Reader Ben asked me to write about Account Hierarchies. When you search for the term online you'll find a ton of how-to videos for your CRM of choice. As a RevOps leader responsible for architecting Go To Market systems it helps to know the capabilities and limitations of your tooling. But if you read this newsletter you'll know I care less to talk about technology.
Let's talk about first principles and business. The technical configuration can be figured out later.
So why do account structures matter?
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Imagine your sales team reaching out to L'Oréal. Based in Clichy, France, L'Oréal recently opened its North American headquarters in El Segundo. It also blasts several subsidiaries such as Kiehl’s, Garnier, Lancôme, and Maybelline. To boot, you can imagine the company has every type of department one can imagine: Human Resources, Finance, IT, Sales, Marketing, Procurement, etc.
As a target, L'Oréal represents a juicy yet confounding target. How do you even sell into L'Oréal? Your Chief Revenue Officer and Revenue Operations team have some work to do to decide how the team will be organized to break into this account
As I don my GTM strategist hat on I Immediately jot down some thoughts. Options to organize the business along:
Region
Subsidiary
Departments
Organize teams to tackle one or more of these dimensions. Dedicated focus will help build stronger relationships, industry insight, and deeply integrated solutions.
Having reps sell across too many regions is a challenge.
Having reps sell across too many industries is a challenge.
Having reps sell across too many departments / personas is a problem.
But I get it. You might not have a choice except to create exceptionally large territories! Depends on which stage of company maturity you're in.
Teams spread across the globe
With a global organization the sales team might be broken out by region. At Google, when I worked there at least, we had four layers of regional teams.
Layer 1: Global Sales
Layer 2: Regions
Layer 3: Territory
Layer 4: Sub Territory
Take EMEA for example. Europe, Middle East and Africa. Between these three parts of the world, Europe would represent the majority of sales performance and thus represent the area of heaviest investment. Although I believe the Middle East and Africa are rising. Middle East because if its active attempts to diversify its economy. Africa because of it's coming demographic dividend.
In EMEA you might have the following Territories:
DACH (Germany, Austria, Switzerland)
BeNeLux (Belgium, Netherlands, Luxembourg)
UKI (UK, Ireland)
SEEMEA (South and Eastern Europe, Middle East, Africa)
Many prospect companies will have different headquarters. Our example company L’Oreal has global HQ in France, but has its regional North American headquarters in California. So who owns the account? Is it the EMEA team or the North America (NAM) team?
It depends. It depends entirely on you
More correctly it should rely on whichever approach reduces friction along the following dimensions:
Relationship building, maintenance, and depth
Cost effective travel
Proximity to decision makers and/or economics buyers
Let's say for example that all decisions are made in France but the evaluation process happens in the US. Both the NAM and EMEA teams are involved equally. Well in this instance a Teaming Agreement makes sense on a 50/50 basis.
A side note on Teaming Agreements
A Teaming Agreement is a rules based process whereby two teams agree to share the workload and the spoils of victory. The temptation to chop everything 50/50 seems fair at first but could represent a point of contention. Just imagine you lived with someone where you both split the rent evenly but you're the one doing all of the house upkeep. Well that's not fair! Your roommate might tell you that when they entered the leasing agreement they did agree on splitting the rent but left the details out on everything else that comes with living with others.
Write your policies down to avoid infighting!
CRM Setup
Duplicate management is a hallmark of good CRM hygiene. But what if you could run two separate sales plays for the French company and another for the USA counterpart?
Do you consider one global account?
Two child accounts where one represents France? The other USA?
Looking something like this:
L’Oreal (Global) [parent]
L’Oreal (France) [child]
L’Oreal (USA) [child]
Or do you stick with just:
L’Oreal (Global) [parent]
L’Oreal (France) [child
What are the pros of each approach? The cons? Wlios you trip up your duplicate rules?
At AWS we had a structure where the L’Oreal account existed as just one account. BUT! AWS sold its products on ‘domain’. One company could have more than one domain. For example:
www.loreal.co.ukw
ww.loreal.com
You could assign domain #1 to EMEA and the other to USA.
But what if domain 2 was jointly benefiting both France and USA? In this case, AWS settled this with a Teaming Agreement; otherwise known as a revenue split.
Now what if you're selling to Kiehl's?
Admittedly I know nothing about L’Oreal’s decision making structure. It could be that Kiehlsyis not a company subsidiary but instead a regional brand managed globally. But for the sake of argument let's assume Kiehl's is an autonomous business unit of its parent.
Kiehlsyhas their own corporate entity, executive leadership, and a separate set of systems. Perhaps L’Oreal has its own instance of Salesforce and so does Kiehl's. This represents an opportunity to integrate the two systems but perhaps due to its autonomy the parent company offered Kiehl's the ability to operate independently. It'll continue to invest in Kiehl's growth so long as the acquired is able to return the minimum contribution margin and profit back to the mother ship.
Who should own Kiehl's internally?
A simple rule would be that all subsidiaries are owned by the owner of the parent company.
Another simple rule is that the subsidiary is owned by the rep where the headquarters falls into.
A complex rule would be that the owner of the account is wherever the decision maker lives.
Trust me, I have seen all of these in real situations. Not having this in writing will absolutely create a fog of war within your own ranks.
You may also need an escalation policy
Let's say for example that the reps want to horse trade in the middle of the year. Rep A wants Company B because that company recently announced a relocation of its headquarters. That's all well and good so long as there is a formal process requesting the transfer.
Should you also transfer quota?
If Rep A is going to transfer an account then hopefully they're going to compensate Rep B for the exchange. If Company B had $60,000 in bookings last year and there's an opportunity to not only renew but also to expand then shouldn't there also be a transfer of quota? Or at the very least a generous revenue split?
What you're really saying is I need an MDM?
You caught me in my web of truth. That's exactly the road I'm leading you towards. But let's define it first. Master data management (MDM) is a business-led program that uses technology to ensure the accuracy and consistency of an organization's shared data. MDM involves creating a single master record for each person, place, or thing in a business, from across internal and external data sources and applications. This information is then de-duplicated, reconciled, and enriched, becoming a consistent, reliable source.
How do records get created in your systems?
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What data points do you need in order to justify this as an official entry
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