Sales organizations are complicated things. There are many moving parts, and many things that are not effectively managed. There are many factors in the sales organization that effect your sales success.
When it comes to more than one salesperson, the idea is simple: all the business processes are shared in the sales organization, and everyone is responsible for them. But what if you have only one salesperson? Simply put, then you need to identify the processes that the salesperson is responsible for and create a structure with appropriate organizational roles. These are the people that should be supervising the processes, and they are the ones that should be reporting back to the sales management.
Effective sales organizations need a model that balances the sales professionals needs with the needs of the organization. This balancing act can be done in many ways. In many organizations, the sales person is in charge of their own needs, which can lead to jealousy and low morale for the rest of the sales team. In other organizations, the sales person is in charge of the needs of the entire sales team, and this can lead to big problems and big turnover.. Read more about sales organization structure best practices and let us know what you think.
In this blueprint, we’ll show you how to create a sales organization that produces results. Because of the changes in SaaS, we no longer need to think of salespeople as individual contributors, but rather as members of a team that spans disciplines, not only inside sales, but also across departments like marketing and product. In this post, we’ll discuss the best sales team structures and how to choose the appropriate one for your company.
Within a corporate organization, a successful sales force structure is essential. It guarantees, first and foremost, that responsibilities are clearly defined. It also aids sales representatives and businesses in achieving their objectives.
There are many advantages to having a well-organized sales department, including:
- Employee conflict has decreased.
- Improves employee-to-employee and client-to-client communication.
- Enhances staff productivity
- Better decision-making
Let’s clarify what a sales organization structure is now that we’ve covered the advantages and significance of an effective sales force structure.
The design of the sales team is referred to as a sales department structure. It defines all members of a corporate organization’s goals and duties in detail. A sales organization structure is the division of a sales force into specialized groups, each with its own set of responsibilities.
The organization of a sales team may be influenced by a variety of variables, including:
- Serviced areas
- Your sales team’s size
- The number of products/services available
- Customers’ size
There are seven different types of sales organization structures.
1. The Production Line
The sales team is structured according to a person’s job title in the assembly line model. As in an assembly line, leads are passed between specialist teams. The aim of this sales structure is to move prospects through the sales cycle as quickly as possible.
PROS
-
- Specialization is encouraged.
- Sales representatives become becoming specialists in their areas.
CONS
-
- Due to many handoffs, there is a risk of a bad customer experience.
- Specialization incurs additional expenses.
The Island is number two.
One representative is in charge of handling their prospect from the lead generation stage till they become a client in the Island model. Smaller sales teams seeking to increase their productivity often adopt this sales organization structure. This sales structure may be used by sales departments that benefit from one-on-one client contact.
PROS
-
- It fosters a competitive environment.
- Individual productivity is maximized.
CONS
-
- Managing several accounts may be taxing.
- Individual achievement takes precedence over collaborative effort.
The Pod (#3)
The Pod is a hybrid of the assembly and island models. A pod is made up of specialist salespeople who work with prospects at different phases of the sales process. Because it splits the sales force into smaller divisions, this sales organization style is mainly employed by big businesses.
PROS
-
- Allows for seamless lead handoff.
- Allows for skill-based changes to sales teams.
CONS
-
- Poor performance are often hidden under successful colleagues.
- Individual motivation is made more difficult.
Aside from the Assembly, Island, and Pod organizational models, there are four more organizational models to consider:
- Territories/geography
- Line of products/services
- Size of the customer/account
- Vertical/industry section
4. Geography & Territory Structure
This structure enables members of the sales team to get acquainted with their local surroundings. The sales staff may even form relationships with local companies and do competition research.
It simplifies sales rep assessments by concentrating on the performance and potential of a particular area.
5. Product & Service Line Structure
Sales teams are divided into groups based on the services and goods that they offer.
It enables sales representatives to connect with like-minded people in terms of product/service and even geography.
Sales teams become experts in their goods, mastering the sales process and boosting revenue as a result.
6. Customer & Account Structure
This is a common arrangement for sales teams that works well with account-based marketing (ABM).
Sales teams organized by customer or account may learn the ins and outs of dealing with a given account in businesses with strong ABM team structures, placing them in a far better position to fulfill the client’s unique requirements.
7. Industry & Vertical Structure
Another method to organize a sales team is by industry or vertical.
Sales teams who specialize in a certain sector would have greater expertise and knowledge of the market’s intricacies, resulting in higher close rates.
If your company sells to a variety of sectors, we suggest segmenting your sales force into verticals.
The Winning By Design Blueprint Series is a collection of blueprints for success.
The Winning By Design Blueprint Series offers sound guidance for every aspect of a SaaS sales team.
B2B salespeople have been referred to as individual contributors in the previous decades.
Reps were recruited, trained, and paid to act as individuals in order to meet quotas. This is from a period when enterprise salespeople would leave the office on Monday and return on Friday with signed purchase orders, submitted costs, and funnel updates, among other things.
This may seem like something out of a movie in today’s world, but most sales organization structures haven’t been changed since those days.
Traditional Sales Team Structure vs. Modern Sales Team Structure
Traditional Sales Organizations (TSOs) – TSOs are traditional sales organizations that In sales, staffing growth was based on revenue per person contributor (IC). The concept utilized a waterfall-like approach that ramps up over the course of a year, with each individual donor bringing in $2 million in annual contributions.
To reach $8 million, a VP of Sales would distribute $10 million in quota at $2 million per IC. This would need the use of five ICs. A territory would be allocated to each IC. The areas were created using ZIP codes that were estimated to have about the same amount of potential.
When quota was increased, the number of salespeople was simply increased to match the rise in quota. (For example, $2 million per individual and a 20% increase in quota compared to the original target.)
