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Sales Territory 101: Defining, Planning & Mapping Territories

Ninad Pathak
October 5, 2023
February 27, 2024
Table of Contents

Selling is hard work. With multiple stakeholders scattered across the globe, longer, non-linear sales cycles, and time zone barriers, it's becoming challenging for sales teams to drive consistent pipeline growth.

That's where well-defined sales territories can have a big impact.

In this guide, we'll cover everything you need to know about sales territories—from what sales territories are and why they matter to how to map and optimize your territory plan. Let's dive in.

What is a Sales Territory?

A sales territory is a geographical area or segment of customers that is assigned to a sales rep.

The rep is responsible for all sales activities and revenue generation within that defined region or customer segment.

In simple terms, territories divide up your total target market into smaller segments that can be better managed by reps.

For example:

  • A software company selling to SMBs across the US can split the country into Northeast, Midwest, South, and West sales territories. Reps based in each territory will handle that area.
  • An enterprise software company may choose to divide its market by industry verticals. One rep handles all education/non-profit accounts, another handles healthcare accounts, and so on.

The territories you define can be based on various parameters like location, company size, industry, product line, channel partners, etc. This can also be useful when working on account-based marketing campaigns.

We'll explore different types of sales territories later in this guide.

Why Are Sales Territories Important?

Implementing sales territories provides immense strategic value for SaaS organizations. Well-defined territories lead to optimal sales coverage, increased efficiency, and higher productivity.

Let’s explore the key benefits of using sales territories:

1. Improves Sales Efficiency

With sales territories, reps can dedicate their time and energy to nurturing a well-defined set of target accounts instead of spreading themselves thin. This focused approach results in higher win rates.

For example, an enterprise rep can go deep with a concentrated group of strategic prospects. They can personalize messaging and solutions for each rather than trying to sell broadly.

2. Eliminates Sales Burnout

Reasonably sized sales territories ensure reps aren’t overburdened. For instance, handing a rookie rep 500 messy leads with no segmentation will inevitably lead to burnout.

But allocating them a focused territory of 100 well-qualified accounts provides achievable workload management. This results in motivated, high-performing teams.

3. Enables Granular Performance Tracking

With reps aligned to sales territories, it becomes easy to track performance for each segment. Sales leaders can quickly identify high-performing territories vs problematic ones needing more support.

Granular visibility enables making data-driven decisions on territories - adjusting goals, realigning accounts, increasing marketing spend, etc.

4. Provides Market Insights

When reps consistently sell into an industry or persona, they master that segment. A vertical rep will learn the terminology, use cases, challenges, and stakeholder dynamics of their sector.

This allows reps to gain deeper insight into the market and reach out to potential customers  and position the product effectively. Customers also appreciate sector-specific expertise.

5. Optimizes Lead Distribution

Since reps build intimate territory knowledge, they provide strategic insights that inform marketing, product development, competitive analysis and more.

For instance, feedback from a public sector rep can help tailor messaging and packaging for government buyers. Cross-functional teams can leverage these market insights.

6. Facilitates Specialization

Inbound leads can instantly be assigned to the right rep based on attributes like industry, geo-location, or company size. No time is wasted figuring out who should follow up. Quick hand-offs result in rapid and effective lead response. Customers get sales assistance faster.

As you can see, sales territories provide immense value in multiple areas—leading to scalable revenue growth and happier, more productive reps. Let’s look at the types of sales territories that you can use for your SaaS business. 

7 Types of Sales Territories for SaaS Companies

Sales territories for SaaS companies can be defined in multiple ways depending on the nature of your business, products, and buyers.

Let’s explore the most common SaaS sales territory structures with real-world examples:

7 Types of Sales Territories for SaaS

1. Geographic Territories

This involves dividing territories according to geographic regions or offices. It's commonly used by field sales teams selling locally.

For example, Salesforce can have an East Coast territory covering New York, New Jersey and Pennsylvania. Reps based in Manhattan will manage all accounts in this territory.

Geographic territories are best when buyers prefer face-to-face meetings vs remote calls. Proximity also helps reps provide quicker support. For expensive tools like Salesforce, this type of sales territory would fit best. 

2. Industry or Vertical Territories

Here you group accounts from the same industry or vertical into segments. 

For instance, Drift can dedicate specific reps for their e-commerce, media, and technology industry verticals respectively.

Industry specialization allows reps to talk the prospect’s language and highlight relevant use cases on calls.

3. Customer Size Territories

Another approach is to create SMB, Mid-Market, and Enterprise customer tiers as separate sales territories.

