Wednesday, April 27, 2011

Lesson #25: How to Structure Your Sales Team & Procedures

Along with your marketing efforts, your sales strategies will make or break the success of your startup, as they are equally critical to your abilities to drive revenues.  Today, we will tackle (i) how best to structure your sales team; and (ii) how best to design internal sales procedures.  Our next post will tackle sales incentives for motivating your team.

There is no one right answer on how best to structure your sales team.  It is largely dependent on the size of your team, the complexity of your product, the size of your average transaction and what works best for your industry.  As a rule, sales teams are structured either as: (i) inside sales teams based in your home office, or outside sales teams working on the road; (ii) inbound call handlers vs. outbound callers; and (iii) geographically split based on regions of the country, or split on other industry-specific verticals (e.g., corporate clients, government clients, university clients). 

The inside vs. outside decision typically comes down to complexity of the product and the average transaction size.  It will be hard to close a $1MM complicated technology sale, without face-to-face contact to educate the client and instill trust in your company. On the other hand, selling a $199 airline ticket can easily be done over the phone, since people are pretty clear on what they are buying and it is a relatively small transaction size.

The inbound call handler vs. outbound callers decision is largely tied to the best marketing tactics for your business.  If you are a big online travel site selling airline tickets, the customers are typically coming to you researching air itineraries on your website, and then calling your customer sales desk with any questions or to book the flight.  On the other hand, especially for products that consumers are not naturally coming to you, telemarketing sales tactics are employed.  And, we all know how annoyed we get by telemarketing calls, especially around election time.  But, sometimes, telemarketing can be tastefully engaged if relevant to a consumer.  For example, "I was doing your neighbor's landscaping yesterday and saw that you needed your flower beds weeded."  Or for repeat clients: "we last washed your windows a year ago, and would like to schedule this year's service?"  Both examples are very tasteful, and should not upset the listener given its relevance to a real need they may have.

The geographic vs. client vertical split decision typically comes down to the size of the prospective market, and the varying needs of a particular industry vertical.  If you are serving 1,000 prospective clients, you could easily split sales efforts around Eastern U.S. sales and Western U.S. sales.  If you are serving 1,000,000 prospective clients, your geographic splits could get down to the city level.  Geography splits work fine, as long as there are an even mix of clients in each region.  But, let's say you are selling products to the entertainment industry largely based in Hollywood, maybe you split your sales team based on film producers vs. television producers vs. gaming producers, all based in Los Angeles.  Or, in another example, let's say you are selling digital video technology, and the needs of a film studio (e.g., entertainment driven ) are different from the needs of a corporate video client (e.g., marketing driven) and the needs of a government video client (e.g., intelligence driven).  In that scenario, different user cases and needs may require expert salespeople just around that user case.

As for designing internal sales procedures, a couple key points.  First, you want your best sales people spending all their time closing sales.  So, often times they may need an assistant to be helping with their cold calling efforts.  The assistant makes the 100 outbound cold calls looking for viable leads, and then hands off the 10 viable leads to the salesperson to close.  A very efficient use of everybody's time, if your budgets can afford it.  If not, the salesperson is making their own cold calls, which may be your only option (but not the most efficient use of their time or your budget).

The other key procedural point is the speed at which you respond to a new lead.  The faster you respond to a new lead, the higher your odds you close that lead, before one of your competitors calls the customer back.  At iExplore, customers would reach out to three or four tour operators while doing their research, and our sales conversion rate was directly proportional to the response time of our sales team (e.g., one hour response closed at 25% rate, 8 hour reponse closed at 10% rate).  And, if it was that dramatic for a four week sales cycle product, imagine the implications for a "real time" sales cycle product (e.g., I need business cards for a meeting tomorrow).

The final procedural point is the frequency at which you follow up with old leads.  I can't tell you how many startups simply deal with new leads and forget to follow up with old leads, or worse yet, forget to follow up with repeat past clients.  It is critical you use some type of CRM to catalog all your leads as they come in, and set follow up schedules for each.  If you have the budgets to afford an expensive product like Salesforce.com, great.  If you don't, often times a simple Excel spreadsheet will accomplish your goal just the same. 

In terms of frequency of the follow up itself, it is directly proportional to the immediacy of the sale.  If a client is calling for a July 1st vacation on June 1st, you better follow up with them in the next day or two, as they need to book their trip quickly.  If a client is calling to book travel for a 2013 family reunion on June 1st, 2011, you can probably follow up with them weekly or monthly given the long lead time before the trip.  But, the key point:  it is critical you set up an operational procedure to follow up with all old leads until they close or go dead, as well as a process for past repeat clients to stimulate a repeat purchase in a reasonable repeat sale timeline (e.g., their once a year summer vacation).

Hope you found this helpful at the highest level.  Our next post will dig into sales incentives to motivate your sales team, which is the other critical piece of the sales puzzle.

For future posts, please follow me at:  www.twitter.com/georgedeeb

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