…But What About the Commercial Team Integration?

Industrial organizations are increasingly leveraging mergers and acquisitions to drive growth, enhance profitability and differentiate their offerings. Whether the goal is to drive operational efficiency, expand into new markets and geographies or broaden the solution portfolio to increase customer share of wallet and provide more value, M&A activity is on the rise. In some instances, the merged company continues to operate as a standalone unit; more commonly, however, it is fully integrated or becomes a business unit within the broader organization.

In these cases, the immediate focus tends to be on operational synergies—integrating operations, back-office enterprise systems and shared services. Yet, many executives fail to thoughtfully and deliberately integrate their commercial teams. This oversight can result in an unclear strategy resulting in misaligned behaviors, deployment inefficiencies with coverage gaps and overlap, limited cross-portfolio selling as sales reps stick to their legacy comfort zones and even pay-for-performance inequities. These factors all contribute to falling short of realizing the full commercial efficiencies and growth potential of an acquisition. While there’s no single answer for how to integrate an acquired company, there are a series of considerations to lead executives down the right path.

Define the Growth Play

A deliberate approach begins by defining the growth play for the integrated commercial organization. The first step is to understand how aligned the sales motions are across customers, buyers, the customer engagement process and the products or services being sold.

Assess Customer and Buyer Alignment

Are the customers and buyer stakeholders similar for the acquired company? If not, it may be best to maintain brand-specific sales organizations and continue leveraging existing back-end processes, systems and warehousing. In such instances, commercial integration and synergies are likely to be limited.

If the customers and buyers are similar, the next question to ask is whether the new products are complementary, overlapping or part of the same product family as current offerings. If they’re not, then it is essential to explore whether cross-business synergies exist. If there are no synergies, the need to integrate is minimal; however, it remains important to proactively share customer intelligence and, if appropriate, establish a referral-based program.

Evaluate Sales Cycle Consistency

Understand whether the sales cycle and sales motions are consistent between the legacy organization and the acquired company. For example, if the acquired company sells a complex, project-based solution with long sales cycles and scrutinized ROI while the legacy company sells higher-velocity, more commoditized products, this difference must be addressed

In such instances, consider integrating the sales organization using a product overlay coverage approach. Establish a single account owner paired with an overlay solutions specialist. The overlay specialist should be well-versed in the messaging and positioning required for the new solution, ensuring clear rules of engagement among sellers. This model should empower the overlay while providing clarity and coordination in sales pursuits, ensuring that customers know exactly who to contact.

Post-Evaluation

If you find that there is overlapping customer and buyer engagement, the products or solutions are similar and the customer engagement process is generally aligned in complexity and velocity, then a full integration of the commercial team into a single organization—with similar representative archetypes—is likely the best path forward.

Establish the Culture, Role Expectations & Drive Privilege of Focus

Integration is not only about structure and processes but also about culture. In any integrated model, management programs must be defined and aligned to drive a consistent commercial culture.

Define the Desired Culture

Ask whether the organization will operate in a competitive environment or strive to establish a mission-based, collaborative culture. When legacy businesses have diverging cultures, it is important to align expectations for what the combined organization should be.

Standardize Role Expectations

Even in a fully integrated model with a single representative architecture, there may be variations in role execution. One organization may emphasize account management while another focuses more on hunting new business. Regardless of the cause, it is critical to define clear expectations for what is required from representatives so that legacy sellers can come together under a common model.

Establish Job Platforms

Organizations must be sure to platform jobs with very tight expectations regarding how and where representatives should spend their time and how they should operate to achieve growth objectives.

Define the Job Architecture & Talent Management Approach

Whether deploying an overlay model or a single rep archetype, it is imperative to 1) define and align on a clear job architecture for the integrated organization and 2) build the coaching and training program in accordance with the talent management strategy.

Align Job Architecture

Even like-for-like sellers from different organizations may have different job grades, resulting in variations in pay levels and competency expectations. Once roles have been platformed, build a job hierarchy to support an integrated talent management strategy by:

• Building a common competency model that defines the expectations for all sales roles
• Mapping sales role progression to a common job code hierarchy

Establish a Cohesive Coaching and Training Program

Determine which coaching programs—whether technical or sales-focused—are needed to develop sellers according to the key competencies. Consider parallel training pathways that build the specific skillsets inherited from legacy companies, ensuring a convergence of seller capabilities and set consistent first-line manager coaching expectations, including:

• What weekly or monthly check-ins should look like
• How the forecasting process should be managed
• What performance reviews and annual planning expectations are required

Synergize the Sales Compensation Program

A harmonized sales compensation program is essential to avoid the pitfalls that come with a “do nothing” approach, which can lead to inconsistent application of corporate strategies and inequities among sales teams.

The first step is to build out a global sales compensation program, including governing rules, guiding principles and plan design components. This process should embed the desired pay-for-performance culture. Determine if the goal is to create significant variability between top performers and median performers or to establish a more “nice place to work” compensation program.

The next step is to address legacy inequities and set pay levels. Assess the differences in pay levels, upside earnings opportunities and downside risk across legacy organizations. In some cases, upside earnings opportunities can vary by two- to three-fold. Higher costs to manage and potential compromise in sales team goodwill must be addressed.

Once a compensation strategy is developed, set pay levels in accordance with the established job architecture. Although the transition may take time, it is crucial to determine the desired pay level range and ideal pay mix to guide the migration process.

Finally, create new compensation plan designs that are based on each role’s responsibilities in support of the integrated company’s overall strategy.

After an M&A

Integrating commercial teams following a merger or acquisition is not an optional exercise but a strategic imperative. Remember these key steps:

• Define the Growth Play: Rigorously assess customer alignment, product overlap and sales cycle consistency. Decide whether to maintain separate sales organizations, implement a product overlay model or fully integrate into a unified commercial team.
• Establish a Unified Culture and Role Expectations: Align divergent legacy cultures and standardize role expectations so that all representatives operate under a common model with clear guidance on how to achieve growth objectives.
• Build a Consistent Job Architecture and Talent Management Framework: Develop a common competency model, map role progression to a unified job hierarchy and invest in cohesive coaching and training programs to ensure a seamless convergence of talent.
• Harmonize the Sales Compensation Program: Create a global compensation strategy that addresses legacy inequities, sets clear pay levels and designs role-specific plans that support the integrated company’s growth strategy.

Leveraging Commercial Team Integration

By taking these steps, companies can avoid the common pitfalls of commercial integration—deployment inefficiencies, limited cross-portfolio selling, unclear strategy and pay disparities—and instead optimize for growth.

Reach out to Alexander Group’s team of experts to discuss how best to engage your leadership team, evaluate your integration strategy and make the necessary adjustments to ensure that your commercial organization is fully aligned to drive profitability and sustained success.