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Why do founders often hire sales teams too soon? When is the right time?
After founding a B2B software company, one of us hired a sales team shortly after closing a seed funding round. Results were disappointing: the pipeline filled up with deals, but they did not move. Time to close was impossible to predict; qualification criteria were unclear, and the expectations of new customers were not met. They had to let that sales team go.
The founder made sales his main priority. He began to document his own process. How quickly did he uncover the specifics of budget, authority, need and timing? What kinds of questions got the most detailed answers? How well did his own gut feel for a deal track with its measured speed through the pipeline? What could derail a late-stage deal? What questions could be asked early on to anticipate these risks?
Sales began to accelerate until he closed twice the planned sales quota for reps. He hired another sales team and stepped back from sales. Results were better, but deals took much longer to close, languishing in security and compliance review for months. Reps were working hard (sales activity was high), but efficiency had dropped. The founder realized that he had internalized these lessons but had not made them available in a usable way to the reps. He built a playbook that defined the questions and criteria for each stage–with room to evolve these as reps continued to experiment.
Our value to the client:
Sales efficiency grew as time-to-close and deal size could be accurately predicted based on stage of pipeline, allowing the founder to successfully transition out of day-to-day sales.
How do you incentivize your sales people so they fight for every deal–but not with each other?
We worked with an event management technology company that was trying to scale up its sales efforts across the US. However, as more territories were targeted and divided up between the teams, some teams felt they had gotten a raw deal, especially with increasingly ambitious sales quotas. The company tried a different approach–sorting leads by industry–but there were many companies that didn’t fit neatly into a single industry. On top of this, incentives were inadvertently structured in a way that caused each sales leader to maximize personal sales instead of helping their team excel, which made scaling difficult. All of this created friction and conflict in the sales organization, lowering overall performance.
We analyzed the ideal sales funnel, including the optimal prospect to deal conversion ratio and sweet-spot deal size. We looked at what the best sales people did everyday and came up with a formula that aligned individuals, teams and sales offices. Bonuses were introduced that would tie teams together rather than pit them against each other. We did away with industry segmentation and implemented a first-come-first-served rule for leads but added a maximum holding period for each opportunity so that nobody could hog leads. We also created more visibility into each sales success so that everyone could rally around top performing teams and individuals.
Our value to the client:
Sales took off when reps felt supported and recognized. End of month sprints became legendary—without creating a boiler room.
Why does spending big on marketing so often yield small results?
Marketing is not like sales. Sales is about building a machine and tuning it; predictability and process win deals. Marketing, by contrast, can seem like a dark art. It’s easy to spend a lot of money for negligible results because marketing is a more subtle conversation. In a sales call, you know when you’re failing to connect with a prospect. But marketing often ends up shouting irrelevant (and expensive) messages into the wind.
This is why marketing teams worry about staying “relevant”–but mere relevance risks following trends and breaking news instead of saying something that’s actually important to your customers. Marketing connects when, instead of trying to ride the latest social media craze or current event, it becomes a conversation you have with prospects in the form of a series of experiments. You start the conversation with them by finding the places (channels) where your prospects spend time and the messages (articulations of value) that connect with their needs and desires. Prospects talk to you by taking actions: reading, watching, browsing, trialing, paying. Actions signal importance: you’re having a real, credible conversation.
We learned this lesson in a marketing automation company one of our team members founded. Close rates for sales were great (after learning founder-led sales), but the sales pipeline was thin–not enough leads entering the funnel. We ran outbound email campaigns, set up conference booths and wrote blog posts. Traffic improved, but trials and demos were low. Then we decided to look at what had worked and extrapolate. We spent a lot of time with successful customers and discovered that all of them except one had undertaken a similar project to re-architect their tech stack and analytics just before they bought our product. We built partnerships with the companies that were key players in these projects and created content that explained our value in terms of the overall priorities for these kinds of projects.
Our value to the client:
The funnel filled with qualified leads who considered the product crucial to their success. The sales team could not believe the difference. Eventually, one of the channel partners acquired the company.