What do you mean by Sales Organisation Structures?
Sales organisation structures are majorly termed as segmentation or dividing the sales team of the company into specified or segregated groups. The way a company organises its sales team depends on factors determined by the number and products offered, regions served, size and industry of customers, and size of the sales team.
The Sales organization structures set sellers for success which makes it significant. No company will put a recruit in charge of the enterprise accounts, likewise, an employee with apt experience in healthcare will find it difficult to sell in tech.
Therefore, a sales organization structures designs allow the company to capitalize on individual experiences and capabilities. Plus it ensures that the right sellers are targeting the right or potential customers.
The sales department gets to generate revenue for the organisation by convincing customers to purchase or try their product or service. In the modern era, post-purchase behaviour becomes important to look upon to achieve delighted customers.
Therefore, for the sales team people to close deals effectively, they focus on sales-critical activities. But most sellers are tasked with activities that better suit sales enablement functions or sales operations. This happens due to constraints such as misunderstanding the role of sales reps or budget issues.
However, with stated goals, it becomes easy to differentiate between the core activities of the sales department and other supporting functions mentioned above. Following are a few points to differ these roles:
|Sales||Sales operations||Sales enablement|
|Indulge with customers to generate revenue and close deals||Manage day-to-day routine of sales department operations like tool administration and forecasting||Prepares sellers for buyer engagement through onboarding activities and training|
|Manage administrative activities like CRM analytic data and expense reports||Analyses and develops revenue strategy||Manage routine communications with go-to-go market teams and sales|
|Attend training and onboarding to grow skillset||Reviews and tracks sales performance metrics||Manages sales organisation strategy and content|
Therefore, the table concludes that the sales team should be supported by roles like sales enablement and sales operations to pursue their jobs efficiently. The department must secure their success by defining its responsibilities and roles, and investing in supporting functions as necessary for they need to thrive.
Sales Structure Models
When the company discusses sales structure models, 3 sales organisation charts perform best. It includes the Island, Assembly Line and Pod. As a result, each one has its weakness and strength.
It becomes significant to decide the sales structure models that work best for the organisation according to their type. Therefore, the following gives a quick understanding of the benefits and limitations of each kind.
The island model explains that each seller terms as a generalist, a single rep manages an individual customer from being a prospect to onboarding. Therefore, a rep will qualify, generate and close the leads on their own. This model gives a high level of autonomy to reps to grow and build customer relationship management. As a result, it creates pressure on individuals to perform. Also, for a few companies, it creates a highly competitive sales culture.
Since it focuses on individual success and simplicity, this type of sales structure model is adopted by organisations with smaller sales teams. The ones looking for more output per hire or where one-to-one relationships are appreciated such as the financial services industry.
- Streamlines seller-customer relationships
- Creates competitive culture and individualistic
- Helps in maximising individual rep output
- Preference for individual success over team collaboration
- Challenges to managing various accounts at different stages
- Not suited to scale or large organisations
Also termed a hunter-farmer model, the sales teams are determined by each individual’s job title. The name comes from similarities between sales operations and manufacturing assembly lines, in both scenarios, the specialized workers perform a specific task. While in sales organisation structures the task is moving customers through an aspect of the journey.
Briefly, the business or account development reps nurture marketing-qualified leads or generate pipeline. These lead to handoff to an account executive, who completes the sale. Once the deal gets closed, customers are transferred to an account manager or customer success who determines the relationship of the customer life cycle.
- Deepens rep expertise in specified sales movement
- Maximization of operational efficiency through specialization
- Moves the buyers via the sales process easily and quickly
- Risk of poor customer experience due to multiple handoffs
- Risk of miscommunication and silos across the teams
- Specialization causes additional costs
The model is a hybrid of both assembly line and island models. Similar to the island model, an individual pod will partner with a buyer from the process of prospecting to solution onboarding. But similar to the assembly line, each pod has reps specialized in the specific task of the customer journey. This involves an account executive, a business or account development rep and an account manager.
This model is adopted by larger organisations that prefer an easy way to segment their sales team. This happens since leadership can easily reassign or assign pods to various segments like geographies, product lines, verticals, etc as required. The pods also benefit from account-based sales organization structures, as an individual pod can efficiently follow a targeted account.
- Greater collaboration leads to smoother handoffs
- Decreases silos between functions and roles
- Enables leadership to make adjustments to a sales team
- Poor performers hide behind successful teammates
- Individual motivation becomes difficult
- Friction between individuals of the same pod is emphasized
For example, A company can further segment its sales organisation structures team in additional factors like:
- Geography/ Territory
- Customer size
- Product/ service offering
- Customer vertical
These segmentations can be combined with any of these models. Initially, an organisation using an assembly model replicate the structure for each geography they are serving in. Moreover, a company using the pod model can dedicate a pod to each of its product lines.
Note: As a company grows, additional segmentation is required to determine that the reps develop the specialized skills necessary to target certain accounts or serve particular markets.