The adoption of this outmoded model based on a limited number of transactions at a higher price is the underlying cause of today’s problems.
Modern Sales Organizations – Due to lower deal value (ACV), ongoing renewals are required to achieve the same profit. This may take >24 months.
Because of the reduced price, achieving a comparable level of growth requires a larger number of transactions. The high-velocity on which this business works complicates things; many customers commit in 90 days or less. This high-velocity technique is referred to as a “production line.”
AN EXAMPLE OF A CASE IN POINT:
SDRs must generate business for AEs who get customers, commitment, and assist them onboard to the point where they can utilize the service in order to increase income yearly.
Recurring needs: Today, it’s clear that a business can’t simply put in a yearly renewal; instead, via the usage of CSMs and AMs, they must verify that customers are utilizing it and that new possibilities inside the account are being identified.
- MDR: Market Development Rep – Follows up on incoming leads and arranges a meeting with the Account Executive.
- SDR: Sales Development Rep – Starts a discussion with a customer through outbound tactics like emails and phone calls.
- AE: Account Executive — Through a series of meetings, develops SQLs.
- ONB: Onboarder – Onboards/Integrates a client and gets them to utilize it for the first time.
- CSM: Customer Success Manager – Ensures that the service is used on a regular basis.
- AM: Account Manager – Develops upsell opportunities to enhance earnings.
The Sales POD is a unique sales team structure.
A self–contained unit, often known as a POD, is formed by gathering specialized team members. The self–contained unit may operate in a niche market, region, or sector. It may do so for the whole period, or it can cycle between a number of segments (known as sprints), or it can focus on a particular event, such as a trade show.
A POD’s operation is as follows:
In this illustration, an MDR/SDR is paired with two AEs in a 22 POD.
Each month, the MDR/SDR team schedules 40-60 meetings for the AEs.
The AEs complete 6-8 transactions each month with an ACV of $18,000 as a result of these encounters.
Modeling of PODs
Due to the intense emphasis on winning logos, the efficiency of these PODs was not previously considered a problem.
The tides began to shift in 2014, when the number of SQLs/SDR fell from 20-30 to the low tens.
This POD’s yearly on target earnings (OTE) should not exceed 40% of annual sales.
Increasing Your Revenue
Revenue is now scaled by increasing the number of PODs. You’ll note in the sample below that our teams are initially unstructured.
SQLs are created by a group of SDRs and allocated to a group of AEs at random.
To expand, the business must divide its resources into two initiatives: SMB and MidMarket, each of which requires a distinct strategy.
As the company expands, new markets are identified, and new PODs are created to tap into them.
For most B2B sales teams, there are a few KPIs to keep in mind:
- It takes three months to get a POD up to 100%.
- PODs should be able to function at 80-120 percent of their allotment. Continue not to raise quotas; they were created for a certain amount.
- Don’t add AEs to a POD after it’s running well. This throws the equilibrium off.
PODs Are Used To Identify Markets
One of the most significant benefits of PODs is the ability to concentrate resources. This is critical in the early stages of revenue scaling.
You can see the difference between government and commercial specializations in the example below. You’ll also notice that each POD goes through sub-segments to heat-test markets. This enables each POD to focus solely on the use-cases and value propositions that are required for each sprint. The sprints may last anywhere from 30 and 90 days.
An example of how to organize a sprint in terms of time:
- Week 1: Introduce use-cases to the team and role-play a range of situations.
- Week 2: Prioritize B-leads.
- Week 3: Promote and arrange an event, and follow up on your A-leads.
- Week 4: Follow up on A-leads.
- Week 5: Finish up and get ready for the upcoming sprints.
Different Business Models and the Use of PODs
PODs may be used for a variety of business types. Platform sales, in which the team closes a transaction for a CRM/ERP system, is the most frequent use.
There isn’t a lot of upselling once the transaction is closed. Consider a workflow platform: it could be first offered for eight users in business unit X.
After a year, business unit X has ten users and perhaps two more seats in a new business unit.
The POD, on the other hand, may be used after the sale has closed in consumption sales. In the example above, a POD is used in a free sign-up approach.
CSMs discover individuals with high consumption potential, the ADR generates leads, and the AM upsells under this approach. A 2000 percent increase in an account is possible in this approach.
Recruiting at a Larger Scale
PODs, we’ve discovered, also enable you to scale your recruitment. A new POD may be created by elevating the top performer of an existing POD (AE of POD 1) to the position of POD2’s new POD leader. POD 1’s team leader has the option of hiring a new MDR to backfill the job inside the POD.
The Importance of a Well-Designed Sales Department
You can’t depend on the same sales department organization you had five years ago today (or even last year, for that matter). The preceding material demonstrates why this is the case.
You may design a sales organization structure that best fits you, your team, and your sales cycle by following this recommendations.
What is the structure of your sales team? Is it past time to make a change?
Also available on Medium.
How to Create a Winning Sales Organization Structure: Without a doubt, the most important thing to know about sales is how to create a winning sales organization structure. The sales organization structure can actually be broken down into three levels: the top and middle management level, the sales manager level, and the sales team level.. Read more about b2b sales organization structure and let us know what you think.
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Frequently Asked Questions
How do you create a sales force structure?
A sales force structure is a way to organize your sales team. It may be based on geography, product line, or other factors.
How do you make a winning sales team?
A winning sales team is made up of individuals who have a strong work ethic, are able to communicate well with others, and have the ability to think on their feet.
What makes a successful sales organization?
A successful sales organization is one that has a good understanding of their target audience and the products they are selling. They also have a clear strategy for how to get their product in front of potential customers, whether it be through advertising or word-of-mouth.
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