Building a system sales department
System sales department - myth or reality? What to pay attention to when building a system sales department
What is a system sales department?
It is a sales department that works according to algorithms understood by all team members, functions stably and is scalable. The ability to scale the results is a key factor in the presence or absence of systematic work.
Why is it necessary to systematize the work of the sales department?
Competently built systematic work both in the sales department and in the company as a whole allows business to achieve not just results, but above results, and scale much faster than competitors.Formulation "building a system sales department from scratch" may be relevant as for new companies that have no history in the market, and history of sales as such, and for active long-term players in the market, which are trapped in the ceiling and can not effectively scale.
If you:
1. A new company - it means that the sales department will be created along with the formation of other departments and processes. Here you have a head start, you can go straight to the right path, having studied the market and described the key business processes, lay the bricks of systematic work of the sales department and immediately set up the management system in the sales department by default. However, you should not confuse the desire to build a system sales department with procrastination over making sales (especially if we are talking about active sales, where it would be self-defeating to lick the business processes to a state of "perfection", not having enough clues and money in the company).
2. A developing company - you already have a history of work, accumulated indicators for decision-making, have a certain reputation in the market. For better growth, by optimizing part of the processes and systematizing the work on all the key growth areas - you can scale up sales faster, and often even improve a number of indicators.
3. A company with a history - the sales department may change globally, and the previous work may be useful, but not solve all problems. Often the upgrade of the sales department and the system of work is justified by the fact that the company has hit the ceiling and it is not possible to grow more.
Depending on what stage of growth you are at, you will have already implemented and implemented some of the following. Nevertheless, something will still be an area of growth and qualitative transformation.Be both critical and a little indulgent, both to yourself and to the recommendations in this article, because it contains a generalized structure of steps and actions towards building systemic work in the sales department, and it will do you the most good and inspire you for qualitative transformation.
Point 1. Goal setting and goal decomposition.
If you have a small scale, you can determine the amount at point B, which you want to get after a certain period of time.If your ambitions lead to taking a new position in the market - then it is worth detailing.
What do you need to do?
1.1 Determine the strategic goal - what results and scale the company should achieve in 1, 3, 5 years. What do you want to achieve? Do you want to open N branches, to have a team with X number of employees, or to become a leader in a niche? The strategic goal is a quality basis for decomposition of tasks in time, and more systematic planning of ways to achieve the goals.Result: you made and kept a table with the written goals for the long term.
1.2 Digitize the goal in the form of a sales plan.
The sales plan in the company is actually the answer to the question "how will I know that the result has been achieved".
The sales plan is the numbers that the sales department should strive for in a specific time frame.
The plan should be based on metrics: sales in money/units, number of customers (new and active), average check level, profit, etc.
Even if your product has a long transaction cycle - the company must have a sales plan, otherwise salespeople will not understand exactly what the company pays them wages and bonuses for. Fulfilling or not fulfilling the sales plan is also an indicator for the company "are we doing everything right, and are we doing everything we need to do." Therefore, everyone should have a sales plan (personal, group of employees, department).
There are companies, often small, that work without a sales plan for about 5 years, have about 10 employees, and even grow in sales volume from year to year. Another thing is that in addition to the lack of sales plans, they lack a number of areas necessary to organize the systematic work of the sales department, from the training system for employees, to clearly regulated business processes, the division of areas of responsibility and other important things.And all the salespeople they hire to grow the company, do not stay more than a few weeks, sometimes - work a month, and still leave.Sales plan - is the entry point, as an indicator of your willingness to systemize work and track where your system helps reach
Stage result:
Plan-minimum - a table with the company's sales plan for the year ahead, decomposed by months.
Plan-Maximum - sales plan for each employee, from salesman to CEO for the year ahead, decomposed by months.
Point 2. Expense.
The topic of expenses is worthy of a separate article. But we will try to lay out at least the basics, which are worth taking into account right away.
Expenses for the organization of workplaces: desktop, chair, laptop or computer, mouse (if necessary), headphones and/or headsets, department software, phones (in the case of work in the fields or the lack of IP-telephony), Internet, cell phone rates (if relevant type of activity), office equipment such as printer / scanner, etc.
