# Territory & Quota Planning Framework

> The 5-step method for carving territory and setting quota off real bottom-up total-addressable-market math and your own win-rate/cycle data, not last year's number plus 10%.

Free framework for sales leaders. Topic: [Metrics, Analytics & RevOps](https://www.peerlab.ai/library/topic/metrics-analytics-revops/). Published by PeerLab in the [Sales Enablement Resource Library](https://www.peerlab.ai/library/). Source: https://www.peerlab.ai/library/territory-quota-planning-framework/

## How to use it

Work through the five worksheets in order each planning cycle, each step's output feeds the next, then re-run the Step 5 health check quarterly to catch a territory or quota drifting out of calibration.

## What's inside

- Step 1 worksheet: build a bottom-up TAM from ICP filters and $ value per account
- Step 2: 100-point account fit-scoring model and Tier 1/2/3 cutoffs
- Step 3: capacity-based territory sizing formula and rep-count worksheet
- Step 4: bottom-up quota formula chain (pipeline coverage → opportunities → meetings → activity) with capacity cross-check
- New-hire ramp quota curve (month 1 through month 5+)
- Step 5: expected attainment-curve model and healthy-distribution benchmarks
- Rebalancing triggers and quarterly territory health-check questions

The 5-step method for carving territory and setting quota off real total-addressable-market math and your own win-rate/cycle data, not last year's number plus 10%.

## Step 1: Build the Real TAM (bottom-up, not top-down guess)
1. Define your ICP filter criteria: industry/vertical, employee count band, revenue band, tech stack signals, geography, and any disqualifying criteria.
2. Pull the full account universe matching that filter from your data source (enrichment vendor, national business registry, internal CRM export).
3. Count total addressable accounts (this is your unit TAM).
4. Multiply by your realistic Average Contract Value (ACV) per segment to get $ TAM:
 `$ TAM = Total Addressable Accounts × Average Realistic ACV`
5. Redo this once a year minimum: TAM decays as companies merge, shut down, or change size band.

**Worksheet:**

| ICP filter | Value |
|---|---|
| Industry/Vertical | |
| Employee count band | |
| Revenue band | |
| Geography | |
| Tech stack / trigger signals | |
| Disqualifiers | |

| TAM output | Count | × Avg ACV | = $ TAM |
|---|---|---|---|
| Total addressable accounts | | | |

---

## Step 2: Segment and Score Every Account (tiering)

Score every account in the TAM against a weighted fit model (100 pts total):

| Scoring dimension | Points available | Scoring logic |
|---|---|---|
| Industry/vertical match | 0–20 | 20 = exact ICP vertical, 10 = adjacent, 0 = off-ICP |
| Company size fit | 0–20 | 20 = sweet-spot size band, 10 = one band off, 0 = two+ bands off |
| Tech stack / trigger fit | 0–15 | 15 = uses a complementary/competitive tool, 0 = no signal |
| Existing relationship / intent signal | 0–25 | 25 = inbound/warm intro/active intent, 0 = cold |
| Geography / territory fit | 0–20 | 20 = core serviceable region, 0 = out of region |

**Tier cutoffs:**

| Tier | Score range | Coverage model |
|---|---|---|
| Tier 1: Strategic | 80–100 | High-touch, named-account, multi-threaded |
| Tier 2: Core | 50–79 | Standard cadence, rep-owned territory |
| Tier 3: Volume | Below 50 | Low-touch / automated / SDR-qualified only |

---

## Step 3: Convert TAM into Capacity-Based Territory Sizing

Don't split territory by equal account count: split by equal **effective coverage capacity**, weighted by tier.

**Reference capacity per rep per year** (adjust to your cycle length and touch cadence):

| Tier | Accounts one rep can effectively cover per year |
|---|---|
| Tier 1 | 30–50 |
| Tier 2 | 75–150 |
| Tier 3 | 200–400 (often SDR/velocity-model, not AE-owned) |

**Formula:** Reps needed for a tier = Tier account count ÷ Capacity per rep for that tier

**Worksheet:**

| Tier | Account count | Capacity/rep | Reps needed |
|---|---|---|---|
| Tier 1 | | | |
| Tier 2 | | | |
| Tier 3 | | | |
| **Total reps needed** | | | |

Balance actual territory assignment for equal **$ opportunity potential** across reps (a smaller Tier 1 book at higher ACV can outweigh a larger Tier 3 book), not equal account count.

---

## Step 4, Set Quota From Win-Rate + Cycle Math

Stop indexing quota off last year plus 10%. Build it bottom-up from the territory you just built, then reconcile against the top-down company target.

1. Required Pipeline = Territory Revenue Target × Pipeline Coverage Ratio (typically 3–4x)
2. Required Opportunities = Required Pipeline ÷ Average Deal Size
3. Required Meetings = Required Opportunities ÷ Meeting-to-Opportunity Ratio (pull the trailing actual ratio from the **Activity-to-Outcome Ratio Tracker**)
4. Required Activity = Required Meetings ÷ your Call/Email-to-Meeting ratio
5. **Capacity check:** does Required Activity fit inside the account count and touch cadence the territory can sustain (from Step 3)? If not, either the quota or the territory is wrong: fix the mismatch before the year starts, not in Q2.

**Worksheet:**

| Input | Value |
|---|---|
| Territory revenue target | |
| Pipeline coverage ratio (x) | |
| = Required pipeline $ | |
| ÷ Average deal size | |
| = Required opportunities | |
| ÷ Meeting-to-opportunity ratio | |
| = Required meetings | |
| ÷ Meetings-per-100-touches | |
| = Required activity volume | |
| **Capacity check: fits territory?** | Y/N |

**Ramp adjustment**, new reps don't hit 100% on day one. Apply a ramp curve to first-year quota:

| Ramp month | % of full quota |
|---|---|
| Month 1–2 | 25% |
| Month 3 | 50% |
| Month 4 | 75% |
| Month 5+ | 100% |

---

## Step 5: Stress-Test With an Attainment Curve and Rebalancing Triggers

Model the distribution you *expect* across the team before the year starts:
- A healthy quota-setting process produces roughly 60–70% of reps landing between 80–120% attainment, a smaller tail above 120%, and a smaller tail below 80%.
- If your model predicts median attainment below 60% or above 130%, the quota (or the territory behind it) is miscalibrated: fix it now, not after two quarters of missed number or uncapped over-payment.

**Rebalancing triggers**: re-run Steps 1–4 mid-year if any of these occur:
- Territory TAM changes more than 15% (M&A activity, market shift, major account churn)
- Rep turnover creates an orphaned or oversized territory
- A tier is materially under- or over-performing against its designed ratio for two consecutive quarters
- Product/ICP shift changes which accounts qualify as Tier 1 vs Tier 3

**Quarterly territory health-check questions:**
1. Is this territory's actual pipeline coverage tracking to the 3–4x model, or drifting?
2. Has the account tiering shifted (accounts that were Tier 3 six months ago now show intent signal)?
3. Is the rep's actual capacity utilization above 90% (burnout risk) or below 60% (room to add accounts)?
4. Does the attainment curve across the team still look healthy, or has it split into haves/have-nots?