Sales leaders agree that the ideal organization is split evenly among inside sales and outside sales professionals, according to InsideSales.com recent research. But there is even more research out there on optimal sales organization structures. Certain types of organizational structures lead to better business outcomes, while others can harm productivity.
Dan Parry, principal at the Sales Benchmark Index (SBI), told us more about this on the Playmakers podcast hosted by Gabe Larsen. He spoke about what makes a winning sales organization structure and how to make changes without losing your most important customers.
SBI are a management consulting firm specializing in sales and marketing focused exclusively on helping B2B companies make their number.
Optimal Sales Organization Structures – Skating Where the Puck Should Be
Sales organization structures are lacking in most companies, says Dan Parry, who has ample experience working on department designs.
“Legacy organization designs are based upon what has happened in the past, as opposed to what’s going to happen in the future. They’re not playing a Wayne Gretzky (professional ice hockey player – Ed.). They’re not going where the puck should be, they are just going where the puck is,” said Dan, on the podcast.
The Seven Types of Organizational Design
Sales Benchmark Index shows there are seven organizational design models, and most companies will exhibit a combination of these models – a hybrid model.
The triangle: This is a very common structural design, composed of an enterprise account, mid-market accounts and S & B sales account.
The hunter/farmer model: In this model, a hunter goes out and finds a deal, then passes it to a farmer. The farmer takes the opportunity and nurtures it, delivers the work and then potentially cross-sales.
A geographical design is based on territories around the country.
The industry vertical model is centered around verticals: pharmaceuticals, manufacturing, technology or health care, depending on the type of product offered.
There is also a product model: the company will be organized based on the products it sells.
The persona model: Thiss mode is based on social proximity – or how well I know my prospect.
Hybrid models: This is the most common and seventh approach, where there is a mix of all of the above models.
Complex Sales Structures Lead to Low Productivity
However, more than two organizational models will hinder productivity, shows Dan Parry. The more models a company uses to structure its sales organization, the higher the chances sale activity is disrupted.
“What happens when you start to get more complex or their number of sales org design models, your productivity starts to go down. It’s because you’re disrupting the sales person. It’s too complex for that sales person to handle. And the customer will be confused as well. They will have multiple people calling them,” said Dan Parry.
With over 11,000 companies studied by the SBI, companies with only two structural models for sales get a quota of about 60%. With three or more models, you will go down below 40 percent on quota attainment.
“If you have a geography and a hunter/farmer structure, that’s optimal. Or you might have a stratification based upon industry. That’s optimal, with a general sales person. But when he starts to get three or more organizational structures, we either see a productivity dip, or the quota attainment goes down,” shows Dan Parry.
The Two Rules of Changing Sales Structure
Sales organizational design is a high risk change in companies, adds Dan. Adoption is always slow, especially in large enterprises. This is because changing things sometimes results in lost customers and revenue.
“We have two rules. When you have an organization design a structure you never ever lose a customer. Second rule, never ever lose an “A” player,” concludes Dan Parry.
Listen to the Playmaker podcast to learn:
- How customers buy and what they care about matters to your sales structure
- Why inside sales are becoming virtual sales – and why your face-to-face meetings are more important than ever
- How you can make Sales and Marketing play nice together by changing your department structures