“Evolving” your sales organization means matching its size, role, degree of specialization and time allocation across different types of customers as the business moves through startup, growth, maturity and decline phases.
The Great Recession of 2009 caused most businesses to struggle to hold on to the revenues and employees they had – much less think about growth again. But we have to remember that many world leading companies like Google, Apple, Intel and Oracle went from startup thru growth to maturity in less than one normal business career, and evolved their sales organizations as they grew.
In the start-up phase, your fundamental decision is whether to sell products direct to customers yourself or thru partners, you can get to every other decision. Only choose the use of selling partners if you get strategic advantage and cost benefits. (1) Size your initial sales organization of generalists based on the initial business goals of establishing relationships and generating orders, not on “what we can afford”.
The growth phase is when you start to specialize, by dividing up the work by territory, by product line or by focusing salespeople on new business only and leaving the repeat orders to Customer Service or Account Managers. This is also the time when established salespeople may become frustrated as these changes impact their income. Zoltners, Sinha and Lorimer (1) show a 3 year ROI model driven by the cost and number of salespeople you hire – and they report that most start up divisions of established corporations often overinvest in salespeople because their desire to be competitive causes them to overinvest.
Maturity emphasizes retaining customers, serving existing markets and optimzing the efficiency of the existing sales force. The most often overlooked, but easy to implement, tool for increasing the efficiency of the salesforce is how the territories and accounts are assigned to maximize existing relationships and strengths you have. Bringing in Account Managers to handle your largest existing customers, although costing more to start with, is actually a strategic efficiency because it frees up your sales managers to focus on winning new business where you have none.
When products age or are overtaken by competition, businesses can enter a phase of decline. The role of sales leadership here is to optimize the results of the sales force they have while at the same time taking cost out of the sales function (as will all other functions in the business). “Taking cost out” can mean transferring small customers to business partners to lower your cost to serve them; reducing direct sales employees, reducing inside sales, account management or other support functions; or reducing compensation to avoid reductions in force. None of these are as much fun as building the team during start up and growth, but have to be dealt with to preserve the business.
The summary above doesn’t account for market differences based on geography. You can have a mature market in the USA at the same time having a growth market for the same product in China. Adjusting the evolution model for differences in market and culture is usually constrained by the local sales organization (in China for example) not wanting to change to support the business units needs.
“Evolution” is not easy and requires constant attention to keep everyone focused. But it’s neccesary to keep pace with how your business is evolving.
References:
(1) Match Your Sales Force Structure To Your Business Life Cycle, Zoltners, Sinha and Lorimer, Harvard Business Review On Strategic Sales Management, 2007.© David G. Wick and David G. Wick’s Blog, 2010.
