During the initial stages of a company's life, a management team generally strives to capture demand from its core market and largest customers. As a result, the sales organization often adds personnel on an ad hoc basis. While the company matures, however, management must focus on upgrading and, if need be, restructuring its sales team. In addition to improving measurement capabilities, they must hire new salespeople or open up alternative markets and channels.

Consider the case of AvePoint, a provider of enterprise-strength infrastructure management software solutions for the Microsoft SharePoint environment. When my firm invested in AvePoint in 2006, the company had built a strong web-based inbound sales effort, but had a limited capacity for lead generation and direct follow-up on customer interest. Since then, AvePoint has established a sophisticated sales and marketing operation with offices around the world.

From its headquarters in New Jersey, AvePoint coordinates its global sales organization. Each sales team now follows established routines of calling on territorial accounts, following up on derived or self-sourced leads via marketing efforts, and upselling to existing customers. By constantly analyzing the results, AvePoint not only ensures the proper allocation of company resources, but also generates customer satisfaction. To support this effort, AvePoint's management team has redesigned the sales organization, providing staff with measurable targets and reorienting its compensation plan to incentivize strong performance. Under this new system, the company has seen revenues double, contract renewals significantly increase, customer satisfaction improve, and shareholder value rise.

Over the years, I have worked with many fast-growing companies as they strive to expand sales. Here are five basic steps that your company can take to maximize sales efficiency:

1. Consider customer concentration
We find that more than half of our younger portfolio companies have customer concentration issues, usually because they have focused their sales organizations around the needs of a few, key early customers. We help them look for new sales opportunities, while still meeting the needs of their key customers.

2. Develop a distribution channel strategy
There are three basic distribution channels: direct sales where companies maintain their own sales force, OEM where their product is incorporated into another company's product and sold through their channels, and indirect sales, where a company uses third-party sales representatives. Each has its own unique advantages. While direct sales are the most costly and require a substantial upfront investment in personnel, they provide the company with the most control and can generate the highest gross margins. Once a relationship has been established, OEM sales are much less expensive to maintain, but yield lower gross profit margins. Indirect sales-through brokers or other representatives-fall somewhere in the middle. Generally, a smaller company should aim to excel in one channel, and explore other channels as it grows.

3. Think globally
Most companies with which we work already have international sales relationships, though they typically represent no more than 10% to 25% of the total sales. When companies want to expand their international presence, we advise working in the easier markets. Unless compelling customer demand dictates otherwise, a good strategy is to begin in the United Kingdom, where the language and legal structure are similar. If that works well, then follow in the Scandinavian countries, next in Germany, then in the rest of Europe, and finally in Asia.

4. Set realistic budget goals
Another important step is doing a reality check of your sales assumptions to ensure that your organization can meet its budget goals. If you have a direct sales organization, for instance, the quick rule of thumb is to multiply the number of sales people in your organization by their quota. Even though you will never have all your sales people working at 100% of quota, this is still a good indicator of whether your goals are within reach. With some modifications, you can use this system to analyze indirect channels, as well.

Projections are somewhat more difficult to make in the OEM channel, where you need to forecast demand for the final product by the OEM. Those projections, in effect, will determine the demand for your product. Given that many OEM manufacturers prefer not to share this information, you may have to estimate.

5. Reach the very last customer
If you cannot meet budget projections based on your current sales organization-or if you would like to increase sales to meet aggressive future goals-you might consider developing a comprehensive, multichannel strategy. That way, you will maximize your ability to reach the very last customer.

My approach, which may seem counterintuitive, is to think in terms of creating "massive channel conflicts" and then structure the organization to manage them. That is, build a multi-channel distribution model that could address every customer through sales people from different channels. Then divide up customer responsibilities by some criteria, such as industry sector, size of customer, geography, etc. By building a system in which each channel sales person could theoretically capture as close to 100% of the available customers as possible, you ensure that your company has covered the entire market set and your sales team remains hungry for more opportunities outside their direct market. If your company has to spend time managing those channel conflicts, then you have covered you have probably achieved high penetration of the potential buyers of your product.

Sales are the lifeblood of any expanding company, bringing in the cash flows that can grow your business. By analyzing your distribution strategy, customer base, and missed opportunities, you can strengthen your sales organization-and take your company to the next level.

Walter G. Kortschak is a managing director of Summit Partners, a private equity and venture capital firm with offices in Boston, Palo Alto, and London. Since 1984, Summit Partners has invested in more than 300 growing, profitable companies across the United States and Europe. Walter can be reached at 650.614.6600 or wkortschak@summitpartners.com.