{"id":1584,"date":"2017-02-13T07:00:51","date_gmt":"2017-02-13T12:00:51","guid":{"rendered":"https:\/\/www.peaksalesrecruiting.comblog\/scaling-sales-team-mistakes\/"},"modified":"2022-10-14T19:39:42","modified_gmt":"2022-10-14T19:39:42","slug":"scaling-sales-team-mistakes","status":"publish","type":"post","link":"https:\/\/www.peaksalesrecruiting.com\/blog\/scaling-sales-team-mistakes\/","title":{"rendered":"Scaling Your Sales Team: 5 Massive Mistakes"},"content":{"rendered":"

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Sales force sizing is an integral aspect of a best-in-class sales team.<\/p>\n

Optimized headcount maximizes revenue while limiting inefficiencies within the sales organization.<\/p>\n

However, this important process doesn\u2019t occur in a vacuum. Executive teams usually choose to expand and scale their sales teams when they\u2019re responding to or anticipating a significant shift, such as major external\u00a0investment, a merger, a new product or market, or a change in leadership.<\/p>\n

Because the expansion of a sales force size impacts both new business goals and existing revenue streams, it\u2019s vital that business leaders create a comprehensive sales team scaling\u00a0strategy.<\/p>\n

Many organizations skip this step, lured by the promise of higher revenue with more \u2018feet on the street\u2019. However, it\u2019s important to plan an expansion with full knowledge of potential missteps.<\/p>\n

Here\u00a0we examine the 5\u00a0biggest mistakes made when scaling a sales team, and the tactics that can be used to prevent these errors moving forward.<\/h2>\n

1. Taking\u00a0a Slow Growth Approach<\/h2>\n

Due to financial concerns, business executives often recommend a slow growth approach to scaling a sales team. Although it\u2019s natural for leaders to take a conservative stance, slow growth fails to account for both the short-term and long-term gains that accompany a sales force expansion to match prospect needs. In short, it places fears about short-term solvency ahead of the long-term viability of an organization.<\/p>\n

World-class companies understand that headcount costs are an investment in future market share, which is the clearest indicator of long-term profitability. In fact, research from ZS associates suggests that by holding off on expansion, companies compromise their future standings compared to competitors\u2019. Meanwhile, their studies also found that organizations that adequately staff their sales teams based on analytical models exhibit higher short-term and long-term profits.<\/p>\n

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Even if executive teams choose to take a conservative route, initial conversations around sales team sizing should rely on analytics and modeling rather than short-term financial constraints. By taking into account the future revenue and market share that accompany an expansion, companies can determine the optimally sized sales team to widen profit margins. With numbers based on analytics and data, business leaders can make a firm argument for fast but sustainable growth that supports the organization.<\/p>\n

2. \u00a0Ignoring Sales Territory Analytics and Data<\/h2>\n

Many sales leaders use CRM and automation tools to evaluate sales team performance, but don\u2019t apply the same technology to determine the sizing. Instead, they make a critical mistake of relying on gut instincts or inaccurate cost limits, which can lead to a mismatched sales force size or failed expansion.<\/p>\n

When executives scale up too fast, they waste valuable resources, fail to adequately support reps, and can cause a downward spiral in the sales culture. When they scale up \u00a0too slow, profits and standing in the market regresses. Therefore, any go-to-market strategy needs to be grounded in top-down and bottom-up assessment of sales territories. Leaders need to test assumptions, basing sizing decisions on data rather than instincts. Two methods \u2014 the return-on-sales optimization calculation or the efficient frontier benchmark model \u2014 help companies maximize profit and market penetration.<\/p>\n

Both these methods effectively target the ideal sales force size based on factors like the segment and product profitability, sales revenue, costs for sales employees, and competitors\u2019 performance. The benchmark method is particularly effective for making sales allocation decisions on a national scale.<\/p>\n

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3. You\u2019re Overpopulating\u00a0Territories<\/h2>\n

When expanding a sales team, it\u2019s also easy to misallocate reps, overpopulating a territory to the detriment of the sales team and the entire organization. When hiring too many reps cover the same area, new or less-experienced salespeople prioritize \u2018low-hanging fruit\u2019 from low-revenue prospects or easy, short cycle accounts instead of lucrative clients that have a strong lifetime value (LTV).<\/p>\n

However, by intentionally optimizing territory design, leaders can increase sales by 2-7 percent without requiring additional resources. Industry leaders can prevent overpopulation by using index-based methods that incorporate three variables: the potential of the territory, the base of existing accounts, and the workload associated with the area. This approach balances reps\u2019 workloads and earning opportunities while guaranteeing that reps are covering the most lucrative prospects.<\/p>\n

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When an organization\u2019s leaders proactively plan territories, they can create a clear foundation for revenue growth \u2014 with the exception of a few tweaks, a well-planned territory design can work for three to five years before needing a reassessment.<\/p>\n

4. Failing to Recognize and Counter Role Pollution<\/h2>\n

When designing an expanded sales team, organizations often fail to recognize and counter the impact of role pollution. As more people join the team, administrative and managerial support can be spread too thin, leading salespeople to pick up extra non-selling activities that are not central to their positions.<\/p>\n

Reps spend too much time servicing and supporting clients and conducting administrative work, which severely limits their ability to maximize sales. A survey from ZS Associates indicates the average salesperson spends 8-10 hours on internal administrative activities (expense reports, meetings, and incentive tracking), 5-7 hours on customer service and support, and 7-11 hours on travel.<\/p>\n

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As best-in-class companies scale up their sales force, they also scale up the administrative, customer service, and support teams, enabling salespeople to focus on selling products or services. By delegating these low-value tasks, organizations create a more engaged, productive sales team and set themselves up for higher revenue.<\/p>\n

5. Your\u00a0Compensation Plans are Misaligned<\/h2>\n

Compensation plans are the most powerful tool a company can use to guide its sales force actions and behaviors. As a company scales its\u2019 sales team, leaders need to consider the incentives that drive reps.<\/p>\n

When compensation isn\u2019t directly aligned with sales goals, reps allocate too much effort on sales actions that don\u2019t contribute to the company\u2019s goals. Reps may focus on activities that, once profitable, are no longer lucrative in a new stage of growth.<\/p>\n

There are three aspects of an effective compensation plan for expanding firms: simplicity,\u00a0alignment, and immediacy. <\/span>Simplicity means that sales reps can easily calculate their direct earnings based on their performance\u2014it prioritizes the most lucrative sales action without getting complicated. Alignment refers to the strong \u201ccause and effect\u201d connection between incentivizes and the priority of the organization. The compensation plan should align with the most important goal of the year, whether it\u2019s market share, profitability, or penetration. Immediacy means that when salespeople either succeed or fail, they see the impact on their salary immediately.<\/p>\n

Incorporating these three characteristics into a comprehensive compensation plan leverages a company\u2019s resources to meet its goals. This approach is even more important for an expanded sales team because the negative impact of misaligned incentives has even wider consequences.<\/p>\n

Want to know the 5 other massive mistakes organizations are making when it comes to expanding their sales teams? Download our latest eBook \u2013 The Biggest Mistakes Made When Expanding a Sales Team.<\/h3>\n

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