Short answer
A sales territory is the set of accounts and prospects a salesperson or team is responsible for, defined by geography, industry, company size, a list of named accounts or a mix. Territories give every account one owner and set the scope for each quota. A well-designed territory is balanced on two measures: the workload needed to cover it and its revenue potential, each within about 10% of the team average.
- A territory is a list of accounts with one owner; a map is just one way to draw it.
- Size the team from workload: total visits or touches a year ÷ what one rep can do in a year.
- Balance territories on workload and potential, not on account count.
- Build territories from small units such as ZIP codes so you can move work in small pieces.
- Realign on a schedule, and weigh the cost of moving customers to a new rep.
On this page
This page is for sales managers, RevOps analysts and founders drawing territories for the first time, or redrawing ones reps say are unfair. It covers the definition, the design options and the arithmetic of sizing and balancing. For the document a rep writes to work a territory, see the territory plan template.
What a sales territory is
A sales territory is a group of accounts and prospects assigned to one salesperson or team, who owns selling to them. The group can be defined by geography (a state, counties or ZIP codes), by customer type (an industry or a company size band), by a list of named accounts, or by a mix.
Andris Zoltners and Prabhakant Sinha, whose work at ZS Associates spans more than 1,500 alignment projects, define sales territory alignment as "the assignment of accounts and their associated selling activities to salespeople and teams." That's the useful way to think about it: a territory is a list of accounts plus the work needed to sell to them. The map is one way to draw it.
Territories give every account exactly one owner, set the scope each quota is measured against, and let a manager spread opportunity so results reflect skill rather than luck.
The main ways to design territories
| Design | How accounts are grouped | Best for | Watch out for |
|---|---|---|---|
| Geographic | Counties, ZIP codes, states or regions | Field sales, where travel time matters | Dense cities and sparse regions are hard to balance |
| Industry | By the customer's industry | Buyers who expect domain knowledge | Some industries are far larger than others |
| Account size | Small business, mid-market, enterprise | Teams whose deals differ by company size | Accounts grow and must move bands |
| Named accounts | A specific list per rep | Enterprise and account-based selling | Accounts on no list get ignored |
| Product | By product line | Very different, technical products | Several reps calling one customer |
| Hybrid | Two layers, such as size, then region | Most teams above about ten reps | More rules to maintain |
A common hybrid splits by account size first, because enterprise and small business deals need different skills, then by geography or industry within each band.
The two numbers to balance
Account counts hide the two things that make a territory fair:
- Workload: the selling time needed to cover the territory properly. For field teams, the visits each account needs in a year, plus travel. For inside teams, calls, emails and meetings.
- Potential: the revenue the territory could produce, from what each account could spend with you.
Workload sizes the team; potential sets fair quotas. The workload method takes three steps:
- Grade accounts into classes (for example A, B and C) by potential.
- Set a contact frequency for each class, such as 12 visits a year for A accounts, 6 for B and 2 for C.
- Divide total workload by one rep's capacity. Reps needed = (accounts in each class × visits a year, summed) ÷ visits one rep can make in a year.
Worked example: three territories for a roofing contractor
Illustrative example. The company, counties and figures are invented to show the arithmetic.
Summit Ridge Roofing (summitridge.example) sells commercial reroofing and maintenance contracts to property managers in six counties. It grades 592 target accounts: A accounts (an estimated $120,000 a year of roofing work each) get a visit a month, B accounts ($40,000) one every two months and C accounts ($10,000) two a year.
| County | A | B | C | Visits a year | Potential |
|---|---|---|---|---|---|
| Northgate | 10 | 30 | 80 | 460 | $3.20M |
| Easton | 6 | 25 | 60 | 342 | $2.32M |
| Riverside | 14 | 40 | 90 | 588 | $4.18M |
| Lakeview | 4 | 20 | 70 | 308 | $1.98M |
| Westfield | 8 | 22 | 50 | 328 | $2.34M |
| Hillcrest | 5 | 18 | 40 | 248 | $1.72M |
| Total | 47 | 155 | 390 | 2,274 | $15.74M |
Visits a year = A × 12 + B × 6 + C × 2. For Northgate, 120 + 180 + 160 = 460.
How many reps. At 4 visits a day, 4 field days a week, for 47 weeks, one rep makes 752 visits a year. 2,274 ÷ 752 = 3.0, so three territories, each carrying about 758 visits and $5.25M of potential.
First draft, drawn on the map:
| Territory | Counties | Visits | vs average | Potential | vs average |
|---|---|---|---|---|---|
| North | Northgate, Easton | 802 | +6% | $5.52M | +5% |
| Central | Riverside | 588 | -22% | $4.18M | -20% |
| South | Lakeview, Westfield, Hillcrest | 884 | +17% | $6.04M | +15% |
The south rep has 50% more work than the central rep, and a bigger quota to match.
