This blog is a summary of the Territory Planning Course from the RevOps Masterclass program. You can enroll today for free!

What is Territory Planning?

Territory planning is the process of designing geographic regions and assigning a list of accounts to each sales representative. The goal is to evenly distribute the sales force across target market areas, ensuring reps can effectively pursue new business opportunities while nurturing existing customer relationships. 

This segmentation allows for focused sales efforts and resources in specific areas, facilitating more personalized and effective customer interactions. The goal of sales territory planning is the equitable distribution of sales territories among sales reps and aligning sales resources with the highest potential market opportunities. This alignment is crucial for achieving organizational growth and ensuring that each sales team member can contribute to their fullest potential. 

Effective territory planning for sales reps also involves a dynamic approach where territories are regularly reviewed and adjusted based on performance data, market changes, and strategic shifts in business objectives. 

By implementing a well-designed territory planning process, companies can create a structured and proactive environment for their sales teams that leads to better sales results, higher customer satisfaction, and more revenue growth.

Why Territory Planning Matters

Territory planning establishes a complete sense of operational order within the sales force, distributing reps evenly across target regions while bringing cost efficiency. Proper territory design ensures key accounts receive focused development over time, aligning resources with high-potential market opportunities and maximizing sales efficiency and effectiveness.

Well-planned territories reduce overlap and internal competition among reps, enabling a more coordinated approach to pursuing new business. Thoughtful account distribution allows for better support of existing customers, facilitating nurturing and retention efforts. By strategically matching reps' strengths to territory characteristics, companies empower their salespeople to exceed quota attainment.

Fundamentally, territory planning provides the systematic framework for targeted selling motions. It lays the groundwork for increased sales performance by channeling efforts into the right markets at opportune times. This strategic alignment of resources is critical for driving sustainable organizational growth and achieving overarching revenue goals.

The Principles of Successful Territory Planning

Effective territory planning hinges on several key principles that ensure fairness, strategic alignment, and overall sales force efficiency. By adhering to these pillars, organizations can design territories that empower their sales teams and drive sustainable revenue growth.

Principle #1 - Equity Over Equality

While an equal distribution of accounts may seem fair, it often disregards the individual needs and abilities of sales reps, which can lead to unfair results. The principle of equity, as opposed to equality, aims to ensure that all reps have a fair chance to meet and exceed their specific quotas. This is achieved by designing territories and account distributions that are highly customized to each rep’s individual compensation plan and skillset.

For example, territories can vary in the number of accounts, geographic coverage, or the mix of account tiering profiles, directly addressing the different needs and potential of each individual. In contrast, equality usually means an equal division of resources, similar to dividing up a meal equally between a 6-year-old and an 18-year-old, without taking into account the nutritional needs of each individual. Focusing on equality can increase the chances of missed forecasts because the distribution is not based on individual needs and capabilities. Equity, on the other hand, focuses on precise, predictive forecasting that takes into account the unique dynamics of the team, leading to more accurate results.

Principle #2 - Flexibility and Adaptability

Territory plans are not static; they require continual refinement based on feedback from sales leaders and evolving market conditions. Maintaining an open and flexible mindset allows for compromises that uphold equitability while meeting the needs of top performers.

Principle #3 - Strategic Account Tiering

Implementing a tier-based ranking system is crucial for prioritizing efforts and allocating resources strategically. Clearly define tiers (e.g., A, B, C, D) based on criteria like an account's strategic significance, revenue potential, industry vertical, and size. 

This systematic categorization enables more prescriptive selling motions tailored to each tier. High-value accounts can receive focused attention, while lower-tier prospects are appropriately managed to maximize overall productivity. Tiering accounts ensures your top targets are continually cultivated while lower-potential opportunities don't consume disproportionate resources.

Principle #4 - Data-Driven Decision-Making

Leveraging data analytics and modeling is crucial for informed territory design. By closely collaborating with data teams, organizations can evaluate different scenarios, balance territories, and make decisions backed by quantitative insights.

Principle #5 - Regular Review and Adjustment

Territory plans should undergo frequent assessment and adjustment cycles to align with changing performance metrics, market dynamics, and strategic business objectives. This proactive approach ensures sales efforts remain optimized and effectively deployed.

Principle #6 - Maintaining a Reserve of Accounts

Maintaining a surplus or reserve pool of unassigned accounts across all tiers acts as a crucial buffer against disruptions. Staff turnover, mergers, acquisitions, or strategic territory realignments can create voids that compromise coverage. 

Having this account surplus allows for seamless adjustments, replenishing depleted territories without compromising fairness or leaving regions uncovered. It's a proactive strategy that provides flexibility to accommodate changes without missing a beat in your sales operations.

Principle #7 - Efficiency in Travel and Account Management

Thoughtful territory design considers factors like rep locations, time zones, and travel requirements to maximize face time with customers. Optimizing these logistics boosts sales productivity while reducing overhead costs associated with excessive travel.

Advanced Strategies for Territory Planning

To stay ahead of the competition, the application of advanced territory planning strategies is crucial. These innovative approaches not only refine the territory planning process but also significantly improve the performance of sales teams. By integrating these strategies, organizations can ensure that their sales efforts are both efficient and effective, leading to better sales results and business growth.

Data Modeling and Analytics

Close collaboration with data teams unlocks powerful modeling capabilities through tools like pivot tables and BI software. Analyze how different territory configurations may impact metrics like quota attainment and revenue potential. 

This data-driven approach provides quantitative insights to optimize designs, ensuring territories are balanced for maximum effectiveness. By leveraging advanced analytics, you can evaluate multiple scenarios, make decisions backed by hard numbers, and continually refine territories based on performance data.

Geographic Hotspot Analysis

A visual analysis of geographic areas with high concentrations of your target market or industry vertical is a strategic exercise. Mapping these hotspots guides critical decisions around territory boundaries, strategic rep placement, and aligning marketing efforts. 

In regions with dense concentrations, like Manhattan, you may need multiple reps to effectively cover the area, using zip codes to create micro-territories. Conversely, expansive regions with sparse concentrations may require leaving some areas uncovered. This focused approach channels sales efforts into the highest-potential locations.

Cross-Functional Collaboration

Territory planning is a cross-functional endeavor benefiting from diverse perspectives. Involve stakeholders like marketing, customer service, finance, and HR to ensure comprehensive consideration of different factors: 

  • Marketing can provide insights into campaigns, target audiences, and go-to-market strategies. 
  • Customer service offers visibility into existing client relationships. 
  • Finance aids in budgeting and resource allocation. HR supports hiring and staffing plans aligned with territory designs. 

This collaborative approach drives holistic, well-rounded territory plans optimized for overall organizational success.

Conclusion

Territory planning in sales isn't just about dividing up regions, it's about strategically allocating resources to maximize efficiency and drive growth. As we've already discovered, the principles of equity, adaptability, and strategic account tiering, alongside best practices and progressive strategies, are the foundation for achieving this goal. 

For sales leaders who want to improve their team's performance and their organization's results, implementing these insights is essential. Use data-driven decision-making, stay flexible, and focus on efficiency in travel and account management. Let's prioritize strategic territory planning to not just meet but exceed sales targets and achieve sustainable success.

If you are interested in learning more about territory planning, check out the full course available for free in BoostUp's  RevOps Masterclass.