There are many ways to form a sales organization structure. However, there are some key points to remember when structuring yours for maximum performance. This guide will teach you everything you need about sales organization structure.
It will also explain how to form it, what types of organizations it is, and what factors you should consider when making your decision.You will also learn about the role of sales managers in a sales organization and some of the challenges that modern-day sales teams face.
Four Most Common Sales Organization Structures [+ Cons/Pros]
The structure of a sales team has a huge impact on their success. Sales reps who are used to selling in one region may have trouble selling to all industries. People who excel in a particular environment can do so because their sales organization structure has been trained in that environment.
If each product requires specialized technical knowledge, it might not be a good idea for sales representatives to represent all products in a territory.
It is simply not true to say that sales skills can be used in all situations. Ask a software representative who only sells to manufacturing companies to sell hardware in all verticals. They won’t be as proficient in one of the two.
Sales Organization Structures
Structure refers to the organization of a 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.
Frank V. Cespedes, a senior lecturer at Harvard Business School in business administration, is the author of this article. He discusses in detail how a company’s design can affect its selling effectiveness and emphasizes the importance of choosing a structure carefully.
Below is a chart that outlines the pros & cons of four common sales models. You can also divide accounts and potential opportunities by:
- Geography/territory
- Service/product line
- Customer/account size
- Industry/vertical segment
Look at your sales structures and decide if a reorganization might be necessary.
Geography/Territory Orgs Structure
By organizing their sales teams according to geography or territory, each salesperson can gain a greater understanding of a specific area. They can build relationships with local businesses and learn about their regional competitors.
It is easier to evaluate your reps when you consider the potential market and sales performance in a specific area. It is important to keep in mind that sales reps can be restricted by geography and territory org structure, which can lead to them working in silos that can limit their ability to develop cross-functional skills.
Structure of Product/Service Line Organization
If your company sells these products or services, it can be a great way for sales reps to align with each other. It’s similar to geographic expertise. This allows reps become experts on a product and can communicate its benefits to clients.
This structure could lead to sales reps focusing more on the product features than the best solution for customers.
Customer/Account Size Org Structure
Another popular way to organize sales teams is to break down accounts by size. SMB accounts require different skills than enterprise accounts.
These businesses have different goals, ask differing questions, and have different budgets. By allowing your customers to learn about the intricacies and details of these accounts, you can better serve your customers as well as your reps.
This org structure can make managing resources more difficult for sales teams. This structure cannot be sustained if there isn’t constant communication between team members to ensure that all clients receive equal service.
Industry/Vertical Organization Structure
Different industries will use your product/service in different ways. Your sales team should be familiar with how different industries can use your products/services.
This is the most expensive way to set up a sales department.
Sales Organization Chart
Here’s an example of a sales organization diagram. This chart can be modified according to the organizational structure you choose (e.g., by geography/territory, product/service line, account sizes, industry/vertical segments).
A clearly defined visual representation can help your sales team work together, improve communication efficiency, help other departments identify the right people and help them align better.
Conclusion
There are myriad ways to form a sales organization structure. However, there are some key points to remember when structuring yours for maximum sales performance. This guide will teach you everything you need about the structure of a sales organization.
