Your product’s taking off. You’ve got traction in your market, and you’re looking to go even further. Your starter sales organization structure is working. For now.
But, is it good enough to help you grow? Can you scale up and hit those revenues with your current team structure? This is a critical step in the growth process, and one many SMBs struggle with.
You might think it’s best to hire amazing sales talent and let them do their thing. You’d be wrong. A Harvard Business Review study found that 50 percent of high-performing sales organizations have well-documented sales processes that are explicitly structured, compared to 28% of underperforming organizations.
In other words, you can’t just haphazardly start hiring sales reps and expect your business to grow.
To ensure long-term growth, you have to choose the right sales team structure that fits your business, culture, and industry. Get this right, and you’ll cultivate a high-growth environment allowing your sales team to shine.
But which sales organization structure is right for your team? Let's talk about it.
To better understand how your current sales process can be optimized and what kind of results you can expect, it’s helpful to visualize your sales funnel. Close offers a Sales Funnel Calculator that can provide insights into how many leads you need and illuminate your path to growing revenue faster.
What is a Sales Organization Structure, Exactly?
For example, some teams specialize in inside sales, while others do field sales, others split teams based on geographical areas, and some use business development reps, SDRs, and account executives to split up tasks.
Being intentional about your sales organizational structure ensures everyone knows their role and helps play to the strength of every team member, contributing significantly to sales performance management.
Which leads to higher sales performance.
However, sales team structures have changed in recent years, thanks partly to the rise of remote work and work from home. Let’s talk about how that shift might impact your sales organization structure.
What is the Best Sales Organizational Structure?
The best sales team structure is the one that works well in your industry, for your team, and for your customers. While no one structure works well for all teams, assembly line organizational structure is common for smaller businesses and startups.
At Close, we use a blend of the Island and Assembly line structure. Each sales rep follows their leads through from start to finish, when they are turned over to our customer success team. However, marketing and growth are responsible for leads, rather than the sales team.
How Sales Organizational Structures Have Changed
Previously, sales team structures were based on regions and overall quotas. A sales director might look at last year’s sales, up it by 20 percent, and use that quota to build next year's goals. If five reps pulled in $1 million, then they’d add one more rep, redraw the district lines and set the salespeople loose.
Now, things aren’t so simple.
Nearly a third of people work from home rather than their business’s main office, making geographical territories less useful. Industry growth means most customers have more options than ever, so churn is a major issue. Plus, the types of products sales reps sell have changed—reps are far more likely to sell software than manufacturing equipment.
Modern sales departments must build in-depth customer relationships by understanding their needs. This allows sales representatives to deliver value not just today, but for years to come. When a current customer is ready to grow, they know their sales rep is there to help them find the right solution.
Essentially, the old sales organization structure was often a one-and-done process, while modern structures require sales professionals to deliver value throughout the sales cycle. That means the most successful sales organizational structures have changed, too.
There are three main sales team structures you can use to ramp up your sales game and build a high-performing sales organization. Below, we’ll cover what they are, the pros and cons, and which companies should consider using easy options.
The Island Structure
The island sales organization model leads to a more traditional, “sell-or-die” environment that people typically associate with sales reps. There’s actually very little organizational structure and no specific job titles beyond sales rep with a sales manager overseeing the team.
You provide your team with some basic back-end services: a little sales training, a range of products they can sell, a commission structure, maybe an office—and that’s it.
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This is a very handsoff model, and every sales rep is responsible for each step of the sales plan from start to finish. They have to generate leads, qualify prospects, and close deals independently. Reps within this framework tend to be more aggressive. They’re up to their elbows in fierce competition—not just with the larger market, but their own teams as well.
This way of structuring your sales team dominates traditional sales operations, like real estate or financial services. Think about your average real estate agent: they walk into the office each day and nominally represent a larger real estate agency, like Coldwell Bankers, or the Corcoran Group. But they promote listings mostly on their own, by posting them online, calling prospects on the phone, and running open houses—all in hopes of a close.
Learn more about effective real estate marketing strategies to enhance your sales approach.
Pros:
- Very little managerial oversight required on a one-on-one basis
- Easier to implement
- Good for simple sales processes, like a one or two call-to-close product
- Can work well in multiple industries
Cons:
- Can create 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
Which Companies Should Use the Island Sales Organization Structure?
