategic growth lever:

Efficiency and Focus

With defined territories, reps know exactly where to focus. This reduces confusion, eliminates overlap, and lets them build deeper customer relationships. According to McKinsey, top B2B sales teams generate 2.5× more gross margin per dollar than their peers by aligning reps and resources through structured territory models.

Fair Workload and Balanced Performance

Territory planning ensures no rep is overburdened while others are left idle. It creates a level playing field that drives motivation and fair competition. McKinsey also found that companies using people-first performance strategies like balanced territory assignments are 4.2× more likely to outperform peers, with up to 30% higher revenue growth.

Strategic Resource Allocation

Territory sales allows you to match the right reps to the right opportunities. Senior reps can handle complex enterprise accounts, while high-velocity sellers focus on fast-moving SMBs. Gartner reports that high-growth sales orgs increasingly use territory planning to align rep strengths with market potential, boosting efficiency and impact.

What Does a Territory Sales Manager Do?

A Territory Sales Manager is responsible for driving revenue within a clearly defined region or customer segment. They serve as the bridge between the small business and its customers, developing strategies, nurturing relationships, and ensuring that the company’s offerings align with market needs.

Key Responsibilities

While specific duties can vary based on the size and structure of the sales organization, the typical day-to-day responsibilities of a Territory Sales Manager include:

• Territory Planning & Strategy: Analyzing market data to segment customers, identify top opportunities, and prioritize sales efforts.
  
  
• Pipeline Development: Prospecting new clients, qualifying leads, and moving opportunities through the funnel.
  
  
• Customer Relationship Management: Building relationships with clients and maintaining them to drive repeat business and referrals.
  
  
• Sales Presentations & Demos: Tailoring product/service demos to meet specific customer pain points and industry requirements.
  
  
• Forecasting & Reporting: Tracking KPIs, sales performance, and territory health in CRM systems to inform leadership decisions.
  
  
• Collaboration with Internal Teams: Working closely with marketing, product, and customer success teams to support deal closure and post-sale experience.

Core Skills & Attributes of Successful Territory Managers

Great Territory Sales Managers are more than just strong sellers; they combine strategic thinking with people skills and data fluency. Here are the traits that set top performers apart:

• Deep Market Understanding: They know their territory inside out, about key players, the competitive landscape, and customer pain points.
  
  
• Strong Communication & Negotiation: They have clear, persuasive communication skills that can tailor their pitch to different audiences.
  
  
• Time & Territory Management: Skilled in planning their week efficiently, prioritizing high-value leads, and minimizing low-ROI sales activities.
  
  
• Adaptability & Problem Solving: Able to navigate shifting customer needs, internal changes, or unexpected blockers.
  
  
• Tech-Savvy & Data-Literate: Comfortable using CRMs, analytics dashboards, and sales enablement tools to optimize their efforts.
  
  
• Customer-Centric Mindset: Focused on long-term value creation, not just closing deals, but solving problems.

7 Methods for Dividing Sales Territories

Designing sales territories is about aligning your resources with the right opportunities. The method you choose should reflect your customer base, your team’s strengths, and your overall business strategy. Below are the most common approaches, along with when and why they work.

1. Geographic Division

Territories are defined by geographic regions such as countries, states, regions, or postal codes. This method is simple to manage and ensures clear ownership of local markets.

• Best for: Businesses with location-sensitive operations such as retail, logistics, FMCG, or real estate.
  
  
• Pros:
  
  
  • Easy to set up and manage.
  • Reduces travel time when reps focus on nearby clients.
  • Creates a sense of local ownership, which can strengthen customer trust.
    
    
• Cons:
  
  
  • Can feel unfair if markets are unevenly distributed.
    
    
• Example: A software company assigns one rep to New York City (dense enterprise market) and another to rural Midwest states. Without adjustments, the NYC rep may have more revenue potential despite a smaller territory size.

2. Customer Type or Demographics

Territories are split based on customer characteristics like SMB vs. enterprise, B2B vs. B2C, or consumer demographics. This creates tailored approaches for different buyer groups.

• Best for: Companies with diverse customer groups that require tailored selling approaches.
  
