Step-by-Step: Creating an Effective Sales Territory Plan

November 8, 2023
Sahith Krishna
Lazy Sales Reps is a myth

Sales Territory planning is not just dividing regions among your sales reps but also strategically paving the path for optimal revenue generation and customer satisfaction. The Sales Management Association underscores this significance, revealing that firms adept in territory design witness a 14% higher rate of sales objective achievement than their counterparts.

Sales Territory Management (STM) stands at the crossroads of analytical prowess and human intuition. It's the art and science of optimizing sales outcomes by ensuring every sales rep has a territory tailored to their strengths. But why is STM so crucial? It's because it's designed to prevent two significant pitfalls: missed sales opportunities and overwhelmed reps.

STM is more than just a one-time strategy; it's a dynamic process. As markets evolve, so must our territories. This ensures that our resources are always used to their fullest potential, driving sales productivity to new heights. Assigning sales reps to a region is less effective than giving them a territory where they can leverage their strengths and expertise to excel.

In this guide, we'll explore the intricacies of STM, exploring its significance, the strategies that power it, and the benefits it promises. Whether you're a seasoned sales leader or just starting in the sales world, this guide is your compass to mastering Sales Territory Management.

Defining sales territory planning

Sales Territory Planning is more than an administrative task; it's a strategic blueprint guiding the sales team to ensure they target the most profitable customers and prospects.

”It's a plan that lets your sales team not just cast wide nets but strategically fish in the most abundant waters.” 

Historically, territories were often defined geographically, but in our digital age, they can be delineated in numerous ways, such as by industry, sales potential, or customer type. Sales territory planning aims to provide a structured approach to maximize sales productivity and enhance the value your sales team brings to customers.

Why sales territory planning is important?

Sales territory planning acts as a beacon, illuminating the path that will effectively lead the sales team to their targets. It ensures that resources are not squandered on prospects that are unlikely to convert but are invested in areas where they will yield the most fruitful results. It’s about ensuring every sales call, pitch, and proposal is heard and resonates, striking a chord with the prospects that matter.

Benefits of sales territory planning

Let’s explore the advantages of sales territory planning and help you decide what’s best for your sales team:

Benefits of sales territory planning
  • A symphony of strategic harmony

One of the most salient benefits of sales territory planning is the harmony it brings to the sales process. Ensuring that the right representatives are targeting the suitable territories creates a symphony of strategic alignment where the sales team's skills perfectly align with the prospects' needs.

  • Cultivating customer loyalty

When sales representatives understand a particular territory's unique needs and challenges, they are better equipped to forge connections that transcend mere transactions. They can cultivate relationships, sow the seeds of trust, and ultimately harvest the fruits of customer loyalty and retention.

  • Nurturing team morale and motivation

When the sales team sees that their efforts bear fruit, it nurtures their morale and motivation. Effective sales territory planning ensures that their actions are not cast into the void but are directed towards prospects that hold the promise of conversion, ensuring that their hard work is rewarded with tangible results.

  • Building a fortress of sustainable success

In the long run, effective sales territory planning builds a fortress of sustainable success. It ensures that the sales team is not running on a hamster wheel of futile efforts but is moving forward, conquering territories that promise immediate returns and sustainable success.

Understanding the basics of sales territory planning

Sales territories are strategic allocations meticulously designed to optimize our sales efforts and outcomes. Whether we’re talking geographical boundaries, customer types, or sales potential, these territories are pivotal to streamlining our operations and enhancing customer engagement.

Types of sales territories

Imagine sales territories as our specialized zones. Each of us, or our teams, gets assigned one, ensuring we’re not simply selling but selling in the right places. Back in the day, territories were primarily geographical. But now, in our digital age, they’ve evolved into segments defined by various parameters like industry, customer demographics, and purchasing power.

  • Geographical territories: Traditional yet effective, focusing on serving all customers within a particular physical location.
  • Industry-specific territories: Tailoring our efforts to specific industries or sectors, ensuring specialized attention and expertise.
  • Customer-type territories: Categorizing and targeting customers based on characteristics, such as size, revenue, or buying patterns.

