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CERTIFIED SALES EXPERT, SALES TRANSFORMATION, WINNING BY DESIGN 0 COMMENT

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Jacco Van der Kooij

(https://www.saleshacker.com/library/?author=Jacco)
January 29th, 2018

In this blueprint, we provide insights on how to structure your sales organization. The
changes in SaaS require that we no longer look at salespeople as individual
contributors, but rather a team that crosses disciplines, not just within sales but also
across other parts of the organization such as marketing and product. The Winning By
Design Blueprint Series (https://www.saleshacker.com/preferred-
partners/certified-sales-expert/winning-by-design/) provides practical advice for
every part of a SaaS sales organization.
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CASE IN POINT: Over the past decades, B2B sales people were referred to as individual
contributors.

Reps were hired, trained and compensated to perform as an individual to hit a quota.
This comes from a time when enterprise sales people left the office on a Monday to
return to base on Friday with signed purchase orders, submit expenses, update the

funnel, etc.

In today’s world, this may sound like something from a movie; however, most

structures in the sales organizations never have been updated since these days.
 Traditional vs Modern Sales Organizational Structure

Traditional Sales Organizations – Growth of headcount in sales was structured

around revenue per individual contributor (IC). The model used a waterfall-like model
that ramps up over the course of a year, in which an individual contributor brings in
$2M/IC per year.

To hit $8M, a VP of Sales would hand out $10M in quota @ $2M/IC. This would mean
five ICs were needed. Each IC would be assigned to a region. The regions were based
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on ZIP
Shares codes calculated to represent approximately to have the same amount of
potential.

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With the increase of quota, simply the amount of sales people were added to reflect
the increase in quota.( e.g. $2M per person, and handing out ~20% more quota vs.
what the real goal was.)

The root cause of today’s challenges can be traced back to the use of this outdated
model based on low volume of deals at a higher price.
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(https://22xmcq37bnw82iclyj35wony-wpengine.netdna-ssl.com/wp-
content/uploads/2018/01/Sales-PODS-English.png)
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Modern Sales Organizations – Due to lower deal value (ACV), ongoing renewals are
required to achieve the same profit. This may take >24 months.

Due to the lower price, it also requires a higher volume of deals to attain a similar kind
of growth. What complicates this model is the high-velocity it operates on; many clients
commit within 90 days or faster. This high-velocity creates a “manufacturing line”
approach.

CASE IN POINT:

Acquisition needs: To grow revenue annually, SDRs need to find business for AEs
who attain clients (https://www.saleshacker.com/sdr-ae-handoff/), commitment
and help them on-board to the point they can use the service.

Recurring needs: Today it is obvious that a company no longer can just send in an
annual renewal, but through the use of CSMs and AMs, they need to ensure clients are
using this AND identifying new opportunities within the account.
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• MDR: Market Development Rep – Follows up on inbound leads, setup a meeting
w/ AE.
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• SDR: Sales Development Rep – Starts a conversation with a client
through outbound actions such as emails/calls.
• AE: Account Executive – Develops SQLs through a series of meetings.
• ONB: Onboarder –  Onboards/Integrates a client and achieves first use.
• CSM: Customer Success Manager – Achieves recurring use of the service.
• AM: Account Manager – Creates increased profit developing upsell
opportunities.

The Sales POD

By grouping specialized team members, a self–contained unit is created, also known as

a POD (https://winningbydesign.com/use-sales-pods-scale-10m-arr/). The self
–contained unit can operate in a specialized area; such as a market, a region, or a
segment. It can do so for the entire time, or rotate through a series of segments (we
call these sprints), or address a specific event such as a trade show.

How a POD works:

A 2×2 POD is depicted in which a MDR/SDR is partnered with 2 AEs.

The MDR/SDR combo sets up 40-60 meetings for the AEs each month.  

From these meetings, the AEs close 6-8 deals per month with an ACV of $18,000.  
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(https://22xmcq37bnw82iclyj35wony-wpengine.netdna-ssl.com/wp-
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content/uploads/2018/01/Sales-PODs-1.png)POD Modeling
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Historically, the efficiency of these PODs were not considered an issue due to the
extreme focus on winning logos.

However starting in 2014, the tides turned as the number of SQLs/SDR dropped from

20-30 to low 10s.

