If your startup is on the cusp of raising a series B, you’ve probably gotten some traction and you’re likely looking to double, triple, even 10x your revenue. You’re excited. You’re ready to grow your sales department.
Hold your horses, says Mandy Cole, the former VP of Sales at Zenefits who’s also built and grown sales teams at companies including LivingSocial, MyNewPlace, Main Street Hub, Stella & Dot and Citysearch. Before hiring a new team, she emphasizes that founders must first understand the fundamentals of scaling a sales operation, from customer acquisition to training and retention.
Cole herself has scaled four growth-stage companies, worked for five founder-CEOs, hired 1,100 sales people and 150 sales leaders and interviewed thousands of candidates in the process. She’s gotten hiring the right team members down to a science — and a track record of growing and successfully scaling small teams looking to go from their first million to $10 million.
Cole shares her playbook for how to build, as she puts it, “a kickass, high-performing sales team.” She lists five major mistakes CEOs make when they’re growing a team from a Series A-level company to Series B. Cole also goes through her 10-step playbook for building and growing an effective sales team. She details strategies for targeting and acquiring customers — and training your team to do that with extraordinary effectiveness.
Five Common Mistakes To Avoid
Before starting on the playbook, Cole first warns executives to avoid certain potholes. Averting these fundamental errors will make it easier for you to execute on her scaling playbook. Here are the top five mistakes she sees in startups attempting to scale their sales departments:
1. Failing to account for customer-product fit.
“Your product roadmap is about making your target customer successful, not just signing up any and every customer. While it’s natural to be testing different targets, once you get that data, hone in on who the right customer is,” Cole says. “If you’re just chasing every target that’s out there, you’ll never gain the efficiency you need to build a really high-performing team.”
“Take the sniper — not the shotgun — approach to customer acquisition.”
2. Prioritizing deals closed over retention.
“Get retention down before you start scaling customer acquisition. You don’t want to be losing them out the back door as quickly as you’re getting them in the front door,” Cole says. She recalls one startup she worked with that hired 200 sales people after raising a big series B so they could pursue a new market. “We found our close rate was less than 10% and our churn rate was over 40%. It was a very expensive way to learn we didn’t have product-market fit in that market segment.”
3. Failing to train and organize your team.
“I see a lot of companies reach product-market fit, hire a couple of people and turn them loose to let them figure it out. Don’t do this. Most of the time you’re hiring somebody who in the past has not figured it out. They had a process at their last job. A sales process helps prioritize opportunities,” Cole says. “A lack of process frustrates your salespeople and burns unnecessary energy.”
4. Playing too many positions: Overloading your employees.
In poorly-scaled sales organizations, people are scattered and stretched thin — their roles aren’t clear, and in some cases, they’re expected to do it all. To avoid this, Cole recommends clear roles and goals, as well as implementing necessary tools to keep employees engaged. She’s used Gallup’s StrengthsFinders, for example, to better understand what fires up employees.
5. Expecting to win without improving your skills: Failing to coach your team.
The work doesn’t stop once you’ve got an organizational structure and sales process in place. “Your sales development representatives (SDRs) and account executives (AEs) still need coaching to improve productivity. Even if they were the best salesperson where they were before, they’re still selling a different product,” Cole says. “They have to learn new things. Don’t hire several sales people without giving them coaching first. Coaching is the most undervalued activity. It makes the biggest impact on performance.”
“You can hire rockstars, but for them to be successful you need the right tools, the right leadership and the right playbook.”
Cole’s Playbook For Scaling A High-Performing Team
In this next section, Cole breaks down her 10-step approach to build a bigger, more efficient sales machine. Her advice is tailored specifically to those leveling up from series A to a series B, and she addresses some of the biggest hurdles to training and retaining the best people — and how to do that while increasing your chances of closing deals. Here’s how Cole tackles the gargantuan task of scaling up a small sales team:
1. Run the stats.
You’re likely starting with a revenue goal in mind. For a realistic target that matches activity in your funnel, Cole suggests starting by gathering data using the following simple formula:
- Number of deals closed x
- Revenue per deal x
- Number of AEs closing deals
The first two factors must be consistent before you hire more people.“Build a process to understand the consistent number of deals you should be getting from your team by measuring your conversion in your activity funnel. How many leads does it take to get a qualified demo? How many demos turn into a trial or a closed deal? And how long does your sales cycle take, from qualified lead to closed deal? Figure out what you can do to push the # of deals and revenue per deal. Look at everything from the skills your team has to your target market to your pricing strategy,” Cole says. “Once you’re comfortable with those topics, it’s a lot easier to add people because you can show them a roadmap to success.”
2. Hone in on your target.
This goes back to the top mistakes. Cole often sees leaders still trying to understand their sales funnel to try to make the product work for everyone. Instead, she recommends segmenting your potential customers. Build a spreadsheet with data like gross revenue per customer, industry, location and product previously used. Then start panning for the golden insights that will change the way you sell. Zenefits was paid based on the number of employees a customer had, so Cole’s team used that metric to hone in on their ideal customer profile.
“Narrow down your list of potential clients and go after what you know. Get your team focused on one target.”
