The Pros and Cons of the Most Popular Types of Sales Management Structures

Stellar sales talent is essential to any team’s success, but it isn’t everything. Even the most skilled reps can flounder if they aren’t operating within an effective organizational structure. 

‌If, for example, you take someone great at selling cybersecurity solutions to tech companies and have them switch to marketing hospital technology, they likely won’t perform as well. Your sales management process must be optimized for your staff, and vice versa.

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What Is Sales Management Structure?‌

A sales management structure — or sales organizational structure — is the design of your sales team. Your management structure takes into account whether you’re using an inside or outside sales model, your territory approach, your product model, and more. Pairing an effective structure with data from a sales management CRM system can result in an incredibly high-performing team.

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The Benefits of a Good Management Structure‌

A 2015 survey published in Harvard Business Review revealed that high-performing sales teams have clearly structured, well-documented sales processes. A full 50 percent of respondents from high-performing businesses said their companies had strictly enforced, automated, or closely monitored sales practices.

‌A well-organized sales structure with clear lines of communication in place streamlines the chain of command, whereby decisions are made more quickly and more efficiently.

‌A good sales structure establishes clear responsibilities for each person’s role and incorporates stronger coordination and communication, cultivating a more knowledgeable sales force. Collectively, this leads to reduced conflict between team members and increased engagement with their customers.

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The Most Popular Sales Management Structures‌

The most popular organizational structures incorporate the aspects discussed above, leaning more heavily on the ones that benefit them the most. There are four types of sales structures commonly used by today’s businesses:

• Geography/territory 
• Product/service line
• Customer/account size
• Industry/vertical segment

Which one you’ll choose will depend on what you’re selling, how many people are on your team, and who your clients are. 

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Geographic territory structure‌

This approach assigns each rep a specific territory demarcated by geographic location. It lets each person on your team become very familiar with their assigned segment of your audience. 

That familiarity fosters their building relationships with local businesses and vendors, tracking sales targets in their area, and keeping an eye on your competition in that region. A geographic approach can also make it easier for managers to track a rep’s performance by examining the numbers in that rep’s region. 

Geographic structures are organized with a sales manager at the top of the chain. Under them are territory managers in charge of reps for their specific region. The sales reps on the ground comprise the bottom level. 

Pros: ‌

• Lower cost 
• Less duplication of effort when properly managed

Cons:

• Can lead to a silo effect, with reps not performing as well across different functions

Product or service line structure‌

Rather than a geographic area, this structure assigns people on your team to specific products and services you sell. They become experts in that product or service, and that deep knowledge aids them in their work. 

This structure type has a sales manager at the top, with the reps reporting to them separated by product line instead of geographic region. There are no intermediary managers in this case. 

Pros

• Lets reps develop deep expertise in a product or service, whereby they can outline detailed use cases and advantages for the customer
• Management has more of a hand in guiding sales efforts 

Cons

• Reps can end up focusing more on product features than on customers' wants and needs
• Can require a higher level of coordination when multiple reps are working in the same region

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Customer or account size structure‌

Dividing reps by customer type or the size of the account is another popular sales structure. Given that it takes different skills to sell to a small business versus an enterprise-level one, it wouldn’t make sense to assign all sales reps to every account regardless of size.

The goals and budgets of these accounts will be different, as will the questions they ask. The person on your team handling a particular account should be attuned to that business’s needs. This sales structure allows your reps to develop that knowledge and become experts in their respective accounts.

Though each account will be different, they should all receive the same quality of service. This method requires constant and efficient communication between the members of your team to assure success.

As with the product/service line structure, groups of reps report to a sales manager with no intermediary. Each group of reps handles a different size of account — usually divided into small to medium, mid-market, and enterprise accounts.‌

Pros:

• Reps become experts in their accounts and knowledgeable of their needs

‌Cons:

• May be more difficult to manage resources
• Requires constant communication with team members

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Industry or vertical structure‌

This organizational structure makes the most sense for companies that have a product or service used by clients in multiple industries. Reps become experts on their assigned industry verticals, making them well-positioned to offer your product to those industries as a solution. 

This structure is similar to a regional organizational chart. At the top is the main sales manager, and under them are vertical leads, to whom the reps on the ground report.

Pros:

• Reps develop deep industry expertise and can sell effectively to certain verticals

Cons:

• Potentially one of the most expensive ways to organize your sales team

‌Make an Organizational Flow Chart‌

Once you’ve nailed down which type of sales structure your company needs, it makes sense to visually illustrate it. Visual representations help everyone at your business track the chain of command. They also help other departments know who to communicate with if the need arises. 

You don’t need to sketch your flow chart with pen and paper or haphazardly render it with text boxes in Word, either. Services like Lucidchart let you map your structure out digitally, and you may be able to use them for free.

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Get Your Sales Team Organized‌

Which of these organizational styles makes sense for you? Whatever industry you work in, whatever product or service you sell, getting organized will help you step up your sales game and generate more revenue. 

Accelo helps small businesses streamline their operations and automate processes so the people who run them have more time for the important things. Sign up for a free trial today to see how we can help yours.