Published: June 30, 2020. Updated [June 17, 2022]

Table of Contents

  1. What is Sales Territory Planning?
  2. How to Design a Sales Territory Plan
  3. Tools for Sales Territory Planning
  4. Using Territory Mapping Software
  5. How to Optimize Sales Territories

Sales territories are a fundamental part of your sales plan and play a huge role in the success of your sales team. But they take much more time and effort than simply throwing darts or circling areas on a map.

In this guide we'll explore why sales territories are such a big part of your organization, how to ensure they are balanced and mapped correctly, as well as how to make sure you're identifying any overlooked opportunities. We’ll also dive deeper into how you can develop a successful territory mapping and management process—but first, let’s define what sales territory planning is.

What is Sales Territory Planning?

Sales territory planning is the process of identifying, mapping, and assigning areas to sales representatives in order to effectively cover all sales opportunities within a company’s industry or marketplace. Your territory map is one of the most important parts of your sales plan and sets the baseline for your quota, resource, and incentive compensation planning. 

It’s important to first understand that your sales territories carry more weight than just what area code reps are calling into. They are your strategy foundation, and there’s almost a trickle-down effect from them to the rest of your sales plan. You must have the right territory design in place to accurately allocate quotas. Accurate quota allocation impacts your team’s ability to achieve its anticipated incentive compensation. This, in turn, affects rep satisfaction and, ultimately, the retention of your top performers.

How to Design a Sales Territory Plan

There are several factors that play into designing a sales territory plan—and using best practices to guide you is essential. But first, you’ll need to gather some key information, do some research, and assemble your planning team.

1. Examine your historical performance, capacity levels, and ramp time.

First, you need a baseline of where your sales team stands before designing territories. Ask yourself this: “how many fully ramped sales reps do we need in order to achieve our goals, realizing that not all of them will hit quota?” 

To answer that, you need to analyze your sales capacity, historical performance, and average ramp time. Your sales capacity helps you identify how many partially and fully-ramped reps you have on deck right now. Based on past performance patterns, you can estimate what percentage of these reps will hit/exceed quota. Combined with ramp time, you can make sure you’re hiring at the right pace to maintain consistent levels of performance. 

This information will be vital in later steps of planning as you identify sales opportunities and assign reps to sales territories.

2. Research your ideal customer profile.

Before you can begin identifying sales opportunities, you need to have a solid grasp of the business you want to target. Examining your existing customer base is a good place to start. You need to understand the different industry verticals, company sizes, readiness to buy, etc. that make up your ideal prospect.

You might even consider creating a scale to break down your target customers and identify who is most likely to buy. This could then be used to help reps prioritize accounts and better manage their sales territories. 

3. Gather as much data as possible.

Aside from your internal metrics, you need to examine external data to fully understand the opportunities within your industry and marketplace. In fact, organizations that adopt data-driven sales territory planning see up to 30 percent higher quota attainment.

There are three key data sources you should consider when creating your sales territory plan:

  • Internally Generated Data: This is the data you’ve already partially examined in the first planning step related to customers, prospects, and potentials. For most companies, this is commonly sourced from a firm’s CRM, ERP, or spreadsheets.
  • Geospatial Data: You should analyze geographic data for sales territory mapping and analysis, including the location of your existing customers, prospects, and potential opportunities. This helps you identify where your target companies are located and where you may need additional resources to cover.
  • Market Data: It’s important to be aware of economic and industry trends. The demographic information that’s available from public sector sources and other data that can be purchased from third-party vendors can help you stay on top of potential market factors.

4. Bring the right planning team together.

Sales territory planning, when done correctly, is a collaborative effort. It’s important to consider the bigger picture, and you have to make sure that every part of your organization is aligned on strategy and all efforts are driving towards the same goals.

Having input from sales, operations, finance, marketing, product development, etc. is crucial. They don’t necessarily have to sit at the table and physically map out sales territories, but there should be a consensus amongst leadership on strategy, messaging, and communication.

You also need field expertise in addition to the data you collect. For example, field sales managers’ knowledge of local markets and account relationships can provide valuable insight. Additional information from customer success, product, and marketing teams will also help decentralize the sales territory planning process and produce stronger territories.

Tools for Sales Territory Planning

By nature, sales territory planning is a difficult, time-consuming process—especially when it is done manually. One of the easiest ways to ensure your territory plan is efficient and effective is to use a sales territory planning solution. In fact, using a territory solution can help reduce planning time up to 75 percent.

Aside from faster design, there are many benefits to using sales territory planning technology. To streamline the planning process, these tools allow you to input all of your data sources into one place, analyze existing territories, and visualize new designs with interactive maps. Many can also integrate with your existing incentive compensation and sales planning solutions to maintain consistency across your entire organization.

