article | November 2, 2016
Org Structure Questions Every Sales Leader Should Ask
SBI recently spoke with Dave Longaker, the Chief Revenue Officer at Rovi Corporation.
Dave leads a robust b2b sales force at Rovi, a leading technology supplier to the entertainment industry. When you are flipping through channels and looking for TV shows or on-demand content, you’re most likely using a Rovi empowered experience.
The topic of today’s article is sales organization design. This is about determining the right number of “feet on the street,” what type of reps you need, and the best organizational chart for you. Sales leaders are asking themselves a fundamental question which is, “Do we have the right org structure? Do we need a new org chart?”
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Dave is an ideal guest to discuss organization design based on his company’s rapid expansion of its customer base, new products, acquisitions, new markets, and new partners. As a result, there was a compelling event for a new sales model to go from a siloed sales model to a unified sales model. Dave’s company uses the geographic approach as an umbrella, and then within each of those geos, there is a level of specialization around certain customer segments.
With Dave’s help, in this article we are going to play the role of the consultant and the practitioner. I ask methodology styled questions that Dave answers. As an audience, ask yourselves how you might answer those questions. Think through what a good answer might look like for you and how you might interpret the methodology questions.
To start on a strong footing, we quickly summarize the seven B2B sales organizational structure models:
What your sales organizational model does Rovi use, and most importantly why you chose the model?
Rovi uses the hybrid model. Rovi as a company has been going through a pretty dramatic shift over the last several years, beginning with investments in several new products that I worked through earlier on the podcast. We’ve acquired companies in the search and recommendations space, in the next generation connected guides space, we’ve partnered with technology companies that take us into the over-the-top space, so the net of that is we’re dramatically expanding our customer base beyond our classic customers in the North American service provider space, and the international consumer electronics space.
We have a much larger customer base to address. We also have a much-expanded product offering to ramp, and many of them are newer products that are just in their first year or two of growing. That in some ways influences the org structure that works well for us. On top of that, we chose a little over a year ago to move from what I’d describe as more silo’d sales teams that were focused on specific products to a unified sales team that’s selling the entire Rovi portfolio. As part of that transition, we found that a hybrid of a geographic model along with some industry specialty and some role specialty works well for us. We put a sales team in the field that deeply understands the customers they’re calling on, has broad relationships in that customer base, and convey the value of the entire Rovi portfolio.
The way we’ve organized is geographically by major region and then within that region, by specific customer segments that we’re targeting. The approach is in recognition that calling on a consumer electronics company is a different kind of skill set and a different kind of experience and knowledge base that you want to bring than calling on a service provider. This allows us to focus in on our key customer segments which for us are service providers, the key TV networks and broadcasters, internet and over-the-top entertainment providers and consumer electronics manufacturers. Within any geographical region, you’ll typically see us focusing dedicated sales teams in each of these areas.
Now, within that model, we also need product specialists to make sure that we have the right technical support in the field for our customers. These specialist positions in the sales team are oriented towards product specialty within each geographical region and supporting each of those vertical market segments. This approach gives us deep subject matter expertise on our discovery business, our metadata business, our analytics business, and our technology licensing business, so those were four areas that we had some subject matter expertise within each region, and within each customer segment base.
What is the right the balance between too little and too much sophistication in organization structures?
We have tried to keep the roles simple so accountability is very clear. The roles that we need in our organization are account management roles serving as the front-line client directors and their management hierarchy. We try to keep the management structure thin. Technical sales, which brings the product specific expertise in each of the business group areas, and then sales operation to provide support for those functions. In terms of customer facing roles, a sales person partners with a technical sales person when engaging any given customer.
Simple model. Within the sales organization, we may have a group of sales people that are in a specific industry segment but the role and responsibilities aren’t very different whether you’re a service provider, client director, or a networks and advertising client director.
At this point you know your org model, and the types of roles that you need in your org chart. The next step is to determine selling capacity. Too much capacity will lead to poor profits. If I have too little capacity, then I’m leaving some revenue growth opportunity on the table. What is the equilibrium point between having too much and too little sales capacity?