The annual on target earning (OTE) of this POD should not exceed 40% of annual
revenue.

(https://22xmcq37bnw82iclyj35wony-wpengine.netdna-ssl.com/wp-
content/uploads/2018/01/Sales-PODs-2.png)Scaling Your Revenue
Growth

Scaling of the revenue now occurs by scaling the PODs. In the example below, you will
notice how at first our teams operate unstructured.

A group of SDRs creates SQLs and they are randomly assigned to a group of AEs.
 To grow, the company needs to structure its resources into two initiatives; SMB and
MidMarket, each requiring a different approach.

As the business grows, new markets are discovered, and new PODs are launched to call
on these markets.  

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(https://22xmcq37bnw82iclyj35wony-wpengine.netdna-ssl.com/wp-
content/uploads/2018/01/Sales-PODs-3.png)A few metrics
(https://www.saleshacker.com/saas-metrics/) to keep in mind for most B2B Sales
organizations:

• It takes three months to ramp a POD to 100%.

• PODs should operate between 80-120% of quota. Do not keep raising quota – it
is designed for a number.
• Once a POD operates efficiently, do not add AEs to it. This messes up the
balance.

Use of PODs To Identify Markets

One of the key advantages of PODs is the realization that you can focus the resources.
This is very important during the early days of scaling revenue.
 Randomly responding to inbound does not allow
you to address your sales strategy – @IndoJacco
(https://twitter.com/share?
text=Randomly+responding+to+inbound+does+
not+allow+you+to+address+your+sales+strateg
y+-+%40IndoJacco&via=SalesHacker&related=S
alesHacker&url=https://www.saleshacker.com/s
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DOJACCO&VIA=SALESHACKER&RELATED=SALESHACKER&URL=HTTPS://WWW.SALESHACKER.COM/SALES-
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In the example below, you will notice the specialization of Government vs. Commercial.
You will also see each POD then going through sub-segments to heat-check markets.
This allows each POD to train only on the needed use-cases/value proposition for each
sprint. The sprints can vary in length, anywhere from 30 to 90 days.

(https://22xmcq37bnw82iclyj35wony-wpengine.netdna-ssl.com/wp-
content/uploads/2018/01/Sales-PODs-4.png)Example of how to structure a sprint
over time:

• Week 1: Train the team on use-cases and role play a variety of scenarios.
• Week 2: Pursue B-leads first.
• Week 3: Market and organize an event, pursue your A-leads.
• Week 4: Pursue A-leads.
 • Week 5: Wrap-up and start next sprints.

Use of PODs with Different Business Models

You can apply PODs for different business models. The most common application is to
land Platform sales, in which the team closes a deal for a CRM/ERP system, etc.

When the deal closes there is not a lot of upsell. Think of a workflow platform; in the
initial sales it may be sold for eight users in business unit X.

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A year
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new business unit.

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(https://22xmcq37bnw82iclyj35wony-wpengine.netdna-ssl.com/wp-
content/uploads/2018/01/Sales-PODs-5.png)However in consumption sales, the POD
can be deployed post close. The figure above depicts use of a POD in a free sign-up
model.

In this model, CSMs identify those who have high consumption potential, the ADR
develops the leads and the AM upsells. In this model, you may see 2000% growth in an
account.

Scale the Recruiting

We have found that PODs also allow you to scale your recruiting
(https://hbr.org/2016/02/hiring-star-salespeople-isnt-the-best-way-to-grow). A
new POD can be launched by promoting the top performer of an existing POD (AE of
POD 1) to become the new POD leader of POD2. The team leader of POD 1 can backfill
the position within the POD and hire a new MDR.
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Also published on Medium (https://medium.com/@SalesHackerConf/how-to-structure-

your-sales-organization-for-maximum-efficiency-804a01cd577a).

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 About the author

Jacco Van der Kooij

(https://www.saleshacker.com/library/?author=Jacco)
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Following a 15-year career as a head of sales for Silicon Valley startups, Jacco
van der Kooij launched a sales consulting practice in 2012.
Winning By Design (http://www.winningbydesign.com/) helps B2B
47 companies with a blue print design that is based on best practices of what
works today, oversees implementation including recruitment & training, and
with a hands on involvement throughout the launch. Check out the Winning By
Design playbook series for more from Jacco.