Structure of the Sales Organization

If you can organize your sales force end-to-end and connect it seamlessly to the rest of the organization, you will have fulfilled a very important requirement for sales success. Otherwise, you will face major challenges in terms of interconnected collaboration. You may be able to attract some excellent account managers, but they might turn out to be prima donnas and will not fit into the organization. Tension will hold back sales success and the success of your business as a whole. This is one reason why sales must be managed. Management, however, has to have been learned. What is often not seen is that a previously successful sales employee usually cannot take on this management role. The result is then all the more disappointing. Good sales management is an important success factor. The appropriate sales structure depends to a large extent on the market and the corporate culture which usually reflect in the organizational structure.

Only when the sales process itself has been defined does it make sense for you to address the sales structure.

Structure follows strategy.

Alfred J. Chandler

Do not build a structure around (randomly) existing employees, but derive your sales structure systematically from your sales strategy and sales process. In which target markets do you want to sell – geographically and according to target industries and/or applications? What do you need to sell successfully in these target markets? What technical support, what application advice and what administrative support do the “front-line people” need?

Example: Mick Jagger would not have been so successful on stage if he had also had to take care of the lighting technology and ticket sales. And the sound engineer and the event agency wouldn’t have their jobs without Mick Jagger.

Sales can also be organized in this way.

Example: A well-known global manufacturer of cartons for milk and juices organizes its sales in an uncompromisingly support-oriented manner. The ongoing sale of packaging material requires the installation of filling machines at the customer’s dairy or juice plant.

The focus of attention is on what customers expect for their purchasing decision. The central contact person for a project customer is the account manager. He accesses technically competent support people in the sales organization. For example, the account manager first sends an experienced technician to the customer’s team who, as part of the team, derives suitable filling machines based on the customer’s sales expectations together with carefully coordinated downstream equipment (repackers, palletizers, stackers, and cold-storage logistics). A layouter creates layout plans for the material-flow-optimized machine arrangement in the customer’s factory. In the technical back office, a realistic project implementation plan with milestones is drawn up. The project purchasing department requests the required plant components both from the customer’s own factories and from specialist suppliers and ensures on-time delivery. The project is costed in the sales back office. Technical service (service desk, trouble shooting, spare parts supply) is planned for the customer. A well-coordinated installation team finally sets up the system at the customer’s site, conducts training for machine operators and maintenance staff, and hands over the system documentation that has been produced in the meantime and an initial spare parts package to the customer. By then, order processing has been organized in the sales back office (capacity, language). The key account manager coordinates all this work and makes the contractual agreements with the customer within the scope of his comprehensive powers. Here, too, they are supported and advised by a project controller.

Banks and insurance companies have now organized their sales in a similar way. An account manager introduces specialists from the back office to their customers as required. They can decide on the deployment of these specialists at their own discretion. If there were barriers blocking access to specialists for the account manager, they would hardly be able to offer their customers professional advice at a high and up-to-date level; sales would be significantly more laborious and less successful for the financial services provider.

How is your sales force organized? Are your “front-line people? really getting the support they need in the field? How can you organize an agile sales force at a reasonable cost?

In addition to a purely functional organizational structure in departments, there are other options you could think about. The option of a process-oriented organizational structure is particularly recommended, in which all departments work in line with the sales department along the process. This avoids silo thinking. The entire organization works in a sales-oriented way. The company does exactly what customers value and are willing to pay for. You will be amazed at how much redundant work you can eliminate from your business process through process orientation. Each employee’s understanding of customer expectations and customer value will grow. With this understanding and involvement in the core of corporate activities, the motivation of all employees to contribute to this success also increases.

For such a sales-oriented organizational approach, you need a different management structure. Despite all the criticism of a matrix organization, some of which is justified, it is precisely a matrix organization that can bring about the close networking of operational functions. When the matrix organizational form is combined with an agile project organization, you get a powerful sales organization.

However, make sure that a matrix organization does not develop its own hierarchies with which it undermines operational cooperation between operational functions.

Example: A group of companies with headquarters near Paris and several purchased operating sites in various European countries needed to be organized more effectively. Until then, each site ran its business autonomously. To this end, each site had all operational functions at its disposal. With the affiliation to the group of companies, the export share of each site was initially cut. Customers abroad were to be served by the foreign sites. Completely unexpectedly, business was lost in the process. So it was decided at headquarters to manage sales centrally. From then on, each sales manager reported to the vice president in Birmingham. Each location was to be able to offer every product in the group. It was hoped that this would lead to additional sales. In reality, however, it turned out that many products could not be approved in other countries or were simply not in line with market requirements. In addition, there was a certain overlap in the product portfolios, which was to be resolved by ?keeping certain products alive? while discontinuing others. Lack of capacity alignment and vanity led to further losses of market share in all countries.

Similarly, the functions of “Finance,” “Purchasing,” “Logistics,” “Product Development,” “Production,” and “Human Resources” each converged under a Vice President in Paris, who together formed the Group’s Executive Team. The local teams, which had previously worked well together, were torn apart into functional silos. Coordination at the sites suffered enormously. Sales no longer received adequate support from other functions. Functional process standardization was given a higher priority than market-oriented procedures. The vice presidents optimized the results of their functional silos, but the overall result of the corporate group increasingly deteriorated. The general managers of the local sites were demoted to formal ?governors? who had to explain the monthly results which they no longer had any influence on. They had no chance to bring together the staff at their sites. Customers no longer received the support they expected. The previously good, aggregated business was massively damaged by the centralized, functional organization.

An international matrix organization can work if the local structures are supported and the local teams can call on specialist know-how from the functional lines. The support of multinational customer organizations can be coordinated centrally. But responsibility for results should remain local. Above all, emphasis must be placed on maintaining and supporting local team work if the sales organization is to function.

Organizational structure is an important decision. Listen to the grassroots, front-line sales people who know what works and what makes the company successful.


What are your challenges?

Restart Dialogue