Direct costs: salary of employees (from salespeople to the manager) and bonus fund, handouts for customers (if available).
Other costs: marketing costs, training costs, office rent, etc.
Going back to point 1, about setting up a sales plan, if you are having trouble setting up sales plans, you can start by summarizing the expense side and pricing, it is highly inspiring to set up sales plans for the team.
Point 3. Sales department structure focused on long-term business goals.
The basic rule for creating the right sales force structure is that the sales force structure is created for the business processes of the company, not the other way around.
Often the structure of the sales department grows and transforms along with the business. In the nascent stages of a business, there may not be a sales department structure as such, as managers in the department are universal fighters: looking for customers, closing deals, leading active customers and making pre-sales. As the business grows, the speed of sales growth is often related to the correct distribution of areas of responsibility among salespeople. The second stage is the division of areas of responsibility between managers who do customer prospecting (hunters) and those who bring customers to purchase and do customer development (closers, farmers).
Read more about possible sales department structures below.
TYPE 1: Simple (linear) sales department structure.
The linear sales department structure is the simplest, in which each salesperson is responsible for all stages of the transaction (prospecting, qualification, identification of need, value creation, closing the transaction, post-sales service and cross-selling).
Advantages of the linear structure of the sales department:
- Suitable for the initial stage of company development, as it is relatively easy to manage;
- is good at the stage when there is no obvious demand and real competitive advantages of the company and the product on the market, and you need to study and promote everything from scratch.
The disadvantages of the linear structure:
- Since the employee does everything and is responsible for everything, it is difficult to define key KPIs;
- it is more difficult to scale sales quickly because everyone is busy doing everything, there is no separation of duties.
Type 2. Functional structure of the sales department
Implies the division of functions between managers. Suitable for companies with a transaction cycle of more than 15 days, and in the long term implies a faster scaling of sales and better management.
There are 3 key types of function managers:
1) Hunter (Hunter) - a manager who actively engages customers (for example, cold calls), qualifies them and passes them on - Closer.
2) Closer - handles the inbound flow of customers, which he receives from the hunter or from inbound marketing. The Closer's area of responsibility is to close the deal with the customer and pass it on to the Farmer for development.
3) Fermer (Farmer). His job is to follow up with clients who have already paid. They are responsible for ensuring that the client is satisfied and buy from you as often as possible. Fermers do post-sale customer support and repeat sales.
In the sales segments of complex solutions and products, 2 types of managers are also added:
1) Pre-sale manager (presale) - a specialist who works with the customer until the payment is made. The presale, unlike the closer, has the technical knowledge and experience to develop and deliver the products that the company sells. For example, if a company sells the service of creating CRM-systems, it is the pre-sale manager who performs the task of pre-writing terms of reference and plans the stages of implementation and deployment of CRM in the client company.
2) Key account manager (abbreviated as KAM) - is a manager to work with key customers, VIP-clients.
Multistage (functional, conveyor) structure of sales department with clear division of responsibility areas (Hunter, Closer, Farmer, key account manager, pre-sale) allows the business to scale sales most quickly, while maintaining efficiency and quickly decide on the development of which areas to focus here and now to increase productivity.
A number of companies, based on the characteristics of business processes and product, combine two of the three stages (e.g., clozer + farmer, if the number of additional sales after the start of cooperation is minimal, there is no need to allocate a separate manager for this purpose).
Advantages of the functional sales model:
- convenient and efficient sales analysis and quick identification of problem areas and growth areas, and more predictable performance management;
- the clearer the specialization - the higher the productivity.
Disadvantages of the functional (conveyor) model:
- not suitable for small companies, with a small number of applications and managers, as it will be difficult to load them with work within the divided responsibilities;
- there can be a misunderstanding of the client why the manager is changing, in rare cases, customers are extremely categorical about the change of manager;
- because of the narrow specialization of the salespeople at each level, there may be a shift in their focus from the company's goals to their personal goals;
- there may be staff turnover in certain areas (often among the hunters); the problem is solved by the possibility of migrating, as you progress, from the role of a hunter to a closer, from a closer to a farmer, and so on.
