• David Hardy

Defining and Effectively Managing a Sales Territory

Whether you are starting a new business, or are looking to reinvigorate your sales strategy, having sales territories that are clearly defined and segmented based on relevant criteria is essential to the success of your sales team and your business. It also helps to ensure that you target the right customers at the right time and that management of the customer's account is allocated to the appropriate sales representative. Effective management of your sales territory helps reduce the cost of sales and improves account management. Good account management increases the rate of repeat business. This article guides you through the process of defining and setting up a sales territory and sets out some best practice tips for effectively managing your new sales territory.

Defining a sales territory

Defining a sales territory

There are several ways of defining a sales territory. The method most people are familiar with, and probably the most frequently used method, is to relate it to a specific geographical area or region. A salesperson or sales team is assigned to that territory in which to sell your company's products and services. However, if your products and services are segmented, it may be sensible to define your sales territories on product or service type or market segment. Other characteristics that can be used to define a sales territory include industry, product or service, customer type, purchase history, and referral source, and where they buy - online or off line.

There are three preliminary steps you need to take before you can define your sales territories or effectively manage them. They are:

Step 1: Analyse and segment your existing customers

You need to set your base lines, without this data you have nothing against which to measure your progress. The first step is to take stock of your existing clients, prospects, and leads and to divide them into segments based on location, vertical, purchase history, or another relevant characteristic. Your records must be clear and without duplication. Ensure there are no gaps in the data.

Step 2: Analyse and segment your potential customers

You should have some knowledge of the potential market size for your business' products and services and at least have an idea of the number and value of sales you are looking to achieve. To be able to turn that into reality, you will also need to also find, list, and segment all of your key potential sales targets. This may be direct customers, retailers, or distributors for your products. You then need to rank and rate them according to factors such as, potential sales, company size and financial strength, and which competitor products they currently buy or sell. You will need to assess the quality of the market they are in. Is it expanding, stagnant, or declining?

Step 3: Define and research relevant public data for your industry

You also need to look at the bigger picture. To do this you will need to access and analyse some potentially large data sets relevant to your industry. Some data, such as population density data, GDP and employment figures, is relevant to all industries. Accessing specific data and trends relevant to your industry may require a subscription to a specialised data service or a geographical information service that provides this data natively, or that can provide your business with a range of appropriate services such as setting up bespoke data warehousing and visualisation tools for you.

An analysis of these factors will help you to direct and prioritise your sales efforts.

How to create a sales territory plan

# 1. Ascertain which verticals your sales team has the most success with, where the customers are located, and how they make their purchases. Does this type of customer buy online and base their purchasing decision on information they get from the Internet? Or do they often require a product demonstration and at least one meeting with the salesperson before making a purchase decision?

Select your top ten prospects and top ten customers and identify the characteristics they have in common.

Not only must you know who your customers are and where they are located, but you ought to be able to answer the following questions about each market segment:

Create a Sales Territory Plan
  • What products and services are your customers buying?

  • Where are they buying them from?

  • Which are the best-selling products or services?

  • What problem does your product or service solve?

  • Which factors lead to purchases?

  • Which factors lead prospects to not buy?

  • What is your conversion rate?

The answers to these questions will help you spot trends in the market for your products and services and will help you to better segment and manage your territories.

# 2. You will need to complete a basic SWOT analysis to identify your sale team's strengths, weaknesses, the opportunities that may be presented, and threats the team will face.


What is your sales team good at? Not only do you need to identify where the team excels, but also to be aware of the skills and talents of the individual team members.


What aspects of the process does the sales team need help with? Is there a stage in the sales process where leads tend to lose interest? Are there any bottlenecks or leaks in your pipeline that must be addressed? Is this a weakness in the sales team or in the way it is managed?


Based on the current marketplace and your customer segments, is there an untapped market or under-served territory that could provide more sales opportunities?


