Although on average, poor performers represent only about 10 % of a sales force, dealing with bad sales performance issues can take up 90 % of a sales manager’s time.
Unbalanced sales territories and bad skills allocations are very common internal causes of bad performance. Unbalanced sales territories result in salespeople having either too many or not enough customers, either because the territory starts out too large or small, or because it changes over time. The connection with bad skills happens when your sales force isn’t well connected to the good type of business depending of it profile or experience.
Faced with these two problems, work on the sales organization can quickly be of great help to improve your company profits, without having to recruit new human profiles or organize layoffs in the worst case.
Definition of a sales organization model
The structure of your sales force is the organizational model you choose to manage your portfolio of prospects and customers. Between us, there is no ideal structure. Everything will depend on the territories in which you operate, the number of products or services you have to offer, the size of your sales force or the profile of your customers.
The best organization is a tailor-made organization that puts your sales teams on the path to success, by putting the right people in the right place and facing the right customers by capitalizing on the experiences and expertise of each one. To maximize your sales force’s chances of success: clearly define the roles and responsibilities of everyone within the sales department and invest as much as needed in features that allow sales reps to focus on their core business.
Why set up a sales organizational model?
When your company has reached a certain size, it is essential to set up a commercial organization in the same way as the organization of production and other key functions of the company. Here are 3 reasons for this implementation :
Having the right persons at the righ places : best return on investment
While in a context of talent shortage, every company is faced with the need to generate more revenue with fewer resources, the key question arises of choosing the right people, putting them in the right place in the organization and keeping them.
This is particularly the case for commercial organizations where there are in reality many professions representing the entire « sales journey » with a customer : pre-sales, account management, global key account management, after sales that referred to by the standard name of “Commercials”, when they have diverse costs (medium to high) for the company, whether we are talking about junior or senior profiles, wheter we talk about strategic portfolios (evaluation of revenues/losses Versus market risks).
In this context, it is important to optimize the roles in the company before maximizing the ROI of each euro invested. Indeed, usually we can never ask the same sales performance from a junior that we would place on accounts with high potential for profit or even loss, as from a senior salesperson. Similarly, placing a senior in positions that can be occupied by juniors or mid-seniors should not be regularly taken by a senior.
So that the trade belongs to the company and not to its sales representatives
Often this organization has been neglected because commerce relies and has relied very much on the men who carry it out. Salespeople with a strong character who capitalize on their address book, their eloquence, and their talent as a negotiator. Today, sales are less a matter of individuals than of a team, processes and tools. The establishment of such an organization reinforces the value of the company and makes the loss of a key salesperson much less important.
To make your sales more predictable
With the establishment of a commercial organization, comes that of processes and tools allowing you to follow the evolution of prospects in your commercial funnel. You gain visibility on the different stages of this funnel, you quantify new opportunities, their chance of success, you measure conversion rates, the duration of the sales cycle, etc. You give yourself the means to manage your sales and anticipate them. This management then allows you to manage the entire organization; because realistic sales forecasts allow you to size all your resources and therefore considerably increase your profitability, even in the event of a drop in sales.
The 3 main types of sales organizational models :
There are three main organizational models – each with its advantages and disadvantages.
A. The Model « All-In »
All-in-one: Every rep tracks their leads through the sales cycle
We sometimes speak of a “lone wolf” organization: in this model, the sales team is made up of generalists who manage each customer throughout the entire cycle: prospecting, closing the sale and post-sales support.
The “all-in-one” solution gives salespeople considerable autonomy in their customer relationship management; it also generates greater pressure on performance. In some companies, this can be a real plus, with a highly competitive culture.
Very simple and based on individual success, this model is readily adopted by small companies, where each must be profitable and where the personal relationship with customers is important – as in financial services, for example.
Depending on the industry, this model can prove to be very successful. It works best for companies that sell in established markets that are very competitive, rather than startups. The Island can make scaling and team alignment tough, as each of your employees has their own approach to sales.
