When to Start and Scale Sales Operations?
- Hire a sales operations professional as soon as possible, even when you have just a couple of salespeople.
- Focus on sales architecture and strategy first and on tactical implementation second.
- Get the most experienced individual you can find for this role, evaluating both internal candidates as well as external experts.
Scale sales operations with your team, and focus specifically on analyzing and continuously improving your sales process.
We recently hosted a sales operations and enablement roundtable at Storm Ventures. If our conversation at that event, as well as online conversations (such as on Modern Sales Salon), are any indication, then most experienced sales leaders believe you cannot invest in sales operations soon enough:
“At previous companies, we spent MILLIONS going back and fixing process that could’ve taken a day if it were done properly in the first place. That doesn’t even take into account the lost productivity. This is essentially the definition of properly scaling an org, and it pays for itself in the long-term.” Andy Stollmeyer, Sales Operations Manager, Entelo
“We see companies hire their first sales operations hire when teams are as little as four people (one VP and three reps). Every VP Sales we talked to in a later stage org said they’d wished they hired sales ops and built out a proper revenue application/model earlier in the biz.” Anonymous, CEO
“I’m a big believer in investing upfront in building out systems and processes that scale. I’m sure most members on this list have one if not more stories of botched systems that they spent far more time fixing that could have been avoided if they were designed correctly the first time.” Carl Ehrnrooth, Sales and Business Operations, New Relic
“I’d highly recommend making an early investment in Ops. I inherited a lot of bad processes that have taken me quarters to unwind and change. It becomes very difficult to change process while running a company during/post scaling. Additionally, you have to invest a lot of time / $ updating historical reporting once a process change has taken place. Investing in Ops now will have an immediate impact and should also set your company up to scale in the future.” Chris Lazzarini, Director of Sales Operations, UserTesting.com
When to Hire Your First Sales Operations Manager?
Let’s define what your first sales ops hire will do? There’s a common misunderstanding that sales operations is purely about the tactical. It’s shouldn’t be. There are two ways of thinking about sales operations:
1. Offloading things that your VP, SDRs, etc. are currently doing; a very tactical role.
2. Initiating things that aren’t being done that need to be done.
Whereas the first approach is about managing processes and tools that you have put in place, the latter is about putting in place or tuning processes and tools that don’t exist or don’t perform optimally.
Ultimately the goal of sales operations should be to increase the sales effectiveness and efficiency of the organization.
The goal of sales operations and enablement is to increase sales effectiveness and efficiency.
The things we commonly associate with sales operations, like sales compensation, managing forecasts, administering the tools (CRM, etc.), getting orders done, data cleaning, sales enablement, reporting & analytics, etc. are all just means to an end, the end being sales effectiveness and efficiency.
Here’s our representation of a complete sales architecture design:
The key elements are:
- Build the right sales process
- Use tools to optimize the process (efficiency, effectiveness, UI/UX etc.)
- Enable your sales team with insights (content; questions, stories, etc.)
- Train for skills that can be used to assist clients, execute processes, and leveraged to use tools/content
- Build an organization that is scalable
Leverage data to make metrics driven decisions
Greg Dalli, the co-founder of Clarus Designs, a Sales and Marketing analytics consultancy recently introduced me to a simple framework to evaluate when to invest in sales operations:
Productivity gain (%) x Quota carrying reps (#) >1
For example, if you think you can get a 20% boost in productivity, and you have a 10 person team, then hiring a sales ops person would give you a 2 FTE equivalent boost in productivity, meaning that you probably should have hired them a while ago.
Below are your break even rates for hiring a sales ops person, meaning the minimum % boost you would need for it to make sense for you to use a headcount for a sales ops person instead of a rep:
While it is rough, it is directionally accurate enough to make a good decision about investing in sales enablement.
Who to hire in sales operations?
Stage 1: Your First Sales Operations Hire
If your focus is offloading tasks from your existing people, then your hire could be a junior to mid-level sales ops manager. If however, your focus is on getting a blueprint, a sales architecture, in place before the cement is dry (as we recommend), then hire the most experienced person you can find. Sometimes that person may be an external expert, who has seen tens of sales designs. In either case, avoid the pitfall of having your new hire or expert implement the process of their last company without careful consideration for your unique circumstances.
Inevitably, sales operations starts out as an one-person department. The post-it notes on Sheila Bradley’s wall represent her many, different responsibilities. She is responsible for sales operations at SLI Systems:
She also pioneered the use of “The Growth Mindset” in her sales organization, to promote an attitude of lifelong learning and self-improvement. If you are a parent, you have heard of this concept. If not, then read up here.
Stage 2: Break Out Sales Enablement
In later stage organizations some specialization occurs. The first role to break out is often “enablement”:
Sales enablement is coming into its own. On November 18, one day after our focus group, the Sales Enablement Society held its inaugural meeting in Florida, with local chapter activities to follow soon. Daniel West leads the group in Silicon Valley.
Stage 3: Specialized Roles
In the most advanced organizations each of the layers of the sales design has it’s own specialist. One company in our focus group had given up several quota-carrying headcounts in order to hire “business process optimization” specialists and recorded that was the “best investment” they made. Another company called this role a “Sales effectiveness Manager”.
As you grow the team, specialists could be assigned by:
- A geographical region (most common)
- Segments of the business e.g. SMB/Enterprise/Key Accounts — or hunting versus farming.
- A “horizontal” sales ops function where they own the core process e.g. forecasting, QBR/MBR, quotas, territory planning etc.
Best in class companies will dedicate about 5% of their sales budget to sales operations or about one operations, or about one sales operations hire for every twenty quota-carrying reps. The average is probably lower than that, but there is a reason that best in class sales organizations are … best in class. Use Greg’s formula above to figure out what is right for you.sales operations hire for every twenty quota-carrying reps. The average is probably lower than that, but there is a reason that best in class sales organizations are … best in class. Use Greg’s formula above to figure out what is right for you.
Best in class organizations spend 5% of budget on improving sales effectiveness and efficiency.
Whatever your ratio, make sure that you don’t stop with just hiring one “jack of all trades”. You should continue to invest in sales effectiveness as you grow your organization. We have written about Sales PODs before and about finding the ideal ratio of SDRs, AEs and CSMs for your organization. Similarly, as you add more sales PODs, you should also add more analysts.