The journey of early-stage startup sales or leading a budding sales team can feel like sailing into uncharted waters. Fortunately, there are guiding stars and seasoned sailors to illuminate the way. Our recent workshop, led by Inovia EiR Simon Leroux, uncovered valuable insights for early-stage startup founders and sales leaders in their initial stages. Let’s delve into these insights and propel your journey forward!
Devoting Time to Sales and Gauging Performance
Once upon a time, you may never have imagined yourself in a sales role. Yet, circumstance demanded it, and you embraced the challenge. Armed with zeal, unwavering dedication, and a profound understanding of your product, you secured initial revenue, signed pilot deals and convinced potential customers to come on board.
Now is when early-stage founders encounter a common pitfall: the need for more discipline around sales efforts. Selling encompasses various elements that demand consistency and dedicated time. Founders often find themselves straying from their sales plan, whether prospecting or meeting with customers; even a delay of one to two weeks can result in stagnation in the sales pipeline. So here is the first piece of advice: right from the outset, allocate specific time in your schedule for selling, engaging with customers, and measuring your performance using key performance indicators (KPIs) as if you were your own first sales representative. This groundwork will prove invaluable in setting expectations when you expand your team.
Crafting a Compelling Unique Selling Proposition (USP)
Having a crystal-clear USP and the ability to communicate it effectively are imperative. Until you have a well-defined USP, building a sales team should be put on hold. While some salespeople might succeed in bringing clients through the door, the risk of churn due to a weak value proposition looms large.
Launching into a new market holds various USP possibilities:
- Excel with a pivotal feature that customers are willing to pay extra for
- Offer a notably cost-effective solution (while maintaining quality and finding that pivotal feature)
- Establish seamless integration with key partners
- Position your product as a top-tier enterprise solution, effectively addressing client needs
Acknowledging Different Sales Roles and Seeking Assistance
As your startup gains initial traction, now is the moment for you to stop being the person chasing those leads, scheduling appointments, and following up. While you may need more time to scale and recruit a full-fledged sales team, consider enlisting help that can free your time to focus on actual customer interactions. At this juncture, you are the most knowledgeable spokesperson for your company and product, and imagine the impact if you could have 2-3-5 meetings lined up for you weekly.
Founders often commit a significant error when hiring their first salesperson, underestimating the variety of roles within sales (Inside Sales, Business Development Representatives, Account Executives, etc.), leading to confusion. Remember that no individual excels in every aspect. Before hiring your initial sales representative, consider these factors:
- What’s your average deal size?
- Who’s your target persona?
- Does the representative deal with inbound or outbound leads?
Ideally, seek candidates experienced in the type of solution and deal size you’re offering and the acquisition strategy you’re pursuing; prioritize this over industry experience, which can be learned. Be cautious when considering candidates from large corporations; their backgrounds might not align with your startup’s needs.
Attracting Top Sales Talent
For early-stage startups, it’s as crucial for founders to sell their vision and growth opportunities to potential candidates as it is for candidates to demonstrate their fit. It’s a mutual dance.
When recruiting, aim for individuals who can accelerate your startup’s growth while contributing immediately. Consider these three factors:
- Cultural alignment: Arrange meetings with potential colleagues and offer candidates shadow opportunities prior to joining
- Relevant experience: Seek candidates who have worked with similar deal sizes and products
- Role alignment: Confirm candidates are genuinely interested in and suitable for the position
Also, during the recruitment process, consider hiring two sales people instead of one as it can facilitate integration, performance benchmarking, and risk mitigation in case of a misfit.
Finally, keep in mind that promotions are earned and can serve as incentives and opportunities for candidates to enhance their careers. Therefore, establishing a clear career path within your sales team is important as it can positively impact performance and retention.
Selecting Your First VP of Sales
The prospect of hiring your first VP of Sales is exciting but pause and ponder whether you’re genuinely prepared. The role of a VP of Sales revolves around five core responsibilities:
- Devoting 25% of their time to recruiting top talent
- Spending 35% assisting the sales team, aiding in closures and providing coaching
- Investing 10-15% in sales strategy, identifying expansion opportunities
- Allocating 10-15% to sales tactics, refining strategies, and maximizing revenue
- Devoting 10-20% to personally creating and closing deals
While the VP should contribute to closing deals, their primary focus should be nurturing their team. Beware of setting unrealistic quotas that could demotivate the VP and their team.
Ensure your VP of Sales has the resources and autonomy to expand their team. Does he/she have the flexibility to hire more representatives? The ability to do so indicates readiness for the position.
Compensating Sales Talent
Compensation involves more than money; factors like benefits, growth potential, and work environment matter to salespeople. However, financial rewards remain key. Align compensation with performance while considering these points:
- A substantial portion of compensation should be variable and performance-based
- Set targets grounded in reality, aiming for about 70% of your team to meet their goals rather than basing them on aspirational or founder-led achievements
- Be opened to paying a premium for top talent to attract and retain the best candidates
Here are approximate salary ranges1 for various sales roles:
- Inside Sales Representative: Base $47-75K, Variable $20-32K
- Sales Development Representative: Base $48-100K, Variable $36-45K
- Account Executive: Base $63-120K, Variable $35-70K
- VP Sales: Base $159-240K, Variable $39-72K
Setting Clear Expectations and Identifying Red Flags
Managing a sales team entails clear expectations, regular performance assessments, and open communication. Monitoring various metrics can reveal progress, challenges, and areas for improvement:
- Analyze top deals and large opportunities
- Address downgrades, deal slips, and neglected deals
- Track pipeline-stage conversion rates
- Evaluate lead source effectiveness
- Monitor pipeline velocity and sales team efficiency
- Compare monthly attainment among team members
- Measure productivity per team member
- Conduct loss reason reviews for quick adjustments
- Monitor SDR performance against opportunity generation
Keep an eye out for red flags, like failing to meet prospecting metrics, resistance to learning, or consistent deal slippage. Early intervention can prevent larger issues.
Sailing Towards Sales Success
Embarking on startup sales is a journey filled with challenges. With the right approach, which encompasses a defined USP, smart recruitment strategies, and consistent performance monitoring, the path to success becomes clearer. Understand that growth involves a learning curve. Equip yourself with knowledge, remain passionate, and maintain focus. After all, success in the startup world often begins with that pivotal first sale. Stay informed, be proactive, and watch as opportunities unfold.
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1 Source: Pave.com. All amounts in $CA.