Labcast: The Keys to Building a Killer Startup Sales Team

While there’s no blueprint for startup sales success, there are certain consideration that every young company should be aware of when building their teams. In our latest podcast, Colleen Francis, Founder and President at Engage Selling Solutions, calls in to share her thoughts on compensating sales reps at the early stage, the key skill sets to target, the right time to hire a VP of Sales, and more.

Labcast: The Keys to Building a Killer Startup Sales Team

For more from Colleen, be sure to check out our previous podcast on the dos and don’ts for startup sales organizations. You can also visit her Sell More & Work Less Blog and follow her on Twitter @CFrancisVoice.

PODCAST TRANSCRIPT

Brendan Cournoyer: Hello everyone, and welcome to this episode of Labcast. I’m Brendan Cournoyer. Today round two with founder and President at Engage Selling Solutions, Colleen Francis.

Colleen, thanks very much for joining us today.

Colleen Francis: Hey, my pleasure Brendan. Thanks for having me.

Brendan: Last time, we talked a lot about some of the big mistakes that startup and young technology companies make in regards to sales. Today, we’re going to shift gears a little bit and talk about how to build that killer sales team for your startup technology company or early-stage technology company. So let’s just jump right into it. For starters, what are some initial considerations that young companies should be aware of in regards to building out their sales team?

Colleen: First of all, I think it’s really important that you understand, as the founders, what activities are important for the salespeople to accomplish. I know that sounds really basic, but what I often find happens is that resumes come in and you see that they’ve had success, maybe they’ve been successful VPs or successful reps, but you don’t pay attention to the type of market that they’ve been selling in. For example, if you sell a fairly low-priced, maybe a software as a service kind of product, where it’s lots of transactions that don’t take very long to close, 60 days, then you don’t want to hire someone whose biggest success has been in selling multi-million dollar, long sales cycle enterprise software, because they’re used to a different kind of sale. So it’s really important that you first of all align your activities so that you find the person who can accomplish those successfully in your marketplace.

Brendan: In regards to building out your sales team, I also wanted to ask you about hiring the VP of Sales, the leader of your entire sales organization, and identifying the right time for that hire. Is there a moment, or is there a certain strategy that people should be looking for when the time is right to make that sort of hire?

Colleen: I wish it was as easy as that, a knock on the head or a bell ringing. Of course, it’s different for every startup. You don’t want to hire a VP too early, because in many cases, what I would rather see is that you build out a small, aggressive sales team and bring in some revenue. I know this is kind of backwards to what a lot of people think. But really what you need up front are people who will get out and evangelize and sell the product and generate some revenue. As the owners or the founders of the business, you undoubtedly have some vision for the business. I think one of the best things that you can do as a founder is to develop some sales VP type skills for yourself, or with a consultant, and start to build out a small team, maybe just one or two people who are starting to generate revenue along side you, and then hire that Sales VP.

The reason why I say that is this. For a lot of companies, a Sales VP is a very big investment, and that Sales VP, being very strategic, might have been out of sales for a long time and is more comfortable and their skills are better at the strategic side than the actual tactical selling. You need revenue as quickly as possible, right? To either attract more VC money, or just to become cash flow positive. So finding those people who can go and do the “in the trenches” work to generate some revenue, and then later on hiring that Sales VP is important.

At the same time, I truly believe that, as the founders of the business, you need to be the initial salespeople for the organization for a couple of reasons. You have to have first-hand experience about what works and what doesn’t work inside your marketplace so that you can fix the process, fix the product, or fix the market. If you can’t sell it yourself, then it stands to reason that it’s going to be very difficult for you to build out a process or support a product that other people can sell. I think that it’s a big mistake that founders make is that they hire a Sales VP and salespeople without really understanding what it’s like to sell your product in your marketplace.

Brendan: So like you said then, when talking about a VP of Sales, you want to start by really building out your sales team and then maybe look at that position after you have some of those processes in place. As far as finding the right fit for some of your reps that are going to be getting out there and generating that revenue quickly for your company, is there a checklist, a skills set, that really you want to focus on for a startup tech company sales rep?

Colleen: Sure. The first thing you want to do, again, is make sure you understand what the activities are. Do you have a long sales cycles, a short sales cycle? Are you selling to a senior level executive or a lower level manager? What’s the price point? If you went a lower level sale, can this be an inside sales, or does it have to be outside sales? So make sure you have those things defined. And then look for people who have experience in those areas.

Don’t be afraid to hire from outside the industry. It’s actually more important to hire somebody from outside your industry that has success in the skills you need them to accomplish than it is to hire someone who’s just got a rolodex of potential customers. You also need people who are willing to be that traditional hunter. Let’s face it, you’re a startup. Your market is still new and untested, and you need people who are willing to pick up the phone, make lots of calls, who aren’t afraid of rejection, who are pioneers and love to grow, because that’s how your business is going to grow. You’re looking for skill sets of people who have built marketplaces, who have started from scratch, or who come from industries that face a lot of adversity. In the tech world, there are always companies who are kind of the proverbial underdogs, maybe companies that compete against Microsoft, or companies that compete against Dell, the big players in their marketplace. So hiring those sales reps, if they’ve been successful in that marketplace, shows that they have a high degree of resilience. That’s going to be really important, because when you’re selling a product that has no reputation yet in the marketplace, you’re going to face a lot of rejection. If you’ve got a team that has no resilience or really low self-esteem, they’re going to be disheartened very quickly. So that’s one of the most important things.

