The question of when to change your sales team strategy can be triggered by a number of different situations, but it’s important that business leaders understand the choices in front of them, from needing to increase a sales team’s size right through to transforming the team you have.
The variables mount up: executives who close more sales, executives who target higher value customers, salespeople who are great at business development but struggle when it comes to extracting more value out of deals, people who are naturals at retaining clients – the list goes on.
And it’s not always about people. Market considerations, product innovation, even the location of a new client can throw spanners in the works for CEOs and sales team managers who need to nail the right team size as fast as possible.
Sales data company Insight Squared has done research comparing sales team headcounts across different sized companies, and you can see their results here.
But while that research looks at it on a macro level, from our experience at ECG we know that a lot of the variables in determining sales team sizes and skill sets are all about reading between the lines.
In this blog, our experts tell you what to look for when your sales team manager, or you as the CEO, are deciding on the best way forward for your sales team.
Time to execute – get it done properly
Jim Colonas, Managing Partner
High-quality analysis, strategy development, coaching and recruitment are the keys to success. But only if you or your sales managers execute efficiently.
Sales leaders need to have a true understanding of the target market size and value. This helps them identify ideal clients within that market and their company’s ideal engagement process, or average proposed sale value per ideal client.
So at this point, I would assume you or your managers have identified:
- Your target market
- Your ideal client profile
- Your value proposition to those clients
- Your ideal engagement process or average sale in a target client
Once you have all of this information, you can use market data to identify how many ideal clients are in your target market.
You should also be able to work out how many ideal clients can be effectively and successfully serviced by a single Account Manager or Business Development Manager per territory.
Then it’s a case of doing the math as to whether you need more people OR more skills and efficiencies.
A bigger sales team is not always the solution. Often as companies grow, their sales teams find their balance in size that delivers the desired growth and long-term revenue stability without the need for constant growth in numbers.
Geographical expansion to another state, for example, requires you to follow the same rules, however you will need to create a reporting mechanism that allows your BDMs to be managed from afar until you can hire a state manager locally. More caution is required in this situation to minimise risks while maintaining growth and accountability.
Reading between the revenue lines and understanding all of these factors will make your sales teams flourish, and your company thrive through optimised margins.
Ensure your sales managers are focused on the right issues
Ralph Vossenberg, Managing Partner
You and your sales managers should be on the lookout for signs that your team members are bleeding sales, sales opportunities, or both.
The factors to keep an eye on include:
- Client retention: Losing clients is a significant signpost for potential sales process issues. Obviously, every product/service has a different lifespan but losing sales to competitors is a red flag that might have nothing to do with your product.
- Product mix: It can have an impact on profitability and needs focus. Is your team presenting the mix properly, do they fully understand the clients’ wants and needs?
- Lack of add-on sales: Upselling, cross-selling and increasing share of wallet are often a great opportunity for companies to increase revenue. If your market analysis is right and your sales executives have been trained properly, they should be a consistent component of every sales interaction.
- Team tension and dysfunction: This can lead to poor performance and require either better management or team restructuring. Making the hard decisions, or hiring a trusted adviser to make them for you, will make life as a leader far easier.
- Company maturity: The balance between business development and account management changes over time and can also be influenced by product development and client demand. Both functions contribute to sales growth but require different sales personnel with different skill sets.
Know the ins and outs of your market, then plan accordingly
Tim Stevens, Sales Growth Specialist
The most important aspect of sales team growth is the development stage your company is experiencing. Most businesses need a different makeup of sales, production, administration and R&D at various times in their maturity.
While early on a company may need more R&D and production to refine a product or service, as time progresses and your company grows, sales become a more pressing need. This balance is crucial to determining success.
So when do you grow the sales team?
Obviously not achieving revenue targets points to a change needed in the sales team, and you have to analyse an array of factors to achieve a balance. This may take the form of team size, training, composition or management focus, among others.
But you need to take into account, and have someone analyse, your market size, potential number of clients, sales cycle and financial targets.
Typically, low-value products/services require more salespeople covering a greater range of potential clients, while high-value products/services require less salespeople covering a small number of potential clients who require a longer sales cycle.
Capitalising on market opportunities caused by factors such as increased demand, competitor instability or product development also impact directly on the size and skill level of the sales team.
In summary, knowing your market size and demographics, and identifying whether your sales team is bleeding sales and taking advantage of market signals such as increased market opportunities are all signs that you need to either increase your team sizes or improve their efficiencies and outcomes by developing their skills further.