The traditional island model isn’t great for most startups—it’s too aggressive and too competitive—but adding collaboration can help this model work in many industries and levels of growth.
It typically suits companies that work in established markets, with high levels of competition and solid sales strategies. The island model works best for low-complexity, high-transaction workflows. Sometimes, the simplest is best. A well-designed SOP template is essential for optimizing collaboration in the island model, particularly benefiting startups in competitive markets with straightforward workflows.
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 maximum efficiency.
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You can apply a service line sales force structure to your team. Your raw materials are your prospective customers, who are cultivated and refined during the sales cycle. The assembly line typically breaks down a sales force by function into three or 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 onboarding, account management, and increasing lifetime value (LTV) for each customer. They use customer success software to automate most of the tasks. They also help upsell customers to higher plans.
In his book Predictable Revenue, Aaron Ross breaks down one assembly line model you can use to structure your sales team:
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The assembly line lets your sales team specialize in different functions and roles. Each step of the sales cycle has a dedicated team. As customers walk through the sales funnel—from leads, to qualified opportunities, to new customers—they’re handed off to the next team.
Because each group in the assembly line is so specialized, you can hold each team accountable for the various sales metrics they’re responsible for. This also makes it 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 they’re closing an acceptable 25 percent of qualified leads, but your SDRs only manage to qualify 20 percent of raw leads.
You can dive into your CRM and see what’s up with your SDR team—whether an individual team member 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 percent 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 create a more effective sales team.
Pros:
- 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
Cons:
- 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-offs as customers travel through the funnel.
- Because teams are highly specialized, each team member becomes increasingly disconnected from the company's overall business goals. They’re focused on their own specific numbers and metrics instead.
Which Companies Should Use the Assembly Line Organizational Structure?
Most startups find that some version of the assembly line works 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 Pod
A pod organizational structure works along similar lines to the assembly line model of sales, but instead creates tight-knit groups, or “pods” composed of team members who play different roles. A podular organization is customer-centric.
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For example, a six-person sales pod would include 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.
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 afterward. 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 sales force member has a larger, more holistic view of the entire company. Pods build more meaningful connections between people who are working together and build stronger relationships with their customers. You can specialize pods based on different industries, verticals, product lines, 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
Cons:
- With the pod structure, there’s less opportunity for your individual sales reps to compete grow, and push each other to excel
- Less specialization with each role, as each member becomes more of a “jack-of-all-trades”
Which Companies Should Use The Pod Sales Organizational Structure?
The pod structure 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.
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.
How to Choose the Right Sales Organizational Structure
Now that you understand the main types of sales organization structures let’s talk about the factors to consider when creating a structure for your sales organization. Namely, budget, customer type, and culture.
Keep in mind, it's totally okay to start with one structure and move to another structure as your company grows. As your needs and sales process grows and changes, your sales organizational structure may as well.
Consider Your Budget (and Your Customers')
Budget might not be everything, but it impacts the type of sales structure that will likely work best for your organization. For example, if you only have the budget for two or three sales reps, a pod organizational structure won’t work. However, a small assembly line might, with one rep taking on generating and qualifying leads, while the other focuses on building relationships and conversion.
Remember to consider your customers' budgets, too. If your customers are spending $100K each, they’re more likely to need a more hands-on approach than a customer spending $20 a month.
Retain Your Customer-Focus
Sales has gotten a bad rap for being more concerned with profitability than customers. The right sales structure should help your sales team focus on customer intimacy, not just the bottom line. Depending on your organization, that might mean using a pod structure so each stage of the sales process is well covered or The Island, where each rep works with one prospect from start to finish.
Whichever structure you choose, ensure customers remain at the center of the sales process.
Don’t Forget the Culture
There are 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 competitors in 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 reason not to go another way.
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 to constantly ask yourself: “What kind of sales team are we? What kind of culture are we trying to create?”
Sales Organizational Structure Has a Long-Term Impact on Growth
The team you build and how you structure it in the early stages of your business will leave a huge footprint on your sales process as you grow and scale. Don’t leave it up to chance. Choose the sales model and team structure that works for you, and you’ll build a sales organization capable of sustaining long-term growth.
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