Scaling a sales organization is both exciting and a little terrifying. Having been in sales for thirty-eight years, I know there’s a lot on the line, and a lot of things that can go wrong if you don’t know what you’re doing. There are a lot of moving parts to manage and, if your company has hit a growth spurt, timing is of the essence.
As part of our recent Go-to-Market Forum, I had the opportunity to sit down with sales leader, Mike McGuinness, and pick his brain about his best advice for successfully scaling enterprise sales organizations. Mike was the first sales person at PTC and ran that company’s sales organization between ’94 and ’97 during which time the company grew from $250 million to $750 million. Later he helped Sophos grow from $200 million to $400 million.
Today, Mike is at Veracode, which was recently acquired by CA Technologies. The following is an inside look into our conversation about some of the key lessons he’s learned from these experiences.
What’s your process for hiring a lot of people to scale an organization?
First, define a hiring process focused on finding strong candidates fast and ensure everyone in your organization understands your expectations of velocity and quality.
Often, it’s not until the end of the process that companies ask a candidate to demonstrate their ability to sell something. An example of a process change that accelerates hiring and reduces mistakes is to flip that around and put that role playing at the start. Do the screen and then jump right into the role play. This avoids everyone getting super enthusiastic about a candidate only to find out at the end that they don’t have the sales skills you need.
If you are hiring for an entry level job, and the person you’re interviewing doesn’t have much experience, you need to find ways to assess how they’ve demonstrated success in the past. At PTC, we were famed for asking people their SAT scores. It may seem silly, but it put them in a challenging situation and either let them lean in with a score they thought was strong or forced them to defend their candidacy despite one they weren’t so proud of. Many companies look for collegiate athletes when hiring salespeople because it’s easy to see levels of success and competitiveness, but achievement in any area of focus works too: academics music, arts, chess, debate, etc.
How do you think about hiring for culture fit vs. focusing only on skillset?
Obviously, you must understand what the culture is (easier said than done). Then you need to develop a line of questioning and/or background queries — that will help confirm or deny that a person fits the culture. You also want to think about how to evolve your culture. How will a candidate bring a diverse perspective or experience?
I like promoting from within, but I also like adding people from the outside. I feel like a 70:30 mix is good. Promoting from within creates a culture of ambition and meritocracy, while hiring from outside helps expand your culture.
Throughout all of this, you have to pay attention to the fact that culture is a living, breathing thing. It can’t change overnight.
How do you manage year-to-year territory adjustments as your company grows?
A key thing for me when you’re building an organization is to avoid pandering to your early stars within the company. Too many times, I’ve come into a company and learned that all the good accounts are with a handful of people, and the new hires are left to survive with no momentum.
As a company grows, chances are your territories are going to get smaller, and you’re going to need to reset the playing field each year so new hires will have equal opportunity. Eventually, people will catch on that if their territories are getting bigger, that’s bad. They will understand that smaller territories are how the company scales and how we all become more successful.
Building on Mike’s advice, I also believe it’s important to treat everyone in your organization the same. If you treat people inconsistently, they will figure out how to take advantage of that. You need to be able to explain why you make certain decisions so that people understand the process and know that it’s fair.
How do you design a successful onboarding process?
It’s an issue of expectations – theirs and yours – and it all gets back to data. You have to make sure you have data that supports the expectations of the ramp a person has to go through. If you expect someone to make quota in three months when the data shows a consistent six-month ramp, you’re setting that person up for failure.
Ultimately, it comes down to looking backwards: What does it take for a competent person to succeed and what are the milestones they’re hitting? Then, you put a ramp in place so a person feels like they’re succeeding. Maybe, instead of all revenue-based objectives, you include some training and ramping or pipeline-building objectives to help people cross the chasm from newbie to being able to see the light at the end of the tunnel.
It’s also important to develop a common sales methodology and terminology to use across the organization and make that available as part of your onboarding process. Additionally, curating your sales content is critical. This is a challenging full-time job, but it’s a critical part of scaling. However, you want new hires to be impressed to have so much information at their fingertips, this will help them minimize the time they need to ramp. So, start your onboarding process early, take it seriously, curate your content and keep evolving the process.
How do you incorporate sales skills development into the onboarding process?
This is less about sales onboarding than an everyday approach to answering specific questions about the company and products. How do you describe the value drivers that make customers buy? This is a companywide question that permeates your go-to-market messaging. It plays a role during the onboarding process but it doesn’t end there. It never ends. It should be the subject of ongoing training sessions and role playing exercises at team meetings.
When you’re on the phone with a new prospect, which discovery questions will open the customer to you and give them an epiphany about how your solution can help solve their problem? This is a skill that develops over time and the whole company needs to be talking in those terms.
It’s not rocket science but it’s work. For any sales process there’s a discovery and demonstration phase, a validation phase, a justification phase and so forth. Understand the process and define the conversation you want your people to have with the customer based on what’s worked in the past. Then train on it over and over. And remember this is always evolving.
How do you build next year’s model?
Again, historical, factual data is what works. If you’re a really early-stage company without much data, you can use benchmarks from companies like yours who do have data.
Once you have the data, approach planning with a realistic set of expectations. For example, a sales rep’s performance is driven by the number of transactions they can do in a period and the ASP of those transactions. If your plan is to increase either of those dramatically without a clear good reason (i.e. you acquired a new set of products) then you may be building a plan to defy gravity. If you have the information about your business and historic billings per quota month and it’s $50K, don’t plan for $75K in the following year unless you have a real, data-driven reason for it to increase by 50%.
You can look for a 10% productivity improvement, but even there you need to know what you’re going to do to drive that improvement. Are you going to train your salespeople in a different way, come out with a new module, or market in a different way?
Also, stretch plans are often seen as ways to inspire people to work harder. There’s a popular misconception that once salespeople hit plan, they take the rest of the year off. That couldn’t be further from the truth. I find that when they exceed plan and hit accelerators, they work harder and you get the added cultural benefit of people winning. It may not be everybody, but when a good percentage of people are winning, the energy feeds off itself and the company roars into the next year. Build your plan based on historical facts and if you overachieve, celebrate!
At what point do you think about specializing in certain industries?
Of course, you use data again. I’m a big fan of density over specialization. I’d rather have five people doing the same thing in a regional office than have one person be the banking person and one person be the healthcare and one the retail person. I hate the idea of three people running into each other at an airport because they each had a meeting with one account in the region.
The time to start layering in specialization is when you’ve reached saturation and can’t fit any more people in geographically. If you have twenty people in a Boston office, for instance, you might then think about breaking it into banking, retail, and healthcare sectors.
How do you align sales with marketing to get optimal productivity and efficiency while you’re scaling the business?
Have one funnel. Instead of having a marketing funnel and a sales funnel, have everybody looking at what your conversion rates are at each stage on the way to a close. Look at a single funnel and do the analysis to see how you can crank things up or change something so the outcome is better.
Have some sales advice we didn’t touch on in our interview? Leave it in the comments below.