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.
What is Sales Force Restructuring?
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
Reasons for Restructuring a Department
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.
- Downsizing can be a tactic for lowering costs and maintaining profitability that can yield efficiencies when faced with poor economic conditions. In a strong market, downsizing can be considered rightsizing to structure your team for maximum bottom line contribution.
- Outsourcing can be used as a strategic move for gaining a competitive advantage. More than just a cost reduction or control, outsourcing can free up internal resources, help gain access to new markets and streamline time-consuming tasks.
- Mergers and acquisitions demand restructuring to eliminate duplication and reconcile the differences between previously separate entities for consistency, coherence and productivity.
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 should be considered a good long term investment. The most important outcomes of a 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 team members may get territories or accounts more suited to their skills, or with a more approachable customer base
- Increased productivity through balancing the workload to get a wider distribution of team members’ time, attention, and knowledge
- Higher profit margins by reducing overlaps and streamlining communication
- Improved decision making resulting from improved communications channels and an empowered organization
However, you should be mindful of the different advantages and disadvantages of sales organization structures.
Team Restructuring Process
Restructuring can be disruptive, but a well-thought out and properly executed restructuring strategy focused on specific goals can smooth out some of the challenges.
- Goals: Identify and prioritize the problems that need to be solved and the opportunities you want to take advantage of. These will direct the development of you restructure and will be used to measure your success.
- Testing: Once you have a suggested restructure outlined, attack it with “what if?” questions to identify the strengths and weaknesses of how your business process will work within the restructure.
- Feedback and Buy-in: As you work on goals, restructure development and testing, involve the team. You are not asking them to make decisions, but allowing them to contribute. Not only can this generate valuable information, but it also shows respect. If team members are legitimately part of the restructuring process, there is a greater chance they will support the plan and contribute to its success.
- Documentation: Once ready, the plan must be communicated to your team. Include the new structure, how it will impact the current structure and how roles will change. Along with proper feedback and buy-in, this can help eliminate surprises that can damage attitudes and productivity. Documentation will also serve as a reference for measuring the success of the restructure.
- Implementation: When you are ready to execute the plan, it is always best to do it face to face will all people involved. When detailing the restructure, it is important to acknowledge specific feedback and decisions regarding that input. Either set up or offer individual meetings to discuss the outcome, including how it affects that individual. Discuss next steps.
The development of a successful restructuring strategy depends on accurate data that typically comes from diverse sources, such as client, segment, market, and individual employee productivity data. Managing sales data from the various sources through proper extraction, transformation and loading will give you insight critical for sound decision making that will maximize these proactive changes and minimize the potential for failure.
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 rumors, 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.