Larger customers require longer sales cycles, demos tailored to their scale, and dedicated account management. Smaller territories can work with video demos, self-service sign ups, and be overall easy for you to onboard. 

Segmenting them helps provide tiered white glove service based on the business size. 

4. Product Line Territories

SaaS companies with multiple products can align reps to specific solutions.

For example, Salesforce reps could be assigned to either Sales Cloud, Service Cloud, Community Cloud or Platform based on their expertise.

This enables reps to demonstrate in-depth knowledge of the product’s capabilities during sales calls.

5. New Business vs Renewals Territories

An account can also be divided between new business reps focused on landing net new customers and renewal reps who manage ongoing subscription revenue.

New business requires more outbound prospecting while renewals need customer success skills. Separate territories prevent mixed focus.

6. Channel Sales Territories

If part of your sales goes through reseller partners, you can have dedicated partner account managers aligned to them.

For example, having an APAC channel partners territory manager who handles all partnerships in that region and works to grow revenue.

7. Named Accounts Territories

Larger SaaS firms often assign strategic accounts like Fortune 500 companies to specific reps who can customize solutions for them.

These named account territories get all the sales and marketing resources required to land massive deals.

As you can see, SaaS sales leaders have many options to define territories based on their unique situation and customer landscape.

How to Create an Effective Sales Territory Plan

Creating an optimal sales territory plan is crucial yet complex. There are many factors to consider and steps involved.

Let's go through a comprehensive, step-by-step process for designing a sales territory plan that drives growth:

Effective Sales Territory Plan

Step 1: Define and Segment Your Target Market

The first step is to analyze and divide your total addressable market into logical segments that make sense for your business.

You can segment your market using various characteristics like:

  • Geographic region
  • Industry vertical
  • Company size
  • Buying criteria
  • Products/services purchased
  • Distribution channel

For example, a tech company selling across the globe can first be divided into regions like North America, APAC, EMEA, and LATAM. Next, it can further segment into industry verticals like healthcare, finance, retail, etc.

Analyze your existing customers and identify patterns in their location, size, industry, and other attributes to reveal potential ways to slice your market. You can refer to your ideal customer profile frameworks as well.

The goal is to divide your large market into smaller, coherent segments that share similar characteristics and needs.

Step 2: Analyze and Assess Potential of Each Territory

Now analyze the sales potential and viability of each proposed territory segment. Some ways to do this are:

  • Evaluate current and historical sales data: Look at where your recent deals and pipeline come from. Analyze win/loss data and identify your best segments and set your priorities.
  • Research target accounts in each territory: Are there enough prospects that fit your ideal customer profile? Assess their budget, authority, need and timeline to buy for each segment.
  • Estimate market size and share: For new territories, research the addressable market size and your potential share. You can use industry reports, statistics, and other industry data to take an estimate of the potential.

This helps you understand the revenue potential and product-market fit of each territory. The idea is to focus on segments with the highest potential first.

Step 3: Define Goals and Quotas for Each Territory

Once you’ve identified the sales territories with the maximum revenue potential, you need to define the goals and resource quotas for each territory. 

  • Revenue goals: Define annual, quarterly, and monthly revenue targets per territory. Ensure it aligns with your broader organizational goals.
  • Activity goals: Set call, email, demo targets to generate sufficient pipeline. Define lead volume goals.
  • Sales quotas: Allocate quota across territories equitably based on segment size and potential.

Get input from sales leaders on historical performance to set ambitious yet realistic targets.

Step 4: Assign Territories to the Right Sales Reps

After you prioritize the territories and have determined the goals and quotas, you need to allocate the same to the right sales reps in your team. Here’s how you can best identify the people for specific territories:

  • Assess reps' skills, experience and capacity to handle large or complex territories.
  • Ensure reps have relevant prior experience and knowledge about the region, industry or product line they'll be assigned.
  • Discuss preferences and strengths to assign mutually agreeable territories.
  • Rotate territories periodically to develop well-rounded reps.
  • Use specialist reps for highly technical products or large accounts.

Get sales leadership input on rep assignments to balance experience, interests and development needs. The end goal is to have a team of sales reps that are familiar with the sales territory in question. 

Step 5: Customize Sales Process for Each Territory

You also need to have sales collateral that matches the sales territory. The level of personalization per asset will depend on the revenue potential. 

However, it’s best to recognize each sales territory individually on your website and in the sales materials. Here are a few things to keep in mind:

  • Create targeted ICPs, ideal sales qualifications (ISQs), and buyer personas for each territory.
  • Adapt messaging, case studies, collateral, and presentations with territory-specific examples.
  • Adjust playbooks based on territory buyer journey and sales cycle differences.
  • Set territory-specific lead nurturing cadences.
  • Provide requisite training and resources to reps aligned to each territory.

