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Sales Eye - The right sales structure (Oct 10th, 2005)

2013-02-19
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The right sales structure

10th November 2005

 

 

It's already October, and either you're getting ready to do your 2006 budget, or you are already well under way.

 

As we begin to think about next year, and how we are going to improve the financial performance of our various strategic business units, one thing that rises to the top of the heap is sales structure. In our business, like many others, sales and marketing costs are the largest cost component of our profit and loss accounts after the cost of goods. Strong or weak control over sales and marketing costs usually makes the difference between a profitable unit and a loss-making section.

 

 

Our Annual Operation Plan (AOP) process started a short time ago, and in our initial discussions we talked a lot about what is the ideal structure of our own sales forces. As we think about the issues that came out in the discussions, we thought it would be a good topic for this week's Sales Eye.

 

Here are some of the issues you might want to consider as you prepare your plans for the future.

 

The universe of clients

 

It's always nice to begin with the 'universe'. To understand, think about your current client and prospect base and consider the following: who are all your potential clients out there; what categories of clients do you service now; what is the sales potential of each group; are there any obvious client segments missing or underserved; what is the geography of your clients; and what is the most efficient way to reach each group?

 

At this stage, some good analysis from your system will show you in more detail what is going on with existing clients. If you have a decent CRM system, you might even learn which client groups are under-represented and why.

 

Ask these questions

 

As you think about your sales structure, ask yourself these questions.

 

How many reps do you have? Map out exactly your current organization, including sales support, in-house sales, and customer-service support (who very often are fulfilling a selling role as well).

 

Are all these reps necessary? What would happen if a sales rep went away? Would sales stop or not be affected at all? We recently had a not-so-inexpensive senior rep go out sick for four months, and - without a replacement - beat his budget every single month. Boy, does this make us think ...

 

How many can you afford? Yes sales drive profits, but you need to be realistic. Building a new or larger sales force costs money. Most new reps take six to 12 months before they bring profits, so in your budgeting, take this into account.

 

Is this selling activity scalable? If, on the other hand, you have a formula that works - new sales reps bring profits fast - you need to expand as fast as possible. Again, you need to take into account your financial resources.

 

What must you/can you afford to pay different sales reps? Do you need expensive super stars, or can you find 'diamonds in the rough'? What are market conditions for the type of sales reps you are hiring? What do your competitors pay? Are you paying your current AM's too little or too much? These are compensation issues, but integrally tied to the organization issue.

 

Matchmaking

Different clients can require different kinds of sales reps. We have a wide variety. Key-account managers are the creme de la creme. They only handle large accounts and must be very good at what they do. We expect more from them, and we pay them for it.

 

Hunters only look for new accounts. This involves as little administration work as possible. Meetings, presentations and phone calls are their job description.

 

Regular sales reps handle medium-sized and larger accounts. They have strict performance requirements, or they are shown the door.

 

Telesales are our newest addition to our sales arsenal. They never leave their desks, and focus on selling to small- and medium-sized companies.

 

Independent sales agents are something we are experimenting with for the future. These are commission-only free agents in outer regions of Poland.

 

You spend a lot of time and money on training, motivation, compensation systems, contests, building management teams, sales support and much more. When was the last time you asked yourself - does our current sales structure make sense? Now, during the golden Polish autumn, might be just the right time to do it.

 

 

From Warsaw Business Journal by John Lynch, Matt Lynch -"The Sales Brothers"