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A Data Driven Approach to Structuring Effective Sales Territories!

Tip #1: Define the Total Universe of Prospects

Begin with a Comprehensive List of All Potential Customers & Non-Customers

  • Many companies approach the structure of sales territories around customer data that exists in their accounting or internal systems. But customers are only a subset of the total available universe of those who could be buying from you.

Current Customers may Present Biases

  • Perhaps you had a strong sales presence in one industry or certain territories due to historical reasons or some anomaly.

  • Analytical models using only your current customers will provide incomplete information to plan with.

  • Step back and take a very big picture view of anyone and everyone who could potentially be buying your products or services, and then work backwards to identify the specific slices and segments.

Tip # 2: Segment Your Customers

Identify Dormant Customers

  • You have customers who are actively buying and many who have stopped buying. Define a criteria for an ‘inactive’ customer.

  • Typically an inactive customer is one who has not purchased ‘recently’ and the definition of ‘recently’ can vary depending on the industry and product or service. Pick a timeframe (such as no purchases in the last 24 months) to define this group.

Rank and Code Active Customers

  • Once you have defined active and inactive accounts, develop a criteria to rate them such as by A, B, C or D. You can use prior purchase volume to establish this rating, such as an ‘A’ account being a customer who purchased ‘more than $xxxx’ in the prior year.

  • A and B rated account total purchases in the prior year should together represent 70-80% of total prior year sales. D customers should represent not more than 10% of the total sales in the prior year.

Add Additional Classifications

  • Your customers likely span many industries or other classifications. Segmentation can be by industry, business type, company size, ownership type, etc.

  • If you begin to classify your customers be sure to be thorough (meaning all records should be classified). You may approach territory assignment not by geography, but by a specific industry group.

  • Therefore, it is important to be as thorough as possible in your indexing of records to get the right count of the potential universe of customers and prospects.

Tip #3: Purchase Non-Customer Data

Obtain a Comprehensive List of All Potential Prospects

  • Once you have defined that you can legitimately sell your product to all businesses in X, Y and Z industries, and within I, II and III geographies, purchase compiled lists from reputable list vendors which can provide a comprehensive list of every potential prospect spanning those industries or geographies.

  • Ideally, you need to ‘scrub’ this purchased list against your current list of active and inactive customers to avoid duplicate names and obtain your ‘net’ prospective non-customers.

Don’t Rely on Salespeople to Create Prospect Lists

  • Relying on your salespeople to create lists and records of all potential prospects will result in spotty data and give an incomplete view of the true universe.

Tip #4: Think Globally Where Possible

Define Your Sales Channels

  • Once you have completed the indexing (ABCD and any other industry segmentation) and have obtained a comprehensive list of non-customer prospects to enhance your lists, you can better plan how to sell.

  • There are many sales channels in addition to direct salespeople such as outsourced inbound call centers, distributors, resellers, independent agents, contractors and self-service via eCommerce.

  • By slicing and dicing and indexing your active and inactive customers - and prospects who are not customers - you will create the ability to assign groups of them to specific channels. For example, all ‘C’ customers in Industry ‘Y’ may be assigned to an inside sales team while all ‘D” customers in geography ‘III’ are designated to only self-service through the website (because purchase volume or profitability does not justify assigning a salesperson).

  • Even small companies conduct business globally today. That is why territory planning should take a big-picture view. Anybody, anywhere who can purchase your product or service should be considered when designing sales territories.

Tip #5: Allocate Records Evenly

Use a Data-Driven Approach to Account Assignment

  • Once you have your segmentation and list of customers and prospects, ensure you allocate them evenly among salespeople or sales teams.

  • If you have 50,000 total customers and prospects to allocate among 25 salespeople, the math dictates that each person receive 2,000 records each.

  • And be sure the ratio of customers (active and inactive) and non-customer prospects are evenly distributed.

  • Companies frequently assign records disproportionately leading to some sales territories having enormous opportunities, while other territories have so few it will be impossible for the individual to succeed. Mapping software tools can help visualize account assignments.

Establish Rules for Resolving Account-Territory Conflicts

  • Account conflicts will inevitably occur; someone will be selling to a prospect that is a business unit of another salesperson’s larger national prospect.

  • Setting up clear guidelines for how potential disputes will be handled are critical. Nothing demoralizes a salesperson more than feeling they have been unjustly denied a sale for a seemingly arbitrary reason.

Reassign records where a Salesperson Departs

  • Salespeople will come and go. When that happens, the active customers are often assigned to another person to take care of.

  • But don’t forget to assign the inactive and non-customer prospects as well to keep the territories balanced. Ensure that all customers and non-customers you have defined are assigned to an active salesperson or sales channel.


The views and opinions expressed in this article are those of the authors. Examples cited in this article are only examples. They should not be utilized in real-world situations as they are based only on limited and dated open source information.

© 2021 Edgemont CRM, LLC. All Rights Reserved – January 2021

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