Very few sales organizations in the B2B sector have a clear structure. Typically they have grown organically -- a result of many past decisions. Still, the market changes over the years, as do the demands on the sales organization. An example: While in the past, decisions were often made by regional purchasing departments, efforts to save costs led to procurement decisions becoming more centralized, thus forcing sales organization to collaborate across regions. This is only one of many reasons why a sales organization should be reviewed on a regular basis. In the following article, we provide an overview of our experience with sales structure trends and provide insights on how to take advantage of them.
#1 Create transparency:
The first step is to create transparency. This involves identifying and understanding the organization's basic KPIs. Performance figures such as revenue, profits, and costs overall and per employee should be considered. Other basic KPIs are the number of customers, how they are segmented, and the manager-to-staff ratio. It’s crucial to understand each function's responsibilities and how they are carried out in daily business. Very often you can observe an imbalance between different functions in an organization. The basis for the following steps is to raise awareness on the extent to which a particular subgroup dominates your organization.
#2 Listen to your customers:
Understanding market and customer needs goes hand in hand with creating transparency. While in the past, focus was on the internal perspective, today modern sales organizations focus more on the external view on the market. What kind of expectations do customers have in terms of presence, service level, and technical advice? How is the customer’s organization structure set up? Tapping the knowledge of both regional sales (presence and quick reaction) and industry or application experts is the best approach as it is cost effective and ensures customer satisfaction.
#3 Define your targets:
The sales organization's structure depends greatly on your targets. Enter new markets? Grow fast and increase market share? Boost margins and not volume? Sales targets can be differentiated by segments and then assessed accordingly. In any case, the goal is to shift from a reactive sales organization to one that is proactive, where markets and customers can be developed independently.
#4 Interact with your employees:
In addition to identifying hard KPIs and understanding the external perspective on customer and market demands and sales targets, it is also important to consider employees' qualitative feedback when revising the sales structure. Their experience and requirements should be systematically documented when reviewing an organization. Factoring this in early on is crucial for getting the sales team to accept internal changes.
#5 Develop a target organization:
Based on quantitative data and qualitative insights, 2–3 potential sales structures should be designed. The criteria used to assess the structures focus strongly on the topics above. Market robustness (revenue and profit growth), resource efficiency, management efficiency (acceptance, controllability, manager-to-staff ratios, etc.), and the closely related process efficiency of the new structure have to be evaluated for each of the options. Doing so will help to build a solid foundation need to make informed decisions about the new sales structure.
Without successful implementation, all efforts are for nothing. We frequently observe how new sales structures are formally introduced, and yet, the old organization persists. In this case, we must emphasize how crucial it is to carefully plan the implementation phase, to set up a realistic time plan, and to involve all of the shareholders early on in the process. This is the time to fine-tune the details.
Many sales organizations have grown organically over the years. Therefore, it pays to look at them with a critical eye. Aside from the hard criteria, market and employee demands must also be factored in. To ensure successful implementation, facts and figures are an absolute must, but so are the experience and insights of decision-makers.