article | December 5, 2014
Does Your Sales Structure Support Your Plan?
I sat across from the SVP of Sales. His company had knocked the cover off the ball for the second year in a row. He was a good leader. But he also had a killer offering in a rapidly growing market. Revenue doubled last year. This success encouraged high expectations. The CEO expected business to double again next year.
“So how are you going to attack the number?”
“Our biggest miss this year was not penetrating enterprise accounts. We have 40% of the Fortune 1000 as clients. But many of them are nibbling at our solution. We need access to the CIO, like we have our best customers. If every client embraced our solution like them, we’d easily make the number.”
It was clear that the SVP had done his homework. A solid account potential analysis linked a strong up-sell/cross-sell strategy.
“So what projects do you have lined up for next year?”
“We’re going to expand our Business Development Rep team. I want hungry guys on the phones cold calling every company tech guy. We need to become hunters. Too many of our leads are inbound.”
Cue the record scratch.
The SVP clearly articulated a targeted series of key accounts. This approach was built for a strategic sales or enterprise team. Instead, he wanted to hire a bunch of low level resources to cold call. Not exactly the optimized channel to reach Fortune 1000 CIOs.
Is your sales organization set up for success? Download our report to see the questions you should ask when structuring your team.
Here are other organizational blunders I’ve personally witnessed in the last year:
Throwing Good Heads at a Bad Channel
An IT Hardware Leader missed his annual number by a wide margin. The field sales force struggled because their product had matured. Revenue per head had dropped by 15%. Meanwhile, inside sales revenue was up slightly, by 7%. The leader threw his budget towards expanding headcount. But he doubled down on the field sales team. He missed the number again. Worse, his costs ballooned with the additional headcount. Over-investment in a poor performing channel yields the worse results. When markets mature, customers become comfortable purchasing through lower-level channels.
A Sales Leader implemented a new quoting program designed to protect margins. The software was complex, and proposals took hours to generate. Reps were previously in the field for 5 days a week. Now a big proposal pulled them inside for a full day. Instead of hiring administrative resources, the VP insisted on better training. The overall margin % went up, but selling time and revenue plummeted. Most reps missed quota. “A” Players collected their annual bonus, then left the company. Lower level tasks should be shifted to lower level resources. The VP of Sales didn’t recognize this, and it cost him.
Are you setting up your sales organization correctly? Many VPs err on the side of status quo, scared of disrupting their team. The result is the sales organization is mis-aligned. Reps spend too much effort in the wrong channel. Or worse, reps are asked to wear so many hats they lose all productivity. Make sure your sales organization has the headcount in the right spot. Download our report and put your team in a position to succeed.
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