Scaling your B2B sales team: 8 pieces of advice from our portfolio founders.
Getting B2B sales right: A series of lessons learned from the signals VC ecosystem
Welcome back to the second part of our B2B sales series. For this edition, we have asked our portfolio founders to share their key lessons about sales hiring, which I’ve condensed, analyzed and summarized in this blog post. Shout-out to the founders of Automation Hero, Workpath, everphone, CoachHub and zenloop for taking the time to share their wisdom. If you’re a founder in the B2B SaaS space, we hope that you’ll benefit from some of these insights.
Having a great sales team is crucial for almost every successful B2B startup catering to enterprises (yes, even for a Product-Led-Growth approach). Neglecting sales hiring can result in a loss of time and resources, ultimately jeopardizing the success of a startup. But what are common pitfalls and what should founders consider at which stage? In order to answer this, it’s first of all important to understand the different phases of sales staffing in startups.
The Sales Learning Curve — Initiation, Transition, and Execution Phase
Just like it takes time to build the product, a company needs time to understand how to sell its product, how a customer buys, or what the productivity of a sales rep is. The Sales Learning Curve for startups picks up this notion and divides it into three phases for sales staffing: Initiation, Transition, and Execution Phase (analogous to the idea embodied in the Manufacturing Learning Curve).
The Initiation Phase begins when the product has been beta tested and is ready to hit the market. Normally, during this time few customers will be willing to consider buying the product, and those that do will require significant incentives.
Once sales yield reaches a point where revenue per sales rep equals the fully loaded cost per sales rep, you’ve moved into the Transition Phase. The focus here should be on developing a repeatable sales model and refining the market positioning.
Lastly, in the Execution Phase, the “formula of success” has been developed and you have a repeatable sales model in place (i.e., know the yield of a sales rep on a repeatable basis). In this phase, the company needs more experienced salespeople that require nothing more than a territory, sales plan, price book, and marketing materials to bring in orders.
With these phases in mind, here is what stood out when speaking with our portfolio founders.
8 Key Learnings in Sales Hiring
1. Start with founder-led sales (Initiation Phase)
Sales in its earliest days is about testing hypotheses and learning, and goes hand in hand with product, marketing or engineering. It requires a person that can relate to the various aspects of the startup as effectively as to the customer. As the founder, you know your company better than anyone else and are best placed to take an evolving product, build a narrative around it and communicate it effectively to customers. Typically, only a small sales team is required to start the learning process. The ideal sales rep in this phase should have an entrepreneurial mindset combined with a deep interest in product technology and a tolerance for ambiguity.
2. Hire junior before senior positions… (Initiation/ Transition Phase)
Experience is not a prerequisite for success. Or as one of our portfolio founders has put it: “Hiring seniors before juniors is the worst thing you can do”. Trying to hire only those sales reps with many years of enterprise experience (e.g., Microsoft, SAP) usually doesn’t work out for a simple reason: seniors don’t work well with ambiguity and expect some process in place (which, in a startup, is mostly a work-in-progress). In the exploratory phase, there is no need for someone with extensive experience that tries to apply everything previously learned. Think about the learning curve: Not everything that has worked in a previous company will work in another one. Thus, look for the young and hungry with a lot to prove instead of the old and established seeking to move their business book.
3. …however, be aware of the type of sales you need (Transition Phase)
Especially in sales to large enterprises (i.e., high ACVs, long sales cycles, etc.) you should be very particular about who you hire, and merely hiring someone that is young and hungry might not be enough. It’s therefore important to be aware that different sales types (e.g., SMB vs. large enterprise) require different personas. This means that you shouldn’t automatically hire someone from Microsoft or SAP but instead someone who has done enterprise sales for the ARR that you will be hitting the following year.
4. Hire a Sales Operations person (Transition Phase)
Sales ops helps you scale, and the stronger your sales ops the more efficient and productive your sales team will be. It’s an easy calculation if you look at the costs of a sales person versus the cost of a sales ops person and how much time they put back into the sales team every day so they can sell effectively. As soon as you have about 4–5 sales reps and plan to scale fast, it makes sense to hire a sales ops person. If you don’t find candidates with a “Sales Operations” background, consider looking for titles in CVs that have similar skill sets, such as Business Analytics, Business Operations, Data Analyst, or Strategy & Operations. And if budget is a concern, consider starting with a part-time sales ops position and ramp up to a full-time function later when needed.
5. Hire a Sales Recruiter (Transition Phase)
This is probably the most agreed upon one. Almost every interviewed founder in retrospect wished they had put more attention on sales recruiting earlier. Scaling the sales team ideally happens in tandem with a rising sales curve. Often, however, the many hurdles of hiring sales reps are overlooked: overall shortage in B2B sales talents, competing against big firms with more attractive offers, finding entrepreneurial sales reps that are at the right career juncture, or the effort it takes to search for talent that often have a notice period and need time to fully ramp-up. A sales recruiter can become invaluable for effectively growing the entire company as most B2B startups only scale with more sales reps. It’s better to over-budget for this position and spend more money to fill it, which will be made up in the long run.
6. Build an Employer Brand (Transition/ Execution Phase)
Employer branding is the way the company shows itself as a great place to work. This can be achieved by several initiatives and is usually part of an entire employer branding strategy. There are, however, also some quick wins with a large impact: regularly sharing relevant content that features your employees. A short video or podcast for instance can be a simple-but-effective way to give a glimpse into your company’s culture (which is, btw, important for 88% of all millennials). One founder stated this as very helpful in hiring, also for sales positions. And let’s be honest: A great 60-second video can be very powerful — and even more so for young (unsexy) B2B startups that in most cases have no profile yet.
7. You should always be hiring… (Transition/ Execution Phase)
In a B2B startup, sales people are the only employees in an organization which are profit centers, so you should never not be hiring. Only searching for talents when sales positions are open can result in poor selection decisions; ergo, sales hiring should be done perpetually in order to always have prospective candidates in your pipeline. Good talent should also be recycled. If a candidate declines your offer at one moment in time, just keep them in the pool for future jobs and circle back.
8. …but bad hires can ruin your startup (Transition/ Execution Phase)
The harsh truth is that you need to know when it’s time to let go of a sales rep. Not doing so can cost you money and momentum. Think about it: If you hire a wrong sales rep, not only do you incur opportunity costs in lost revenues but also in 9–18 months of lost productivity as you manage them out and onboard the next one. However, a sales rep should not be let go for performance reasons alone: If they are capable of executing well, are committed and have an attitude that aligns with the company’s culture, it’s worth diagnosing the reasons for the (bad) performance.
Wrap-Up
Sales hiring is an essential part of every sales-driven B2B startup and deserves special attention. While every B2B startup has its individual challenges in sales hiring, they all tend to go through different sales maturity phases. Chances of success may increase dramatically if a founder manages to overcome common pitfalls in sales hiring, as sales plays a key role in scaling B2B startups.
Are you a founder in the B2B space? I’m sure this blog post only scratches the surface of a broad subject, and I’m always happy to start conversations and learn from entrepreneurs that are building companies in the B2B space. Feel free to reach out — I’m looking forward to chatting with you!