The real beauty of establishing sales territories lies in its ability to optimize our sales efforts, enhance our customer relationships, and ensure strategic allocation of our resources.

A well-defined sales territory ensures that each customer receives adequate attention and service, enhancing customer satisfaction and loyalty. It ensures that the sales team can provide tailored solutions, understand the customers' unique challenges within the territory, and build long-term, mutually beneficial relationships.

Crafting the map: Process of sales territory planning

Identifying and assigning sales territories demands data-driven decision-making and strategic foresight. It’s not just about dividing a map but allocating resources to maximize sales potential and enhance customer relationships. Let’s dissect the process step-by-step:-

1. Understanding business goals and objectives

Before diving into territory planning, aligning with the organization's overarching goals is essential. This involves understanding the industry landscape, market trends, competitor practices, and the unique value proposition of the products or services being offered.

2. Analyzing and understanding the market

Our starting point is to identify potential customers, understand the ebb and flow of market trends, and recognize the sales potential within various segments. It's about knowing where our products or services will be a hit and where they might strike a different chord.

3. Determine your Total Addressable Market (TAM)

Define the entirety of the market that fits the ideal customer profile. This ensures that the territories created have substantial conversion and revenue generation potential.

4. Defining sales territories - Crafting a balanced sales map

Next up, we define our territories. Imagine having a map and marking out areas where we know our products will sell. We use data and insights to carve out these territories - geographies, industries, or customer segments, ensuring a balanced and equitable distribution of sales opportunities among the team.

5. Assigning sales representatives

Now, onto assigning our sales reps. We align the strengths and expertise of sales representatives with the defined territories, ensuring that they are placed where they can make the most impact.

6. Setting targets and expectations

Setting clear, achievable targets for each territory is like setting a sales destination for each shop. We ensure they align with the overall organizational sales goals, providing each sales rep or team with a clear path and destination.

7. SWOT analysis

Conduct a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to understand different territories' potential challenges and advantages, ensuring we are ready for the journey ahead.

8. Territory documentation

Clearly outlining each territory's boundaries, potential revenue, and specific characteristics ensures clarity and provides a reference point for performance analysis.

9. Action plan development

Creating a robust, adaptable action plan that aligns with the identified territories and organizational goals ensures the sales team has a clear path and strategy.

10. Monitoring and adapting

And, of course, we keep a close eye on things, continuously monitoring the performance of each territory, identifying challenges, and spotting opportunities for optimization. It's about ensuring our ships are always on the right course, adjusting as needed to navigate the ever-changing sales seas.

11. Performance tracking and adaptability

Regularly assess the effectiveness of the strategies employed in each territory. Be ready to modify plans based on evolving market scenarios and feedback.

12. Deep dive into customer and prospect analysis

Understand the preferences and needs of current customers and potential prospects. Analyze historical sales data, identify patterns among profitable customers, and pinpoint areas with untapped potential.

13. Continuous analysis and improvement

Regularly review the sales territory plan's performance. This provides insights into territory performance and the opportunity to make adjustments to optimize results proactively.

Harnessing Technology for Strategic Planning

In today's sales landscape, territory planning goes beyond mere geography. It's about leveraging technology to make informed, strategic decisions. It's also about aligning territories with market opportunities, customer segments, and sales rep expertise. While CRM platforms track customer interactions, they don't necessarily help in optimizing territory assignments. That's where specialized tools come into play. 

Territory Mapping platforms like Maptive and eSpatial provide insights for balanced territory distribution, ensuring each sales rep has an equal opportunity. Route Optimization tools like Badger Maps and Spotio help sales reps navigate their territories efficiently, saving time and fuel. And sales process automation tools like Luru ensure sales teams can get notifications tailored to their territories, ensuring they're always in the loop.

Integrating Luru for enhanced territory management

Integrating Luru for Sales territory managment
  • Real-time monitoring: Track sales activities as they happen. You're instantly informed if a deal shifts or stalls in your territory, allowing for timely interventions.