Type 3. Structure of the sales department by channel, product, territory, target audience.
1. Structure by channel.
If the company sells by sales channels, it is more effective to structure the sales department by channels.
For example:
- Cold call channel and inbound channel;
- wholesale, retail, distributors.
You can start with a division by channel, and a manager-unit within each direction. As sales grow, develop the "branch," by dividing authority. First, unload the productive universalist from the tasks of primary processing of leads by hiring him an assistant or a caller, then - transfer the best closers to farmers, hunters to closers, etc., depending on the company's business processes and its real ability to scale sales.
Modular structures often have good team cohesion. Due to the division by channel, it is possible to diagnose quite quickly and clearly which channel gives the most profit, and to focus on it.
2. Structure by product.
If you sell complex solutions or high-tech equipment, the team for each individual product will consist of a closer, a farmer and a technical specialist (product manager). Hunters for all products, on the other hand, can be generalists.
3. Structure by CA segment.
The productivity of the department and employees separately, depends on a clear division of areas of responsibility. Analyze the customers of the company with whom the managers work, and what they have in common, and divide the areas of responsibility. In the example of a company that sells medical equipment, separate managers should work with public clinics, the other - with private, it is not only "not overlapping" base, but also different business processes of pre and after-sales service.
Summary:
The effectiveness of the sales department is related to the proper division of duties and areas of responsibility between specialists. When determining the optimal sales structure, it is important to consider:
- The complexity of the product (for example, complex products require the involvement of a technical expert in the sales cycle);
- the complexity of the company's business processes;
- the desired and realistic speed of sales scaling;
- the potential of sales channels (wholesale, retail, distributors, inbound calls, cold calls);
- geography (the division by territory allows not only to provide more coverage, but also to level out unfair competition between managers).
Point 4. Organization
A total number of companies leak a decent share of sales, due to poorly developed processes and documents within the company. It seems trivial, but it's a fact. Optimization of business processes - has been and remains one of the most common areas of sales growth for any company.
4.1 Pay attention to the interaction between the sales department and:
- marketing department;
- legal department;
- accounting department.
Difficult interaction between departments, procrastination, lack of clear regulations for action, can be not only the cause of failure, but also the cause of conflicts within the team. It is better to prescribe and implement all the necessary regulations once, having diagnosed the business process in combat mode, and to exclude losses due to misunderstanding within the team. In the end, the sales department, the marketing department, the accounting department, the personnel department and the legal department all get money when there are sales.
4.2 Documentation (text, video, tests).
Different documents are needed, different documents are important. Here is a short initial list of documents, the presence of which will not only help you prevent an employee's excuse: "I was not told about this", but also help you avoid possible conflicts within your team:
- About the company, values and mission, the company's product and value to customers;Job description;Regulations for the position;
- Rules of internal order and interaction between departments and team members;
- Regulations on paid sick leave and vacations;
- Agreement on non-disclosure of commercial secrets;
- Company price lists (possibly different for different customer groups);
- Regular performance report forms, etc., with instructions on how to complete them correctly.
Point 5. Motivation system in the sales department
5.1 Financial motivation of salespeople.
2 key rules for building a system of financial motivation for salesmen:
- it should be as simple as possible, the employee should be able to calculate in a minute how much money he earned;
- Avoid focusing on a large number of indicators (this applies not only to the sales department, but also to technical, product, and other departments).
1-3 key indicators for focus is more than enough.
Beware of complicated KPI, they complicate life not only for employees, but also for managers, who will have difficulty assessing the real impact of each of the many indicators on the overall result.
A salesperson's salary should consist of:
1. Salary.
Companies with a short cycle of the transaction (up to a few days) and a regular stream of quality incoming appeals, with established system of sales and lead generation, it is allowed to set a lower level of salary, and a higher percentage of bonuses from sales, if the % of conversion of leads into a transaction is performed. In other cases, the optimal salary should vary between 30-40% of the total amount the manager has to earn in the company by fulfilling the sales plan.