Types of Sales Organisation Structures
The sales organisation structures problem lies when asking the people handling different aspects of the sales process. Therefore, there are 3 rules concerning people, problems and processes. As a result, if more than one-third of the company’s salespeople are underperforming in these three performance metrics, then there occurs a sales structure problem. The four types of sales organisation structures are:
- Geographic structure
- Functional structure
- Product-sales force structure
- Market-based structure
Each sales organisation structure has its successful teammates’ pros and cons that should be kept in mind before implementing them in the business which is considered as follows:
Sale teams that work by these sales organisation structures are organized by location. Also termed a territorial sales force structure, they break the sales team between the cities. The geographical sales structures are one popular kind with a bundle of benefits.
- Firstly, the sales team organized on the basis of the geographical location of customers are less expensive. If the reps are not settled in the region, then the movement to all over the place adds up to cost over time.
- Secondly, a successful sales team in one area leads to the continuous growth of that region.
- Thirdly, customers get to know the sales rep of that area extremely well which increases customer loyalty building better customer relationships and better revenue in future.
However, it becomes difficult to place territory lines for the company’s sales reps to follow. Furthermore, the sales reps situated in those different regions will not be able to specialize making the sales tasks harder to do on their own.
This kind of ales organisation structure focuses on specialization within the marketing team. This explains that every rep has an obligation to fulfil within the sales team on features like interests, specialities, and other factors.
The sales team that runs by functional structure are more efficient since each rep specializes. But it does create a plethora of problems since sales is an interwoven department which means they require coordination.
The functional structure can also be difficult when the accounts and clients are handled from different regions. Few reps may not be able to interact with people of different cultures or handle multi-lingual accounts.
There is a chance of duplication since multiple people can end up running with the same account at the same time. However, duplicate processes may sound like cross-checking of work at first but can be detrimental to the specific account.
Product sales force structure
This kind of sales organisation structures focuses more on the products that the clients make based on individual products or product types. The product sales force definition structure ensures that the sales reps are attuned to the way they can sell to companies from the products they have.
The sales team has become so efficient that a sales rep can handle one type of product at one company and the same type at another. This type of sales organisation structures works for companies that focus on one industry.
But can be hectic if a company brings multiple industries with multiple products at once. The sales rep might confuse with too many factors and cause communication issues demanding more coordination with individual reps.
Also known as customer sales force structure, termed as a sales team organized by industry or customers. More briefly, grouped by industries. It focuses on placing sales reps in individual industries.
This way it gives reps a chance to specialize and understand the needs of the companies within that industry. Moreover, reps get a chance to become experts and earn a better chance to grow stronger relationships with potential and current clients.
The market based is a kind of sales organisation structure that can be advantageous for those companies that aren’t focussed on one or few industries. However, specialization comes with higher costs and difficulties in the management of sorting locations of different companies.
Briefly, companies don’t base the location on what industry they are in entirely. This explains some technology companies are in Nashville, others in San Francisco etc. The sales rep has to move around for the different geography of different industries.
Structuring a Sales Team
Finding the right sales organisation structures for the company’s sales team depends upon several factors that consider as follows:
The location of customers, which product or service they often purchase, and how large the sales model needs to be along with the segmentation that will be successful.
A higher budget allows the company to invest in a larger and more specialized sales model such as the pod or assembly line models. While the smaller business may opt for the island method that maximizes output per headcount.
Every model has its own unique culture. Therefore, a company thinks about whether they prefer more competitive sales organisation structures or a collaborative team one that suits the company values.
The key point lies in finding the right model and the right type of segmentation for the business. Moreover, one might have to adopt a different model as the sales team grows. Furthermore, the sales organisation structures are influenced by supporting functions such as sales operations and sales enablement, and vice versa discussed above.
B2B Sales Team Structure
In the B2B sales team structure, buying habits are evolving. While capitalizing on B2B sales opportunities refers to building a B2B sales team structure structured to address the customers. In the modern scenario, the B2B buyers are more informed with a clear understanding of what they need and how to solve the current problem.
As a result, they expect the B2B sales team structure to help them with the right product choice. Therefore, the rep has to focus not only on selling but to help customers understand what and how to buy. The sales rep’s objective is to present a solution concerning the prospect’s problem and turn them into customers.
The five emerging trends of B2B sales team structure are:
Therefore, this explains that companies having appropriate sales organisation structures suffer less coordination or communication problems between the individuals of the sales team. However, the type of sales organisation structure depends upon the different businesses and the stage or growth level of the company. The models specify how the sales team will structure while the structures depict the segmentation of the company to pursue their business.
Frequently Asked Questions (FAQs)
What are sales organization structures?
Sales organization structure refers to the segmentation of your sales team into specialized groups. How you organize your sales team will be determined by the regions you serve, the number of products and services you offer, the size of your sales team, and the size and industry of your customers.
What is an organizational structure in sales and distribution?
The organization structure of SD involves five parts – Sales Organization, Distribution Channel, Division, Sales Office and Sales Group.
How do you structure a B2B sales team?
- Create a Collaborative Sales Culture.
- Follow a Modern Approach to B2B Sales.
- Develop Flexibility and a Growth Mindset.
- Promote All Hands Access & Transparency.
- Align your Team towards the Common Goal of Increased Sales.
What is B2B sales organization?
Business-to-business (B2B) describes a relationship, situation, or marketplace between one business entity and another.