How to build a boiler room

A playbook for building a sales organisation


Despite the huge amount of “sales” literature, I never found a book outlining how to properly design and execute an inside sales organisation.
The predominant sales literature is usually focusing on the act of selling itself. Sales success is, however, a matter of implementation and execution rather than just the sales pitch itself. This short post provides a scaffolding for building a scalable sales organisation. From a top level perspective, most sales organisations can be described by the following value chain:

Sales Value chain (source: Paul Gebhardt)

It’s easy to fill another book on each section in the value chain. I will focus on the key aspects and save the details for more elaborate posts.

Hiring sales reps

The basics

Before you start with hiring, have clear hiring goals. Tech companies use to complain about hiring engineers. Finding good sales people can be equally painful.

Clearly define candidate requirements. Are you looking enterprise sales people who must have a prior industry experience or inside sales reps who usually have a different profile.

Set-up a clear hiring process. Start with a standardised process for the collection and screening of application and communication with candidates (rejections, invitations etc) . Eat your own dog food, i.e. ideally use the same CRM you use in sales for managing your HR pipeline.

Making hiring more sophisticated

Examine candidates trough an extremely standardised interview process. Ask yourself: How can I figure out if the applicant fits my profile? Pour each attribute into an interview form (e.g. prior knowledge, academic degree, extroversion etc). Rate qualitative interview answers on a scale from 1-5 or 1-10 such as “how well did the candidate in pitching you the product he previously sold”. Use tools like google forms to set-up the interview and keep track of answers.

Make a science out of hiring sales people. Continuously review your interview questions. Analyse which question is the most powerful predictor of top candidates. Do you tend to hire people who score high on specific interview questions?

On-boarding sales reps

On-boarding new sales people should be a central KPI to either your sales lead or a sales operations manager. The KPI tracked is usually the time it takes until the new sales guy is up to speed, i.e. delivers the same output as her follow team mates. The biggest mistake: Just having new people listening to the sales pitch of new ones. The only way to get people up to speed quickly is through hardcore training. Set-up a sales playbook containing all necessary information. Each new person joining gets the playbook and is expected to have diligently studied the playbook before his first day. The playbook must cover: (a) An introduction into the company’s product, mission and vision (b) how you sell that mission and vision to customers (c) a primer on the CRM you use to keep track of sales efforts (d) common customer objections and objection handling (e) ideally even an audio file of a sales conversation (the pitch) . I don’t like the term pitch, though. A pitch is usually a monologue but selling should be a dialogue.

Test and feedback new sales people. Let them do estimations on how many deals they think they are able to close and review their estimates. Testing, through multiple choice tests, is not only a good way to incentivise people to diligently read your sales playbook but also to analyse how you can improve your on-boarding process.

Sales Operations and lead management

Leads are the fuel your sales team is running on. The more expensive the products is you are selling, the less standardised becomes the lead process (e.g. enterprise sales). The opposite applies to less expensive / low-touch products. You probably know how big your market is. How many potential customers do you have? Where do you get their contact information from? Again, the more expensive your product is the less standardised becomes the process (e.g. hiring an experienced sales guy who comes with an address book of leads), versus specifically knowing where to gather leads from (e.g. the telephone book when you are selling penny stocks like Jordan Belfort in Wolf of Wall Street).

I am a friend of properly splitting lead qualification and selling. As in any efficient economy, an efficient organisation “specialises” in key task. Ideally you have a lead qualification or research team generating leads / contacts. Your sales team is basically sourcing leads internally and giving feedback on how good they are. Even consider having an internal price for leads, i.e. the sales agents have a budget and can buy leads from the research team. This way you make sure sales teams properly feedback lead quality.

Defining the sales funnel, goals and metrics

Only people who sold the product once should design the sales funnel. Think about which stages make sense. In any case you start with a (1) Cold state, which describes a raw potential contact (2) warm lead, once you talked to the customer (3) Value Proposition, once you talked in more detail with the customer about the solution you offer. The next state is either directly the “won” state, i.e. you won a new customer, or other stages referring to an implementation, follow-up, demo etc.

The goal of a sales funnel is primarily to help you manage your sales efforts as well as to analyse where you can improve. Are the leads bad? (Conversion from cold to warm or value proposition). Can we improve the pitch? (conversion from value proposition to later stages).

The sales funnel directly translates into how your CRM is set-up. Most importantly, try to minimise the time sales people spend with the CRM. The goal of the CRM should be to facilitate sales not to waste time by documenting every single step.

Sales management, hierarchies and motivation

Despite tech companies being usually less hierarchical; sales should definitely follow a clear command line. First, sales is a numbers game and far more objective than marketing or especially engineering. Judging the beauty of a code base is hard and almost a philosophical matter. Sales people are judged by the revenue they generate. Hence, the more revenue a persons brings in, the more autonomy should she get. This makes it rapidly more hierarchical, which is important as it will also serve as an important incentive for sales people.

One person can properly manage 5 direct reports. I suggest to split sales team from the bottom up into teams of five, which are led by a sales team. Several sales teams are led by an industry, vertical or country team. These teams again are managed by a head of sales or chief revenue officer (however you may call him).

It does sound more complex than it is. Of course such a structure only makes sense for bigger or rapidly growing teams.

Sales feedback cards

Todays CRM systems make it easy to collect and visualise data. The challenge comes with making a daily routine about working with that data. I, therefore, suggest to have cheat sheets for all sales leads. The cheat sheet gives clear guidance what needs to be improved.

For example, team leads shouldn’t get an overview about individual call volumes or sales quotas hit. Ideally, the daily KPI reports clearly indicates “WARNINIG, Sales volume has been down by 20% compared to a 7 day average”. The same on an individual level by giving a proposal per sales rep on what to improve. The daily goal of each inside sales rep must be to beat the average with respect to call numbers, pipeline movements and closed contracts. By design 50% of the sales reps will not manage to outperform the average. If you can manage to constantly push average values by training, pushing and dismissing low performing team members within the organisation, you end-up building a decent sales organisation.

Again, the primary goal of a sales rep should be — like a portfolio manager — to outperform the benchmark.