I think too, on the interview side, as the founders of a company we really love our business and we want it to be a success. We’re very focused on our businesses, of course. I think that it’s critical when you’re hiring to have a three-way check. I recommend to people that they have anyone that they’re seriously considering interviewed by three different people inside the corporation or maybe one of them is a close advisor in three different settings. It’s important that you see how well this salesperson responds to an interview in a busy coffee shop, especially if there’s going to be an outside sales component, as well as maybe once in your boardroom to see how they deal with the pressure of a big boardroom, and once in an intimate setting. Three different people inside your organization should also conduct that interview so that you do get a gut feel. As a small company, they’ve got to be a team player that everyone can get along with, whether it be from engineering, support, or sales.

Brendan: What can you tell us about comp plans at the startup stage? Obviously, once you have your sales team in place, their compensation is going to be a major factor in whether they decide to come and work for you and how happy they are while they’re there. As a startup, it can be tricky, I suppose, really finding the right compensation plan for your team at such an early stage. What are some thoughts and advice that you can give us about compensation for startups?

Colleen: Sure. First of all, always have a plan that’s a combination of base salary and commission. Do not go to a full commission plan. The reason is that you don’t get the loyalty and the hard work up front from somebody that feels like you’re not supporting them at all financially. Now that being said, you don’t need to give them a huge $100,000 or $200,000 big salary. I usually look for a plan that, at plan, if the sales rep hits their target, they’re about 50% base salary, 50% leverage or commission. Now, there are reasons why we might go 60/40 or 80/20, but it’s never 100% commission. You can think about it this way. You’re a brand new company with a fairly new market. They’re not going to start earning commissions and making sales for 60 days, or 6 months if you’re having a long sales cycle. So you need a balance there.

Now, there are reasons why you might make the commission a team commission in the early stages, because people have to work together. But just know that ultimately, you have to go to an individual commission with a base salary. Otherwise, you’ll lose your top performers because nobody wants to be dragged down through a group bonus or a group commission because they’re being paid based on what the worst performer on the team is doing.

Also, early on, do set targets. You might not expect that a first year sales rep can do a million dollars in sales in a new marketplace, but do set some kind of target because you want the team to be motivated early to hit their goals and celebrate those wins. You’re going to be hiring people, ultimately, who have a good competitive streak in them. I often will counsel my startup clients to hire people who have a history, maybe at university or college, of playing on varsity teams, or who played competitive sports, because you want that team mentality and that competition. So setting targets and having them hit goals and celebrating them hitting goals is a great way to keep the team motivated and keep your revenues growing.

Brendan: I absolutely agree with that. I’ve been dating for the last 5+ years a salesperson who is one of the most competitive people I’ve ever met. So I can absolutely speak to that. But that competitive nature, it’s not just about compensation. It’s also something that we talked about a little bit earlier, which are territories. That can also be a point of contention for a sales team. Everyone wants the best territory, and you want to have your best reps, I assume, to have those best territories. That’s a consideration that can go into at a startup company, making sure that your team is assigned the proper areas, right?

Colleen: Absolutely. What often happens is a company will hire a sales rep for the first time, and let’s say your marketplace is all of America. So you say, “Okay. You’re our only Sales Rep, so you have all of America. That’s your territory.” Then you hire someone else, and you say, “Oh, well now you’ve only got half.” And then you hire someone else, “Oh, you’ve only got a third.” That’s a big mistake, because that first person who had the whole country now feels like they’re working harder to make less money, that you’re taking things away, and it’s a penalty

What you need to do early on is divide up the territories. Pretend you’ve got the sales team that you want in five years. So maybe your goal is to grow to a place where you’ve got ten salespeople. Well, divide up the territories now based on what you think is going to happen. Then hire based on an assignment and say, “Joe, we’ve hired you to run and manage the California territory. Now, you’re the only person right now, so of course if a sale comes in from New York or Chicago, you can run with that and get paid on it. But when we hire someone for the Chicago territory, it’s all going to be turned over to them. So we’re not going to penalize you now, of course, and you can have whatever leads you want. But know right now that California is your territory.” Build that into the contract that they sign when you hire them. Make sure that there’s a territory agreement in their contract or in their compensation plan so they know in writing that while they might be getting paid right now on a deal in Chicago or New York, or wherever it happens to be, ultimately those territories belong to somebody else. That will help to keep them motivated when the time comes that you are growing, and it’s easier then to make that transition.

Brendan: Colleen, we’re just about out of time. Before we finish up, any last words of advice?

Colleen: Sure. My favorite rule when it comes to hiring salespeople and compensation plans is to remember this:  Salespeople do exactly what they’re paid to do. Most dysfunction of a sales team comes because there isn’t alignment between what the company wants them to accomplish and how they’re being paid. So when you’re designing that comp plan and interviewing salespeople, pay attention to the results you want and the activities that you know that you need them to accomplish, and then build your territory plan and your comp plan and your job descriptions around those activities. Then you’ll have alignment and you’ll have success.

Brendan: Excellent. Thanks very much again. We appreciate talking to you as always. And of course, people can go and find more from you at Engageselling.com. Is that correct?

Colleen: Absolutely.

Brendan: Excellent. Well, thanks very much again, and hopefully we can have you back on the podcast for round three sometime soon.

Colleen: Well, thanks so much for having me. It’s a real pleasure to chat with you and to all of your listeners.