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The Center for Sales Strategy Blog

Different Types of Sales Organizational Structures

Different Types of Sales Organizational Structures

Are you trying to organize your sales team? Are you trying to figure out what the best sales organizational structure is  or trying to identify the problem within your current structure?

Determining the best way to organize your sales team is important, and we're sure that you're looking to find the most efficient sales structure. Your sales team organization matters, because it can affect the sales that you make and the revenue you bring in.

Let's talk about what the different kinds of sales organizational structures are and list some pros and cons. Then, we can discuss how you should go about organizing your own sales team.

Types of Sales Organizational Structures

2020 Media Sales Report Now Available

Remember, before making a structure change, it's important to identify and define the problem. Some solutions do require big sales structure changes. Others require smaller changes.

The sales structure problem often lies in asking your people to handle too many different aspects if the sales process. In our new IMPACT courses, we introduce the Rule of 3s and using them to determine if you have a People or Process problem. If more than 1/3 of your salespeople are underperforming in your top three performance metrics, you likely have a sales structure problem.

There are four main types of sales organizational structures:

  1. Functional Structure
  2. Geographic Structure
  3. Market-Based Structure
  4. Product Sales Force Structure

Each one has its own pros and cons that you should consider before implementing any of the structures in your business.

1. Functional Structure

Function structure refers to the sales organization structure that focuses on specialization within the marketing team. This means that everyone has their own purpose to fulfill within the team based on their specialties, interests, and other factors.

Having a sales team that runs by a functional structure is more efficient, but it does come with a plethora of problems. It may sound great to have each person specialize in their tasks, but sales is a very interwoven department. This means that people need to coordinate a lot in a sales team that runs by a functional structure.

Having specialization can also be difficult when you're handling clients and accounts from different geographic regions. Some people may not be able to handle multi-lingual accounts or they may not know how to interact with people of different cultures.

In addition, there may be some problems with duplicate information. As tasks and to-dos run around the office, it's likely that multiple people are going to end up with the same account at the same time. This is because processes tend to run simultaneously in the sales team.

Having duplicate processes going around may sound efficient at first, but it can be detrimental to an account. This is especially if both sales associates are interacting with a customer at the same time. It can be overwhelming to perform multiple processes on the same client at once.Top Challenges Media Sales Departments Face

2. Geographic Structure

Geographic sales structures sound like what they are. Sales teams that run by this structure organize by location.

So, let's say that you have some clients in Atlanta, others in Boston, and others in New York. With a geographic organizational structure, you're likely to break your sales team between these cities. This is also known as a territorial sales force structure.

Geographic sales structures are extremely popular in the sales world. They come with too many benefits to ignore.

  • First, sales teams that are organized based on the geographical location of their clients cost much less. It doesn't take a lot to leave certain sales reps in certain areas. If you weren't organizing based on region, you may have to move your sales reps all over the place, which can add up in cost over time.

  • Second, a successful sales team in one geographic area leads to continued growth in that area as well as the surrounding areas. By taking care of one region at a time, you're more likely to be successful in caring for that region.

  • Third, clients in a certain geographical area will come to know your sales rep in that area extremely well. Even if you have multiple, it's likely that it's a small team that will split up the clients in the area.

If customers get to know your sales representatives well, you're more likely to make more sales and increase customer loyalty. This means more revenue in the future and better customer relations overall.

Plus, those existing customers may bring more in.

That being said, it may be difficult to decide on your layout. You need to know where to place territory lines for your sales reps to follow.

Plus, the sales reps that are located in these different areas won't be able to specialize. This can make more difficult sales tasks harder to do on their own.Missed Opportunities with the Wrong Sales Structure

3. Market-Based Structure

A market-based structure, also known as a customer sales force structure, refers to a sales team that is organized by customers or industry. More likely, they're grouped by industry.

By placing your sales reps in a specific industry, you're giving them a chance to specialize in that industry and the needs of the companies within that industry. Plus, by becoming experts, your sales reps will have a better chance to grow stronger relationships with your current and potential clients.

For companies that aren't focused on one industry or a few industries, it's likely that a market-based structure would be advantageous. This is especially given that higher-ups on the management team can bounce around from industry to industry that the sales reps are specialized in.

By organizing your team strategically in this way, you'll be able to make more sales and build stronger bonds with your clients.

Unfortunately, market-based structures come with higher costs and difficulties in sorting the location of different companies. Obviously, companies don't base their location on what industry they're in (entirely). This means that some tech companies are in San Francisco, others are in Nashville, and others are in Minnesota.

You'll have to move your sales reps around a lot to make up for the splotchy geography of different industries. This can raise your costs and leave your sales reps whipping from one area to the next.

4. Product Sales Force Structure

The product sales force structure focuses on the products that clients make. This can be based on individual products or product types. This organizational structure is the most specialized of all of these options. 

With this kind of sales organizational structure, you may find that your sales reps are more attuned to how to sell to certain companies based on the products they have. In fact, you'll have sales reps that can handle one product type at once company and the same product type at another company.

This kind of specialization is great if your company focuses on one industry, but it can become a little much when you're bringing multiple industries with multiple products in at once.

Sales reps can get interwoven with too many factors. This may cause communication issues and the need for more coordination with each, individual sales rep.

Is Your Current Sales Structure Designed For The Results You Want?

How to Create a Sales Organizational Structure

You need an organized sales team. In fact, the Harvard Business Review performed a study that found that well-organized sales organizations perform much better than sales organizations without a distinct organizational structure.

So, if you're looking to create an organized sales team, you need to figure out what the best organizational structure for your team is and where the problems are within your team and/or structure. This means that you need to determine the best way to organize your team based on what industries, products, and geographical locations your clientele consist of.

You should also consider what traits and specialties the sales reps within your team has. This means looking at what your team members have done in the past and how they've contributed to your company so far.

By creating the best sales organizational structure, you'll find the following changes in your team:

  • Reduce conflict between team members
  • Increase engagement from the sales team members
  • A more knowledgeable sales team that is ready to face a variety of situations
  • Better coordination of activities between team members
  • Better communication between coworkers
  • Clearer communication of expectations and goals for the team
  • Improved decision-making based on the team's expectations and goals set prior
  • Possibility for more customers and more sales with a more cohesive team.

You'll be able to reap all of these benefits of a more organized team by taking the time to evaluate your industries, clients, and geographical locations. Once you evaluate this information, you can then place the right people in the right roles based on their individual strengths.

Getting the Help You Need to Implement Sales Team Structure

Every business needs an organized sales structure that brings every team member together. The better organized your team is, the better they will perform. This means that they'll pull in more revenue for the company and may even start some new business relationships.

Our new IMPACT series (specifically the Process courses) takes a deep dive into sales structure and how to identify the problem, define the problem, solve the problem, and then roll it out. For example, if your know your problem is not enough new business development and your weakness is lead generation, then the solution is to make a structural change that fixes the bottleneck problem.

Sales structure is one component of our IMPACT Process Pyramid that is designed to help you determine if you have a sales structure problem, and if so, what process can you use to help determine a new structure.

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Topics: sales structure sales organizational structure