Your product’s taking off. You’ve got traction in your market, and you’re looking to go even further. Your first basic sales model has accomplished wonders for your business so far, but after weighing the various factors involved and taking a close look at the market, you’ve decided to start building your sales organization. This is the time to determine which of the 3 sales team structures is best suited for you.
This is a critical juncture for many startup founders, and one that people often struggle with. We like to paint a picture of salespeople as cowboys, who walk in with guns blazing. The best salespeople are go-getters, who seize initiative and take charge. You might think that it’s best to just hire amazing sales talent, and let them hit the ground running, and you got yourself a great sales team.
You’d be wrong. A Harvard Business Review study shows that 50% of high-performing sales organizations have well-documented sales processes that are explicitly structured, compared to 28% of under-performing organizations. You can’t just haphazardly start hiring sales reps, and expect your business to grow automatically.
As a founder, it’s your responsibility to choose the appropriate sales team structure that fits your business and your culture. In doing so, you’ll cultivate a high-growth environment that will allow your sales team to truly shine.
Here are the three basic sales team structures that you can use to ramp up your sales game and build a high-performing sales organization.
(Note: We've put together a complete sales management toolkit for you: checklists, onboarding plans, meeting agenda's, comp plan calculators and more. Download your free copy now!)
Sales team structure 1: The island
The island model of sales organization leads to a more traditional, “sell-or-die” environment that people typically associate with sales reps. There’s actually very little organizational structure that goes into it. You provide your team with some basic back-end services: some training, a range of products they can sell, a commission structure, maybe an office—and that’s it.
In this model, every sales rep is essentially responsible for each step of the sales process on their own. They have to generate leads by themselves, qualify them, and close them. Reps within this framework tend to be more aggressive. They’ve got their elbows out in fierce competition—not just with the larger market, but their own teams as well.
Each member of your sales team essentially becomes their own entrepreneur.
This way of structuring your sales team dominates traditional sales operations, like real estate or financial services. Think about your average real estate agent. She’ll walk into her office each day, and nominally represent a larger real estate agency, like Coldwell Bankers, or the Corcoran Group. But she’ll promote her listings mostly on her own, by posting them online, calling prospects on the phone, and running open houses—all in hopes of a close.
- Very little managerial oversight required on a one-on-one basis
- Good for simple sales processes, like a one or two call-to-close product
- Creates a very aggressive sales environment
- You have much less control over how your brand is represented in the market, because it’s highly dependent upon each individual rep’s style.
- Because everyone does everything, it’s difficult to keep track of key sales metrics and benchmarks
The island model isn’t great for most startups—it’s too aggressive, and too competitive—but there’s always exceptions. It typically suits companies that work in established markets, with high levels of competition. The island model works best for low complexity, high-transaction sales processes. Sometimes, simplest is best.
Sales team structure 2: The assembly line
The assembly line drove the Industrial Revolution, and built Ford’s famous Model T. It essentially specialized the labor force, and sequentially arranged production processes for max efficiency.
You can apply the assembly line structure to your sales team. Your raw materials are essentially your prospective customers, who are cultivated and refined during the sales cycle. The assembly line typically breaks down a sales force by function into four different groups:
- Lead generation team: Responsible for developing leads, and gathering names, phone numbers, emails, and data.
- Sales Development Representatives (SDRs): Also commonly referred to as Qualifiers/Prospectors. SDRs reach out to prospects and qualify them by asking questions that focus on customer needs, and identify the decision-making process.
- Account Executives (AEs): Responsible for closing the deal. They call up qualified leads, give demos, manage objections, move the deal forward, and ultimately try to close the deal.
- Customer Success team: Once a deal is closed, new customers are passed on to this team. They’re focused on account management and keeping customers happy, increasing lifetime value (LTV) for each customer. They also help upsell customers to higher plans.
If you want to more help managing your team better, download our free sales management toolkit.
In his book, Predictable Revenue, Aaron Ross breaks down one assembly line model you can use to structure your sales team:
The assembly line allows your sales team to specialize among different functions and roles. Each step of the sales cycle has a dedicated team. As customers walk through the funnel—from leads, to qualified opportunities, to new customers—they’re passed on to the next team.
Because each unit of the assembly line is so specialized in function, you can hold each team accountable to the various sales metrics they’re responsible for.
By specializing your sales team, it becomes much easier to isolate bottlenecks in your funnel, and fix them accordingly. For example, perhaps you set an overall sales goal of closing 12 deals out of every 100 leads sourced. If the results you’re pulling are five deals out of every 100, you can look closer at each stage of the funnel to find the friction. You might look at your AEs and see that they’re closing an acceptable 25% of qualified leads, but your SDRs are only managing to qualify 20% of raw leads.
