What is Sales Territory Planning?
The process of dividing your total addressable market into defined territories assigned to specific sales reps or teams.
Definition
Sales territory planning segments your market by geography, industry, company size, product line, or account tier, then assigns those segments to reps. Good territory design balances opportunity across the team so no rep is overloaded while another starves. It directly impacts quota attainment, rep retention, and revenue predictability. Most companies redo territories annually, and it's a major operational lift every time.
Why It Matters
Poorly designed territories kill morale and revenue. If one rep has 500 accounts and another has 50 enterprise accounts worth 10x the pipeline, you'll lose the overloaded rep and under-challenge the other. Territory planning also prevents account conflicts, double-coverage, and customer confusion about who their point of contact is.
Example
A 20-person sales team covers North America. Instead of splitting purely by geography (which creates uneven opportunity), you segment by company size and industry: 5 reps cover enterprise accounts nationally, 10 reps cover mid-market by region, and 5 reps handle SMB through an inbound model. Each territory targets roughly equal pipeline potential.