Having spent the last 25 years in startups and high growth companies, I have had to build sales teams from the ground up several times. While many people would prefer to avoid the heavy lifting required to build a sales team from scratch, starting with a clean slate offers a great opportunity to establish the conditions for success right from the start. That said, there are also several unique challenges that must be tackled in order to be successful.
One of the first challenges is getting the timing right.
As a recruiter specializing in finding top performing sales people, we receive many inquiries from companies eager to hire their first sales people. While it sounds counter-intuitive for us to talk prospects out of buying our services and hiring sales people, we often do so.
Why? Because we have personally experienced the frustration, pain and cost of building a sales team too early. We help employers assess their own readiness by asking some of the following questions:
- Business Readiness. In spite of having no proof of viable product or market opportunity, companies will sometimes try to hire a salesperson in hopes that knocking on doors will generate sales that aren’t otherwise materializing. In some cases there are sales, and in other cases there are none, but in both cases hiring a sales person is likely going to be problematic. Sales people are geared to sell, so having sales people involved in testing or developing strategy is a poor use of their time and skills.
Furthermore, if the direction of the company and offering are still shifting regularly based on market and customer feedback, sales people will have trouble qualifying prospects and prioritizing opportunities. Beyond wasting limited resources, the biggest risk is that the founders and salesperson pull the company in different directions.
Yes, there are certainly sales people that excel in early stage companies (more on that below), but the ones that do well in the very earliest stages are more inclined to start companies themselves than work for others. More structure is usually better for the selling effort.
- Budget Availability. Sales people who can consistently generate revenue (the only type of sales people you would want) are the exception amongst the sales profession. These types of sales people are employed and they are paid well, so they are suspicious of startups with a limited track record and high or full commission plans no matter how big the upside is on paper. To move them from their current employers will require investment, but if hiring strong sales people sounds expensive, speak to anyone who has built a team of mediocre sales people. The latter is far more expensive because mediocre sales people don’t magically become high producers. Instead, they consume an inordinate amount of management and training time and squander valuable leads and opportunities. If you want to achieve aggressive sales numbers, you will need to hire sales people who can consistently deliver sales. So the question becomes, can you afford to hire capable sales people away from other employers?
- Management and Support Availability. Self-managing sales people and teams are as rare as purple unicorns. Even seasoned sales people benefit tremendously from direction, development, coaching, and ongoing management. Most companies hire sales people before they hire a sales leader, so thought needs to be given to who has the ability and time for tasks such as sales strategy, sales forecasting, funnel management, establishing rhythm, building a culture of success, holding reps accountable and working with the sales team members to secure the desired accounts and drive overall sales goals.
Before building a sales team can commence, the sales strategy needs to be defined. There are whole books that do a great job of covering this topic, so I will just point out a few of the major elements that need to be addressed.
- Goals. Confirm the revenue and customer acquisition goals as well as any other sales related goals in company’s business plan.
- Customers and Targets. Perhaps the most critical aspect of the sales strategy involves identifying the target markets, ideal customers and accounts the company wishes to acquire, as well as the definition of a qualified prospect. These will play a critical role in focusing the efforts of the sales team.
- Selling Approach and Structure. There are many ways to structure sales teams, with two approaches being the most common. The first is to have sales reps that handle everything from prospecting and qualifying to developing and closing sales. The second approach involves having one type of sales rep that handles and converts inbound leads and smaller sales, and a second class of reps that hunt for new business, do target account selling and/or handle larger sales. The structure should be tailored to the way customers buy and by the sales goals that need to be achieved. It is also helpful to define your selling process in terms of how the sales team will engage prospects and what selling techniques will be used. This prevents your sales people from defining their own selling processes, which in turn can compromise overall business and sales goals.
- Territories. Defining sales territories will further focus prospecting and selling efforts in addition to preventing salespeople from tripping over each other in the field, wasting effort and/or looking disorganized in front of customers. Territories can be defined by geography or sectors.
- Individual Goals and Measurement. No less critical than other parts of the sales strategy is the need to clearly define the sales goals and metrics that will be used to measure the sales reps. These should include not only the revenue goals but also the sales activity required to achieve the revenue. To derive these, work backwards, start from the desired output divided by the number of sales to arrive at the target number of sales wins, and then determine the number of prospects, calls and amount of time required to win each sale. It is important to be realistic. There is nothing to be gained in setting a $5M quota for a sales person when there are not enough hours in the day or months in the year to do all the work necessary to secure that volume of sales. Also be sure to factor in the ramp up period for each new sales rep, as well as the time required to build the necessary pipeline of opportunities required to close the desired number of sales.
- Commissions and Compensation. In most cases, a company’s business model drives its sales compensation plans. Whatever the company can afford to pay the rep at various levels of revenue is split across base salary and commissions. Sales comp plans vary widely across industries and companies, but as a rule of thumb, new business development positions pay a 50/50 split of base and commission. The compensation plan may need to be adjusted to provide fair reward for the effort and risk assumed by the sales person, but more importantly plan to ensure that it is high enough to attract the right sales people from competing employers.
