The choice that shapes everything downstream
Your territory model isn't just a line on a map or a list of accounts. It determines how leads get routed, how quotas get set, how comp plans work, how reps spend their day, and how you measure performance.
Choose geographic territories and your reps think in regions, drive to customers, and own everything in their area. Choose account-based territories and your reps think in verticals or tiers, build deep expertise, and may travel across the country for a single meeting.
Neither model is inherently better. The right choice depends on your sales motion, your market, and your team. Here's how to decide.
Geographic territories: own the map
In a geographic model, each rep owns a defined region. Every account and prospect within that region belongs to them. Boundaries are typically drawn using states, ZIP codes, metro areas, counties, or drive-time radii from a central point.
How it works in practice
A rep covering the Pacific Northwest gets every lead from companies headquartered in Washington, Oregon, and Idaho. They build relationships with businesses in their region, attend local events, and become the "face of the company" in that geography.
Routing is straightforward: a new lead comes in with a company address in Portland → it goes to the Pacific Northwest rep. No ambiguity about ownership.
When geographic territories make sense
Your reps are in the field. If selling requires being on-site — demos at the customer's office, facility tours, in-person relationship building — geographic territories minimize travel time. A rep covering a defined area can visit 3-4 customers in a day. A rep covering accounts scattered across the country visits 1-2 per week.
Your product is location-dependent. Construction, logistics, commercial real estate, local services, and medical devices are all industries where proximity matters because the product or service is delivered locally.
You have a broad, horizontal market. If you sell to any company regardless of industry or size, geography is the simplest way to divide the market. It creates clear ownership without needing firmographic data.
Your team is smaller (5-30 reps). Geographic splits are easy to understand, easy to manage, and don't require sophisticated data. Every rep can point to a map and say "that's mine."
Data maturity is low. You need clean addresses to route by geography. That's it. You don't need firmographic enrichment, industry classification, or account scoring. Most CRMs have address data by default.
Where geographic territories break down
Unequal market density. The rep covering Manhattan has thousands of potential accounts in a 5-mile radius. The rep covering Wyoming has dozens across 97,000 square miles. Account count, revenue potential, and workload are wildly different, but the map looks "fair."
Remote and hybrid companies. A company headquartered in Austin with employees working from 30 states. Which territory owns them? Geographic models assume companies exist in one place. They increasingly don't.
Account quality variance. A geographic territory might contain 200 accounts, but only 30 are in your ICP. The other 170 are noise. The rep spends time sifting through low-quality accounts because geographic boundaries include everything.
No specialization. A geographic rep sells to hospitals, manufacturing plants, and law firms in the same territory. If your product requires industry expertise to sell effectively, geographic generalists will underperform compared to industry specialists.
Account-based territories: own the relationship
In an account-based model, territories are defined by account attributes: industry vertical, company size, revenue tier, or specific named accounts. Geography is secondary or irrelevant.
How it works in practice
A rep owns "Enterprise Healthcare" — every healthcare company above $500M in revenue, regardless of location. They become a healthcare expert, understand the regulatory landscape, speak the industry language, and build a network of healthcare contacts.
Routing is attribute-based: a new lead comes in from a hospital system with 10,000 employees → it goes to the Enterprise Healthcare rep. Their location doesn't matter.
When account-based territories make sense
Your sale requires industry expertise. Healthcare, financial services, manufacturing, and government are verticals with specific regulations, buying processes, and terminology. Reps who specialize outperform generalists because they can speak the customer's language and navigate industry-specific objections.
You run ABM programs. If your go-to-market strategy is account-based marketing, your territory model should match. Named account lists define who each rep is pursuing, and lead-to-account matching ensures every lead from those accounts reaches the right rep.
Deal size justifies travel. If your average deal is $200K+, a rep can afford to fly across the country for an on-site meeting. The ROI per trip justifies the travel cost. Geographic proximity is a nice-to-have, not a requirement.
You have strong firmographic data. Account-based routing requires reliable data on industry, company size, revenue, and other attributes. If your CRM has this data (through enrichment tools or manual research), account-based territories work. If you're routing based on company name alone, you'll misroute frequently.
Your market is concentrated. If 80% of your revenue comes from 200 target accounts across the Fortune 1000, it makes more sense to assign reps by account than by geography. The accounts are the territory.
Where account-based territories break down
Travel inefficiency. A rep owns 40 enterprise accounts spread across 15 states. Each customer visit requires air travel, hotel, and a full day of logistics. Compare to a geographic rep who drives 30 minutes between accounts.
