How Sharp is Your Sales Structure?
by Dave Kahle, Copyright 2001
Personal note from
How can I get greater productivity out of my salespeople? In one form or another, that's a question every owner and sales manager ponders regularly.
As a sales trainer and consultant, it is the basic question that I confront. And it is the underlying question behind every attempt to train salespeople. Investing in training and developing your salespeople is always a good idea. But it isn't the entire solution for many organizations.
Often, enormous improvements in sales productivity can be achieved by sharpening the structure of your sales organization.
The structure is the sum total of all the policies, guidelines, procedures and tools your company uses in its sales effort. It's everything about how your company sells, other than the people themselves. For example, your compensation plan is part of the structure. It doesn't matter (hopefully) who the salesperson is, the compensation formula is the same for everyone. Your sales automation system is part of the structure. Whether you use palm devices, laptops or paper to manage customer information - the way that you do it in your company is part of the structure. How you manage your salespeople is part of the structure. Do they report to branch managers or sales managers? How many salespeople are there per manager? How often do you have sales meetings? What forms are salespeople required to submit to their managers?
All of these decisions you have made about how things are done in your sales organization have gradually been codified into a structure. That structure forms the rules for the salespeople, and tells them what to do and how to do it. That structure stimulated certain behavior, and the salespeople create practices and habits that reflect your structure.
Here's a list of the major components of a typical sales structure:
Why does all this matter? Because of a powerful truth of human behavior: Change the structure and you change the behavior of the people who operate within that structure. This is true for any organized group of people, whether it be a family, a school, a volunteer organization, a business, or a sales team.
Here's an example. For years my wife and I were foster parents. We cared for 19 foster children over a fifteen-year period of time. Most of these children came from miserable home situations, and were out of control when they came into our home. Over the years, I watched my wife impose a structure on them that always resulted in the kids responding positively.
On the first day they came into our home, my wife would show them the bed where they would sleep, and let them know that they were expected to sleep in that bed. They were expected to wash their faces, brush their teeth, eat three meals at the table with the family using silverware and plates, go to bed at certain time, get up at a certain time, etc. She imposed a clear and comprehensive structure on them.
The responses were predictable. At first they would test the limits. But once they discovered that the rules really were the rules, that there was a clear and understandable structure, they began to blossom within that structure. They knew what was expected of them, they sensed that the rules were good for them, and they began to develop within the rules. That shouldn't be any surprise. Because, when you change the structure, you change the behavior of the people who operate within that structure.
This fundamental principle of human behavior is just as true when it is applied to sales efforts. From my experience as a sales consultant, I can assert, without a shred of hesitation, that you can expect significant and measurable improvements in the productivity of your sales efforts if you will sharpen your structure. For example, we're often involved in helping to revise a sales compensation plan. Let's say we create a plan that provides an additional incentive for the salesperson to acquire new accounts. We've changed the structure. What happens as a result? The salespeople modify their behavior and call on more prospects, acquiring more new accounts.
Here's another example. We'll often work with branch managers or sales managers to help them institute a certain kind of sales management system. Part of our system requires a highly structured monthly one-on-one meeting between the manager and the salesperson. As part of this meeting, managers discuss the coming month's plan with their salespeople. /p>
When this system is implemented, it represents a change in the way things are done - a modification of the structure. Since we've changed the structure, we can expect a change in the behavior of the people. What kind of change do we normally see? Typically, salespeople become more strategic and less extemporaneous. They spend more time planning because the structure requires that of them.
We can go on and on with countless examples. But you get the idea. When you change the structure, you change the behavior of the people who operate within that structure.
So, now the question becomes, "How can you use that insight to improve the performance of your salespeople?"
Typically, most sales structures have evolved over time as a result of specific decisions that were made in years gone by. Over time those decisions have been hardened into the real rules of how things get done in your organization. Some aspects, like compensation, are often finely articulated, while other portions of the structure, like how samples are distributed, are rarely written down.
