By Jeff Winters on Sep 12, 2018 2:37:11 PM
This article was originally featured in Innovation Enterprise.
If you want your business to grow, your sales team has to grow — that's the bottom line. But when is it actually time to approach building a sales team? There’s no one-size-fits-all answer to this question. The timing depends on a number of factors, including what you’re selling.
But whether you have an enterprise sales team (which sells to large accounts at high price points) or a transactional sales team (which sells primarily a lower-priced product or service to small and midsize accounts), you need a well-developed strategy in order to scale successfully.
In my experience scaling sales teams, most people approach growth backward. They believe that more salespeople drive more sales. I disagree. More leads drive more sales; more salespeople create more leads, and those leads convert to more sales. But great members of your sales team should not be spending significant time on sales lead generation. That’s low-leverage time for a top-tier salesperson. Instead, your top-tier players should be spending time closing deals, which is high-leverage time.
Focus on lead generation
Rather than preemptively building a sales team, wait until you are confident that you can generate enough leads to support them once you have ramped them up. For example, let’s say a sales team of one person is selling to small to midsize businesses with an average sales cycle of 30 days. This person can probably handle three to five phone meetings per day and reasonably be expected to follow up, track progress, etc. If you assume 20 meetings per week for one person, you need to be sure that your marketing or sales development function can generate those meetings for another salesperson before you hire anyone else.
This framework actually simplifies the process of scaling your sales team. Beyond the operational and cash constraints, following the plan of scaling your sales team in line with scaling your leads removes the guesswork of when to hire salespeople. When you are running your forecast models, you don’t have to calculate the incalculable incremental business generated by adding a salesperson. You can calculate a lead conversion rate for new salespeople and experienced ones, then apply that number to the forecast instead.
Following a lead-generation-first framework isn’t the only key to building a successful sales team. Here are three other strategies to keep in mind:
1. Be your own first salesperson.
Even if you as a founder are more technical and not proficient in sales, you should be the primary salesperson for a period of time. You’ll hear insights from prospects, which can be just as valuable as the all-important customer feedback in terms of improving your product. Even if your team has created the sleekest new product to fill a major market need, the positioning might determine how sellable that product really is. Getting prospect feedback can be invaluable to a founder.
Acting as salesperson also helps you develop empathy for your sales team. It’s easy to look at sales as a car stereo you can turn up or down, bang on when it doesn’t work, and scream at when you’re upset with it. But sales is the lifeblood of your company. If you treat it like anything else, you’re risking too much. If you don’t know how to make a sale, you can’t understand your team’s struggle.
You’ll also get a better candidate pool. It’s hard to find great sales talent — there is an enormous demand and a very limited supply. Given this dynamic, it’s hard to get great salespeople to work at a company that is unproven in its ability to sell its product. Getting a little revenue under your belt can be useful for recruiting.
2. Hire salespeople with intention.
There’s no perfect number for how much you should sell before making your first sales hire. Thought leaders in the SaaS space say that a founder should sell $1m in annual recurring revenue before hiring a salesperson. Whether that is a hard-and-fast rule or not, you should sell enough to understand whether the company truly has product-market fit.
Once you’re certain you have a viable product, it’s time to find your first salesperson. Some people believe in hiring in pairs. But it takes a long time to ID, recruit, and acquire your first sales hire; delaying his or her start date to find a second person is wasteful. Don’t compromise on your second sales hire just to find a buddy salesperson rapidly.
You should be looking for three traits in your first sales hire. Does he or she have experience with your sales cycle and type of client (large company and long sales cycle versus small company and short sales cycle)? Has he or she had huge success elsewhere? Is he or she witty? If your candidate checks all three boxes, you could have your first great sales hire.
3. Don’t be afraid to gamble.
While there’s no magic right time or revenue level to start scaling your sales team, there is definitely a wrong time. And that’s when it is too late. Scaling your sales team is much easier when you are a venture-backed tech company flooded with cash than if you are a bootstrapped services company. I get it. But no matter the company, hiring is a gamble.
If you’re not gambling, you’re much too late. Hiring is always a gamble because you always have the feeling that you could be wrong. You might think your first salesperson has been doing OK, but he or she might not have been at the company long enough to become great. And even with this uncertainty, you’re likely about to spend a bunch of money on a new salesperson and a recruiter to help run that search.
You can’t truly know whether your sales team will scale, but if you as a founder have sold somewhat successfully and your first real salesperson is getting off the ground, it’s probably time to scale.
Effectively building a successful sales team is never easy. But whether you have an enterprise or a transactional sales team, you need to have a strategic plan in place. Focus on your lead generation to lay the framework for growth. Then, make sure you understand sales, hire with intention and embrace uncertainty.