Understanding the Structure of High-Performing Sales Organization w/ Enrico Parodi

WBSP047: Grow Your Business by Understanding the Structure of High-Performing Sales Organizations w/ Enrico Parodi

In this episode, we have our guest Enrico Parodi, who describes the sales organization’s key components. He also discusses different sales organization structures and how their roles vary, including direct, hybrid, and channel-driven. Finally, he had a chance to touch on sales and marketing alignment and why that is important for an organization’s sustained growth.

Chapter Markers

  • [0:24] Intro
  • [2:49] Personal journey and current focus
  • [3:49] Perspective on growth
  • [4:46] Sales organization through an inflection point
  • [9:30] Sales organization for B2B companies
  • [12:06] Selling through partners vs. direct
  • [19:54] Generating net-new sales for brands
  • [23:55] The role of marketing in a sales organization
  • [27:24] Demand generation challenges in a hybrid salesorganization
  • [29:13] Closing thoughts
  • [30:36] Outro

Key Takeaways

  • Around the $5 million point, there is no destination, the compensation plan, most of the time doesn’t exist, there is not even a sales organization, because most of the time the business is driven by the family, or it is driven by the owner, and there is no size later.
  • At $25 million, sales strategy starts to appear. But still, there is a problem because there is no formal structure. There is no CRM, or if the CRM has been bought by the company is not used, it is just there to support the operation in a passive way.
  • There is a very tight correlation between not growing the company and not having a sales strategy. So when you talk about strategy, you need to start from your customers and your potential customers and define an approach to the market. Once you have identified and that approach, you then decide how do you sell? How do you reach out to those customers?
  • You want harmonization between the channels, and again, the starting point is your sales strategy, which channel do you want to use to reach what type of customers and to sell what type of product or service and you need to have a kind of a mapping process here. So, through that process, then you define precisely which is the role of each one of the channels.


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About Enrico

Enrico Parodi has 30+ years of global experience, including leading direct and indirect go-to-market channels, with specialization in small and mid-sized companies. He earned multiple Presidents club awards over his career, with the most recent being at Sales Xceleration. He is also credited to have the first rank among 150 advisors in 2020. He currently consults with small-to-medium-sized businesses in the capacity of fractional VP of sales.

Resources

Full Transcript

Enrico Parodi 0:00

You need the high octane gasoline for the car. That is the compensation plan that fuels the behavior of your reps. As well as the leads, you need a sports team to support you. So that means that you need to hire. The right says you need the dashboard and the windshield in order to drive.

Intro 0:24

Growing a business requires a holistic approach that extends beyond sales and marketing. This approach needs alignment among people, processes, and technologies. So if you’re a business owner, operations, or finance leader looking to learn growth strategies from your peers and competitors, you’re tuned into the right podcast. Welcome to the WBS podcast, where scalable growth using business systems is our number one priority. Now, here is your host, Sam Gupta.

Sam Gupta 1:00

Hey everyone, welcome back to another episode of the WBS podcast. I’m Sam Gupta, your host, and principal consultant at digital transformation consulting firm ElevatIQ.

Building a high-performing sales organization requires more than just winners and the winning product. It requires the right compensation structure, refined customer groups, and a deep understanding of their needs. But is that enough for sustained growth? What do small to medium-sized businesses miss that struggle to grow? Whose responsibility is it to generate leads? Is the sales organization accountable for everything? Or should marketing share some accountability of missing growth targets?

In today’s episode, we have our guest, Enrico Parodi, who describes the sales fields organizations’ key components. He also discusses different sales organization structures and how their rules vary, including direct, hybrid, and channel-driven. Finally, he had a chance to touch on sales and marketing alignment and why that is important for an organization’s sustained growth. Let me introduce Enrico to you.

