3 Sales Organization Structures That Work (How to Structure Your Sales Team for Success)

3 Sales Organization Structures That Work (How to Structure Your Sales Team for Success)

Your product’s taking off. You’ve got traction in your market, and you’re looking to go even further. Your first basic sales model has accomplished wonders for your business so far.

After weighing the various factors involved and taking a closer look at the market, you’ve decided to start building your sales organization–but you aren’t sure where to start.

The first step is to determine which of the three sales team structures works best for your business so you can deliver the best possible sales experience for your prospects–and close more deals.  

This is a critical step in the growth process, and one many SMBs struggle with.

You might think it’s best to hire amazing sales talent and let them do their thing. You’d be wrong. A Harvard Business Review study found that 50% of high-performing sales organizations have well-documented sales processes that are explicitly structured, compared to 28% of underperforming organizations.

In other words, you can’t just haphazardly start hiring sales reps and expect your business to grow.

To ensure long-term growth, you need to choose the right sales team structure that fits your business and your culture, and the right sales management tools to empower your reps to work productively.

Get this right, and you’ll cultivate a high-growth environment that will allow your sales team to truly shine.

What Is a Sales Organization Structure, Exactly?

A sales organization structure (aka sales team structure) refers to how you segment your sales team into different roles or departments. For example, some teams specialize in inside sales while others do field sales, others split them into geographical areas, and some use business development reps, SDRs, and account executives to split up tasks.

Being intentional about sales team structure ensures everyone knows their role and helps play to the strength of every team member. This, in turn, leads to better sales performance.

However, sales team structures have changed in recent years, thanks in part to an increase in work from home. Let’s talk about how that shift might impact your sales organization structure.

Traditional vs. Modern Sales Team Structure

In the past, sales team structures were based on regions and overall quotas. A sales director might look at last year’s sales, up it by 20%, and use that quota to build next year's goals. If five reps pulled in $1 million, then they’d add one more rep, redraw the district lines and set the salespeople loose.

Now, things aren’t so simple. People work from home, rather than their business’s main office, making geographical territories less useful. Industry growth means most customers have more options than ever, so churn is a major issue. Plus, many companies target multiple vertices, so having sales reps with expertise in niche areas is crucial.

Modern sales departments also need to build in-depth customer relationships by getting to know their needs. This allows sales representatives to deliver value not just today, but for years to come. When a current customer is ready to grow, they know their sales rep is there to help them find the right solution.

Essentially, the old sales organization structure was often a one-and-done process, while modern structures require sales professionals to deliver value throughout the sales cycle.

3 Sales Team Structures for Building a High-Performing Sales Organization

There are three main sales team structures you can use to ramp up your sales game and build a high-performing sales organization. Below, we’ll cover what they are, the pros and cons, and which companies should consider using easy options.

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Sales Team Structure 1: The Island Structure

The island model of sales organization leads to a more traditional, “sell-or-die” environment that people typically associate with sales reps. There’s actually very little organizational structure and no specific job titles beyond sales rep. You provide your team with some basic back-end services: a little sales training, a range of products they can sell, a commission structure, maybe an office—and that’s it.

Sales Team Structure 1: The Island Structure

This is a very handoff model and every sales rep is responsible for each step of the sales plan on their own. They have to generate leads by themselves, qualify them, and close them. Reps within this framework tend to be more aggressive. They’re up to their elbows in fierce competition—not just with the larger market, but their own teams as well.

This way of structuring your sales team dominates traditional sales operations, like real estate or financial services. Think about your average real estate agent: they walk into the office each day and nominally represent a larger real estate agency, like Coldwell Bankers, or the Corcoran Group. But they promote listings mostly on their own, by posting them online, calling prospects on the phone, and running open houses—all in hopes of a close.

Pros:

  • Very little managerial oversight required on a one-on-one basis
  • Good for simple sales processes, like a one or two call-to-close product

Cons:

  • Creates a very aggressive sales environment
  • You have much less control over how your brand is represented in the market because it’s highly dependent upon each individual rep’s style.
  • Because everyone does everything, it’s difficult to keep track of key sales metrics and benchmarks

Which Companies Should Use the Island Sales Structure?

The island model isn’t great for most startups—it’s too aggressive and too competitive—but there are always exceptions. It typically suits companies that work in established markets, with high levels of competition. The island model works best for low-complexity, high-transaction workflows. Sometimes, the simplest is best.