  • Automated Notifications: Set up specific triggers, like when a lead is assigned to a territory. Only the relevant sales rep gets the alert, ensuring focused and efficient communication.

  • Quota tracking: Luru provides instant updates on territory quotas. If targets are met or if there's a shortfall, you're promptly notified, enabling proactive decision-making.

  • CRM Integration: Update CRM records directly from work apps, reducing manual entry and ensuring data accuracy.

  • Collaboration: Luru fosters seamless team collaboration, ensuring all departments, from sales to customer success, have access to consistent and updated information.

By incorporating tools like Luru, sales territory planning becomes dynamic, responsive, and more aligned with real-world scenarios.

Best practices for successful sales territory planning

Territory planning isn't just about drawing lines on a map. It's a strategic move, a chess game where every decision can lead to a checkmate or a stalemate. As someone in the sales game for decades, I've seen the highs and lows of territory planning. Let's break it down.

Key strategies for successful territory planning

Sales territory planning best practices
  1. Understand your battlefield

Knowing your market isn't just about recognizing your customers but understanding their pain points, purchasing patterns, and the competitive landscape. For instance, CRM systems like Hubspot allow you to visualize sales funnels, automate follow-up sequences, and keep abreast of customer needs, ensuring your strategies are data-driven and customer-centric.

Example: If you're selling software solutions, identify not just who needs them but why, when, and what challenges they face without your product. This isn't merely about demographics but psychographics and buying behaviors.

  1. Define your ideal customer

Beyond just demographics, understanding your ideal customer's psychographics and unique buying behaviors is pivotal. This involves recognizing their industry and location and comprehending their challenges, needs, and the solutions they seek.

Example: If your product is a CRM system, your ideal customer is not just any sales team but remote sales teams in the tech industry who need help with lead-tracking and require a user-friendly interface.

  1. Data-driven decisions

Utilizing data isn't just about collection but strategic application. Employ CRM and other data tools to gather, analyze, and predict trends, ensuring your territory planning is not reactive but proactive and predictive.

Example: If data shows rising demand for remote work tools in a particular region, your territory planning should pivot to prioritize that region, aligning sales efforts and resources accordingly.

  1. Collaborate and conquer

Collaboration should extend beyond internal teams to include customer feedback, ensuring your strategies are theoretically sound and practically applicable and genuinely solving real-world problems.

Regularly consult with customer success teams to understand client feedback and adjust strategies to address any recurring issues or unmet needs.

  1. Keep it fluid

Adaptability is key in the ever-evolving market. Regularly revisit and revise your territory plans, ensuring they reflect current market conditions, customer needs, and organizational capabilities.

Example: If a new competitor emerges in a territory, reassess your approach, ensuring your strategies and resources are realigned to address this new challenge.

Common mistakes to avoid in sales territory planning

  • Overcomplicating the process - Simplicity fosters clarity and actionability. Ensure your plans, while thorough, are straightforward, actionable, and easy for sales teams to understand and implement. For example, instead of a complex algorithm to assign territories, utilize clear metrics like sales volume or customer density.
  • Ignoring the human element - Recognizing and leveraging your sales reps' unique strengths, weaknesses, and expertise ensures territories are not just logically but practically assigned. For example, assigning a rep with a tech background to a territory dense with tech companies, ensuring they can speak the language and understand the unique challenges of those customers.
  • Stagnation - Complacency can be a silent killer in sales. Ensure your strategies and territories are regularly reviewed, reassessed, and revitalized to prevent stagnation and decay. For example, regularly rotate reps between territories to provide fresh eyes and prevent burnout and complacency.
  • Neglecting training - Equip your team with tools and the knowledge and skills to utilize them effectively. Regular training ensures your team is continuously operating at peak efficiency and efficacy. For example, regular workshops or webinars on new features of your CRM tool ensure your team is always utilizing its full capabilities.