Enrico Parodi has 30 plus years of global experience, including leading direct and indirect go-to-market channels, with a specialization in small and medium-sized companies. He earned multiple president club awards over his career, with the most recent being at sales acceleration. He is also credited with having the first rank among one PP advisors in 2020. He currently consults with small to medium-sized businesses in the capacity of a fresh new VP of sales. With that, let’s get to the conversation. Hey, Enrico, welcome to the show. Hey, good

Enrico Parodi 2:46

Good afternoon, Sam. Thank you for having me here.

Sam Gupta 2:49

Of course, it’s our pleasure. Just to kick things off, I do want to start with your personal story and your current focus.

Enrico Parodi 2:55

Yes, thank you so much. So you can understand my accent is a little bit that I am not American. I’m Italian. I came to the United States twenty years ago. I came here. I was working for corporate at the time I was in the information technology was with IBM great experience. I was in that business for almost 30 years.

And then, a couple of years ago, I decided that to get out of it. I wanted really to go into something in which I could help companies and CEOs. And so I decided to become a fractional VP of Sales Empire now have a network of people across the country. It is called sales acceleration. And we really to help CEOs of companies to have a high-performing selling organization. That’s what we do.

Sam Gupta 3:49

Okay, amazing. So before we get into some of your backgrounds, and obviously we want to hear some of those exciting stories that you might have, from your fractional sales experience, one of the standard questions that we have for all of our guests, and that is going to be your perspective on business growth. What does business growth mean to you, Enrico?

Enrico Parodi 4:10

I mean, business growth is the life of a company. You cannot stay in business without growing. So my contribution to all the discussion of the growth is around how you can connect the growth to your sales organization. You cannot grow if you don’t have a sales organization. And I would even say the more. Specifically, you cannot grow and sustain growth if you don’t. They’re in high performing selling organization. So that’s so crucial for the success of the company. That’s where I spend my time with my customers.

Sam Gupta 4:46

Okay, so do you believe that the sustained growth that you are talking about from the sales perspective does change at each stage of the organization, so as organizations grow through their inflection points, are sales organizations going to change and be changed for structure in the fields of migration? Is that going to change as well?

Enrico Parodi 5:08

Absolutely. If you allow me, I usually use a comparison between high performing selling organization and a sports car. So this car performs if all the pieces are there. But that’s not enough. They need to work all together, you need the driver, and you need the destination. And the trick is really to make all these things work together.

So for example, if we look at the key components, and we do a review this comparison between a scorecard in a sales organization, you need the destination, those are the sales targets, you cannot operate in a sales organization without having sales goals, you need the high octane gasoline for the car. That is the compensation plan that fuels the behavior of your reps, as well as the leads.

You need a sports team to support you. So that means that you need to hire the right team. You need a dashboard and a windshield in order to drive the car. And this is going to be your CRM, a customer relationship management that and your forecasting system. And then you need the driver. And this is your sales leader. So I just focused on a few of these five components.

Enrico Parodi 6:00

Now, when a company goes through an inflection point, some of these components and in their early stages do not exist. And then, the more they grow, the more they have to add those components. Otherwise, they cannot grow at a certain point is not only the key is not only adding the components.

It is how they work together, how they can scale, what is the skill of the people that you are using in the different stages. So if we go through the different stages of a company, let’s assume that we started normally. The inflection point is around the beginning of $10 million.

But I have to say from a system point. There is one even below that identifies around the $5 million. At that point, there is no destination, the compensation plan, most of the time doesn’t exist, there is not even a sales team, because most of the time the business is driven by the family, or it is driven by the owner, and there is no size later.

That’s what I find that the $5 million, then if we go to the next level, if you go to the $10 million, then obviously the company realizes that they need some people, it’s unwraps some sellers be as call them as you want.

Enrico Parodi 8:00

So they start to hire people, and they put some kind of compensation plan, but all the rest is not there yet there is no sales target. There is no customer relationship management system. There is not a sales leader. So those compensation plan is there. But there is very often a situation of frustration, wherein in the end, the CEO is not satisfied with the sales team because they don’t do what he or she wants.