Whole counties aren't enough. Riverside is too large to pair with anything but Hillcrest. The best whole-county split (Riverside with Hillcrest, Northgate with Lakeview, Easton with Westfield) gives 836, 768 and 670 visits, still 12% either side of the average.
Final split, using ZIP codes. Moving Riverside's eastern ZIP codes (2 A, 4 B and 10 C accounts: 68 visits and $0.50M of potential) into the Easton and Westfield territory closes the gap:
| Territory | Contents | Visits | vs average | Potential | vs average |
|---|---|---|---|---|---|
| 1 | Riverside west, Hillcrest | 768 | +1% | $5.40M | +3% |
| 2 | Northgate, Lakeview | 768 | +1% | $5.18M | -1% |
| 3 | Easton, Westfield, Riverside east | 738 | -3% | $5.16M | -2% |
Every territory is now within 3% of the average on both measures. The lesson: build territories from the smallest unit you have data for (ZIP codes for field teams, single accounts for inside teams) so you can move work in small pieces. Real alignments also weigh travel time on actual roads, which this example leaves out.
Balancing an inside sales team
When reps sell by phone and video, geography matters mainly for time zones. Illustrative example. An e-signature software vendor with four reps sorts 1,200 target accounts by potential and deals them out in snake order (rep 1, 2, 3, 4, then 4, 3, 2, 1). Each rep gets 300 accounts with close to equal total potential.
Estimating potential without history
- Your own results: average first-year revenue from customers of each size and industry.
- A driver of spend: employees, locations, square footage or fleet size, whichever predicts what a customer buys.
- Public counts by area: the Census Bureau's County Business Patterns publishes establishments and employees by industry for counties, metro areas and ZIP codes. It counts establishments with paid employees, not companies.
Building the graded account list is the slow part. Bebop finds companies in each area that match a plain-language description of your target accounts and explains why each one fits.
Related terms
| Term | Meaning | How it differs from a territory |
|---|---|---|
| Territory plan | A rep's written plan for working a territory | The plan, not the territory |
| Territory management | Working a territory day to day | Execution, after the design (see the territory manager role) |
| Sales region | Several territories under one manager | One level above |
| Book of business | The existing customers a rep owns | Part of a territory, which also holds prospects |
When to realign
Review each territory quarterly and realign when:
- Workload or potential is more than about 15% above or below the team average.
- A rep leaves or joins.
- A new product or segment changes which accounts matter.
Moving customers has a cost, because the relationship starts over; Zoltners and Sinha list customer disruption among the factors their alignment models weigh. Move prospects before customers, and realign on a set schedule, usually once a year.
Next step: once territories are set, have each rep write a territory plan.
Sources
- The 2004 ISMS Practice Prize Winner: Sales Territory Design: Thirty Years of Modeling and Implementation (Marketing Science 24(3), 313 to 331), Andris A. Zoltners and Prabhakant Sinha, INFORMS, August 2005
- About County Business Patterns (CBP), U.S. Census Bureau, accessed 26 October 2026
Written by the Bebop team at Blackpearl Group. Last updated .
Questions people ask
What are the types of sales territories?
The main types are geographic (counties, ZIP codes, states or regions), industry or vertical, account size (small business, mid-market, enterprise), named accounts, and product-based. Most teams use a hybrid, such as splitting by company size first and then by region within each band. Field teams lean on geography because travel time limits how many visits a rep can make, while inside teams more often split by size or industry.
How do you divide sales territories fairly?
Balance each territory on two measures: workload (the visits, calls or touches its accounts need in a year) and revenue potential (what its accounts could spend with you). Grade accounts by potential, give each grade a contact frequency, add up the workload and divide by what one rep can handle. Then assign small units, such as ZIP codes or single accounts, until each territory is within about 10% of the average on both.
How many accounts should a sales territory have?
There's no fixed number, because it depends on how much work each account needs. Work it out from capacity: if a field rep can make 750 visits a year and an A account needs 12, a B account 6 and a C account 2, a territory of 20 A, 50 B and 105 C accounts fills the year. Inside reps, who can make far more touches, often carry several hundred accounts.
What is the difference between a sales territory and a sales region?
A sales territory is the set of accounts one rep or team owns. A sales region is a larger grouping of several territories, usually run by one sales manager or regional director. For example, a company might have a West region containing five territories, each owned by one account executive. Quotas are usually set for each territory and then rolled up into a regional target.
How often should you realign sales territories?
Most teams review territories every quarter and realign once a year, plus whenever a rep joins or leaves. Realign sooner if a territory drifts more than about 15% above or below the average on workload or potential. Avoid constant changes: every move resets a customer relationship and makes reps less willing to invest in long-term accounts. Move prospects before existing customers where you can.