  
• Pros:
  
  • Lets reps specialize in customer behaviors and needs.
  • Clearer messaging and personalization in sales outreach.
    
    
• Cons:
  
  • Risk of overlap if customer categories aren’t well-defined.
    
    
• Example: A SaaS provider splits its sales team so that one group focuses on fast-moving SMB clients, while another team nurtures long enterprise sales cycles.

3. Industry or Vertical Specialization

Reps are assigned to specific industries such as healthcare, finance, retail, and education, so they can develop domain expertise and deliver sector-specific solutions.

• Best for: Complex or highly regulated industries where subject-matter expertise builds credibility.
  
  
• Pros:
  
  • Reps become industry experts and can speak the customer’s language.
  • Easier to tailor messaging and solutions to specific sector challenges.
    
    
• Cons:
  
  • Risk of uneven revenue potential between industries.
    
    
• Example: A cybersecurity company assigns one rep exclusively to healthcare (HIPAA compliance), while another covers finance (data security regulations).

4. Account Size or Revenue Potential

Accounts are grouped by size or value (e.g., high-value enterprise vs. smaller accounts). This ensures the right level of attention and resources for each tier.

• Best for: Businesses with accounts of widely varying value.
  
  
• Pros:
  
  • Ensures top talent is dedicated to high-value accounts.
  • Prevents reps from ignoring smaller accounts while chasing “whales.”
    
    
• Cons:
  
  • Can create morale issues if reps feel stuck with only low-value accounts.
    
    
• Example: Senior account executives manage Fortune 500 clients, while newer reps focus on mid-market and SMB accounts.

5. Product or Service Line Segmentation

Territories are based on product categories or service lines. Reps gain deep knowledge in one area, making it easier to upsell and cross-sell within that portfolio.

• Best for: Companies with a diverse product portfolio.
  
  
• Pros:
  
  • Encourages deep product expertise.
  • Reduces customer confusion about who to contact for which product.
    
    
• Cons:
  
  • Customers buying multiple products may deal with multiple reps.
    
    
• Example: A tech company has one sales team for SaaS subscriptions and another for on-premise hardware solutions.

6. Hybrid Approaches

Two or more methods are combined, such as geography + account size, to balance workload and market coverage. This adds flexibility and fairness.

• Best for: Mid-to-large businesses that want flexibility.
  
  
• Pros:
  
  • Balances workload across reps.
  • Can adjust for both market potential and rep expertise.
    
    
• Cons:
  
  • More complex to manage.
    
    
• Example: A company splits territories geographically but adds a layer of industry specialization; one rep handles healthcare clients on the West Coast, while another covers finance in the same region.

7. Data-Driven & AI-Powered Models

Territories are designed using CRM data, predictive analytics, and AI tools. These models factor in market potential, travel time, and rep workload for balanced, efficient coverage.

• Best for: Scaling organizations that want fairness, balance, and precision.
  
  
• Pros:
  
  • Removes guesswork and bias.
  • Accounts for workload, travel time, customer density, and historical performance.
  • Allows territories to evolve with market changes.
    
    
• Cons:
  
  • Requires investment in tools and clean data.
    
    
• Example Tools: Salesforce Territory Management, Maptive, eSpatial.
  
  
• Example: A global SaaS provider uses AI-powered mapping to balance territories by factoring in both the number of accounts and historical deal values, ensuring each rep has an equal revenue opportunity.

Key Steps in Territory Mapping

Sales territory mapping is the strategic sales process of defining who sells where and to whom. When done well, it improves market coverage, rep productivity, and customer experience. Here’s a structured step-by-step guide to mapping your territories effectively:

1. Analyze Market Data

Before drawing any lines, start with a clear understanding of the market landscape. Look at your customer base, historical sales data, buying behavior, and competitor presence. The goal is to identify patterns, gaps, and opportunities that can inform how you carve up your sales territories.

Actionable Steps:

• Review your current CRM data to find customer concentration and revenue by region or industry.
• Identify under-penetrated markets where there are high potential customers but low rep coverage.
• Map competitor presence to avoid conflicts and discover underserved segments.

