In M&A, we often hear investors ask how a company intends to scale. This is a critical factor in determining an investor’s interest in making an investment or acquisition.
In my experience as the co-founder of a SaaS company, I had to figure out how to scale a sales team. I knew that scaling a sales team was the most important component to the growth we needed to achieve to meet our exit strategy. It took me some trial and error, so I hope the result of my experience will help guide you on best practices to make this easier for you. What I learned is that people, process and technology go hand in hand.
Ten Steps to Scale a Sales Team:
1) Talent acquisition. I can’t tell you how many times I’ve heard a founder say “I’m just going to hire sales people and let them go”. Please don’t do this! Your hiring process needs to have many components and should be criteria-based and aligned with your industry. Don’t hire by gut feel! Use criteria to ensure that the new salesperson will be successful. Remember, employees are expensive investments. Take the time to find the right fit so you don’t get people who bounce after 6 months or a year – attrition is a drain on morale.
2) Hiring speed. I’ve also seen founders make the mistake of hiring as many salespeople as possible as quickly as possible and letting them “just sell”. This is another mistake. It is absolutely critical that you have process and technology infrastructure for your salespeople or they likely will not be successful. Take the time to build the infrastructure and I guarantee that you will not regret it because speed and success will be the result.
3) Process. Create a sales process for your company. In our case, I used the Solution Selling methodology and tweaked it. We were selling to enterprise buyers, so the methodology worked because it ensures that leads are qualified to what you are offering. It also ensures that you keep the prospect engaged throughout the selling cycle, which can be long in enterprise sales. Whatever methodology you adopt, ensure that you have a process instantiated in your sales execution.
4) Lead generation. There is another fallacy in the mind of founders that sales and marketing are the same activity. They are not! Marketing should be responsible for generating leads and sales should be responsible for working off the leads. It is critical that Marketing keeps a consistent number of leads flowing through the sales team to keep their pipeline full.
5) Repeatable sales process. The sales process should not change! Process is meant to be repeatable from prospect to prospect. You can tweak the process for small, medium and large prospects, but the underlying method should always be consistent. For example, we used a 5-step qualification process (pain, power, value, vision and control) that needed to be completed for every prospect, regardless of whether they were a $10k or $7m account.
6) Sales enablement. Where do you want your salespeople spending their time? Writing proposals from scratch every time or meeting with prospects? Of course, it is the latter. This is why sales enablement tools are so critical. If you ensure that you can provide all of the materials in a consistent format for salespeople, they will be more effective. Marketing needs to establish the content, in concert with the sales requirements.
7) Tracking and forecasts. This is another area that you don’t want salespeople to spend time on regularly. Once their goals are agreed to, the remainder of the tracking, reporting and forecasting must be automated. They should simply ‘do their job’ and the tools record all of the data needed for weekly, monthly, quarterly and annual reporting. This will also ensure that the information is accurate because it is tied to CRM, marketing automation and all the other tools that are used by the team.
8) Normalization. Normalization in this case is the process of adjusting (dividing) your metrics to a common scale (in this case, to one sale). How many leads do you need to make a sale? How many touches generate a lead? How many proposals generate a new customer? Using a normalization metric will give you the clarity for scaling because you’ll always know how many of all components of your marketing and sales cycle are needed to get to your goal. You should then back into sales goals from the normalization to 1 metric. This will give you the goals for marketing leads, sales proposals and new customers.
9) Management. Managing sales teams is a full-time job. You need someone in the leadership position who understands how to keep up morale because disappointment in sales comes often. Not everyone is motivated by the same things, so you need a leader who can coach effectively. At the same time, focus and consistency are critical. I’ve seen sales leaders who pivot the team’s focus based on any success and that causes confusion. It’s a bad way to manage.
10) Be unique. Your sales and marketing teams are the people telling your story. It is very important that they know how to communicate what makes your company unique. They can’t just communicate your technical differentiators, but explain how that translates into better value. I’ve seen so many prospects get turned off when salespeople focus too much on the how and not the result.
When you scale the sales team, you will have the infrastructure needed to scale your growth. You should also have the same infrastructure planning for customer support, R&D and other areas of your company. Your exit strategy is likely dependent on growth, so working on scaling your company is critical. Remember, M&A doesn’t just happen. It is the result of good strategy executed well. The work you do on building the proper scaling capabilities for people, process and technology will help you enjoy a profitable exit in the future.