If you choose to offer your salespeople a bare percentage with no salary, even if it is a very high percentage, you are effectively transferring the risks of the owner or entrepreneur to the hired employee. In this case your personal risk zone is that after some time this seller is more likely to understand how the market and the system are arranged and to start his own business, and he will be right. The salary in the salary is a conventional safety buffer, which psychologically and actually differentiates the roles and responsibility zones of the business owner and the hired employee.
2. The variable part for the performance of indicators (KPI), as a "floating" part of the salary.
As a rule, it is not more than 10% in the general motivation system, but is necessary to keep the seller's attention on indicators which influence the company's sales in the long-term outlook. Example of KPI indicators, which can be implemented in the financial motivation system of the salesman:
- % of lead-to-transaction conversion (the "from %" level);
- number of meetings / Skype calls with clients;
- number of prepared personalized offers to potential clients;
- the level of the average check, etc.
3. Bonuses (percentage of sales).
Give you the opportunity to earn at least one more salary on top (if you meet the plan), or two or more salaries if you significantly exceed the targets.
You can use a fixed bonus on sales, which does not change depending on the amount of revenue that the manager made. Or you can use a progressive percentage, which better motivates cool salespeople to exceed the plan.
To make a progressive percentage, you must calculate your thresholds at which you are willing to pay a salesperson a higher or lower percentage. In fact, your incentive system should allow the best salespeople to earn at times the market rate, and the laggards to "fall off" due to poor performance.
An example of "thresholds" for plan fulfillment bonuses:
<60% plan fulfillment - no bonus (or minimum bonus amount);
60-80% of the plan - 0,5% of the revenues;
80-100% of plan fulfillment - 1% of proceeds;
101-120% of plan - 2% of earnings;
>120% - 4% of earnings.
Additional material bonuses can be accrued for above results, for example, a bonus for exceeding the quarterly sales plan, a bonus for the record amount of transactions in the department, etc.
4. Competitive mechanics. Use in the long run to further motivate salespeople.
Super Prize for:
- Completing 70% of the plan in the first half of the reporting month;
- Fulfillment of a collective plan on sales;
- Fulfillment or overfulfillment of a certain indicator (the number of meetings held, prepared personal offers, the average bill for the service, etc.).
Create a system of rewards that consists not only of direct financial bonuses. For example, a system of points, by accumulating which an employee can receive:
- 3 additional paid days off;
- premium subscriptions to youtube, google play, itunes, etc;
- full or partial payment for online training or a conference of the employee's choice;
- monthly/quarterly/yearly gym membership;
- health insurance;
- a trip to Turkey or Egypt for two people or a family with a child;
- a Macbook with transferable rights after one year of employment.
5. Penalties.
A tool of negative motivation.
You can punish only for violations of administrative moments: tardiness (here, pay attention to the manager himself to come on time, otherwise you can not avoid discontent on the background of "double standards"). You also have the right to punish for negligent maintenance of the client base in the CRM, violation of the principles or standards of communication with clients or within the team.
It will be better if you choose non-material methods of punishment, because monetary penalties will always affect the emotional background of your relationship with the employee.
Even better is if you have a system of bonuses and bonuses, and a clear system of negative points that cannot be violated.
And for violations - to revoke bonuses.
In addition to the cancellation of bonuses, you can also use other methods of non-material punishment, which will have an effect.
For example, if a manager ignores the issue of quality CRM (completing the history of communications, updating tasks, does not keep reports, and does not respond to your comments / entreaties / requests, you give him a piece of paper and a pen, and he must write 100 times: "I promise to correctly maintain the CRM-system.
After he writes it 100 times, you can count it, and if there's less or more than 100, he writes again.
Why does this work?
- Because you have to write it during working hours, which means you're wasting precious time on something that won't give you profits and money;
- because we're used to writing with a pen, and our hand gets really tired in the process;
- because there's a resentment in our heads like "why the hell should I do such nonsense when I'm such an important expert, etc."
If you think that you can't make Top Specialists write such "explanations", you know you can. Moreover, if the employee refuses to follow the rules and doesn't want to "bear the punishment" - you just can't go that way, you can say goodbye to him on the spot. Another thing is that the "rules of the game" you have to stipulate in advance, not after the incident, and clearly explain why it is important to conduct correct CRM, to update the tasks, to come to work on time, etc.
