Build A Better Sales Machine: Part 1By: Vinay Kashyap | September 15, 2014
Part 1: Prioritize People and Create a Supportive Sales Culture
Mainsail Partners works exclusively with companies that have grown without the help of outside capital. We choose to partner with these bootstrapped entrepreneurs for good reason: they often create capital efficient businesses with great products that almost sell themselves.
Almost. What we’ve discovered through our partnerships with more than 40 bootstrapped companies is that they typically have an unpredictable sales model—one that is reactive or reliant on the CEO and perhaps one rainmaker to close new business. While this sales process has helped grow many a bootstrapped business to $5 million in revenue, it can’t carry your company to $50 million and beyond.
That requires building a predictable sales machine that enables your business to scale efficiently and effectively. In this two-part series, we’ll discuss how to do just that, first by focusing on having the right team and a supportive sales culture in place. In the next piece, we’ll address how to accelerate your success by optimizing sales operations with data and by utilizing best in class technology.
Building a powerful and successful sales machine starts with your people. As we often advise our entrepreneurs, you can have the best Sales Force Automation systems and predictive metrics, but without the right managers, sales people, and culture, your sales organization will struggle. Here are five tips for creating a proactive and motivated sales team.
BRING OUT THE WHITE BOARD
At one Mainsail SaaS (Software-as-a-Service) portfolio company, the first change made during a sales optimization project was to purchase a massive white board. The sales team began to “put up on the board” their daily sale counts in full view of the rest of the company. The presence of the board forced the sales manager to get out of his office and assess who were his A, B and C players for the first time.
It also spurred him to action. He put the C players on a one month sales remediation plan, and let them go if they couldn’t meet their goals. You want to nurture that competition in your sales organization. Remember: sales people are competitive and they want to win. If they aren’t winning at your organization don’t hold them back, let them go find a place where they can succeed.
RECRUIT TEAMS WITH PREVIOUS SUCCESS
We view sales organizations as living organisms with their own culture, folklore and associated vernacular. Often times the best sales teams move together, from growth company to growth company as each gets acquired by a larger, more bureaucratic organization. As a growth company CEO you should always be building your sales recruitment “bench”. You should be able to list off your “wish list” of local sales VP’s if you were handed the budget to make the hire. One good place to look for sales leadership talent is at a recently acquired growth company. Entrepreneurial sales leaders often times get smothered in a large company’s bureaucracy and are eager to find a new growth company to scale. If you find the right VP of Sales with a high quality network, they should be able to bring their top lieutenants with them as well.
MATCH YOUR SALES TEAM TO YOUR CUSTOMERS
Recruit your sales team based on the customer persona they are targeting. Three of Mainsail’s SaaS investments, Steelwedge (S&OP software for Fortune 1000 manufacturers), Netchemia (talent management software for K-12 school districts) and Zen Planner (business management software for fitness and wellness companies), have very different customers and require different sales personalities. For example, at Zen Planner, the sales team is made up of fitness enthusiasts, many of whom have owned fitness businesses themselves. They can easily relate to the passion and drive it takes to create a successful fitness or wellness company. As a result, they establish a faster and more authentic relationship with their customers, and aren’t judged as “just another sales person.”
DON’T PROMOTE YOUR BEST SALES PERSON TO MANAGER
Promoting your best sales person to manager is a common mistake we see at companies. Just like the best NBA or NFL player doesn’t make the best coach, your best sales person is not likely going to be the best sales manager. Sales people are generally individual contributors by nature, and the majority of them do not make great player/coaches. Sales managers need to think of their team first and leave the glory of closing big deals to others. As a rule of thumb, you can usually tell if you have promoted the wrong person to VP of Sales within one sales cycle. Do not wait too long to make the necessary change.
COMPENSATION MATTERS, BUT KEEP IT SIMPLE
Of course compensation is important to your sales people, but don’t overcomplicate your plan or forget about non-monetary incentives. At Mainsail we have seen countless ten-tab spreadsheets filled with data tables that calculate commissions to the hundredth decimal. They’re needlessly detailed and not typically effective.
A good rule of thumb is that a sales person should be able to calculate their commission on their iPhone calculator. Successful compensation plans include:
- Monetary incentives
- Clarity of message on sales tasks
- Employee recognition
For example, innovative companies like HubSpot use rapid promotions in title, as well as compensation, to keep their sales team motivated and learning. You should also think hard about any unintended consequences that may be hidden in your commission plan. Most of Mainsail’s portfolio companies have business models based on recurring revenue. These types of companies have to make sure that their commission structure encourages new customer additions, and doesn’t allow sales hunters to get fat and happy off residual compensation from business they sold three years ago.
So if your sales team scores a three-year software license for $300,000, the commission should be based on the value of the first year of the contract only. You can offer a “kicker or spiff” for the multi-year deal if that is aligned with your overall corporate strategy. Net Recurring Revenue (i.e., retained recurring revenue) should drive your commissions, while kickers and spiffs should drive your other business goals such as multi-year contracts and product module sales.
The path to $50 million is certainly a coordinated effort between several teams within your company, including sales, marketing, operations, IT and finance. Hopefully some of these sales tips will help your company reach that next level of growth.