In today’s complex selling environment, many organizations have come to realize that relying on new product features is not enough to attract more customers. Many are discovering that they need to organize internally around their customers.
This involves creating new avenues of sustained growth, which hinges on evolving the sales strategy. Sales organisations should adopt a targeted customer segmentation approach that aligns sales with customer segments.
This alignment requires a reorganization that begins with segmenting customers by their transaction histories, buying processes, and needs and preferences. When salespeople understand customers’ net present value along with key segmentation, it maximizes conversion ratios and increases activity per customer.
By focusing on segmentation efforts, executives can better assess customers’ potential value and ways to realize this value. Different buying processes and decision mechanisms of buyers necessitate different sales services to different customers.
Some customers will require a specialized sales force while others do not. The sales force selling aircrafts to airlines, for instance, will require sales staff with technical know how, as well as staff knowledgeable about maintenance and financing. Dealing with a grocery chain, on the other hand, is mostly about hard bargaining.
When organising a sales force, there are five approaches:
1. Generalistic: With this approach, each sales representative sells the entire product range to all customers in each defined territory. This tends to be the most efficient structure, but the more heterogeneous the environment, the more effectiveness will suffer. This strategy works best when companies have few unsophisticated products, very similar customers with simply buying processes, and when efficiency matters.
2. Market based: Organisations are segmented by geography, sector, account size, or customer needs and each segment is served by a different group within the sales organisation. Depending on customers’ buying process, the team may include one or more people. This approach works best when there are different customer segments and a complex buying process, when customer knowledge makes an important difference, and when efficiency doesn’t bring effectiveness.
3. Product based: Sales teams are assigned to product or product groups, ideally in parallel with marketing teams assigned to the same products. Depending on the sophistication of products or customers’ buying processes, team sizes may vary. This works best when the company sells broad, sophisticated, and diverse products and product knowledge is of the utmost importance.
4. Activity based: In this approach, sales teams are organised around the sales process. A specialist team performs different sets of tasks and accounts are set up according to acquisition versus account maintenance, as well as national versus local teams. This works best when there are complex activities in the selling process that require special knowledge and when the tasks within the sales process require different skill sets.
5. Hybrid: This organisational structure could be any meaningful combination of other structures. For example, product sales teams assigned to specific territories and large account teams covering a specific set of products selling to customers in all territories. Hybrid structures are usually more relevant in larger companies operating in multiple geographies and selling a large product portfolio.
As with establishing any new strategy, due diligence is required. Each stage therefore requires organisations to ask questions. They may include, “Can effectiveness be improved if we have product specialists?” “Would we have segments with meaningful sizes to warrant specialist teams,” and “Would a generalist team avoid certain critical tasks?”
After asking these vital questions, choose the dimensions that create the greatest variation in the selling process, and build your strategy around which approach you take to organising your sales team. For example, in the health care business selling to a hospital is radically different from selling to a physician who has his own office. In the former, there are multiple layers of decision making; in the latter, a single person makes the decision. In this example, the decision making process is a major differentiator between the two buyers.
During your selling-approach discovery, you will realize that whatever your organisation chooses, a sales force cannot be an exercise isolated from overall company strategy and organised separately from the rest of the company.