I had a conversation with a CRO last quarter that perfectly captures the territory problem. He told me his top rep was crushing quota. 140% attainment, best on the team by a mile. When I asked how many accounts she had, he said around 400. I asked how many she'd actually engaged in the past 90 days. He didn't know. We looked it up together. The answer was 47.
Forty-seven out of 400. That means 353 accounts, all qualified enough to assign to the best rep on the team, were sitting completely untouched. Not because she was lazy. Because there's a physical limit to how many accounts one person can work, and she was already maxed out on the ones producing the most pipeline.
Those 353 orphaned accounts represent real revenue potential that's going completely unworked. And this was the best rep. Imagine what the mid-performers' books looked like.
This is what happens when territories are designed by instinct instead of data. And it's far more common than most revenue leaders want to admit.
Why Traditional Territory Design Fails
Most territory designs I've audited were created using one of three approaches, all of which are flawed.
The equal-account-count method. Take all your accounts, divide by the number of reps, distribute evenly. Simple, fair, and almost completely disconnected from revenue potential. Giving one rep 200 accounts in a saturated, low-ACV market and another rep 200 accounts in a high-growth, high-ACV segment isn't equal. It's arbitrary. Equal account counts produce wildly unequal revenue opportunity.
The geographic carve-up. Draw lines on a map. This rep gets the Northeast, that rep gets the Southeast. Geography made sense when sales was primarily face-to-face, but in a world where 60-70% of B2B sales interactions happen virtually, your geographic territory boundaries are often an artifact of a selling model you no longer operate. Worse, geographic distributions almost never correlate with actual market opportunity. The density of high-value accounts in the Bay Area is fundamentally different from the density in the Mountain West, but both "territories" might be assigned to a single rep.
The gut-feel method. A sales leader sits down with a spreadsheet and manually assigns accounts based on relationships, history, and intuition. This works when you have 5 reps and 300 accounts. It breaks completely at 20 reps and 3,000 accounts. The complexity exceeds what any individual can hold in their head, and the decisions become increasingly arbitrary even if they feel deliberate.
All three methods share the same fundamental flaw: they don't start with data about revenue potential, rep capacity, or strategic fit. They start with a constraint (geography, count, or gut feel) and work backward. Data-driven territory design flips that entirely.
The Data Inputs That Actually Matter
Before you touch a single assignment, you need to build the data foundation. Here's what I look at when we do a territory planning engagement.
Total Addressable Market (TAM) by account. Not every account is worth the same amount of effort. You need a scoring model that estimates the revenue potential of each account based on firmographic data (industry, size, growth rate), technographic data (current tech stack, buying signals), historical data (past purchases, engagement history), and fit scoring (how well they match your ideal customer profile). This gives you a weighted value for every account, not just a binary "assigned/unassigned."
Historical conversion rates. What does your data say about how different account segments convert? If healthcare accounts close at 35% and manufacturing accounts close at 18%, that dramatically changes how you think about allocating rep capacity. Don't just look at overall conversion. Break it down by segment, deal size, source, and sales cycle length.
Rep capacity modeling. How many accounts can a rep effectively work in a given period? This isn't a one-size-fits-all number. It depends on deal complexity, average sales cycle length, required meeting frequency, and the rep's role (hunter vs. farmer vs. hybrid). I typically see effective capacity ranges from 30-50 accounts for enterprise reps with complex, multi-stakeholder deals to 150-200 accounts for commercial reps with transactional sales motions. Your data will tell you your number, so use it. For a deeper framework on building these models, the guide on sales capacity planning is worth reviewing.
Coverage and travel costs. If your reps are in the field, geography still matters, but as a cost factor, not a design principle. A rep covering accounts spread across six states has fundamentally different coverage economics than one with a dense metro cluster. Model the travel and time costs, and factor them into the territory value equation.
Segment-specific needs. Some accounts need specialized expertise: industry knowledge, technical depth, language skills, or strategic relationship management. These constraints are real and should be built into the model, not treated as exceptions handled manually after the design is done.
Existing relationships. Account history and rep relationships have value. Ripping an account away from a rep who's been cultivating it for 18 months has a real cost, potentially a deal delay or a damaged customer relationship. The model should weight this, but not let it override everything else. Relationship inertia is the enemy of optimal territory design.
The Process: From Data to Deployment
Here's the actual process I follow for data-driven territory design. It's not a weekend project. Done well, it takes 6-10 weeks from kickoff to deployment.
Step 1: Build the Model (Weeks 1-3)
Start by constructing the analytical foundation. Pull and clean the data inputs listed above. Build the account scoring model. Define rep capacity assumptions. Establish the constraints (minimum account count, maximum geography spread, segment specialization requirements).
The output is a model that can take any set of accounts and reps and produce a territory allocation optimized for revenue potential, balanced for capacity, and constrained by your specific requirements.
Step 2: Run Scenarios (Weeks 3-4)
Don't build one territory plan. Build five. Run scenarios that test different assumptions:
- What happens if we weight TAM more heavily than historical conversion?
- What happens if we add three reps to the mid-market segment?
- What happens if we eliminate geographic constraints entirely?
