Is it Time to Hire a Sales Team?

The $150,000 sales team mistake that you can avoid.

Outgrowing the “Founder One-person Sales Team” is a natural stage in the business cycle and it’s one that many founders want to get to sooner rather than later.

The crossroad where the founder is ready to step back from the day-to-day selling and hire salespeople to take over the process, so that he can spend more time working on the business instead of in the business.

I’ve come across this situation several times over the last 10 years, but this one company sticks out more than others.

This founder held on for 14 months with two sales team hires only closing a handful of deals. To make matters worse, most of those deals were prospected by the founder himself and handed-off to the sales team to finalize the paperwork.

Between the two base salaries and onboarding expenses, those reps cost the company over $200,000 in labor costs. When you factor in the missed opportunities from lost leads and botched conversations, the true costs of that failed transition spiraled much higher.

The founder knew how to sell his solution, but didn’t have the time to diagnose why these hires were so far behind.

More so than angry, he was confused.

“I gave them everything they needed to be successful. Why didn’t it work?”

Too many times we get introduced to businesses after they get trapped in this classic ROI nightmare of launching a sales department without a solid plan. Life would be easier for everyone involved if we could just get introduced before the spiral begins.

The Real Problem Wasn’t the Salespeople

This part is always tough to understand the first time around. When a sales hire costs more than he brings in over a year, though our instinct is to blame the hire, eventually we come to understand that it’s actually the system.

These two salespeople didn’t fail because they lacked sales talent. In fact, they both had a pretty good sales track record in previous roles. They failed because there was no map that defined what success looks like from Day 1 onward. There was no decision matrix for the leader to know when to guide the sales team and through what specific challenge.

Knowing What to Measure and When

It’s common for sales leaders to measure success based on the bottom line. Deals closed. Revenue generated. Quota hit or missed.

Here’s the challenge. Leaders know that the sales team is not going to close deals on Day 1. Or even Month 1. And in companies with long sales cycles, like the one in this example, maybe not even by Day 90.

That’s why poor performance in sales goes unmeasured and unnoticed.

Here’s why we get confused. When evaluating the success of any other department, leaders can easily define what success looks like early in the ramp-up. X amount of widgets. 98% QA. Track and reduce costs by Y. If the metrics aren’t met within the first 90 days, it’s time to make a change.

The sales department, however, is often treated like a mystery. During days 1-90 it is acceptable to not produce because we have to “build the pipeline”. The thinking is that we don’t have anything to measure until enough time for the full sales cycle has occurred.

That philosophy is wrong.

Closed deals are lagging indicators that tell you what already happened in the past. The problem is that by the time lagging indicators turn red, the damage is done. You’re measuring a problem that started 90 days ago.

This founder kept telling himself, “I’m not expecting sales in the first 90 days, so there’s nothing to worry about right now.”

Then 90 days turned into 120. Then 6 months turned into a year. At that point, so much time and money went into ramping up the team, changing directions seemed like the worst idea.

This was the point where I was brought in to help.

How To Build a Sales Team

Step 1: We define the Leading Indicators first

We mapped every activity in the onboarding process, the training process, and, of course, the sales process. We identified the specific behaviors that caused the pipeline to grow. Connections, Discovery calls. Proposals. Advances. Referral Requests. Everything.

We built a way to measure the Leading indicators, the activities that help us predict results before the results are due.

Now, for the first time, this founder could answer a question he had never been able to answer before:

Is my sales team on track to onboard properly?

Is prospecting on track?

Are they building a solid pipeline?

We built clear metrics that we can measure right now, on Day 1, Day 18, Day 67. At any point, he would know where they were and where they needed to be. Which meant he could coach and support appropriately as well.

Step 2: We defined the Lagging Indicators that proved ROI for the Department

We built clear benchmarks for the revenue needs, close rates, average deal sizes, customer acquisition costs, and so much more. We knew exactly what the sales department needed to achieve, and when, in order to deliver a real ROI.

These weren’t pie-in-the-sky wishes. There were specific, time-bound commitments tied directly to carrying two salespeople on payroll and growing the company.

Step 3: We built a Pro Forma that showed everyone what success looks like

Using the leading and lagging indicators we defined, we built a sales proforma that provided a month-by-month roadmap of all the financial expectations from Day 1 to Day 365.

Everyone on the team now knows exactly where they were on the roadmap and if they were winning.

Step 4: We documented every step of the sales process

Knowing what to do works best when accompanied with knowing how to do it. We built a sales playbook, and even filmed some videos, to assure the team had resources available at their fingertips whenever they needed them.

We started from the hiring process, the onboarding process, the training process, and all the activities that made the company successful.

Now the salespeople could follow all the best practices that had been developed over the years and they knew the why behind each step.

The Sales Team Turnaround

The next 12 months were completely different from the previous year.

We were able to keep one of the original salespeople, and the other left on a mutual agreement. The entire team knew exactly what success looked like at any point on the timeline.

Accountability was healthy, and in most cases, actually fun.

We’ve had some challenges along the way, and we caught them early. The best part, this company is ready to bring on two more sales team members. We know exactly what to expect financially and the founder is prepared to work through any of the challenges that may come up.

Are you ready to scale your sales team, or are you hoping for the best?

Hope isn’t a strategy, and lagging indicators are too expensive to rely on. By partnering with a Benchmark Executive Coach, we’ll help you map out your leading indicators, build a predictable sales pro forma, and design a system where accountability is clear from Day 1.

Avoid the ROI nightmare. Connect with an Executive Coach today to lay a bulletproof foundation for your sales team.

Resources