Effective Sales Territory Mapping

Once you have your planning data in hand, you’re ready to actually map out your sales territories. The goal is to create a balanced sales territory map so you can evenly distribute reps for the best results. Again, following best practices is a must—here are a few quick tips you should consider when designing a sales territory map.

1. You need to achieve fair, balanced territories.

Anyone who has worked in sales will tell you nothing is harder than getting the “bad territory.” Usually, these are areas that aren’t densely populated with prospects. The key to an effective sales territory map is balance. 

Your sales territories must be balanced, and each area must provide reps with equal sales opportunities—but they also need to be fair. It’s not just giving reps the same amount of potential deals, they should also be fair. Remember that scale we talked about earlier? You should ensure that there’s an equal balance of prospects and readiness to buy for each territory as well. 

This not only keeps morale high; it also sets your team up with the biggest chance for success. When your territories are balanced, you’re giving each rep a key resource to meet and exceed their goals.

2. Establish a system of measurable results.

You need to be able to track if your sales territories are performing well in order to hit your goals. The worst thing that can happen to a sales organization is that they are blindsided by poorly designed territories. It’s important to set up a reliable and easily accessible metrics system. (Hint: territory planning software can help achieve this and manage it more easily).

3. Consider your territory travel efficiency.

Travel is often a large part of sales. Some deals just close more easily when you can meet with prospects in person. But poorly-designed territories can lead to high travel costs, which only moves you farther from your goals. Using your geolocation data (from the steps above) helps you map sales territories with travel efficiency in mind, to keep travel times minimal and the associated costs low.

Using Territory Mapping Software

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If you’ve mapped sales territories at any point in your career, you know it can be tedious work. Compiling and analyzing all of the data needed is a huge task, and there’s simply not enough time to manually model every single scenario. You just have to trust that you’ve gotten it right. Territory mapping software helps streamline this process and make territory management much more efficient.

Planning technology takes your data sources and analyzes it for you by identifying the most balanced approach—but that is just one of many benefits. Many contain interactive maps to help physically draw out territory boundaries and evaluate the opportunities within each area. You can also integrate with your incentive compensation software to identify the right place to assign reps and ensure their workload and sales potential are balanced.

What is Sales Territory Management and Optimization?

Once your sales territory map is designed, there are two key components to driving success: territory management and optimization. Both play a vital role in setting your team and your entire organization up to meet their goals.

Territory Management: The largest part of territory management is understanding that the work isn’t done once you’ve mapped and planned your territories. Rather, it is an ongoing, continuous process. In order to maintain balanced, fair territories and high performance, you must also accept that plans may need to adjust more than once throughout the fiscal year. 

This is especially true with unforeseen circumstances. Continuous analysis and management will allow you to adjust your territories for economic changes, market disruptions, and anything else that comes your way.

Territory Optimization: When you are consistently analyzing your territory performance, you are enabling yourself to optimize your strategies. Again, this all comes down to data. You can use your internal performance and territory insights, as well as up-to-date external data to improve your territories. Sales territory software will make this process easier by analyzing the data for you and allowing you to run it through different scenarios.

There are three major factors involved in sales territory optimization:

  • Data-driven insights: Your data analytics and insights help identify where you can improve existing sales territories, increase balance and travel efficiency, and potential opportunities that may have been overlooked.
  • Automated processes: Using sales territory software, you can streamline the design and mapping processes and fairly distribute reps based on a large variety of factors, including workload and sales opportunities. 
  • Increased collaboration: Planning tools encourage collaborative planning by creating one central place for all things territories in your organization. It also enables different roles to be included in planning, such as field sales managers. 

How to Optimize Sales Territories

In recent years, there’s been an increase in the conversation around automating processes. But it takes more than just making your sales territory plan digital. Your technology must help you manage and improve your existing strategies. 

There are two main parts of sales territory optimization—identifying areas for improvement and uncovering white space opportunities. Again, continuous management is essential and helps you identify where your existing territories can be improved. This includes your initial planning for a new year and also as you check in on performance throughout the year. 

You also have to cover your bases when it comes to identifying sales opportunities. It’s easy to assume you know your market well—after all, you are the expert in your industry. But there is always a chance that you’re missing out on deals because you deemed an area “dead to sales.” 

Using Xactly’s sales territory software, you can cross-reference your internal data with third-party information to flag any missed opportunities and include them in your territory map.

Performing these optimization tactics regularly ensures you are maximizing your sales potential. 

After all, companies using territory technology achieve up to 30 percent higher sales objective achievement, so they must be on to something, right?

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