Which Companies Should Use the Island Sales Structure?

Sales Team Structure 2: The Assembly Line

The assembly line drove the Industrial Revolution and built Ford’s famous Model T. It essentially specialized the labor force, and sequentially arranged production processes for max efficiency.

Sales Team Structure 2: The Assembly Line

You can apply a service line sales force structure to your team. Your raw materials are your prospective customers, who are cultivated and refined during the sales cycle. The assembly line typically breaks down a sales force by function into four different groups:

  • Lead Generation Team: Responsible for developing leads and gathering names, phone numbers, emails, and data.
  • Sales Development Representatives (SDRs): Also commonly referred to as Qualifiers/Prospectors. SDRs reach out to prospects and qualify them by asking questions that focus on customer needs and identify the decision-making process.
  • Account Executives (AEs): Responsible for closing the deal. They call up qualified leads, give demos, manage objections, move the deal forward, and ultimately try to close the deal.
  • Customer Success Team: Once a deal is closed, new customers are passed on to this team. They’re focused on onboarding, account management and increasing lifetime value (LTV) for each customer. They also help upsell customers to higher plans.

In his book, Predictable Revenue, Aaron Ross breaks down one assembly line model you can use to structure your sales team:

Sales Team Structure 2: The Assembly Line

The assembly line allows your sales team to specialize in different functions and roles. Each step of the sales cycle has a dedicated team. As customers walk through the sales funnel—from leads, to qualified opportunities, to new customers—they’re handed off to the next team.

Because each group in the assembly line is so specialized, you can hold each team accountable for the various sales metrics they’re responsible for. This also makes it easier to isolate bottlenecks in your funnel and fix them accordingly.

For example, perhaps you set an overall sales goal of closing 12 deals out of every 100 leads sourced. If the results you’re pulling are five deals out of every 100, you can look closer at each stage of the funnel to find the friction. You might look at your AEs and see that they’re closing an acceptable 25% of qualified leads, but your SDRs are only managing to qualify 20% of raw leads.

You can dive into your CRM and see what’s up with your SDR team—whether an individual member of the team simply isn’t converting quality leads, or whether it’s a more global problem. You could institute further training and data-driven coaching, to boost SDRs up to 50% of leads qualified rate, and hit your broader sales goals. Looking at the segmentation of your funnel is one of the most powerful ways to create a more effective sales team.

Even with only two sales reps, you can still start specialization early. Have one focus on prospecting new clients, and the other on closing deals, based on their natural abilities and talents. Use the 80/20 rule to determine when to build new stations on the assembly line—when your reps spend 20% or more of their time on a secondary function, it might be appropriate to pass that role on to a specialist. This is also known as the hunter-farmer model.

Pros:

  • This sales team structure creates predictability for your business
  • Makes it easy to isolate problems in the funnel, and laser in on them
  • More specialization in your sales organization equals more efficiency

Cons:

  • When you’re starting out with two sales reps, it’s difficult to split them into four different teams—you just won’t have enough manpower for the job.
  • By splitting up the funnel into different stages, there can be friction between the hand-offs as customers travel through the funnel.
  • Because teams are highly specialized, each team member becomes increasingly disconnected from the overall business goals of the company. They’re focused on their own specific numbers and metrics instead.

Which Companies Should Use The Assembly Line Sales Structure?

Most startups will find that some form of the assembly line will work best for them. It’s great for reducing the complexity of your sales cycle, increasing sales efficiency, and scaling your team. Your sales cycle is probably relatively complex—and will grow more complex along with your business. The higher your annual customer value (ACV), the more important it is to have specialized sales team members dedicated to each part of the customer journey.

The power of the assembly line sales team structure lies in creating a reliable and repeatable process for nurturing leads. In doing so, it takes your funnel and transforms it into a revenue powerhouse as you build your business to scale.

Sales Team Structure 2: The Assembly Line

Sales Team Structure 3: The Pod

A pod works along similar lines to the assembly line model of sales, but instead creates focused tight-knit groups, or “pods” composed of team members that play different roles. A podular organization is customer-centric.

Sales Team Structure 3: The Pod

For example, a six-person sales pod would be composed of three SDRs, two AEs, and one Customer Success rep. Instead of having large teams, you create little pods of specialized roles, and each pod is responsible for the entire journey of specific customers.