You can dive right in, and see what’s up with your SDR team—whether an individual member of the team simply isn’t converting quality leads, or whether it’s a more global problem. You could institute further training and data-driven coaching, to boost SDRs up to 50% of leads qualified rate, and hit your broader sales goals. Looking at the segmentation of your funnel is one of the most powerful ways to fine-tune the engine of your sales machine.
Even with only two sales reps, you can still start specialization early. Have one focus on prospecting new clients, and the other on closing deals, based on their natural abilities and talents. Use the 80/20 rule to determine when to build new stations on the assembly line—when your reps spend 20% or more of their time on a secondary function, it might be appropriate to pass that role on to a specialist.
- This sales team structure creates predictability for your business
- Makes it easy to isolate problems in the funnel, and laser in on them
- More specialization in your sales organization equals more efficiency
- When you’re starting out with two sales reps, it’s difficult to split them into four different teams—you just won’t have enough manpower for the job.
- By splitting up the funnel into different stages, there can be friction between the hand off of customers as they travel through the funnel.
- Because teams are highly specialized, each team member becomes increasingly disconnected from the overall business goals of the company. They’re focused on their own specific numbers and metrics instead.
Most startups will find that some form of the assembly line will work best for them. It’s great for reducing the complexity of your sales cycle, increasing sales efficiency, and scaling your team. Your sales cycle is probably relatively complex—and will grow more complex along with your business. The higher your annual customer value (ACV), the more important it is to have specialized sales team members dedicated to each part of the customer journey.
The power of the assembly line sales team structure lies in creating a reliable and repeatable process for nurturing leads. In doing so, it takes your funnel and transforms it into a revenue powerhouse as you build your business to scale.
Sales team structure 3: The pod
A pod works along similar lines to the assembly line model of sales, but instead creates focused tight-knit groups, or “pods” that are composed of team members that play different roles. A podular organization is customer-centric.
For example, a six-person sales pod would be composed of three SDRs, two AEs, and one Customer Success rep. Instead of having large teams, you create little pods of specialized roles, and each pod is responsible for the entire journey of specific customers.
Dave Gray, author of The Connected Company, provides this diagram of the pod model:
You still utilize the specialist roles we outlined above, with SDRs, AEs, and Customer Success reps. But instead of having all of your SDRs or AEs compete against each other, with a podular organization of your sales team, pods compete with other pods. Each pod works together to win the customer, and keep them happy afterwards. They’re more fluid, and come up with ideas independently.
With the pod, you build a more modular and flexible structure than the traditional model. Since success is measured by pod, each member of the sales force has a larger, more holistic view of the entire company. Pods build more meaningful connections between people who are working together. You can specialize pods based on different industries, verticals, or countries.Pros:
- Because pods work in close-knit teams, your sales team doesn’t just care about their own step in the process, but about the entire customer journey.
- High empathy and understanding within pods, less friction and better communication
- Pods are more flexible and agile
- With the pod structure, there’s less opportunity for your individual sales reps to compete and grow, and push each other to excel
- Less specialization with each role, as each member becomes more of a “jack-of-all-trades”
The pod structure of sales organization is essentially a refined version of the assembly line. It’s perfect for more mature startups trying to optimize existing sales resources to tap into new markets and verticals.
If you work in a competitive industry, with aggressive companies cranking well-run assembly lines, it can be hard to compete with a pod model—the pod trades efficiency for versatility. But if you’ve established your market, and have significant traction, organizing your teams into pods creates a highly flexible, agile sales team, ready to meet a variety of challenges, and pounce upon new opportunities.
Don’t forget the culture
There’s two simple goals you want to meet when it comes to organizing your sales team:
- Drive maximum results.
- Create the best cultural fit for your organization.
Take a look at the other competitors within your industry—how are their sales teams structured? You don’t have to imitate what they’re doing. But if everyone in your market is crushing it in a specific way, it’s worth asking why—and finding out if there’s a good, rational reason behind it.
As you structure your sales team, what’s most important is finding the right fit that will drive the results you’re looking for.
It’s critical that you constantly ask yourself: “What kind of sales team are we? What kind of culture are we trying to create?” The team you build and the way you structure it in the early-stages of your startup will leave a huge footprint on your sales process, as you further grow and scale your business. Don’t leave it up to chance. Choose the sales model and team that works for you, and you’ll build a sales organization capable of sustaining long-term growth.
Want more tips on building winning sales organizations? Get The Sales Hiring Playbook - An actionable guide on building winning sales teams in 2017.