And the reason is that the compensation plan is not really aligned with the said strategy, but there is no said strategy. So that’s the problem. Okay, then as you grow to the next level of $25 million, sales strategy starts to appear. But still, there is a problem because there is no formal structure. There is no CRM, or if the CRM has been bought by the company is not used, it is just there to support the operation in a passive way, you move to the 50 million, and you start to see the need of establishing a sales leader.

But very often, I still see situations where there is no CRM in place. And finally, when you go to the 100 million, the business is at the point where there is no way to grow if you don’t have very structured processes. Now at that point, really, as I said before, the secret of the successes are all those components that I just mentioned working together, are they designed to be complimentary, and do you have the right people in place so that the machine can scale.

Sam Gupta 9:30

Okay, amazing. So when we talk about sales strategy, obviously, my assumption here is going to be this is going to be primarily B2B play, so if we look at the state of the B2B organizations, especially the in our target audience, which is going to be the manufacturers, distributors, retailers, and some of the e-commerce B2B players, right.

So when if I look at their field structure at this point in time, their primary channels, or distributors. So these are two primary channels that they acquire their customers from. They are going to have some web presence, which is very rare, okay, so even if you have a web presence, they might not get any traffic from the web at all, just because they’re not spending as much money, they probably don’t trust on this channel.

And when I speak to my marketing audience here on this show, they have a comment that these organizations are extremely sales-focused. They are a sales-driven organization. So now, looking at the structure the way I described here, and we go, do you feel this is the fields-driven organization? If yes, why do you feel? If not, why do you feel?

Enrico Parodi 10:41

To answer your question, the same strategy is so crucial to the point that there is a very tight correlation between not growing the company and not having a sales strategy. So when you talk about strategy, you need to start from your customers and your potential customers and define an approach to the market. Once you have identified and that approach, you then decide how do you sell? How do you reach out to those customers?

And that drives then the type of people and the type of channel that you want to use? Are these salespeople, though, that work directly with customers? Or are you working with this with channel and distributors, and that is so crucial, because the skill of people that you need from a sales standpoint, that is really dependent upon what type of customers you are, if you manage the relationship with a network of partners, you require a totally different skill than selling directly to customers.

So today, I agree with you. You need that type of the right channel that either manager, customers, or managers partners to be successful in this arena.

Sam Gupta 12:06

Okay, so let’s talk a little bit more about this specific scenario, right? So there could be three scenarios. In one case, the manufacturer might be selling directly to the customers, which is rare because pretty small manufacturers, they will not really sell direct, they were selling through distributors, and distributors were selling through the retailers, right?

That’s the retail value chain. So now, with changes in the marketplace, now there is a lot of overlap. Distributors are trying to manufacture their own goods. And then manufacturers are trying to go to the consumer, end customers directly, right. So we typically see three different business models from the manufacturer’s perspective, one is going to be very distributed or the partner-driven, the way you mentioned, one is going to be completely focused on the customers, and the third is going to be mixed. I’m interested in knowing this mixed mode. There are going to be a lot of channel conflict issues. So how would you approach a model where you are trying to sell through partners as well as direct?

Enrico Parodi 13:09

Yeah, this is a great question, Sam and I have seen many, many companies failing it because they were not clear and crisp on this point, right. So channel conflict, there is one answer you want to avoid, you want harmonization between the channels, and again, the starting point is your sales strategy, which channel do you want to use to reach what type of customers and to sell what type of product or service and you need to have a kind of a mapping process here. So, through that process, then you define precisely which is the role of each one of the channels.

Now, that is the starting point. Then in execution, inevitably, you will find situations where there is some overlapping. So at that point, you need to be very crisp on how do you manage the conflict, and all comes first, no comes second. In my experience, I have to tell you that if you do not put your partners ahead of you or your internal salespeople, you will not be very successful in implementing in hybrid channel go to market that’s crucial to show that you are supporting your partners your there is a value-added component in their selling activity. They can trust you. They will stay with you. If you are not walking the talk there. You’re building an app a says strategy on it on the sand.