It’s a delicate balance given the transformation in our product portfolio, the plethora of new products that we’re focused on bringing to market, and expanding country by country, and given the relative newness of transforming into a unified sales structure, as well as the newness of some of the sales employees themselves. The exact metric is one that we’re still working our way towards. We inherited a certain structure when we first moved to the unified sales model and the goal is to continue fine tuning that until you have enough experience with the new model we’re implementing to know exactly how to scale it.
It’s a balance that we revisit and personally I revisit it almost every month asking these key questions: “Do we have the right people in each role, in each geography to support the customers that we’re engaging?” One of the things that we’ve focused on is developing the right metrics to track the scaling and then the right systems to allow us to track those metrics. It’s one of the key roles of sales operations to make sure that the metrics that we need to understand sales productivity are easy to gather and something that we can look at in a frequent basis to sort out how to think about the continued evolution of the organization.
The quantitative methods to determine the right size of the sales force involve using three methods together; pipeline method, activity based method, and conversion rate method. These are all quantitative methods that when used together typically produce an accurate result.
How have you made sure that your best people are on the accounts with the most potential?
We make sure the scarce resources are focused on the most important opportunities and customer relationships. The way I’ve approached it has been to start by making sure you have the best leaders in place. Our top-level organization is by geography, and so for me, ensuring that throughout the organization our best resources are working on our best opportunities is the responsibility of the sales leadership in each of our major groups. By having the right leaders in place, we are making the right real time decisions about deployment of that capacity, and where it’s focused.
One of our biggest opportunities are with multinational operators and global manufacturers, and so the question of optimizing the deployment of capacity isn’t contained within any given region. It’s one that requires global allocation across several regions and so we have created a global accounts team to ensure optimization of resources across regions for those customers that span multiple regions.
Which sales channels do your buyers want to engage your sales team?
This is an area that’s called a “renewed focus” from us. Where we’re focused today is working with three different types of partners that are driven by how our customers prefer to engage us. Aside from our direct sales, we work in partnership with consumer electronics manufacturers representing a traditional partnership for Rovi.
The second area is local specialists who offer a similar product that may complement or enhance our offerings in that local market, and by local market I’m usually talking about a specific country. When you’re talking about entertainment discovery, content discovery, localization of that discovery is so important that at times we’ll find partnerships with local vendors combined with our global capabilities are a great combination. Not just in delivering the right product and solution to the customers, but also in delivering the right sort of localized support. We look for partnerships that make sense, that could be opportunity driven, could be customer driven, or could be overall market driven.
Our last area that we’re focusing more on today is the system integrators. There are large companies who do system integration for the service providers in the world, the MSOs and the various types of pay TV providers, and those are natural fits for us as they look to bring a complete end to end solution to our shared customer base. We are seeing many opportunities where our end customers are looking for a single system integrator to bring an entire next generation system together for them and so they’re a natural channel for us. These are the three types to answer your question.
Do you have a separate sales team called a channel team, that sells into these? Or, does your direct sales force also have responsibilities for these three alternate channels?
Today, our direct sales teams in each region have responsibility. We usually a sales person or two focused on the channel partnerships within the regions. Over time, this is something that I’m certainly taking a close look at and as our business evolves to evaluate a global approach.
When you looked at specialized roles, did you have to go through an economic analysis in terms of what the buyer’s willing to pay for, or was this more of a “If we don’t do it, they’re not going to buy anything” kind of decision?
We are always looking at the cost of the sales model and sales organization we put in place. We look at it as what degree of specialization and relationship do your customers require to win business, and then how do we make that work in our business model. When it’s properly designed, we can find ways to implement specialization so that it’s not much more expensive than a more generalist model.
You can support the same amount of business with roughly the same number of people, but it’s a question of how do you organize them and how do you assign account responsibilities. At times, where that can impact cost is more in travel than it is in staffing itself. Again, we look at as how can we understand the customer’s business and industry enough that we can bring them great experiences.
Too few reps and you will miss the revenue number. Too many reps and you will destroy profits. Hire field reps when you need inside reps and frustrate the customers. Organize in a hunter farmer model when you need industry verticals or product specialists and the revenue goal will be harder to hit than it needs to be.
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