Some of these structural rules are positive, in the sense that they are well thought out and designed to stimulate certain behavior on the part of the salesperson. Unfortunately, much of the structure is not positive. It developed unconsciously instead of thoughtfully, and detracts from positive sales behavior. For example, your salespeople may have developed the habit of coming into the office every Monday morning for a few hours to start their week. No one told them to do that, it's not part of any management plan, it just happened. Somewhere, some time in the past, some one started doing that, and it became part of the structure. No one has ever considered whether they ought to do that, or whether that practice is wise and time effective.
If you want to make measurable changes in the productivity of your sales team, refine your sales structure. Here's how to go about it.
Four Steps to Sharpening Your Sales Structure
Step one: Identify and clarify your current structure.
Since much of the sales structure is composed of unspoken rules and habits, you may not even be aware of it. So, you need to identify and clarify exactly what rules and procedures your salespeople operate within.
You may want to gather a task force for this project. Enlist the involvement of a couple of your most insightful salespeople, and add in some bright managers and executives. It's also helpful to have someone from outside your company be a part of this process.
Charge the group with identifying the real structure. Write it down. What are the procedures that govern the communication between your sales managers and salespeople? What are the routine practices of your salespeople? How about your sales managers? How are samples and literature distributed? What computer-related skills do you expect of your salespeople? What is your sales compensation program? How are your sales territories configured? How are proposals written and tracked? What training do you provide your sales force?
Take all the pieces of your structure - the rules, procedures and tools, and describe them in writing. Use the list at the beginning of this article to guide you. Now you have a starting point. Pay attention to what really happens in your organization, not what is supposed to happen. For example, you may have a policy somewhere that says that branch managers will have a monthly meeting of the entire sales staff. The reality may be that it rarely happens. You want to record the reality.
Step two: Analyze the structure.
Look at each piece of the sales structure and ask this question, "What impact does this have on the productivity of our sales efforts?"
Does that straight commission sales compensation plan really encourage salespeople to acquire new accounts? Does the common practice of salespeople starting every week with two to three hours in the office on Mondays really help them be more productive? Are those irregular sales meetings well designed and helpful? Is learning "on the job" really the best way to create a professional salesperson? Is the practice of salespeople reviewing every big order to make sure it has been keypunched correctly really necessary? Are geographically defined sales territories the most effective organization?
Step three: Prioritize the revisions.
If you've never attended to the structure before, you may discover that you have unearthed a huge task, with an overwhelming number of practices, procedures and rules that need to be changed. Best to prioritize and start with those that will make the biggest difference first. From my experience, here are the areas that hold huge potential for stimulating transformational change:
This may not be true for your business, but typically the list above contains the five major pieces of sales structure. And, while the task of articulating and clarifying every piece of your sales structure is daunting, every well managed, productive sales team needs to have well thought-out, clearly articulated policies, procedures, practices and tools regarding these major five components.
If you have these things in place, then move on to other issues, prioritizing them according to their potential for stimulating positive behavior change in the salespeople.
Step four: Make changes as necessary.
If only it were this easy. Some of these practices have been around so long that many of the salespeople consider them sacred. How dare you change the compensation plan that you inherited from the previous administration ten years ago?
If you've gathered a task force earlier, that group can be a powerful tool for change management. Gather their input on priorities and the best way to implement and announce changes.
Start with those issues about which you are most passionate, and that you know will make the biggest change in sales force behavior. If you've not made major changes in your sales structure recently, you are likely to meet some passionate resistance. It's not unusual to lose 5 - 10% of your sales force when you make significant changes in each of the five issues mentioned above. Make sure you count the cost before you act.
Give yourself time to carry out each initiative and to guarantee the success of the change before you start on the next one. It typically takes a full year, for example, to refine and implement a new compensation plan.
In some organizations, this project is so large it becomes a permanent job - managing structural change in the sales system. In others, it’s a periodic task. Regardless, it is one of the best things a sales executive can do, almost guaranteed to return sales and profits far in excess of what it costs to carry it out.