Sam Gupta 14:55

Okay, so tell me some of the nuances associated with selling through partners versus selling the right how the sales strategy is going to differ. What are some of the things that executives need to be aware of? Let’s see if they have never sold through partners, or they have never sold, right? What are some of those nuances?

Enrico Parodi 15:14

I think that in a nutshell, selling direct to customers is today. I mean, you can be successful. If number one, you will listen to your customers. And second, you help them to solve their problems. This is a skill that can be built in an individual and requires a severe predisposition to listen and to be curious and be able to go in solution mode. I call it a selling scale.

When you go in there with a network of distributors or resellers, sometimes, I mean, it could be even integrators or influencers, then, and I’m talking about not the influences in the digital world or the people that influence customers. And then it’s all about business development. You need to have a salesperson that understands that his or her role is to develop the capability of your partner.

So the partner can be effective in the market, the person needs to understand that the business has to make sense for the partner first and second for your company. So it’s a totally different DNA, a totally different type of go-to-market approach totally different people. When I hire people to do these different roles, I look for completely different job descriptions and completely different types of profiles profile of the candidates.

Sam Gupta 16:51

Okay, do you have any stories that you might be able to share around the hybrid structure, or maybe direct to sales? So just tell us some stories in terms of the structure? What may be your customers had before? What problems do you see with the kind of changes you made? Just from the structural perspective, there? Yeah, that’s exactly what he decided he wasn’t aligned.

Enrico Parodi 17:12

So this is a technology company that is really integrating. So they are acting as a distributor for a technology product. And at the same time, they also have a network of partners. Okay, so it’s a kind of a hybrid model. So their value proposition is really they are various experts in their industry. And before I joined the company, the company was able to really assess the organization with no specialty.

So the salespeople had both coverages for resellers and end-users, there were not enough salespeople, and one of the salespeople was the CEO of the company. And so COVID caps, and the business, obviously is getting impacted. They have huge challenges in reaching out to customers. So what they did in this context, I looked at the organization, every shaft of the organization, we made sure to have the right people in the right seat.

One of the things that define a sales organization is the people, and you need to add high-performing people doesn’t matter what they did in the past. What matters is are they able to be high performers in this new environment, and maybe they were successful before, but they are not successful anymore.

Enrico Parodi 18:50

So we said, I selected the right people in the job, I’d find different roles, we segmented the customers in different sizes, and we separated approach between supporting resellers and selling directly to customers.

For example, one of the things that we are doing today is we want to sell value, okay, and to sell value, you need to be able to solve problems. So we are introducing an assessment methodology that we do directly with customers. And the purpose is to identify their issues and to come up with some solutions. This is the approach for the direct customers. The approach for the partners is going to be different. We want to enable the partners to do the same with their own customers.

So it’s more about sales enablement than says execution with a purpose. I don’t know if this gives you an idea, but it’s really interesting because we double the organization even in a difficult situation like this, but now there is clarity. People know exactly what are the customers that they have to target. They know exactly what to do, what their goals are, and what their expectations are of them.

Sam Gupta 19:54

So I guess when things go well and then sales or big vision, I have not seen much of The problems, right? Because if you have tons and tons of leads, then things are easy. But if you don’t have much of the business flowing at the top of the funnel, that’s when the problem is going to be there. So what do you believe? I mean, do you believe that it is going to be the responsibility of the salespeople to be able to deliver the results isn’t going to be the responsibility of the partners to be able to deliver the results?

Who is responsible, number one, for generating the demand? And number two, do you have any stories where the demand was really low? And you did something because of which you created tons and tons of demand that everybody got busy and busy? Meaning closing deals? Right, that’s what everybody wants?

