3 Sales Team Structures And Their Pros And Cons
Sales teams come in all shapes and sizes. But no matter the size or structure of your team, there are pros and cons to each configuration. In this post, we’ll take a look at three common sales team structures and discuss the advantages and disadvantages of each. By understanding the different structures available to you, you can make the best choice for your business.
What Does A Sales Department Do?
An organization’s sales department is responsible for generating revenue for the business. They do this by scoping out and convincing potential customers to purchase the business’ product or service. Sales success is dependent not only on the team’s sales strategy but on how the team is organized.
Sales teams often consist of the following roles:
The sales director is in charge of overseeing the strategic leadership of the company’s sales department. They set the sales targets, measure KPIs, and maintain the overall sales performance of the team.
Sales managers usually report directly to the sales director. They’re in charge of managing sales teams by recruiting, training, and mentoring sales reps, creating timelines and goals for the teams, and putting together sales reports.
In some companies, hiring managers take charge of talent acquisition, onboarding, and employee retention. In bigger organizations, this task is delegated to the Human Resources department, where a whole team is responsible for recruiting and keeping new employees happy.
The job of a sales trainer is to improve a sales team’s performance by providing trainees with the proper tools, resources, and skills to do their job. Sales trainers are responsible for orienting new recruits about the sales process, structuring training plans, and evaluating trainees’ performance.
In a nutshell, sales representatives are the face of a business. The sales rep is responsible for conveying the benefits of the company’s products or services and is tasked with identifying prospective customers, generating leads, providing resources and assistance to existing clients, and closing deals.
Account managers are often the mediator between the sales team and the customer. Oftentimes, sales representatives will pass a customer on to a lead when they’re certain that the lead will become a sale. The account manager will then assist the lead through the sales pipeline all the way to onboarding. Account managers are also tasked to maintain relationships with existing clients so that they may return to make a purchase once more.
Sales Development Reps (SDR)
In bigger organizations, sales development representatives take on the role of prospecting and lead qualification. Working mostly in inside sales, SDRs move leads through the sales pipeline. They don’t often, however, close deals. Rather, they try to bring in as many leads as possible and find out if they can make for good customers.
Once the account is established, customer service reps take charge of handling all customer queries and concerns. If a customer receives a defective product, if they have issues with a service, or if they want to discuss their billing status, they would have to go through a customer service rep first. The rep will then determine which person on the sales team is the best fit to handle the issue.
What Are The Different Types Of Sales Organizations?
There are two ways of looking at sales organizational structure: external and internal operations. There are different types of external sales organizations, including:
1. Geographical Sales Structure
This structure divides sales teams by territory. This means that sales reps are assigned to a particular service area and can only operate in said area.
2. Product And Service Line
This organizes sales teams according to the product or service line they’re selling. For example, a home entertainment company might sell smart TVs, music systems, and smart hubs, and different sales reps or teams will be assigned to each product line rather than trying to sell all three types of products.
3. Industry And Vertical Structure
Sometimes called a market-based structure, this organizational structure groups sales teams by the industry they serve, giving reps a better opportunity to specialize in their assigned industry.
4. Account-Based Selling
This is a model that aims to deliver a custom onboarding experience. Sales and marketing teams work together to serve individual accounts with a tailor-fit solution to address their unique needs.
What Is A Sales Organization Structure?
Once you’ve figured out your front-facing structure, it’s time to look at the best internal organizational structure for your business.
This refers to the way you arrange the workflow and assign tasks to each sales rep. Note that not all structures work for all types of businesses, so you may have to go through some trial-and-error to find the right fit.
Sales organizational structures can be divided into two types: centralized and decentralized systems.
Centralized structures rely on a single point person to make major decisions for the team. According to Chron.com, a more centralized structure “keeps all levels of an organization focused on one vision or purpose”. As such, this model works best when a business’ owner is heavily involved in the company. It also allows for faster communication and execution of decisions.
Decentralized structures, on the other hand, allow more people to share the responsibility of making decisions. This allows sales reps to splinter off into groups headed by sales experts. This allows an organization to increase its reach on the ground and gives sales representatives more freedom to get creative in how they strategize.