A tough lesson to learn, and one which I learned first-hand in the early nineties when I built my first sales team, is that selling for a startup is very different than selling for an established company.
At the time, I incorrectly assumed that hiring a successful rep from an established competitor would result in a fast ramp up and sales. I quickly realized, however, that selling in a startup is very difficult for a salesperson that is used to working with a recognized brand, a stable offering, lots of references with extensive support and infrastructure.
Moreover, selling for a startup means facing a ton of objections and dealing with a tremendous amount of resistance.
Ideally, you want to hire people that have demonstrated success in startups, selling similar products or services, at similar prices, to similar customers, with similar levels of competition.
This provides the most proof that someone can sell for you. To know if they will sell for you, target personality traits (or DNA as we like to call it) shared by the highest achieving new business development reps in startups. These include ambition, perseverance, confidence, optimism, sense of urgency, desire to influence others, flexibility and ability to deal with uncertainty.
The specific traits required will depend on the type of sale, but in any event, the right DNA is often the biggest predictor of sales success.
Needless to say, it is a rare breed of sales person that can excel in this environment, but this is what you are seeking.
ATTRACTING SALES TALENT
Every employer wants to hire sales people who can sell, so great sales people receive a lot of employment offers and it can be tough for early stage companies to get their attention, particularly where funds are limited, which is almost always the case.
In order to attract strong sales people, a company will have to be creative if it has limited profile, track record of success to point to, or limited resources to pay compensation that mitigates these perceived risks for a top salesperson. Having said that, there is plenty that companies can do to ensure they attract the sales people they need.
- Aim High. If you are serious about achieving your sales goals, commit to targeting the right salespeople — those that can sell.
- Look Everywhere. The best sales people are busy selling, not looking at job ads. In order to be exposed to top performing sales people, you will need to look far and wide. Social networks, conferences and industry events can be good ways to get exposed to great sales people. Also tap your network for referrals and leverage search firms to extend your reach.
- Stand Out. While posting job ads will attract a substantial amount of unqualified sales people, they still provide value for startups by exposing the opportunity to a large audience. The key to maximizing the impact of job ads is to apply the same marketing tactics used to attract customers. That means abandoning the traditional job ad that focuses entirely on qualifications. Instead, use compelling copy that highlights the benefits of your working environment, like the work/life balance, and ability to make a direct impact on the success of the organization.
- Offer Careers. The best sales people want to work for the best companies and management teams where they are most likely to advance their careers. Commit to offering careers, not jobs, and sell the vision of your company and the chance to be part of a great growth story.
- Get Compensation Right. If possible, offer above market compensation to pull people away from their current employers. Money may not be everything to everyone, but it is top of mind for most sales people. Also consider non-monetary rewards, such as flex-time, extra vacation and recognition.
- Pursue. Since great sales people are used to being pursued by employers that want to hire them, you have to be very aggressive and proactive in getting and keeping their attention. Never expect them to come to you. Go to them. They may seem lukewarm or disinterested at first, so it is critical to be persistent (without being annoying).
- Never Stop Recruiting. Great people are rare and hard to find so you need to be looking for them constantly.
MAKING IT WORK
A failed sales hire means a huge lost investment in recruiting, training, time and lost opportunity. Unfortunately, even if you hire great sales people, there is a lot that can go wrong after they are on board.
There are, however, several things you can do to increase your chance of each hire being successful in the shortest possible amount of time.
The first 90 days of a sales rep’s employment is a critical time to make sure they effectively sell your offering. Each of the first 90 days should be mapped out in terms of training on the product/service, the market and customers, and on the selling approaches, systems and tools.
Territory and account plan development and various other tests should be used to gauge learning progress and knowledge retention.
Set Up for Success
A new hire should come into an environment where they can focus on learning and then selling. Make sure the computer, phones, CRM, systems and sales tools are in place prior to sales people joining.
The last thing you want is a new sales hire wasting time trying to figure out how to obtain necessary equipment, how to access relevant systems or trying to understand who has answers to pertinent questions.
It is critical that a new sales hire’s performance be monitored and measured closely in the first 90 days. This is easy to do in companies with a shorter sales cycle, where it will be reasonable for a sales person to generate sales very quickly.
In companies with a longer sales cycle, the focus needs to be on activities such as calls, meetings and pipeline of qualified opportunities. In either case, failure to monitor the activities can lead to poor habits, poor results and a failed hire.
Building a sales team from the ground up is no easy task for most companies, but, when done properly, results in a powerful sales force that delivers strong, consistent, and predictable revenue.
About Eliot Burdett – CEO, Peak Sales Recruiting
Before Peak, Eliot spent more than 20 years building and leading companies, where he took the lead in recruiting and managing high performance sales teams. He co-founded Ventrada Systems (mobile applications) and GlobalX (e-commerce software). He was also Vice President of Sales for PointShot Wireless.