Implementing a Sales Territory Plan

With decades of experience under my belt, here's my take on how to successfully implement a sales territory plan:

Step 1: Embrace the buyer-centric approach

Understanding the buyer's world -  The customer is the hero. Knowing them, understanding their needs, and aligning our strategies to meet those needs is paramount. It's not just about geographical territories anymore; it's about carving territories where our buyers live - physically and virtually.

Crafting tailored experiences - A buyer-centric approach means crafting experiences that resonate with them. It's about being where they are and speaking their language. Dive into data, understand their buying patterns, and create territories aligning with them.

Step 2: Leverage data insights to your advantage

Data - The unseen guide - Analyzing data gives us insights into buyer behavior, sales trends, and potential growth areas. It helps us identify where our efforts are bearing fruit and where we must pivot.

Strategic allocation - Use data to strategically allocate resources, ensuring that high-potential territories are adequately serviced. It's not about being everywhere; it's about being in the right places where our buyers are.

Step 3: Assessing capacity and resources effectively

Balancing act - Assessing capacity isn't just about numbers; it's about ensuring each territory has the right resources to service it effectively. It's a balancing act - ensuring every territory is unrestricted.

Dynamic adjustments - Be ready to pivot. If a territory shows unexpected growth, be prepared to reallocate resources dynamically. It's about being agile and responsive to the ever-changing sales landscape.

Step 4: Designing a sales territory with precision

Considerations to make- Consider factors like potential growth, existing customer base, and the competitive landscape when designing a territory. It's about creating a territory where your sales team can thrive and your buyers can be serviced effectively.

Methodical designing - Use a systematic approach to design territories. Leverage data, understand market dynamics, and ensure that each territory is set up for success. Focus on crafting a strategy that propels your sales team forward.

Implementing a sales territory plan

Implementing a sales territory plan is a process that takes time. It's a dynamic, ongoing process that evolves with the market, your buyers, and your organization. It's about being agile, staying tuned to the market pulse, and being ready to pivot when needed.

Key Benefits of Sales Territory Management

Now, let’s have a close look at the various advantages of sales territory management:

Benefits of sales territory management
  • Building stronger customer bonds: Understanding the specific needs and challenges of the territories allows sales reps to tailor their interactions and solutions, fostering stronger relationships. Ensuring reps have manageable territories means they can engage with customers consistently, understanding and addressing their evolving needs.

  • Optimizing use of resources: Reps can focus on high-potential prospects and customers, ensuring their time and resources are effectively used. Strategic planning of territories can minimize travel time and associated costs, allowing reps to spend more time selling and less time traveling.

  • Aligning with market dynamics: Effective territory management allows your sales team to quickly adapt to market changes, ensuring that your strategies and approaches align with current market dynamics. Understanding the nuances of each territory enables your team to identify and exploit opportunities that competitors may overlook.

  • Balancing workloads: Ensuring that sales territories are balanced and manageable prevents reps from becoming overwhelmed, reducing the risk of burnout and turnover. Conversely, ensuring reps have enough opportunities to pursue prevents disengagement and keeps them motivated.

  • Making data-driven decisions: Utilizing data to analyze the performance of each territory enables you to make informed decisions and refine your strategies for better outcomes. Ongoing territory data analysis helps identify trends, understand what's working, and recognize areas that need attention or different approaches.

  • Boosting team morale and fairness: Fair distribution of territories and accounts ensures all reps have equal opportunities to earn commissions and achieve their targets. When reps see that territories are managed and allocated fairly, it fosters a sense of recognition and appreciation for their efforts.

  • Enhancing forecasting: Understanding the potential and challenges of each territory allows for more accurate sales forecasting, aiding in strategic planning and resource allocation. Identifying potential risks or challenges in each territory enables you to develop strategies to mitigate them before they impact your sales performance.

  • Improving training and development: Insights from territory management can highlight areas where reps may need additional training or support, enabling you to provide targeted development opportunities. Recognizing the strengths and expertise of each rep allows you to align them with territories where their skills will be most effectively utilized.

  • Increasing customer satisfaction: Ensuring that reps are spread evenly allows them to respond more to customer needs, enhancing customer satisfaction and loyalty. A deep understanding of the territories enables reps to anticipate customer needs and provide solutions before issues escalate, improving customer experiences.