2. Set Clear Objectives

Your territory design should reflect what you’re trying to achieve, whether it’s maximizing revenue, improving coverage, or increasing customer retention. Without a defined goal, you’ll struggle to measure success or make informed trade-offs.

Actionable Steps:

• Choose a primary objective: revenue growth, workload balance, cost efficiency, or customer satisfaction.
• Define performance metrics such as quota attainment, rep utilization, or average deal size by territory.
• Align sales, marketing, and leadership on territory sales targets so everyone works toward the same outcomes.

3. Choose Segmentation Criteria

Now decide how you’ll split the territories. You can segment by geography, customer type, account size, industry, or product line. The key is to match the segmentation to your new business model and sales motion.

Actionable Steps:

• Audit your customer base to understand which segmentation logic (e.g., SMB vs. Enterprise, Retail vs. Healthcare) fits best.
• Create account tiers based on revenue potential or lifecycle stage.
• Build rules of assignment (e.g., enterprise overrides geography) to avoid overlaps or conflicts.

4. Leverage Tools and Technology

Manual mapping leads to inconsistencies, overlaps, and blind spots. Instead, use CRM data, sales analytics, and mapping tools to create territories that are balanced and scalable.

Actionable Steps:

• Use mapping tools like Salesforce Territory Management, eSpatial, or Maptive to visualize rep coverage.
• Layer in analytics such as deal velocity, win rates, or travel time to optimize designs.
• Test territory models using AI or predictive insights before rolling them out.

5. Test, Monitor, and Adjust

Your first version won’t be perfect, and that’s okay. The most effective territory models are dynamic, not static. They evolve based on performance data, market shifts, and sales team feedback.

Actionable Steps:

• Review territory performance quarterly to check quota attainment, coverage, and customer engagement.
• Collect feedback from salespeople to surface edge cases or inefficiencies.
• Adjust boundaries or segmentation logic when needed, especially after product launches, team changes, or M&A activity.

Challenges & Pitfalls in Territory Sales

Even the most well-intentioned territory plans can fall short if they aren’t grounded in data, reviewed regularly, or clearly communicated to the sales team.  To build a system that truly scales, it’s critical to understand where territory strategies often go wrong.

Unbalanced Territories

When territories are divided purely by geography or account count, some sales reps end up with high-value clients while others are left with low-potential geographical areas. This creates internal friction, reduces motivation, and leads to missed revenue opportunities.

Fix: Rebalance territories using a mix of sales history, market potential, and account value, not just location.

Overlapping Coverage

Without clear rules, multiple sales professionals may target the same prospects, resulting in confusion for the buyer and friction within the sales team. It also dilutes accountability and wastes resources.

Fix: Implement strict territory assignment rules and automate lead ownership through your CRM or territory management system.

Ignoring Market Potential

Territories that look fair on the surface (same number of accounts or same area size) may differ drastically in revenue potential, leading to underperformance.

Fix: Use data like average deal size, customer intent, and total addressable market (TAM) to inform territory design.

Resistance from Sales Teams

If sales reps feel territories are unfairly assigned or misaligned with their expertise, they may resist the changes, which lowers morale and slows adoption.

Fix: Involve sales reps in the planning process and clearly communicate the reasoning and data behind every territory decision.

Inefficient Use of Tools

Relying on spreadsheets or basic mapping tools limits your ability to analyze territory performance, rep workload, and market gaps effectively.

Fix: Use dedicated territory planning software that integrates with your CRM and includes analytics, drive-time data, and segmentation models.

Conclusion

Territory sales is more than just a way to divide accounts; it’s a strategic framework that helps you align the right reps with the right opportunities. When territories are thoughtfully mapped, regularly reviewed, and powered by real data, you set your team up for scalable growth, stronger customer relationships, and consistent performance.

Whether you’re building your territory model from scratch or optimizing an existing one, remember: the most effective plans are dynamic, not static. Keep iterating based on feedback, results, and market shifts.

Need help designing or optimizing your territory plans with better data, structure, and visibility? Everstage can help you simplify the process with territory planning tools built for modern sales teams. 

Book a demo now to see how.