I recommend you start with the following three questions when assessing Sales Force Structure:
- What phase in the Business Life Cycle are we in and what are our key Strategic Objectives?
- Is our current Sales Force Structure aligned with the three key Stakeholders (Customers, Stakeholders, Employees)?
- Are current resources properly aligned to maximize results?
Business Life Cycle & Strategic Objectives:
If you haven’t re-evaluated your sales force structure in the past two years, you should ask the following questions.
- What stage are we in on the Business Life Cycle (see figure 1)?
- Does our Sales Force Strategy match our stage on the Business Life Cycle?
- Is our strategy one of Effectiveness or Efficiency? Typically an organization that is in the growth stage of the business life cycle would deploy an effectiveness strategy. An Effectiveness strategy is based on increasing revenue per sales head while remaining cost neutral. Usually mature companies that are focused on margin optimization would develop an Efficiency Strategy. An Efficiency Strategy focuses on cutting cost per head while maintaining revenues.
- Customers – Ask your customers and then listen! Also look at metrics like customer churn rate and your market share growth vs. industry trends.
- Shareholders – What are your shareholders asking for? Is your current Sales Force Structure maximizing shareholder value?
- Employees – What are your turnover trends? How do they compare to your competitors or World Class sales organizations? Is your sales force coveted by competitors?
Is 80% of your revenue coming from 20% of your customer base? Are your resources being properly deployed to account for this distribution? Do you have high paid resources calling on customers that produce relatively low revenue or margins? These are examples of questions that determine if your Sales Force needs a structural overhaul.
Once you understand the “why” behind your Sales Force Structure direction, you can get more tactical on “what” future state will look like. Stay tuned………….