Inbound lead routing complexity. A lead comes in from a 300-person manufacturing company. Is that mid-market or enterprise? Is "manufacturing" the right vertical classification, or is their parent company in automotive? Account-based routing requires reliable classification data and clear decision rules for edge cases.
New market coverage gaps. Account-based models typically focus on known accounts. What about the prospect that isn't on any named account list? What about the inbound lead from a company you've never heard of? Without a geographic fallback, these leads can fall through cracks.
Workload balancing is harder. Fifty enterprise healthcare accounts is a very different workload than fifty SMB retail accounts. Balancing account-based territories requires a workload index; simple account count is meaningless.
The hybrid model: own the intersection
Most mature sales organizations end up with a hybrid model that combines geographic and account-based dimensions. A rep might own "Mid-Market Financial Services in the Southeast" — layering segment, vertical, and geography into a single territory definition.
When hybrid makes sense
You have multiple sales motions. Enterprise accounts get dedicated, named reps. Mid-market accounts are covered by segment-specialized reps within geographic regions. SMB is handled by inside sales. Each motion has its own territory logic.
You're scaling past 30-50 reps. At this size, pure geographic splits create too much variance. Layering account attributes on top of geography creates more balanced, specialized territories.
You have field and inside sales covering the same market. Field reps own in-person engagement within geographic territories. Inside reps handle digital engagement for specific segments or account tiers. The hybrid model defines how these roles interact without conflicting.
The complexity cost
Hybrid territories are the most powerful but also the most complex:
- Routing logic must evaluate multiple attributes simultaneously and handle conflicts. Does the named account rule override the geographic rule? Does the segment rule override the vertical rule? Priority order must be explicit.
- Rep clarity suffers. In a geographic model, a rep knows exactly what's theirs. In a hybrid model, ownership depends on multiple factors, and edge cases create confusion.
- Data requirements are highest. You need clean geography data AND reliable firmographic data AND maintained named account lists. Gaps in any dimension cause misroutes.
- Maintenance burden increases. Every territory change potentially affects multiple dimensions. Adding a rep means rebalancing geographic boundaries, account assignments, and segment definitions.
Decision framework
| Factor | Choose Geographic | Choose Account-Based | Choose Hybrid |
|---|---|---|---|
| Sales motion | Field-heavy, in-person | Consultative, expertise-driven | Multiple motions |
| Travel | Reps must minimize drive time | Deal size justifies air travel | Mix of local and remote |
| Product | Horizontal, any industry | Vertical-specific | Multi-product portfolio |
| Team size | 5-30 reps | 5-20 specialized reps | 30+ reps |
| Data maturity | Low (addresses only) | Medium (firmographics) | High (enriched data) |
| Market type | Broad, horizontal | Concentrated, named accounts | Segmented |
| Inbound volume | High, diverse | Low, targeted | Mixed |
| Rep specialization | Generalists | Industry/segment experts | Tiered specialists |
The simplest decision rule
If your reps drive to customers daily → geographic.
If your reps need industry expertise to win → account-based.
If your answer is "it depends on the deal" → hybrid.
Transitioning between models
If you're outgrowing your current model, transition thoughtfully:
Geographic → Hybrid
The most common transition. As your team grows, you start by carving named enterprise accounts out of geographic territories and assigning them to specialist reps. Geographic territories remain for mid-market and SMB. This creates a two-tier hybrid without fully redesigning.
Watch out for: Geographic reps losing their best accounts to the new named-account team. Compensate with quota adjustments and transition comp to prevent resentment.
Account-Based → Hybrid
Less common but happens when an account-based team realizes they need geographic coverage for inbound leads and new market development. Add geographic fallback territories that catch leads that don't match any named account.
Watch out for: Unclear ownership when a named account generates a lead from a location covered by a geographic rep. Define priority rules and build them into routing logic.
Any model → redesign
When the transition is significant enough, do a full territory redesign rather than patching the existing model. Incremental patches accumulate technical debt in your routing logic and create inconsistencies that confuse reps and misroute leads.
The bottom line
The territory model you choose is a strategic decision, not an administrative one. Geographic territories optimize for travel efficiency and simplicity. Account-based territories optimize for specialization and depth. Hybrid models optimize for coverage across multiple dimensions at the cost of complexity.
Start with the model that matches your sales motion today. Plan for the model you'll need in 18 months. And when it's time to transition, invest in a proper territory design process rather than patching the old model until it breaks.