-Ideal model for small company (SME) or start up because agile and low cost effective.
-Unless no monitoring of individual performance in place in the company, this model is in principle the better adapted for high sales performers.
-This system allows the company to track easily the bad or medium sales performers as soon as a monitoring of individual performance is clearly in place in the organization.
-Difficulty managing many accounts at different stages of maturity at the same time
-Individual success trumps collaboration
-No scaling possible
-Not compatible with key account customer management, as the expensive sales senior profils are not well optimized on, dealing with tasks that could be done by middle experienced profils.
B. The model “production chain”
The production chain involves different teams for each stage of the commercial cycle :
This model (also known as “hunter-gatherer”) is inspired by industrial production models, with sales teams specializing in a specific type of task, throughout the sales cycle.
On this “production chain”, we can distinguish three main positions. Upstream of the cycle, development managers are responsible for generating and qualifying leads. They then hand over to the account managers, who close the sale. Afterwards, customers are entrusted to account managers, who ensure that the commercial relationship is maintained and developed over time.
-Maximized operational efficiency through specialization
-Increased expertise of salespeople in their field
-Accelerated customer progression through the business cycle
-Model well adapted to massive B2B market with generalist products (IT services, RH services, company cars, ..)
-Risk of silos and discontinuities in the event of friction between teams
-Risk of line loss during relay handovers
-Model not adapted to concentrated B2B market with dedicated products (packaging for food and beverage indutry, ingredient for the food indutry, …)
C. The model « Cluster »
The cluster model achieves a kind of synthesis of the first two, small autonomous units accompany each client throughout the cycle. As in the “all-in-one” model, a cluster manages its clients from prospecting to implementation. But as in the production line model, each cluster is made up of specialized sales people – development managers, account managers and customer account managers.
This model is often favored in large companies that are looking for a flexible way to arrange their sales teams. Depending on the needs, clusters can be (re)assigned to certain markets, territories or product types. Clusters are also relevant for targeting large accounts, from an ABSD (Account-Based Sales Development) perspective.
-Better fluidity in handovers with closer collaboration
-Increased flexibility in the general organization of the sales force
-Well adapted to larger company than SME.
-Best organization for key accounts as the human ressources are optimized (the best competencies versus the best costs).
-Discourages individual incentives and need to be counter-balanced by a dedicated incentive program.
-Unless an individual performance is not clearly in place, Bad salespeople can hide behind their more successful colleagues
Conclusion : How to design the right structure ?
The choice of a structure depends on many factors. To help you make the right choice you can start by considering :
-Your budget: The more resources you have, the more you can target the specialization of the sales teams (clusters or production line). Smaller companies are more likely to opt for an “all-in-one” model, seeking maximum results for each salesperson.
-Your customers: Where are your customers? What is their size? What are their needs? The answer to these questions can determine not only your optimal model, but also the complementary segmentation(s) you might need to succeed.
-Your culture: Each model is linked to a certain professional culture. Does your company want to encourage cooperation, or do you prefer to play on emulation and competition?
What works for one business may not necessarily work for yours. The key is to find the structure that best suits your situation not to mention that the growth of your activity could lead you to change your model.
Very important : Also remember that your sales force is not alone in the world. Its structuring will also depend on support functions such as commercial operations or sales enablement. In what configuration can these functions be most effective? And how can you organize them to best serve sales teams in this or that model? I will write an article soon about this import distinction between « sales operations » Versus « commercial operations ». Indeed, they are (too) often considered to be the same function, whereas they are very different but complementary.
-Rethinking the Sales Force: Redefining Selling to Create and Capture Customer Value by John De Vincentis.
-Compensating the Sales Force: A Practical Guide to Designing Winning Sales Reward Programs Building a Winning by David Ciccelli.
-Sales Force: Powerful Strategies for Driving High Performance by Andris Zoltners.