6 Tips for the Perfect Sales Team Structure
If you aren’t putting as much thought into your sales team structure as the Marines do with their platoons, perhaps you should.
A U.S. Marine Corps rifle platoon is typically comprised of three squads totaling 13 men — three fire teams of four men each, plus a squad leader. Every Marine (from pilot to artillery to quartermaster) is first trained in infantry, receiving a combination of classroom instruction and hands-on practical application, similar how reps are trained in sales.
The organization and hierarchy of a platoon is carefully designed to meet goals, while also ensuring the success and survival of each member of the team. Further, specialization (e.g. a sales engineer or someone trained on the M249 Squad Automatic Weapon) ensures that there are members of each team who can support the different challenges of the sale.
The International Coach Federation states, “the average company can expect a return of 7 times the initial investment in coaching.”
There are definite challenges faced by overwhelmed sales managers with too few management layers below them. These managers often have so many cats to herd that they aren’t able to give their sales teams the training, coaching, and guidance needed to meet organizational goals.
When managers oversee too many front-line reps, those reps stop getting the attention they need to succeed. Effective coaching and training is reduced, as is the focus on improving overall sales performance.
On the other end of the spectrum are sales managers with too many management layers below them. This scenario results in inefficiency and waste, as well as an unnecessary increase in the organization’s compensation costs. (You can learn more about compensating your sales team with this guide.)
Sales Team Structure and Balance
Ultimately, the goal of leadership should be to strike a balance—management should be lean enough to be efficient and cost-effective, but not so lean that engagement and productivity are affected.
How should you structure your sales team? And at what point do you know you have too many managers? There is no one-size-fits-all answer when it comes to the structure and organization of sales teams, but following are 6 best practices to keep in mind:
- Use data to as your guide – the right data
Data is one of the most powerful tools in the business world these days. Companies can gain immeasurable perspective into their business and industry. However, the value from that data depends on how you use it. For example, measuring your sales reps’ success based on how many times they make prospect calls doesn’t mean much if those calls conclude with hang-ups.Another in-the-weeds way of looking at it, sales managers should ask themselves, “Out of every dollar I earn in revenue, how much am I spending on base and incentives for my sales team?” If the dollars earned don’t outweigh the cost, the number of layers in your sales team may be contributing to the problem. From leads to final sale, sales reps and their managers can use solutions like Xactly Insights to accurately identify the star performers.
- Take a close look at shared credits
There are about 14 different checks written after the close of a typical sales deal. How many layers are there between the VP of Sales and those tasked with closing, and are all those being compensated contributing to the sale?Spending adequate time reviewing your incentive compensation plan can help here. Knowing the cost of a sale for your company can directly influence how your sales team is structured. Using the data gathered from Xactly Insights will help assess which team members have their hands on a single sale. You need to both reward the contributors, without giving “incentives” to people who never touched the deal.
- Analyze the information so it can be correctly applied
Don’t apply across-the-board decreases in sales staff, without using accurate data to guide you. A solution like Insights can allow companies to record and analyze data throughout the whole sales process. When used appropriately, data can be an unmatched tool for business growth and success.
- Check if mid-level performers are stagnating
Leaders who are distracted with too many reps fail to give mid-level performers the coaching and training they need to improve. The first way to remedy this ailment is identify your top, middle, and bottom performers. Sales representatives who received at least three hours of coaching per month exceeded their selling goals by 7 percent, increased revenue by 25 percent, and increased close rates by 70 percent.Using a tool like Xactly Inspire will help completely change the way sales team managers think about professional coaching of their reps.
- Assess turnover among top performers
Has your employee turnover increased? Overloaded managers are unable to invest a lot of time in top performers. When the link between managers and top reps erodes, engagement and productivity suffer. Another added negative of turnover: It’s costly for your business. On average, the hiring process of a new sales rep can take up to eight weeks. Plus, additional time for training.Also with turnover, leftover work from departed employees is loaded onto the plates of others, which can spur negative vibes and company morale. Finally, the sales manager is spending precious time interviewing, when they could be coaching a rep to close another deal.Keep disengaged representatives at the top of mind, and consult your sales compensation software to find ways to introduce incentives. When given the choice between allocating budget toward turnover or on ways to keep a productive sales rep, always bend in favor of the sales rep.
- Look at overall sales
Have sales declined overall? If good managers aren’t pulling typical numbers from their teams, their span of control may be out of control. While increasing the number of sales reps per manager might sometimes seem like a good idea, it rarely makes financial sense.
To end, if you want your sales teams to be as efficient and effective as a Marine platoon, pay close attention to their size and structure. Use your sales data to determine the optimal number of reps your managers can handle before distraction sets in.The best measure of whether your org chart is working is profitability. Again, it’s the data that will reveal how the numbers of layers in your organization are impacting profits. Use that knowledge to adjust.
How many layers does your organization have, and how did you figure out the right balance? Tweet your answers @XactlyCorp.
[View Recording] Managing a Growing Sales Team’s Compensation
In this webinar, Erik Charles, VP of Product Marketing at Xactly, will discuss why emerging companies with small sales teams need to consider how incentive compensation plays a role in their success as they add 5, 10, or even 50 sales members.