You are the first salesperson in the company you’ve founded, you’ve established some processes and you feel it’s now time to move to the next stage and build a sales team. How do you do that? By building an effective sales organization. That’s the other name for starting your own sales team.
This blog post is also available as a podcast, part of our Build Your Sales Machine series.
The preparation phase of building your sales organization
To build a sales team the first important question to ask is when do I start building my team?
When to Build a Sales Team?
Here’s a simple checklist to help you find out if the timing is right:
- Your product/service is bringing true value to your clients pay for it
- You’ve conducted abundant interviews with potential clients and you know there is a product-market fit
- There’s a steady, repeatable revenue stream
- Your current setup cannot handle the incoming leads or you are looking to significantly accelerate the lead generation process
If you’ve checked all four it’s probably time to build a sales team.
Or, you’re just starting, and you need support with getting the first meetings and doing the primary customer interviews. If you are at this stage you need help with the first part of the prospecting process, lead generation, building databases, and getting in touch with these first leads. You can either hire someone in-house, for example, junior sales rep, or look for an experienced sales development agency that can help you do that.
What kind of talent do I need?
Going back to the first scenario where you know it’s time to build a sales team. The next important question to ask yourself is, what kind of sales talent and type of sales team do I need? Based on how you’ve been able to onboard the first five to 20 customers, answer the following questions.
- Did you get them through referrals?
- Did you implement any marketing activities that drove these leads to your website?
- Were you visiting conferences or meetups where you met with your first clients?
After you have a simple record of this information, continue with answering the following:
- Do I need an inbound sales team? An inbound team handles the inbound requests coming your way. These leads are potential MQLs (marketing qualified leads) who are visiting your website, and are leaving their contact details. They are semi-warm leads, which can be further qualified by your sales team.
- Do I need an outbound sales team? An outbound team consists of researchers, sales development representatives, account managers and executives, who can generate new opportunities or leads. They are proactive sales salespeople with various skill sets, who can bring you contacts based on your ideal customer profile. Then move them further to sales funnel by qualifying, making them opportunities and potentially closing them as clients in the end.
These two different strategies, one marketing centric, and the other one sales-centric depend on what you’re selling. Are you selling to enterprises or SMEs and startups? How big is your total addressable market? And at the end of the day, what works for your potential clients?
Remember, it’s crucial how you sell, but it is even more important how your potential customers are buying. You, as a founder, have to be aware of that.
The sales teams that work for startups
In June last year, we gathered a group of tech CEOs and founders at an event to discuss sales, business development and learn from each other. From what we learned through the discussion and our experience working with 150+ tech companies, we can differentiate the sales team needed based on the stage of the company.
Stage: starting organization
For a starting organization where the CEO and the founders are responsible for sales and business development, it’s best to find a self-driven individual willing to go for opportunities that may seem impossible at first — a person who will be proactively testing different approaches and looking for opportunities. These people are usually referred to as sales superstars.
Stage: growing organization
For a growing organization where there is an established sales process, the team should be able to perform a scalable and repeatable sales process, both inbound and outbound. Usually, there is a sales leader who can establish a process that can be measured based on results, and executed no matter who the salespeople are. So if you have somebody leaving the company or joining it, they can onboard quite fast and start performing and delivering results.
A key turning point in every startup company and how a founder should proceed
This is when your sales function needs to transition from depending on sales superstars to a predictable sales process that can be scaled fast by adding additional salespeople.
In case you as a founder have decided to build an inside sales organization, there are two options. Start small and then grow, versus start big and have tons of issues managing and leading a sales team.
We advise you to start small. Hire one to three salespeople. One is always a bad idea because salespeople are competitive creatures. They need someone to compete with, and by competition, I mean a healthy one. Then focus on people, processes, and systems. What are the exact types of salespeople you’re hiring? What processes will they follow? Which systems will they leverage to enhance their sales approach?
How to find sales talents?
Through referral or headhunting. Find someone who has experience in the sales industry, knows the business, and has a network. Or find professionals with experience in an industry with a similar buying process. Someone with solid experience in selling to SME clients will not necessarily be as effective in enterprise sales and the vice versa.
The stage your company is at is another factor to keep in mind, when looking for the best candidate. If you’re just starting and you want someone with solid experience in the sector, you probably will not be able to afford her. So think about if you can provide equity or higher commission in order to attract the right person.
How to retain and manage your salespeople?
Now that you have laid the foundations of your sales organization, it’s time to think about the compensation plan – salary, and bonuses. And coaching. Are you going to coach them yourself, or you’ll delegate it to a professional?
How are going to track the sales results? What metrics are you going to use?
2. Relationship building
Are there any people and companies within your network to whom you can present your new sales hires? We’ve spoken to a lot of founders who are not able to retain sales talent, and that’s an issue everywhere.
How to coach, lead and manage a sales team?
Results drive salespeople, therefore, a proper incentive system should be in place. The best way is to combine a fixed salary that covers basic needs and a bonus scheme that rewards results achieved. A good ratio for SME sales is 60% from base salary and 40% from a bonus scheme or commission basis.
With enterprise sales, the commission from a closed deal can be much higher than 40% of the total remuneration, but the sales cycle is usually longer than a month. The ratio between bonus scheme and fixed salary will depend on the average deal size and sales cycle in your organization, but it’s important that you take them into account when planning the remuneration of your sales team.
Believing in your solution
Salespeople should understand the value you deliver to your clients. Sometimes it takes longer to close a deal and they should be patient, which is easier if they believe in the worth of the product or service they are selling.
Onboarding and coaching your salespeople
Founders and CEOs should put time and effort to onboard the salespeople and help them understand what is the problem their clients face, what is the solution offered by the company, and what is the value delivered.
Are you, as a founder, going to coach your sales team? If you’re with a business background, you’ve made extensive sales, then it makes sense for you to start with that. On the other hand, if you’re with a tech background, you’ve been focused primarily on the product and you’ve started the sales process yourself- then think of someone who can continue this from you and to whom you can delegate the coaching.
Leading the team
Leading is something that the founders should be doing. Doesn’t matter to which role within the team – sales, product or marketing. At least at the beginning, you are the person to motivate your salespeople – to push them towards results and advocate the USPs of the product.
Building an effective sales organization is a process
Starting a sales team is a big milestone in your organization and timing is critical. If you’re late you’re probably missing opportunities. If you’re too early, you might have skipped important steps within the sale cycle – talking to your customers and seeing for yourself if there is a product market fit for your product or service.
It’s a long process, and you need the right people. I advise you that you start with a small number of people. Hire one to three sales professionals in the beginning. Be very careful about your first head of sales. Check if you need an outbound or an inbound sales team based on your current sales track record.
Last but not least, document all your sales processes, best practices and lessons learned and pass them on to your sales team.
If your thinking to build a sales team, you should also check out the previous blog post from the series that will walk you through the steps to create a sales process.
If you are interested in the topic you can also check out our comprehensive guide on How to Set Up Your Startup Sales Process in 3 weeks.
Head of Business Development