Enrico Parodi 20:41

Yeah, I mean, this is a question I get a lot, Sam. There is, in my view, a clear distinction between the sales role and the marketing role. And those are two different professions that you need people with a different profile. Obviously, the two organizations have to work together and support each other, but they should be accountable for their part of the job. So in terms of ensuring the sales goals are achieved, this is a responsibility of the sales organization, there is no doubt.

And so, you need to have an accountability system that holds the salespeople accountable for the different parts of the business they are responsible for. Okay. Now, as you noticed, I didn’t say that the salespeople are accountable, in my view, to generate leads or to do demand generation. That is the responsibility of the marketing team. And that is to be very clear so that everybody works on their own piece of the puzzle.

And many times, I find situations where there is not even a marketing part of the organization. And salespeople are accountable for generating demand, cold calling, and things like that. Unfortunately, it doesn’t work. You want to spend the money of your salespeople to make the biggest impact that is really to talk to customers that are interested. Okay, so how do you get to customers that are interested?

Enrico Parodi 22:00

This is why your marketing. So the story I can tell you his story of a customer where the customer was launching a new product is it was targeting new customers different from their traditional customers are and what we decided to do for the first time in a survey company to use an external company to do qualification of customers. So we could know an in the company ABC, there is a person that is interested about what we are trying to sell to them.

And then to do appointment setting. They were never used to doing that. Their model was or relationship-based. Their apps were going to customers and finding opportunities. The problem was that this new product they were bringing to market was different. They didn’t have the traditional people they were using to talk to as their counterparts.

So the process proved to be very successful, we were able to get a lot of interest from nontraditional customers, and we are now selling this new product. And really, their reps are involved. Just when the customer says, hey, I’m interested, I want to see it. Come here. And obviously, there is much more productivity and success rate. Right?

Sam Gupta 23:55

So let’s look at this from the manufacturing executive perspective. So let’s say if I’m the CFO or the CEO of the organization, and I want to create some sort of sustained growth in my organization. Now, if I go to my marketing, you know, marketing is going to say that you know what, I should not be accountable. Because I don’t know, I can write my content.

But I don’t know whether that is going to generate the leads or not. If I go to my sales leader, the sales leader is going to say that unless you have leads, I will not be able to close anything. So as an executive, obviously, I’m looking for tons and tons of investment. Number one, I’m looking for tons of investment in the marketing department where I don’t have much of the hope, whether those initiatives are going to be converted or not.

And then I’m talking to my sales team, and sales teams are saying unless you give me the leads, I will not be able to deliver on my targets. So obviously, there is a huge risk here with respect to sustained growth. So how in your recommendation, how do you think executives should approach number one, how should they approach what’s the structure of the organization? And how can they ensure that their investment is not going to be wasted?

Enrico Parodi 25:07

Again, this is a very common case, Sam. It happens, not only is more business, but it’s also in big corporations in my experience, and usually, it becomes a finger-pointing contest, then at the end of the story, right, it is never my fault. And in order to keep it simple, First, you need that to set up clear roles and clear responsibilities. Marketing, in my view, has a responsibility to generate a pipeline of leads that I will call marketing, qualified leads, and sales as the responsibilities than to take those leads and move them through the funnel.

So they have to work together, then you need to put in place a Sam system that makes them work together and rewards them for doing that. Once that system is in place, then the next step is to be extremely crisp on what is the definition of a sales qualified lead and the marketing qualified lead marketing is going to be accountable to generate a certain number of marketing qualified leads and says, we’ll take those leads, and then using whatever is the conversion rate be accountable for the revenue for the company, it is philosophically not complicated, it is difficult to execute in my experience because there is lack of clarity.

Enrico Parodi 26:50

But if you have clarity and teamwork, it is doable. My part of what I do I’m really focused on says, I work very closely with the CMOS and fractional CMOS, and they are part of my team, we work together, we define this together with how to enable the salespeople we define together, what is the value proposition for the company because you need to have a value proposition in order to be selling to your customer.

