Organizational redesign is a daunting, nebulous, and risky task for chief sales officers (CSOs). However, when approached carefully, reorganizing a sales organization can unlock sustainable growth and success. This article will discuss the steps CSOs can take to redesign an effective sales organization and the factors that should be considered while making changes.
The Benefits of a Careful and Strategic Approach
Redesigning a sales organization is not an easy process, and it comes with significant risks. The organizational changes may have a ripple effect on the entire company, and employees might need to be retrained. However, the benefits of a careful and strategic approach can be enormous. The reorganization can lead to sustainable growth and long-term success.
Structure follows strategy
In sales, structure should follow strategy. The sales organizational structure should align with the overarching sales strategy and corporate objectives. There is no best or universal sales organizational structure, but the old business adage that “structure should follow strategy” certainly applies to sales organizations.
Establishing an overarching strategy
CSOs can start by establishing or validating the overarching strategy for the sales organization, which should be aligned with the overall corporate objectives and cascade down to sales objectives and target setting. The sales strategy needs to align with the marketing and product development strategies to ensure that all business areas work together towards the same objectives. Without a clear sales strategy, it is impossible to design a sales organization structure that aligns with it.
Sales analytics for performance
Sales analytics, such as bookings and revenue, are excellent ways to examine seller performance. CSOs should analyze the sales data for key performance indicators and use the insights to improve the sales process. A data-driven approach to sales can ensure that the organization’s resources are deployed optimally.
Examining Seller Focus
CSOs should use the same data-driven approach to examine seller focus. They should identify how much of a sales representative’s time is spent on activities that directly impact sales, such as qualified lead generation and deal closure, and how much is spent on non-sales related activities. Sellers must focus on high-value activities to achieve their targets.
Common Sales Organizational Structures
Before diving into a solution, CSOs should examine the three most common sales organizational structures: centralized, decentralized, and matrixed. Each structure has a variety of advantages and disadvantages. Therefore, it’s imperative to evaluate each one based on sales complexity, go-to-market strategy, salesforce, customer profile, and product mix.
Evaluating Organizational Structures
The sales organizational structure must align with how the company sells, its target markets, and the types of products or services it sells. The best sales organizational structure for a particular company depends on its sales processes and overall business strategies. CSOs should evaluate each potential structure with these factors in mind. A company with a complex sales process may benefit from a matrix structure with several layers of management, while a company with a simple sales process may be able to streamline its structure.
Quantitative and qualitative evidence
To evaluate organizational structures, CSOs should look for both quantitative and qualitative evidence to inform their decisions. Quantitative evidence can be gathered from data on performance metrics such as sales per employee, average order value, and customer acquisition costs. Qualitative evidence includes feedback from customers, sellers, and other employees who are engaged in the sales process. This feedback can provide invaluable insights into the sales process and reveal areas for improvement.
Knowing When to Make Changes
Finally, knowing when to make changes is just as important as knowing what changes to make. CSOs should be aware of when it is time to make organizational changes. Sales organizational redesigns should be based on data-backed insights, not emotions or gut feelings.
In summary, to successfully redesign a sales organization, CSOs need to adopt a data-driven approach. They should begin by establishing or validating the overall strategy for the sales organization, examining the seller focus, and evaluating potential organizational structures. The redesign process will require careful planning, and any changes should be supported by quantitative and qualitative evidence. By using this approach, CSOs can create a sales organization that supports sustainable growth and achieves long-term success.