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Sales Organization Strategies It was 3000 BC. Tribal club seller Og ran into stone knife salesperson Ur down at the local watering hole. After the mandatory exchange of grunts and dinosaur claws, talk turned to the best way to set up a sales group. Five thousand years later, CEOs are still debating. Everyone has an opinion, very few people get to start off with a clean slate, and often things “just happen” rather than result as part of a long term strategy.
Companies struggle with the right strategy for their sales department. The internet, cell phones, instant connectivity, and massive blasts of technology change the landscape – yet, the strong personalities within the sales organization resist change or (at best) put their own personal spin on the issue.
Let’s explore the pluses and minuses of the most common of business-to-business sales organizations. Warning – consultants are famous for providing just the right answer, but in this equation “one size does not fit all”. The answer lies in understanding your position and migrating to the best future.
For the next four minutes – let’s assume there are six sales organizational strategies:
- Geography based
- Technology or industry segmentation based
- Sales built around individual skills
- Account assignment driven territories
- Hybrid Organizations with Specialists
- Matrix sales organization
Geography based We all know the story of the traveling salesman – armed with an order book, pencil, and a pair of freshly shined shoes – these guys worked a territorial route. (If it’s Tuesday, this must be Pittsburg.) Last week, a new salesperson shared, “My dad worked a territory. And, I am proud to say, I was the first woman in our company to be given a territory of her own.”
Pluses She felt good because in her mind – she owned something. Ownership is a key strength of a geography based organization. A new business opens and there is no question as to who should begin prospecting. Referrals flow more naturally. Travel can be minimized (with the right planning). If distribution or reps are used – territories are a natural extension of the planning process.
Minuses Not all territories are created equal and this creates issues with metrics of sales people and relative skills. Personality issues or conflicts between key customers and sales people fester over time. Managers face issues “Gerrymandering” of sales territories and border squabbles between sales people.
Technology / industry segmentation basedDomain knowledge developed as a buzz word in the later 1990’s. Sales organizations who pursue value-add or consultative sales strategies find industry based selling to be a natural consideration. The salesperson targets in on a single industry or technology segment – they become part of the industry, attend association meetings, and subscribe to the trade publications of their segment – they speak the jargon of their chosen industry. In short they become their customer (almost).
Pluses Industry segmentation in the sales force provides a vehicle for matching product knowledge to customer base. Market segmentation allows customer-centric tuning of the entire sales process; sales person skills, customer support structure, marketing style, and value proposition adapt to the buying preferences of each segment. Because communications and prospect definition is easier, companies with strong marketing organizations love segmentation.
Minuses Travel and logistics overlap add to the inherent costs of an industry segmentation approach. Sales Managers find it difficult to balance out sales responsibilities in small sales teams. Shifting accounts to even work load or cover in case of health or injury issues grows more difficult. Expansion plans may require multiple paths of thought.
Organized by skill factor Hunters and farmers – my first boss broke sales people into two categories. Hunters found accounts easily. Breaking down barriers, kicking the competition, cold calling, and turning a chance meeting into new business was their life – they lived for “the thrill of the hunt”. Once established in the account; they lost interest and their performance began to wane. Farmers feel uncomfortable with new people – they almost never find a new account. But once in an account, they provided customer service like there was “no tomorrow”. They “farmed” the account for every available dollar. The Hunter-Farmer strategy is but one of many that use human skill factor to grow business – the best of each of these involves careful consideration of unique talents by a very perceptive sales manager.
Pluses Skill factor based organizations get strong grades for maximizing the impact of a team. Companies who orient on individual strengths tend to be more progressive in other areas of their management style. The Gallup Organization interviewed 80,000 managers in creating the book “First, Break all the Rules” – their findings provide additional insight to other valued derived from this management style (i.e. decreased turnover, happier employees, and long term skill growth).
Minuses Only an experienced and skilled manager can discover and capitalize on the individual skill sets of a diverse team. Organizations scattered over multiple locations may find it difficult to “drill into” the specific and individual strengths of a large number of sales people.
Account assignment driven Convenience rather than a strategy; experts argue this is the strategy of no-strategy. It works this way – since I want you to call on John Deere in Illinois and Iowa – I am going to give you everything else in the Midwest.
Pluses This provides for coverage in a pinch.
Minuses Rarely do the “cover the rest too” accounts grow to their potential.
Hybrid territory mixes – with Specialists Companies pressed between the challenges of developing marketshare over a large geography and providing domain skills to advanced customers are moving to this model. This strategy combines geography with segmentation via specialists. Specialists provide the marketing attention and domain knowledge while geography based sales people handle relationships and logistics. Industrial distribution (Electrical, Power Transmission, Fluid Power, Pipe Valve and Fittings, and Mill Supply Distributors) has moved increasingly to this model. Technology based companies – Microsoft, Dell, Cisco, and others have incorporated Specialists over the top of a geography based sales force.
Pluses Multiple relationships back to the selling company – Buck Rodgers in his book “The IBM Way” first described the value of multiple connections to the customer’s organization. Specialists “over the top of” territory based sales people provide a great mix.
Minuses When people work together on the same task, roles must be well defined and orchestrated. The plain truth is very few organizations take the time to define their sales process. Issues with compensation, commission squabbles, and inconsistent coverage drive dissatisfaction with this process.
Matrix sales organization Imagine multiple sales organizations working the same territory. Each has its own organizational structure, goals, objectives, and measures of success – yet they work together. Capitol equipment sales and MRO products sold from the same company come to mind as a place for matrix sales.
Pluses A matrix organization allows use of individual sales talents and provides (to a limited extent) the power of segmentation. Many larger companies have no option but to establish a matrix organization.
Minuses Duplicate management teams and duplicate sales logistics most notably come to mind. Without planning and a long term strategy this organization can become a management tar baby.
Which should we use? This article was not developed to provide you with a road map to selecting sales organizations – instead, it was developed to kick off your own thought process.
Colonel John Boyd, the father of American Air-Fighter Strategy, developed a strategy called the OODA loop – Observe, Orient, Decide, and Act (then repeat the process). You observe your sales team daily. Hopefully with this article you will be able to Orient yourself to the other strategies that surround you. Decide – is there a better way? What are the pluses and minuses to your organization? Act – plan a strategy.
A parting thought Sales people are a strange lot. I know – I have earned my keep in a selling capacity since I was just a boy. I don’t believe in stereotypes but most sales people by nature fear changes in structure. Think change by process – not change by decree. I favor migration paths that move culture and people over the course of several years. Define North Star direction, bring in training and trainers and share articles demonstrating your objective. In short, create your change from the bottom up.