Step 6: Configure Your CRM for Lead Routing

Your sales territory definitions will change as you mature. But when you create them in the beginning, it’s best to set them up as additional columns in your CRM. Then, create automations to auto-assign the accounts to the correct reps. 

  • Create territory rules based on lead attributes like geography, industry, company size etc.
  • Build a lead scoring model to identify qualified leads for each territory profile.
  • Integrate marketing automation workflows to nurture leads until sales ready.

You can achieve this in most CRM tools or a combination of CRM + automation tools like Zapier, Make.com, and others. 

Step 7: Track Territory KPIs and Optimize

Once you have everything set up, it’s time to begin tracking key performance indicators (KPIs) for continuous optimization. Here are some of the metrics that you should consider tracking. 

  • Territory revenue, pipeline and activity goal attainment
  • Win/loss analysis 
  • Sales cycle, close rates 
  • Marketing qualified lead (MQL) volume and quality 
  • Rep ramp time and turnover 
  • Customer satisfaction

Address any underperforming territories by adjusting goals, adding resources, or reassigning reps. A tool like Factors can help you make the most of these KPIs without complicating thingsfor the team. 

Remember to make iterative changes when it comes to sales territories to allow your sales reps time to adjust. You do not want to make knee-jerk changes that disrupt the working processes your sales teams follow.

How Factors Helps Optimize Territories

Factors is an AI-powered Account intelligence & analytics platform that can help maximize the potential of sales territories:

1. Enriches Anonymous Traffic

Factors Helps Optimize Territories

Factors enriches anonymous website visitors and ad impressions with company data—revealing the company name, industry, location, and other attributes you can use to map accounts to matching sales territories.

2. Automatically Assigns Accounts to Territories

Once Factors discovers the right data, like the location, industry, account size, etc, it automatically assigns the accounts to the right reps based on the territory definitions in your CRM. You no longer have to manually assign a rep every time there’s a new lead in the system. 

3. Alerts Reps About Territory Accounts

Factors helps you automatically alert users when there are new accounts identified. You can set up Factors to automatically message users on Slack informing them about the new account. 

The best part is, Factors continuously monitors your website and other connect platforms for new leads. Your reps are alerted as soon as a new lead hits Factors (in real-time) so they can act upon the leads while they’re hot. 

4. Provides 360-Degree Territory Account View

Factors unifies cross-channel account data to provide a 360-degree view of territory accounts—including web activity, ad impressions, intent data, CRM interactions etc.

5. Enables Data-Driven Territory Optimization

It analyzes territory performance across metrics like engagement, pipeline velocity, and more. This allows data-driven planning and optimization of territories.

With Factors, you can leverage previously untapped anonymous interactions to drive more territory leads. Continuous optimization of territories also becomes easier based on hard data vs guesswork.

Key Takeaways

  • Sales territories optimize market coverage, sales efficiency, and account management for your team. Ways to define territories include geographic, industry, size, products, or channels.
  • Steps for creating a territory plan include choosing territory types, mapping target accounts, estimating potential, setting goals, assigning territories, configuring lead routing, and tracking performance.
  • When assigning territories, take rep strengths into account, involve reps in planning, make data-driven decisions, and limit frequent realignments.
  • Specialized software provides visibility into sales territories and makes territory management efficient.
  • Factors enriches anonymous traffic to assign accounts to territories. It also unifies data across channels for continuous optimization.
  • Well-planned sales territories ensure your reps have reasonable workloads and can nurture the right accounts. Combined with the right technology, sales territories provide immense leverage to scale revenue growth. 

Map Your Path to Sales Success with Sales Territories

Territories allow reps to go “all-in” on targeted accounts instead of spreading themselves thin. This results in higher win rates and accelerated revenue growth.

But territory success depends on getting the fundamentals right.

Choose appropriate territory characteristics based on your business model, products, and customers. Involve reps in co-creating territory plans that align with their strengths. Set up your CRM to automatically route inbound leads to the right reps. And continuously track and optimize territories based on hard data.

Factors plays a critical role here. It enriches anonymous website traffic to identify and assign accounts to matching sales territories automatically. Cross-channel analytics further fuel data-driven territory optimization.

With Factors, you can leverage previously untapped traffic to generate more territory leads on auto-pilot. It connects the dots across customer touchpoints to uncover revenue opportunities hidden within your data.

So if you're struggling with sub-optimal territory planning, take control of your revenue engine. Book a customized Factors demo today to see how it can help optimize your sales territories.

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