What are the threats to your success in a given territory? Is there a competitor fighting for the same market share in a particular vertical, location, or customer segment? Rank the threats in order of seriousness.

# 3. Set goals. You must set S.M.A.R.T. goals for your sales team to achieve in its territory. The goals must be challenging, but achievable. They must be:

Specific, that is they must be clearly defined;

Measurable - this why you set your base lines;

Attainable, they must be challenging, but be within the capabilities of your sales team;

Realistic, that is, they must reflect the business reality of your business; and

Timed, that is you must set a specific date by which the goals are to be achieved.

Whether you are mapping out a new territory management plan for the whole team or redefining a specific salesperson’s territory, it is best to set clear parameters and tangible goals. The easier your goals are to measure and track, the better.

Ask yourself and your team the following questions to help you set goals for your sales team:

  • Looking at our sales pipeline coverage, how many new opportunities do we need to add to meet our sales target?

  • Where will most of our new leads come from?

  • Which geographical areas should we focus on?

  • Are any of our territories being under-serviced?

  • If so, what additional resources should we assign to those territories?

  • Which products are the most profitable? Which customers are purchasing them?

  • Which customer segment provides the highest return?

  • Are we maximising the return from that customer segment?​

When you know what you want your business to achieve, you can set S.M.A.R.T. goals for your sales team and put in place effective measures to ensure those targets are met.

# 4. Now that you have segmented your market and set S.M.A.R.T. goals, you are ready to create a plan that targets the most profitable segments and maximises sales coverage.

Using the information collected in the steps described above and taking account of sales potential and also ensuring appropriate distribution of resources, you can now assign individual salespersons to specific regions or markets. Try to match individual team member's skill sets to the type of territory to which they are assigned.

Looking at your customer segments, determine how often different types of accounts should be contacted. Consider whether they require personal visits to be made by field representatives or whether most of your accounts can be handled through your website. Bear in mind the following questions When creating your strategy:

  • What resources do your representatives need to manage the accounts assigned to them?

  • What else does your team need to succeed in achieving the goals and sub-goals set for them?

  • How will you increase the conversion rate in each territory?

  • Are there additional sales opportunities in under serviced territories?

# 5. Measure your results: Measuring your progress toward achieving your goals is a continuous process. Measuring your progress, starting from the base lines you established, is the only way in which you can see if your new territory plan is having a positive impact on sales. The results will answer questions such as:

  • Have sales increased in a specific region or market?

  • Is there a large disparity between sales in different territories?

  • Which salespeople are struggling to keep up with leads?

  • Which salespeople are achieving their targets?

  • Are the targets realistic?

  • Is there a market that is under serviced, which that needs additional resources assigned to it?

The answers to these questions will help you determine which, if any, of your territories or salespeople are underperforming, and will enable you to make any necessary adjustments.

Sales Territory Best Practice

Sales Territory Management Best Practice

Sales managers can maintain an even territory distribution and set their salespeople up for success by following to the following best practices:

1. Create a call rotation schedule so you can keep in touch with all your accounts. Determine how much contact each account requires to establish how often your salespeople should get in touch with the customer.

2. Consider whether the customer requires a physical meeting to renew their contract or it can be managed in another way, such as by email.

3. Take seasonal buying trends into consideration to ensure the customer is contacted at the most appropriate time of year for them. Contact your customers when they are most likely to be ready to buy again.

4. Prioritise long-term results. Although it is important to address fresh leads whenever they arise, do not allow unqualified opportunities to distract from you your plan. Encourage the sales force to keep to their call schedule even when new leads appear.

5. Consider going beyond geographic sales territories. Depending on your product or service and who your target market is, dividing up leads based on geography might not be the best choice. This is especially so if your sales people do not usually travel to meet clients in person. It may make more sense to segment customers in some other appropriate way.

By following the guidance in this article, you can define and establish a sales territory based on appropriate and relevant criteria and will be able to effectively manage your new sales territory.

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