Building a Sales Tribe in a Product Development World
Growth stage companies can be too focused on user growth, with revenue a distant thought at the back of everyone’s mind. This is especially true in companies where the developer to sales employee ratio is in favour of the coding counterparts. While developers can build amazing products that makes the users go “ooo” and “ahh,” in the long run if there is no engine driving in top line results, user growth can stall if resources grow thin.
It’s important for businesses to remember: sales helps fund the vision of the company.
The challenge these companies face is the slow, yet inevitable, evolution of the sales team. These are the first comings of the high tempered, fast speaking and hyper competitive employees that are hired to accelerate the success of the company. They come from larger sales dominated companies which have a different culture than what they’re used to and they need to learn how to quickly adapt to their Product-focused environment.
I was one of those sales folks who came from a corporate giant (Oracle) to a smaller company. Here are some helpful quick tips that I picked up along the way in building a successful sales channel within a world dominated by Product Development.
The backbone of the sales team should be the culture of “Support”
Imagine a world where you call your customers and they’re excited to hear from you and your pitch. Sounds like a dream situation right? If you’re working on customer retention and revenue growth, and you need an easy sales cycle for your team, then the key is to have a kick ass support culture.
Having a friendly and consultative sales representative will always yield better returns for you as well if support is ingrained in them. They’ll think more of “how do I help this person?” rather than their own commission checks and provide the development teams with great dividends which include product feature requests and excellent contacts for real customer case feedback. This is the one benefit that sales can provide product that is universal for every business, regardless of industry.
On customer acquisition, this strategy helps because word of mouth goes a long way for referrals, and cold calls become easier when the market sees your product favourably.
TEST! It’s not just a Product thing
If you work in a company that has a very low entry point for pricing, you’re going to need to find out where the value is if you’re trying to raise Monthly Recurring Revenue (MRR) or the Average Revenue Per User (ARPU). I’ve been a part of three different sales tests before I made my first successful sales channel.
What I’ve learnt along the way is to treat testing like one would in a science experiment. Follow the scientific method and ensure that you’re properly measuring your observations, hypotheses, predictions, experiments and conclusions. For example, if your goal is to increase ARPU, important factors in the future success of your new sales team can include: how much pipeline you have, how long the sales cycle is and what the return on investment will be. It’s imperative that you measure this within a framework that tests your ideas for revenue growth to ensure that you can replicate your success and scale.
When sales becomes a science, it becomes predictable, and predictable revenue is the best kind. This is exactly what your Product counterparts want to see if they’re going to help build anything for you in the future. The more you speak their language and show them the potential impact of what your test will do, the more open they’ll be to your input and ideas.
Understand the Important Metrics for Growth
In my SaaS world and within sales, I follow the CAC (Customer Acquisition Cost) Ratio. The salesman in me always has revenue as my focus but my CPA/CMA/MBA has me thinking about the margins as well. The CAC ratio of your sales team will help determine when to scale and when to maintain what you have. Here’s an excellent article written by Bessemer Venture Partners that breaks down the CAC Ratio for you very well; I heavily recommend it.
The basic premise is this: take the Gross Margin between two quarters, annualize it and divide it by the cost from the previous quarter. If your CAC ratio is >1.0, then invest more! If it’s < 0.33 then something is wrong. If it’s between 0.33 and 1, then focus on productivity improvement.
If you follow this method you’ll grow your sales team properly and keep your finance folks happy.
While the sales teams’ success is good news for everyone, the view from within the Product Development world may be clouded by the short term demands of their jobs (and oh boy what a demanding job it is!). Product teams are concerned about their weekly/quarterly/annual goals and their deadlines; they live in a world of sprints and launches. As such, presenting your Product team with a list of daily demands on what you think is best can conflict with what they’ve been trying to solve for weeks.
It is really important that you can understand what they’re focused on because that is the direction your product is moving and inevitably what you have to sell.
Some companies out there follow the OKR (Objective and Key Results) process. This is a wonderful system because it gives visibility to everyone in the company about what everyone is working on.
If you’re about to build a test, it’s best to attach yourself to these objectives and see how you can effectively promote and improve their key results.
How to Achieve Kum-Ba-Yah
It’s all about unity. If you’re currently living in a Product Development world bashing your head in because you need changes to make your selling life easier, you need to take a step back and think about what you’re asking of them. Does what you’re working on also align with what they’re working on? If not, then it’s an opportunity for you to learn outside your existing channel and be an intrapreneur!
One of the best pieces of advice I got was from a Product Manager:
“If you’re asking me to build you something, you have to ask yourself first: What is the product manager not building because they’re building something for me?”
Stay calm and remember that you’re all in this together. Product people want to help the masses and you want to make money for the company so you can reach those masses. By delivering a structured and tested business case, you’ll be able to move the company forward instead of spinning in circles. Always look for harmony and remember that it’s your job to help them understand your perspective.
Once you’ve finally got synergy and the products are in place, all barriers will be gone and execution is completely up to you and your sales team.