Point 6. Control and automation of processes
Why use automation services? First of all, in order to automate processes that require minimal human involvement, to increase the speed of processing requests, to systematize work with clients and within the team, to improve the quality of data analysis and management decision-making.
6.1 Introduce CRM system for work.
With a sufficiently large selection of ready CRM on the market you can implement the most suitable for your business. Part of the companies with simple business processes may be suitable ready-made solution, which may be cloud or boxed. Medium and large businesses are better suited to develop their own CRM system, which will meet the objectives of business and is much better to optimize business processes.
Working in the CRM, you not only improve the relationship with customers, accumulating data about them and the history of communication, but also strengthen management reporting and automate a number of processes that are important for speed of decision-making and business scaling.
Read our article "How much does it cost to develop your own CRM system" if your company are interested in it.
6.2 IP Telephony or Basic Call Recording
Any sales department spends the lion's share of its time communicating with customers. If you don't control that process - you don't manage it and you're definitely losing some money.
The cost of integrating ip-telephony, including in conjunction with CRM, are many times lower than the potential benefits you get by controlling the calls, operators' load, the result.
Substitute your metrics in the example below, and calculate the lost benefit of not implementing a call control system.
What do we have:
2,000 incoming leads per month.
2 managers to process requests
15% - calls missed due to "the client called and the line was busy, the manager didn't call him back after completing the dialogue because he didn't see it (the client found another offer and ordered from a competitor).
15% - the average conversion rate from a lead to a transaction in the company.
$180 is the average check at the company.
How much money will the company lose each month by not implementing IP-telephony?
2000*0.15 = 300 missed calls
300*0,15 = 45 deals missed due to 15% conversion
The equivalent in money: $8100 of turnover.
Point 7. People (team, staff)
Finding and hiring employees, especially salespeople, is one of the least favorite tasks of any manager, because it is quite difficult to find both a good professional and just "his" person.
By the way, in a sales department with zero history, it is quite difficult to attract an experienced salesman. So in practical terms, look for young, not very experienced, with fire in their eyes and greedy, teach them, give them tools, scripts, and develop their professional and personal qualities.
If you have experience in sales and you understand not only how to manage sellers, but also how to develop them - this scheme will work. If not - then hire experienced salesmen at once, or inexperienced, but with the hiring of a good ROP, who will compensate your weaknesses with his strengths. Draw up as detailed a portrait of your candidate as possible, this will allow you to weed out unsuitable ones. Pay attention not only to the victories of the applicants, but also to the defeats, and in particular to the conclusions that the person made, because "only he who does nothing is not wrong.
At the start of the employee's exit, be sure to familiarize them with the values and mission of the company, and train them "from scratch" using your training and adaptation system, even experienced salespeople and managers.
Point 8. The system of adaptation and training
The most common misconception of an executive is to rely on sales experience gained outside your company. There is no doubt that combat sales experience is valuable, but being able to sell one product does not guarantee excellent results in selling another product. The same employee may and may not open up in different companies that sell the same product, in the same market, due to a variety of factors that affect personal performance.
From a practical point of view, it is worth developing a system of employee training.
1. For new employees:
- Create a sales book that will provide learning about the company's product, product selling techniques, value to the customer, company values, and more. You can even add examples of movies to the sales book that convey values relevant to working at your company);
- games and case studies;
- analysis of calls and negotiations.
2. For permanent employees:
- A system of internal product training, and cross-products that have an impact on the sale of the company's core products;
- Case analysis, analysis of dialogs, analysis of work with key or "problem" clients;
- The system of external training (an invited trainer or attending conferences);
- Joint creation of a wiki-library of knowledge in the company;
- Plan of joint reading of books on sales;
- business games, etc.
The system of knowledge and training should be updated regularly (at least twice a year), irrelevant materials should be removed or corrected. Most importantly, having a training system in place does not guarantee that managers will start using the tools provided. Therefore, any training should end with a control test, choose any acceptable form: from creating a control test with variants of answers to questions, to a meeting with managers, where you randomly ask each a question to reinforce the material, or a format for preparing a mini-report for 10-15 minutes for the department.