Sales force restructuring is most effective when the process is proactive instead of reactive. It is easy to become complacent when the sales team is doing well. Keeping a periodic check on the performance of territories and sales force will give you a fair idea about the frequency at which you need to restructure them.
Sales force restructuring involves reassigning the territories, redefining sales processes, and most importantly, changing the structure of the sales team.
The right sales force structure allows you to:
- implement effective sales processes in every targeted customer segment
- direct the selling effort to the right products, markets, and activities
- utilize sales resources efficiently
Why You Might Restructure the Sales Force
There are a number of interrelated factors that may signal the need for change. For example, companies may change their existing structure to increase efficiency and reduce lost selling time. The other major reasons for restructuring are alignment with changes in the market, product line, or go-to-market strategy.
- Market change, such as an economic recession or on the other hand, a booming economy, may require the company to change their sales process or strategy, which in turn requires a change in sales force structure.
- Launching a new product or entering a new market often causes a need to either specialize or generalize the sales force by skills and experience, and/or type of activities performed in a particular role.
- Inefficiencies in the team and low morale are often signs that something is not working. You might decide that the workload needs to be distributed differently in order to avoid the over- and underutilization of resources.
For instance, if you are looking to create more awareness for your product, you may invest in a less qualified sales team to do the cold calls and other related tasks. Your more qualified sales people are not burdened with an extra campaign and are free to focus their skills to do that which they do best – selling. The awareness campaign will cost you probably a fraction of the payment required for using a more specialized sales force.
Let’s look at an example of sales force restructuring where hiring a specialized sales force made more sense. A pharmaceutical company had a deep portfolio of products and their brand was entrenched in their existing markets. However, when they launched a new product in a totally different market, they could not leverage the current sales force because:
- Reps were not knowledgeable about competitive drugs already in that market, making the customer interactions stilted and ineffective.
- Reps were already at their full bandwidth and could not accommodate a new product and really do it justice.
- Sales incentives for the new product were not enough to lure sales reps to shift their focus.
In this case, even if the company paid high incentives, it would not have worked. The company eventually hired a new specialized sales force to sell into the new market.
Benefits of Team Restructuring
The structure of your sales force can have a significant impact on your customer and revenue. Sales force restructuring is a good long term investment. The most important outcomes of good sales force structure are:
- Greater efficiency of the sales force due to the right allocation of resources and accounts
- Balanced territories that are aligned with sales strategy
- More top performers as they may get territories or accounts more suited to their skills, or with a more approachable customer base
- Higher profit margins by reducing overlaps and streamlining communication
Special Challenges for Product-Based or Activity-Based Structures
Companies that restructure the sales force to specialize by product or selling activity, deal with a few challenges:
- Confusing end customers: Imagine that an end customer who was targeted by a single rep since the last few years is now targeted by multiple reps. The customer may become unsure about who the primary contact is and to whom they should direct their queries.
- Inefficiency of the sales team: Multiple sales reps going to the same customer add to the cost of sales. The need for coordination between multiple sales teams increases for sharing customer details, which once again increases time spent on non-sales activities.
- Reduced or no cross selling opportunities: Sales reps cannot sell a product which is not in their sales portfolio. Even if they know that the customer needs a particular product, they cannot recommend it, if it is not in theirs to sell.
To negate the above disadvantages, companies can take certain steps:
- Incent the sales force to drive desired behavior. For example, pay incentives for sharing prospect customers with the peer-sales force.
- Invest in a good call logging system. Choose a CRM system which enables the reps to enter their call activity in real time. Such a system also would help them easily retrieve information as needed.
- Communicate the plan and launch training initiatives. Communicate the reasons for restructuring and outline the steps of the process clearly. Answer all questions and manage any concerns with transparency to gain the trust and cooperation of your entire sales force.
- Speed things up. While it’s important that you do everything right, try to implement the plan quickly. A prolonged restructuring process can fuel rumours, make sales reps insecure and lead to loss of productivity.
- Implement a periodic feedback process. Ensure that there are regular ‘health check’ surveys where sales reps can enter anonymous feedback. It is a good practice to have even if there is no restructuring, and it becomes more important if a restructuring takes place.
Sales force restructuring is a way to ensure sales team efficiency and alignment to sales strategy. Taking a fresh look at the team structure periodically allows you to balance territories and refocus the team’s selling potential.
Measuring Sales Team Effectiveness Through Analytics
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