You still utilize the specialist roles we outlined above, with SDRs, AEs, and Customer Success reps. But instead of having all of your SDRs or AEs compete against each other, with a podular organization of your sales team, pods compete with other pods. Each pod works together to win the customer, and keep them happy afterward. They’re more fluid, and come up with ideas independently.

With the pod, you build a more modular and flexible structure than the traditional model. Since success is measured by pod, each member of the sales force has a larger, more holistic view of the entire company. Pods build more meaningful connections between people who are working together and build stronger relationships with their customers. You can specialize pods based on different industries, verticals, product lines, or countries.

An example of a company that implements this outside of sales is Etsy: They organize their team into squads of 10: 6 engineers, a designer, a product manager, and an analyst. Each squad then gets a problem to tackle and 1 metric of success.

Pros:

  • Because pods work in close-knit teams, your sales team doesn’t just care about their own step in the process, but about the entire customer journey.
  • High empathy and understanding within pods, less friction, and better communication
  • Pods are more flexible and agile

Cons:

  • With the pod structure, there’s less opportunity for your individual sales reps to compete and grow, and push each other to excel
  • Less specialization with each role, as each member becomes more of a “jack-of-all-trades”

Which Companies Should Use The Pod Sales Structure?

The pod structure of a sales organization is essentially a refined version of the assembly line. It’s perfect for more mature startups trying to optimize existing sales resources to tap into new markets and verticals.

If you work in a competitive industry, with aggressive companies cranking well-run assembly lines, it can be hard to compete with a pod model—the pod trades efficiency for versatility. But if you’ve established your market, and have significant traction, organizing your teams into pods creates a highly flexible, agile sales team, ready to meet a variety of challenges, and pounce upon new opportunities.

Which Companies Should Use The Pod Sales Structure?

If you're going after enterprise accounts, you can also check out this discussion on organizational structure with Philippe Botteri from Accel and Jeremy Jawish from Shift Technology.

And if you're currently at $10M in revenue and want to grow to $100M, this SaaStr panel could be of interest to you.

This podcast on structuring sales teams at public companies with Amy Appleyard, SVP of Sales at CarbonBlack provides some interesting insights as well.

If you're going after enterprise accounts, you can also check out this discussion on organizational structure with Philippe Botteri from Accel and Jeremy Jawish from Shift Technology.

How to Structure Your Sales Organization for Success

Now that you understand the main types of sales organization structures, let’s talk about the factors to consider when creating a structure for your sales organization. Namely: budget, customer type, and culture.

Keep in mind, it's totally okay to start with one structure and move to another structure as your company grows. As your needs and sales process grows and changes, your sales organizational structure may as well.

Consider Your Budget (And Your Customer’s)

Budget might not be everything, but it does impact the type of sales structure that is likely to work best for your organization. For example, if you only have the budget for two or three sales reps, a pod organizational structure simply won’t work. However, a small assembly line might, with one rep taking on generating and qualifying leads, while the other focuses on building relationships and conversion.

Don’t forget to keep your customer’s budget in mind, too. If your customers are spending $100K each, they’re more likely to need a more hands-on approach than a customer spending $20 a month.

Retain Your Customer-Focus

Sales has gotten a bad rap for being more concerned with profitability than customers. The right sales structure should help your sales team focus on customer intimacy, not just the bottom line. Depending on your organization, that might mean using a pod structure so each stage of the sales process is well covered or The Island, where each rep works with one prospect from start to finish.

Whichever structure you choose, make sure customers remain at the center of the sales process.

Don’t Forget the Culture

There’s two simple goals you want to meet when it comes to organizing your sales team:

  1. Drive maximum results.
  2. Create the best cultural fit for your organization.

Take a look at competitors in your industry—how are their sales teams structured? You don’t have to imitate what they’re doing. But if everyone in your market is crushing it in a specific way, it’s worth asking why—and finding out if there’s a good reason not to go another way.

As you structure your sales team, what’s most important is finding the right fit that will drive the results you’re looking for.

It’s critical to constantly ask yourself: “What kind of sales team are we? What kind of culture are we trying to create?”

Sales Organizational Structure Has a Long-Term Impact on Growth

The team you build and the way you structure it in the early stages of your business will leave a huge footprint on your sales process as you grow and scale. Don’t leave it up to chance. Choose the sales model and team structure that works for you, and you’ll build a sales organization capable of sustaining long-term growth.

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