- What happens if we protect all existing relationships vs. only relationships with active pipeline?
- What happens if we create a dedicated team for the top 50 strategic accounts?
Scenarios aren't about finding the "right" answer. They're about understanding tradeoffs. Every territory design involves tradeoffs between fairness, optimization, and practical constraints. Scenarios make those tradeoffs visible and quantifiable.
Step 3: Validate With Sales Leadership (Weeks 4-5)
This is where the analytical work meets organizational reality. Present the scenarios to sales leadership. Not just the recommended option, but the alternatives and the tradeoffs involved. Let them pressure-test the assumptions. Do they agree with the capacity model? Are there relationship constraints the data doesn't capture? Are there strategic accounts that need special handling?
The goal isn't consensus (you'll never get every sales leader to agree on every assignment). The goal is informed alignment: leaders understand the methodology, see the data, and support the overall approach even if they'd tweak individual assignments.
Step 4: Implement in CRM (Weeks 5-7)
Territory design is worthless if it doesn't translate into system-level execution. This means updating account ownership in the CRM, adjusting lead routing logic to align with new territories, reconfiguring reporting dashboards, and updating any downstream processes that depend on territory assignments: forecasting, compensation, pipeline reviews, all of it.
This is also where you build the governance layer. Who has permission to reassign accounts? What's the process for handling accounts that change segments (M&A, growth, new product adoption)? How are new accounts assigned as they enter the CRM? Without this governance, your beautifully designed territories will degrade within months.
Step 5: Monitor and Rebalance (Ongoing)
Territory design isn't a set-it-and-forget-it exercise. Markets shift. Reps turn over. New products launch. Segments evolve. You need a monitoring framework that tracks territory health metrics (pipeline per territory, coverage ratios, account engagement rates, quota attainment distribution) and triggers a rebalance conversation when the data shows meaningful imbalance.
I recommend a formal territory health review quarterly and a potential rebalance semi-annually, with the annual redesign being a more comprehensive exercise that feeds into annual planning.
Handling the Politics
Let me be direct about this: territory redesigns are politically difficult. Reps will lose accounts. Some reps will see their estimated territory value decrease. People will feel that the process is unfair, even when the data supports it.
Here's how I navigate the political landscape.
Lead with data, not opinions. When a rep pushes back on losing an account, the response shouldn't be "because we decided." It should be "here's the capacity analysis showing you're overloaded, here's the engagement data showing these accounts haven't been contacted in 90+ days, and here's the data showing the rep receiving these accounts has the capacity and segment expertise to work them effectively." Data doesn't eliminate disagreement, but it elevates the conversation from opinion-based to evidence-based.
Protect active pipeline. One non-negotiable rule: don't move accounts with active pipeline above a defined stage. If a rep has a deal at proposal stage, that account stays with them through close. Moving mid-deal accounts is a revenue risk nobody should take, and it's the fastest way to destroy trust in the process.
Communicate the "why" before the "what." Before anyone sees their new assignment list, the entire sales org should understand why the redesign is happening, what methodology was used, and what the expected outcomes are. The worst thing you can do is send an email with new assignments and no context. I've seen that turn a thoughtful redesign into an organizational crisis.
Build in a transition period. Don't flip the switch on a Monday morning. Give reps 2-4 weeks to transition accounts with warm handoffs to the new owner, shared context on active conversations, and introduction emails to key contacts. The transition period is where territory redesigns either succeed or create customer confusion.
Acknowledge the imperfection. No territory design is perfect. Tell the team that explicitly. The goal is a design that's significantly better than what exists today, with a commitment to monitor and adjust as you learn. Perfection is the enemy of progress.
Scaling: Building the Framework for Growth
If your company is adding reps (and if you're reading this, you probably are), your territory design needs to accommodate headcount growth without a full redesign every time someone is hired.
The way to do this is to build capacity buffers into your model. Instead of allocating 100% of territory capacity, allocate 85-90%. The remaining capacity is your growth buffer. When a new rep is added, you can carve out a territory from the buffer without ripping existing territories apart.
You should also design territories at the segment or team level first, then at the individual level. If you add a rep to the mid-market commercial team, the territory adjustment should be contained within that segment, not cascading across the entire org.
And when you do need a comprehensive redesign (usually triggered by entering a new market, launching a new product line, or a significant change in go-to-market strategy), having the analytical model already built means you can run new scenarios in days rather than starting from scratch. That's where the real ROI of the original data investment shows up. For a real-world look at what territory redesigns involve end-to-end, this territory redesign case study walks through the process in detail.
The Bottom Line
Territory design is one of the highest-leverage activities in the entire GTM motion. Getting it right means every rep is working accounts they can actually close, with capacity they can actually cover, in segments where they can actually compete. Getting it wrong means orphaned accounts, frustrated reps, unbalanced quotas, and revenue left on the table.
The difference between the two comes down to whether you're designing territories based on data or based on tradition. If your territories were drawn on a whiteboard more than a year ago and haven't been pressure-tested with data since, it's time for a territory planning conversation. The accounts your reps aren't working are your competitor's next customers.