3. Clearly define your value proposition.
Once you’ve analyzed your data and understand where to place your targets, it’s time to study them. “Ask, ‘What exactly are we doing for them?’ I’ve seen sales emails that list 100 features a product has — I just delete them. Quit feature dumping. Tell me what problem you’re going to solve for me,” Cole says. At Zenefits, Cole learned this the hard way. Her team would pitch HR managers on the software, which automated tasks. Demos were popular, but conversions were low. So Cole hit pause. “What are we actually solving and who are we solving for?” As it turned out, the CFOs were the real decision-makers and were stressed about benefits spending and compliance with new regulations. The team pivoted its target and pitch, and sent conversions soaring. So make sure your team understands your target customer and buyer personas.”
“Focus on understanding what problems keep your customer up at night. How do they benefit if you solve them?”
4. Build a repeatable, scalable process.
Once you’ve defined your customer and value proposition, it’s time to create a structured process. Cole recommends starting by defining what’s sales-qualified — who’s the decision-maker you want, or what’s the timeline you’re looking for?” Be clear about the criteria for each stage of your pipeline. Know what must happen for you to move to the next stage, and understand what tools your team has to enable the process. You’ll have a much more realistic revenue and pipeline forecast if you do,” Cole says. Then, tailor your pitch: customers want to know how the product will address their needs. Get a customer relationship management system (CRM) like Salesforce or Pipedrive, and dig into any failures using data to analyze for commonalities that may help you improve how you target customers.
5. Find the talent you need to run your playbook.
Now that you have your process, playbook and goals in place, you’re ready to hire. Cole’s top tips include creating hiring days, or two mornings a week where managers are dedicated to meeting with candidates. In addition to the job requisites, Cole stresses ‘the 3 Cs’: curiosity, competitiveness and coachability. “Are they naturally curious about the customer, the product, the industry? Do they want to solve problems? Are they driven? Do they set deadlines and goals and compete against their personal best?” Cole says. “I say, ‘Tell me about a time you got feedback from a direct manager on something you need to improve, and what you did with that.’ It’s really interesting how many people can’t even a.) think of a time they got feedback or b.) say ‘Oh, I did such a good job that my manager doesn’t give me feedback.’ I’m a huge believer in ‘Tell me about a time.’”
6. Leverage your vision to give your team a why.
Most of the time your vision is a three- to four-year one. Salespeople need a shorter-term outlook. “They need to know how are the things I do every day contributing to success. You can build confidence and trust quickly by sharing what the company is doing each month or quarter,” Cole says.
7. Define success and how to achieve it.
Your people need a daily and weekly plan. In Cole’s roles, “We just very clearly state, ‘This is how you’re measured monthly.’ That helps with performance expectations. It’s a lot easier to motivate people around actions that they’re directly responsible for,” Cole says. “They can make enough calls or enough emails to schedule a demo. Sometimes they can’t control of the deal closes, but they can control their activity. Make sure to give these people recognition so your team understands how to get to their revenue goals. And you’ll want to ensure that the compensation incentivizes the right behavior.”
8. Invest in a foundation of high performance from day 1.
So you’ve defined success and set expectations. Now ensure your team has the right tools and structure to grow. “They need to continue to get better and see improvement. Each month, ask yourself what you’re doing around talent,” Cole says. “Make sure you’re giving your team really clear focus and expectations. What are you doing to develop and motivate?”
9. Iron sharpens iron: Create a culture of developing talent.
Training for salespeople can be a bust. “People get one day or one week of training. Most of the time it’s just about the product, not how to sell it. I hired 200 people in four months going through steps 1–8 of this playbook. When it came time to train, we broke down the sales process to four steps and turned it into a four-week program. There were interactive group exercises, one-on-one peer exercises, a weekly performance challenge — and they had to earn points to get certified. We changed their behavior by practicing one thing each week. It allowed people to get really good at one thing before jumping to the next step.”
10. Have fun: Leverage incentives to drive change and engagement.
Cole doesn’t recommend offering $100 to the first salesperson to close a deal that day. “Contests are most effective when changing behavior. If you need people to switch their calling to another vertical, that’s a good time to roll out a contest,” Cole says. “As you grow you’ll want to think about how to develop and retain your top performers, layer on more long term incentives, and make sure you provide team leader and mentor opportunities. Overall, you just want to see people get better.”
Cole, an avid sports fan, likens the path of a salesperson to that of an athlete becoming a champion. She points to famed Warriors player Steph Curry, who was often picked last for games growing up. Once he was in professional training, coaches loved him — Curry came 30 minutes early for every practice, shooting 150 shots before anyone else arrived.
“All successes are about good habits. It’s not about being the most talented person in basketball. Steph was just meticulous about everything he did — and kept getting better,” Cole says. “Success is not an accident. It’s a choice. Steph Curry is one of the best shooters on the planet because he chooses to create good habits. That’s why it’s so important to cement a sales process and be laser-focused on your value prop and target customer. You must create the right habits for salespeople to follow in your organization.”
“Are the habits you have today on par with the dreams that you have for tomorrow? That’s the question you should be asking yourself every single day.”