  • Strategizing growth: Effective territory management helps in identifying untapped opportunities and areas with growth potential. Insights from territories enable you to make strategic decisions about where to expand and how to approach new markets.

Two-way street: Sales territory planning and management

Sales territory planning and management are like two peas in a pod, each influencing and enhancing the other. Planning involves the strategic division and allocation of territories, ensuring that each rep's workload is manageable and aligned with their expertise. On the other hand, management is the ongoing process of optimizing these territories, ensuring they remain viable and productive.

Planning lays the foundation, providing a structured approach to territory allocation. Management then builds upon this, continuously assessing and adjusting territories in response to market changes, rep performance, and company goals. Together, they create a dynamic, adaptive strategy that drives sales success.

Let’s make sales soar with smart territory planning!

Sales territory planning is about diving deep into each territory, understanding its unique characteristics, and aligning it with your sales team's strengths. It's a meticulous process that involves analyzing each spot's potential and ensuring it resonates with your team's capabilities.

Territory planning in sales with Luru

However, manual tracking and notifications can be overwhelming in today's fast-paced sales environment. This is where tools like Luru come into play. With Luru, you can effortlessly track territory performance, ensuring that target quotas are met. Moreover, its real-time alerts ensure that the respective sales rep is instantly notified when a new lead is assigned to a specific territory. This not only streamlines the lead management process but also ensures that every opportunity is noticed.

From diving into SWOT analysis to setting SMART goals, every step in sales territory planning is crucial. But with the added advantage of Luru's automation, you can ensure that your sales strategy stands on robust pillars.

The path is all laid out, and the strategies are all yours. Now, it’s your turn to put these strategies to work, see how they do, and tweak them to perfection for a future of smashing sales success. Remember, the depth of your planning today will build the height of your sales achievements tomorrow.


1. What is sales territory planning, and why is it important?

Sales territory planning is a strategic approach that divides sales regions and allocates them to sales representatives based on factors like geographic location, customer type, or sales potential. This planning is pivotal as it ensures that sales efforts are not dispersed but instead focused, ensuring that the right customers are targeted effectively, maximizing sales productivity and revenue.

2. What steps are involved in sales territory planning?

Sales territory planning typically involves several key steps:

  • Analyzing and segmenting the market and customers
  • Conducting a SWOT analysis to understand internal and external factors
  • Setting specific, measurable, achievable, relevant, and time-bound (SMART) growth goals
  • Developing a strategic map that aligns with organizational objectives
  • Continuously reviewing and tracking results to ensure alignment with set goals and making necessary adjustments.

3. What are the best practices in sales territory planning?

Best practices in sales territory planning encompass:

  • Ensuring that territories are balanced and equitable, preventing sales rep burnout, and providing market coverage
  • Utilizing data and analytics to inform decision-making and territory allocations
  • Regularly reviewing and realigning territories in response to market changes, sales rep performance, and organizational goals.
  • Employing a customer-centric approach, ensuring that customer needs and potential are at the forefront of planning.

4. How can data insights be utilized in sales territory planning?

Data insights play a pivotal role in sales territory planning by:

  • Providing a clear understanding of customer demographics, buying behaviors, and sales potential within a territory
  • Enabling sales leaders to identify high-performing and underperforming territories and reallocate resources accordingly
  • Offering insights into market trends, competitor performance, and potential threats and opportunities within a territory
  • Facilitating the tracking and measuring of sales performance against set targets, ensuring that strategies yield desired outcomes.

5. What are the considerations when designing a sales territory?

When designing a sales territory, considerations should include:

  • The sales potential of the territory, ensuring that it offers ample opportunities for sales reps to meet their targets
  • The geographic location and size of the territory ensure that it is manageable for the assigned sales rep
  • Customer demographics and needs within the territory, ensuring alignment with the sales rep’s expertise and product offerings.
  • The assigned sales rep's performance and capabilities ensure they have the skills and resources to serve the territory effectively.

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