A geographic area assigned to a salesperson for selling products or services.

In the world of sales, a sales territory refers to a geographical area or customer segment assigned to a salesperson, sales team, branch, dealer, or distributor for them to focus their sales efforts on. It’s essentially a way to divide the overall target market into manageable chunks, allowing for more focused and efficient sales coverage.

Why Use Sales Territories?

There are several advantages to dividing the market into sales territories:

  • Increased Sales Efficiency: By assigning specific territories, salespeople can become experts in the local market dynamics, customer needs, and competitor landscape. This focused approach allows them to build stronger relationships with potential and existing customers within their territory.
  • Improved Sales Management: Territories make it easier for sales managers to track individual and team performance, allocate resources effectively, and provide targeted coaching and support.
  • Reduced Overlap and Competition: Clearly defined territories prevent salespeople from stepping on each other’s toes and competing for the same leads. This fosters collaboration and avoids internal competition within the sales team.
  • Targeted Marketing and Sales Strategies: Businesses can tailor marketing and sales strategies to the specific needs and preferences of customers within each territory.

Types of Sales Territories:

Sales territories can be defined based on various factors, depending on the nature of the business and its products or services. Here are some common approaches:

  • Geographic Territories: Dividing the market based on geographical boundaries like states, regions, or even zip codes. This is a common approach for businesses with a physical product or service requiring local presence.
  • Industry Verticals: Segmenting the market by industry sectors. This is often used by businesses selling B2B (Business-to-Business) solutions where specific industry expertise is crucial.
  • Account Size: Assigning territories based on the size and potential revenue of customer accounts. This is relevant for businesses with a wide range of customer sizes, from small businesses to large enterprises.
  • Customer Type: Focusing on specific customer segments with distinct needs and buying behaviors.

Effective Sales Territory Management:

  • Data-Driven Decisions: Utilize sales data, customer demographics, and market trends to define balanced territories with similar sales potential.
  • Salesperson Input: Involve salespeople in the territory planning process to leverage their knowledge and experience of the market.
  • Regular Reviews and Adjustments: Sales territories are not static. Regularly assess their effectiveness and make adjustments as needed based on market changes or sales performance.
  • Clear Communication: Clearly define and communicate territory boundaries, customer assignments, and performance expectations to all stakeholders.

Beyond Geography:

In today’s digital world, sales territories are not always strictly geographical. For businesses with a strong online presence or those selling digital products, territories might be defined based on customer segments or online behavior.