So your product or service is taking off, you are confident of your product-market fit and have successfully raised a round of capital, now what? Time to think about further growing your sales team and scaling your sales organization and equally important, what’s the best structure for your sales team?
A Harvard Business Review study shows that 50% of high-performing sales organizations have well-documented sales processes that are structured, compared to 28% of underperforming organizations. As your product or service starts to scale, don’t start hiring sales reps without thinking about the right team structure for your business and culture. This is more than just choosing your sales management tools, it’s also about creating a high performing sales organization.
So, what is the best structure for your sales team? Here are 3 models to think about:
1. The Island Structure
This is a more traditional “sink or swim” model that is based on having very little structure. The founder in this scenario typically acts as the head salesperson and as a result, the sales team will be given some basic support: This includes basic training, products to sell, a commission structure, and you let the team figure it out.
In this model, each of your sales reps are responsible for the entire sales process including generating, qualifying as well as closing deals.
- Helpful in a company where sales are simple and transactional, it is also helpful when the sales process does not include too many sales steps involved
- Requires little management and therefore, easier to implement
- Can provide healthy competition between sales reps, especially if managed properly
- Little control over brand positioning
- Creates a highly aggressive and non-collaborative environment
- You can’t effectively track and monitor sales metrics because sales reps do everything
2. The Assembly Line Structure
your sales team will have different roles including inspired by the Industrial Revolution, and often used to simplify a more complex sales process:
- Lead generation: This includes inbound and outbound lead generation
- Sales Development: this team qualifies the leads and identifies decision-makers
- Account Executives: Responsible for closing deals
- Customer Success or Account Managers: Responsible for increasing lifetime value (LTV) for customers by up-selling and keeping customers happy
This model is explained in Aaron Ross’s book, Predictable Revenue:
- Highly specialized roles = Higher efficiency of the sales process
- More predictable sales outcomes
- Easier to isolate and correct issues in the sales funnel
- Harder to implement in smaller teams (1 or 2 reps)
- Can create tunnel vision, where the sales team is highly specialized and focused on their own part of the process, neglecting the big picture
- Can create friction between the various team players due to lack of seamless handoff process
2. The Pod Structure
This includes a more Customer-Centric approach to sales, “Pods” are small, autonomous units that can act and react quickly and easily, without fear of disrupting other business activities. This means that each Pod is empowered to think creatively, solve problems as well as finding ways to deliver value to the customer.
Dave Gray, author of The Connected Company, provides this diagram of the pod model:
- Create a more flexible and agile sales environment
- More customer-centric and responsive which leads to more focus on driving value
- Develop positive behaviors such as empathy and collaboration
- Easier to isolate and correct issues in the sales funnel which leads to better resolution
- The structure can be too fluid and therefore offers fewer chances for individual specialization
- May not appeal to more competitive sales reps which results in reduced hiring success
If you are a founder of a company looking to scale up, it’s never too early to start thinking about the right sales team structure for your company. First, look at your culture and be clear about what’s important to your future growth.
Here are some questions you can ask to determine the right sales team structure:
- Are you customer-centric or revenue-focused?
- Is collaboration more important than competition?
- Is your sales process complex or transactional?
- How much does your brand positioning matter?
- What’s your management bandwidth? In other words, how much time can you spend managing your sales process?
Determining the right sales team structure is key to understanding what kind of competencies and skills you need to bring to your team, and subsequently, deciding how to compensate your sales team.
Schedule a free consultation with a ScaleX team member.