Building Startup Sales Teams
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01
Don’t hire sales people too early. In the early days, the founders should be able to sell (and should be selling). Yes, yes, I know. You're an engineer/designer/whatever. You've never sold anything. Doesn't fit your personality. But here you are. Praesent nec tincidunt felis. Vivamus a facilisis nisl.
02
You don’t need sales people, you need sales. Don’t think VP of Sales — think “Revenue Engineer”. (Not the greatest analogy, but just like you won’t hire a development “manager” as one of the first 5 people in a startup, you shouldn’t hire a sales “manager” either -- not as your first hire).
03
Don’t hire several sales people at once. Your goal is to figure out the “pattern” of what kinds of people are best based on what you’re selling and who you’re selling it to. You need some feedback from the system so you can continue to iterate on your hires.
04
If you’ve never hired or been around sales people before, be prepared for a bit of a shock to the system. They’re not bad people, they’re just different from you, especially if you're an introverted geek like me. Nulla sit amet augue at justo vestibulum lacinia in vel augue. Vivamus volutpat risus et faucibus convallis. Mauris aliquam quam et mollis dictum.
05
Resist the temptation to create complicated compensation plans. If it requires a spreadsheet with multiple tabs and lookup functions to figure out the commission, it’s too hard. Don't worry, you'll have plenty of time to confuse yourself and your sales people later. For now, start simple.
06
Agile methodologies can work in sales as well. Iterate! Refine your demo script, your slides, and any other collateral information. Capture the lessons learned by the best-performing people and spread it to the rest. In the early stages of your company, your story and pitch should be getting better every day.
07
Sales people will generally act in mostly rational (but often surprising) ways based on incentives. The rules of the game defines the behavior of the players. Don't say you weren't warned. There is a passing of title (property or ownership) of the item, and the settlement of a price, in which agreement is reached on a price for which transfer of ownership.
08
ALWAYS connect incentives somehow to ultimate customer happiness and success. If you reward just “deals getting done”, you’ll get deals — but at too high a price. You might get push-back that sales people don’t control/influence customer happiness, but they do.
09
Make sure you understand the economics of your business. Figure out your total COCA (Cost of Customer Acquisition). This includes sales people, marketing people and marketing campaigns. Quick example: Let's say you paid a sales person $10k, a marketing person $10k and you spent $5k on Google AdWords (for a total of $25k) last month.
10
Your life-time-value (how much revenue you expect to generate per customer) should be higher than your COCA. No, I did not need a degree from MIT to figure that out. Once your LTV is a multiple of your COCA, you’re ready to start turning the knob and scaling the business a bit (hiring more sales people). But, if your LTV is way lower than your COCA.