So it’s totally relying on the numbers. There are other components of integration between the two organizations, and in the end, you can be successful, but it doesn’t come out if you don’t have the number one predisposition to work with another organization. And second, you have a clear approach.

Sam Gupta 27:24

Okay, so this is going to be an even bigger problem when you are working with a partner, right? So let’s say if you’re working with a distributor, now, what distributor is going to say if everything I’m going to do from the sales and marketing perspective, if you’re not going to be providing me any leads, and in most cases, I think that’s where the definite finger pointing is going to be my distributors gonna say, you know, what, if you aren’t providing me any leads, then what I’m really going to do is I’m simply going to carry your competitor’s product, and you know, whatever my customers are going to buy, I’m going to sell them, because now I’m a distributor, right?

So this problem can be for fear when you are working with the partners. So what will be your recommendation in structuring the KPIs in the case of the distributor-driven organization?

Enrico Parodi 28:06

When you work with partners, it’s, yes, it is more complicated. But you also need to be very crisp about setting up the expectation with balance. All right, it might not be providing the latest part of the value proposition and a managed partner organization across the world and for different products.

And the topic about generating leads was really to me is a signal from the partner telling me I do not know how to go after the market opportunity. I do not know how to differentiate myself. Can you help me to be more effective in the marketplace? And that’s why it’s called partnership because there is not an answer that is a short answer to that question. It has to be developed in the man’s in the near side because the market changes. So if you’re there for the long run and you work on partner enablement, that becomes really the real route to success.

Sam Gupta 29:13

Right, and we go, that’s great. Do you have any last-minute closing thoughts, by any chance?

Enrico Parodi 29:18

I can say that there is really a couple of things that are crucial if you want to be successful. First, you need to have a destination. You need to be very crisp about what your goal is, which are the customers you want to target are the market segments we want to target. Who are you using to do that? Second, you need the system to go after the meaning you need it clearly defined sales process. You need the technology to support it like CRM, customer relationship management system. I mean, and then you need an accountability system.

The reason why reorganizations fail is that these pieces are missing. They have to be managed as a car altogether. You cannot have a car with three wheels. It doesn’t go very well. You cannot have a car where the windshield is obscured, and you don’t see that the road ahead, you’re going to go against the wall, right? So that’s really the most difficult thing. Keep the added pieces, but make them work together.

Sam Gupta 30:36

Okay, amazing. So my personal takeaway from this conversation is going to be it’s all about structure and alignment. So on that note, thank you so much, and we go for your time. I really enjoyed your insight and had fun with it.

Enrico Parodi 30:48

Thank you so much, Sam, and good luck to you.

Sam Gupta 30:51

I can’t thank our guests enough for coming on the show for sharing that knowledge and journey. I always pick up learnings from our guests, and hopefully, you learned something new today. If you want to learn more about Enrico, head over to salesacceleration.com. Links and more information will also be available in the show notes.

If anything in this podcast resonated with you and your business, you might want to check other related episodes, including the interview with Jeff White, who discusses why it is so important to identify the ideal customer profile for your offerings to streamline your growth. Also, the interview with Gil Walker who discusses why CRM is important and how that fits among other systems, such as ERP and e-commerce.

Also, don’t forget to subscribe and spread the word among folks with similar backgrounds. If you have any questions or comments about the show, please review and rate us on your favorite podcasting platform or DM me on any social channels. I’ll try my best to respond personally and make sure you get out. Thank you, and I hope to get you on the next episode.

Outro 32:10

Thank you for listening to another episode of the WBS podcast. Be sure to subscribe on your favorite podcasting platform, so you never miss an episode. For more information on growth strategies for SMBs using ERP and digital transformation, check out our community at wbs.rocks. We’ll see you next time.

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