Why A Well-Organized Sales Force Structure Is Essential To Your Team’s Success
The majority of high-performing sales teams rate their sales department as having an excellent or above-average organizational structure. But why?
With well-defined roles, you reduce the chances of redundancies – increasing your operational efficiency. Having well-defined roles also reduces friction and conflict among reps while still allowing for friendly competition. Finally, by organizing your sales teams, you also get the opportunity to get a closer look into your sales process. This exercise will help you find bottlenecks and issues in your sales pipeline – problems that can easily be solved with the right structure, strategy, and sales productivity tools.
3 Effective Sales Team Structure Models
These are the top three most effective sales team models:
The Island Model
They say no man is an island, but in the island structure, each sales rep is on their own. As such, every seller will have to become a “jack-of-all-trades,”, mastering every step of the sales process from lead generation to qualifying to close.
Sales managers may provide reps with basic back-end services and sales training, but at the end of the day, reps have near-total autonomy to make a sale. This also makes this structure a highly competitive one, putting pressure on individual sales reps to outperform their co-workers.
- Requires less oversight from management
- Creates more streamlined relationships between sellers and customers
- Encourages competition and creativity among sales reps
- Does not encourage collaboration and can lead sales reps to withhold key information that can advance the whole team
- Makes tracking sales metrics and benchmarks more difficult
- Businesses don’t have much control over how their brand is represented
The Bottom Line
The island is a traditional approach to sales that is simple but aggressive. It encourages competition, which can push sales reps to be more creative, but also discourages collaboration and sharing of effective strategies.
The Assembly Line Model
Also known as the hunter-farmer model, the assembly line structure gives sales reps an individual job title. Like a typical product assembly line, a sales force is arranged in an assembly line, with prospective customers acting as the “raw materials.”. Each customer passes through a phase of that assembly line as they go down the sales pipeline.
An assembly line sales team often consists of the following roles: lead generation, sales development, account management, and customer success.
- Allows sales reps to deepen their expertise in a particular part of the sales process
- Is a predictable model that allows for easy tracking of sales metrics and benchmarks
- Moves customers through the sales process faster and more efficiently
- Lets teams find problems in the sales funnel more easily
- Having too many handoffs from team to team can create friction between customers and the sales team
- Can make teams feel disconnected from the business’ goals
- Is not suitable for smaller teams running on limited manpower
The Bottom Line
The assembly line model comes with a lot of benefits. But from a customer perspective, it can feel a little disconnected. It also doesn’t work well for small businesses with limited manpower.
The Pod Model
The pod structure combines the best parts of the island and the assembly line structure. Like the assembly line model, sales professionals are given different roles to fulfill. However, instead of being sent of into a team that performs only one specific task, members are assigned to a focused group or a “pod” that consists of team members playing different roles.
By putting one or two of each specialized role into a pod, you create a group of people that can complete the sales process within their own little pod. As such, instead of competing against each other – as one would in the island model – sales professionals compete as groups.
- Lets sales professionals work in close-knit teams where they can learn about and work on every step of the customer journey
- Allows for deeper and friendlier collaboration
- Creates less friction among customers because the handoff still happens within a single team
- Is a less competitive model that can let some team members to become complacent
- Does not encourage team members to hone their skills in a specialization
The Bottom Line
Pods are great for large businesses that are looking for a simple way to split up their sales teams. However, sales managers need to keep an eye out for poor performers who take advantage of the pod structure to ride on their teammates’ coattails.
So, what type of sales organization structure is best for your team? Well, that depends on the products or services you offer, the size of your company, and how many people you have in your sales force. But no matter what, it’s important to have a well-organized sales force structure. Having one ensures that everyone knows their role and responsibilities within the department and can work together cohesively to achieve common goals.
Reviewing your sales organization structure also allows you to find issues in your own sales process and determine what kinds of sales productivity tools are necessary for enhancing efficiency. If you’re interested in the power of revenue intelligence tools to boost efficiency and, in turn, your bottom line, consider People.AI’s Revenue Intelligence software.