Don't Scale Your Sales Team Until You've Done These 4 Things
Entrepreneur's New Year’s Guide
The fastest-growing startup in Utah last year was an enterprise software company called Podium. Its smart, forward-thinking service tapped into businesses’ growing need to cultivate an impressive, authentic collection of customer reviews. Even smarter was its method of scaling up.
As Podium steadily grew its team over the course of three years -- from 12 employees to 265 -- the brand managed to grow its revenue by 600 percent year over year.
What these impressive figures imply is that Podium engineered a way to develop its sales team and strategy at the same time in a way that didn’t jeopardize its product, growth, and reputation.
Scaling success is never just the result of an amazing product. An effective prototype and smart marketing might earn a startup a few early wins, but scalable sales require much more than that: a team of skilled salespeople -- with a competent, motivating sales leader -- who have mastered multiple acquisition channels in an effective external communication strategy.
Phew. All this sounds like a tall order, but it’s really just a case of focusing on the right steps in the right sequence.
4 steps for building a sales team from ground zero.
When I arrived at Node, there was excitement over some initial traction the company was experiencing. But I knew we couldn’t rest on those laurels and risk growing the team prematurely. Once we had demonstrated consistent results across the sales process for another half-dozen customers, that’s when we could feel more confident in our product-market fit, and only then did I hire our first two account executives and one sales development representative.
You should take as much care crafting your sales team and strategy as you do crafting your product. So before you hire an influx of bright-eyed salespeople, make sure to follow these four steps:
1. Find product-market fit.
The first year in business is the most tender. According to figures from the U.S. Bureau of Labor Statistics, less than 80 percent of businesses founded in March of one year will still be in business the following March.
Many startups attempt to scale up immediately. They assemble a sales team without having established a single customer. But they soon discover that they’ve got a crowd of talented salespeople trying to sell something that just doesn’t speak to the market they’re aiming at.
That’s why it’s vital that before you think about scaling up, you work to establish product-market fit. At Node, we did this by acquiring a small set of initial customers, about 10 or so, and working to create several months of consistent new customer wins and post-sales success (as determined by engagement and customer feedback) before scaling beyond our initial team.
This order of priority was important because it gave us the opportunity to learn and make significant improvements to our core product in a safer environment. It also ensured our sales team didn't fail to close deals as a result of factors outside of its control -- that's a surefire path to demoralization and churn.
2. Prove a direct sales strategy at a small scale.
A startup’s sales tactics change drastically from the first sale to sales further down the road. Early deals tend to be done via close connections, investor introductions, inbound leads who wander onto the website and/or sustained and intense outbound by the CEO. These unusual efforts are unsustainable once you start scaling up, but they do form a model for what works in the early days.
Just look at the stats for modes of selling and associated success rates: LinkedIn research shows that cold calling garners a meager 1 percent success rate, but it can be done at scale with the right technological support. Contrast this with social selling, the mode based on cumulative relationship-building, which strikes between a 15 and 30 percent success rate but isn't as quick to scale as dialing for dollars. For most companies, learning how to manage multichannel selling is critical to success.
The initial effort of early sales should inspire a scalable model that a sales team can take and make its own. CEOs should be on hand to teach from their experience, but they shouldn't expect that their own hypertargeted approach will work at scale -- it's important to test alternative approaches and learn quickly what works best with your target customers.
3. Craft a hiring strategy that's unique to sales.
If you cast a vast net out into the world of available talent in order to drag in an exceptional salesperson, you’ll be sorely (and expensively) disappointed. You wouldn’t hire a lineman to play quarterback, and you wouldn’t hire a front-end developer to build a back-end database. Sales is similarly a unique skill that demands a unique hiring strategy that seeks out the specific experiences and expertise that will serve your particular product and customer base.
According to the aforementioned research by LinkedIn, employers are increasingly seeking out specific, advanced selling skills. The demand for skills such as “enterprise relationship management” and “partner management” has grown and is now three times higher than the “standard,” more traditional sales skills that most LinkedIn users claim. In fact, only 1.5 percent of users appear to have these newer, more sought-after skills.
Expect this trend to continue as sales becomes increasingly competitive, but don't lose sight of the bigger picture: Ultimately, your sales hiring strategy must cater to the needs of your business. If you have a rapid-fire transactional sales process, your hiring process and ideal candidates will differ significantly from those in a complex, relationship-driven sales environment.
4. Prioritize the post-sales experience.
Many early-stage startups are so deep in the weeds of developing and marketing their product that they neglect what happens after a sale has been made. The post-purchase experience can define how a product (and, in some cases, the salesperson) is remembered by a customer. A positive post-sales experience builds on the delight of the initial purchase and enables the customer to extract value from the solution throughout the lifetime of the contract.
According to research by the CMO Council, 60 percent of customers find their post-sales experience “underwhelming.” This is a word no brand wants to be associated with. But there are tools out there that can help. At Node, we use a product called Pendo to help us manage the customer experience post-sales and understand where our customers are seeing the most value and where they might be struggling. Used judiciously, technology such as Pendo allows us to support customers while they're using our service, as well as learn from them to keep improving our approach.
Growing your sales team before you’ve established these foundations is a bit like putting flour, butter and eggs into the oven and hoping a delicious cake will result. Preparing the ingredients is crucial if you want the mixture to rise, taste delicious, and keep your guests out of the emergency room. Sales is no different: Give your company the best chance at successful growth by preparing your sales strategy before you start to scale.