The structure of a sales force has significant bearing on its success. For example, a rep used to selling to a given region might flounder when asked to concentrate on just one industry nationwide. If each of your company's products require deep and specific technical knowledge, it might not make sense to have reps sell all products by territory.
It's simply not true that sales talent translates into all situations. Take a software representative who sells exclusively to manufacturing companies, and ask them to start selling hardware across all verticals. They're probably not going to be as good at one of these assignments as the other. Salespeople who excel get very good at excelling in a particular environment, and organizational structure is the bedrock of that environment.
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Sales Organization Structure
Sales organization structure refers to the design of the sales team. Businesses may use an inside or outside sales model, geographic or industry territory approach, product model (split by product line or type), SMB/mid-market/Enterprise split, or some combination of the above.
In his book Aligning Strategy and Sales, Frank V. Cespedes, senior lecturer of business administration at Harvard Business School, explains in depth how organizational design impacts selling effectiveness, and emphasizes the importance of choosing a structure carefully. In the chart below, he lays out the pros and cons of four commonly used structures. Accounts and opportunities can be divided by:
- Geography/territory
- Product/service line
- Customer/account size
- Industry/vertical segment
Take a look, and then think about whether a reorg is in order.
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Sales Team Structures
Geography/Territory Org Structure
Organizing your sales team by geography or territory allows each salesperson to develop familiarity with a specific geographic location. They can build rapport with local businesses, get to know regional competitors, and track target accounts.
It can also be easier to evaluate your reps by taking into account the performance and market potential of a specific geographic location. One consideration of geography and territory org structure is that it can lead to sales reps working in silos, inhibiting their ability to develop cross-functional expertise.
Product/Service Line Org Structure
If your company sells several different products or services, it can help to align salespeople to those products and services. Similar to geographical expertise, it allows your reps to become the expert on a specific product you sell, thereby better able to communicate its value and use case for individual clients.
A potential downside of implementing this structure is that reps may focus more on the features of the products they are selling, and not the best solution for the customer.
Customer/Account Size Org Structure
Organizing your sales org by account size is another popular structure. The skills a rep needs to sell to an SMB are different than those of selling to an enterprise account.
These businesses have different goals, will ask different questions, and have very different budgets. By allowing reps to become familiar with the intricacies of these accounts, you'll better meet the needs of the customer and your reps.
With this org structure, teams should be aware that it may be more difficult to manage resources. To be successful, this structure requires constant communication with team members to ensure all clients receive the same quality of service.
Industry/Vertical Org Structure
Different industries will use your product/service in different ways. Make sure your reps are well-versed in how to position your offering to these various verticals by organizing your sales team accordingly.
This can be one of the most expensive ways to structure a sales team.
Sales Organization Chart
Here's an example sales organization chart. This can be modified depending on which organizational structure you choose (i.e., by geography/territory, product/service line, customer/account size, or industry/vertical segment).
Source: Lucidchart
Having a clearly defined visual representation of how your sales team is organized can help teams work well together, make communication more efficient, and help other departments identify exactly who to reach out to for better alignment.
Looking for more? Check out the difference between sales and business development next.
