When one interacts with the founders of technology / Internet start-ups during networking events, one topic that never ceases to generate interest is about “what should one’s sales strategy be and how to hire a crack sales team”. The reason why this is a hot topic for discussion is because typically most of the founders come from a technology background and have had no active sales roles in their previous professional avatars.
I have also seen many of the founders getting into the role of a Head of Sales – not just taking decisions on sales strategy and doing front-line sales but also hiring sales managers and the team. The passion of the founders to take the company forward can absolutely be not doubted but this trend definitely raises the question – “is sales as easy as a DIY tool”?
In my opinion, any technology / Internet start-up is propped up by 4 pillars – Product, Marketing, Sales and Customer Service and the company would be as strong as its weakest pillar. One would have to acknowledge that each of these pillars is a specialized field and needs specialists to strengthen it. This is especially so of Sales because this is the only pillar that has the responsibility of earning money for the company whereas the other pillars look for investment/spends from the company.
Thus, any technology / Internet start-up should look at its sales operations very carefully. In an increasingly ‘aware’ business economy, competitive advantage is built by strong selling propositions making sales operations not a simple tool anymore.
Here are a few decisions that a founder CEO will have to take with regards to building a sales engine for the company.
1. What’s my sales proposition? In simple words, what do I tell my customers that will excite them the most and will make them pay for my product / service. A founder of a start-up should be its best salesperson and hence, it is best articulated by the person who started it all. I believe that this would be the starting point for the rest of the sales related decisions to follow.
2. What should my channel strategy be? Today’s environment, strengthened by technology and skills, offers multiple channel strategy options. The channel strategy would be a function of various factors like below.
a. Do I need customer-facing time with my client to demo my product / service?
b. How many customers am I targeting? And which media are they reachable through?
c. How is my prospective customer base segmented? By enterprise size, by geography, by industry or by need?
d. What average ticket size am I targeting?
e. What average sales cycle do I foresee?
Each of these factors will impact the channel strategy of a company. For example, if I am selling an online personal finance product with a ticket size of Rs.250 per year (less than US$6), my best efforts would go towards building an efficient online sales engine. However, if my product is targeted to the enterprise segment where the average ticket size is Rs.10 lakhs (approx. US$22,000) and the decision cycle is 4-5 weeks, I would have senior sales people who will service the Enterprise accounts with customer-facing time.
Thus, a start-up will be served with a myriad of choices – online sales, field sales, inside sales, sales through franchisees / business partners etc., and a mix of the above. It is thus critical to choose the one that suits one’s business the best.
c. If I need salespeople, when should I hire them?
The timing of hiring sales people would be dependent on the time required to train them. If the training schedule is likely to last 15 days, it would be ideal to have the sales people on board atleast a month in advance of the product launch. This would give the sales people sufficient time to soak in the company culture, ‘live’ the product and do mock sales drills.
d. Who should I hire first – the Sales Head or the sales people?
If you foresee having a substantial number of sales people in your team in the next 12 months, hiring a Sales Head first would be ideal. This will not only give an opportunity for the Sales Head to hire and ‘own’ his team but will also allow the founder to have a manageable span of control.
e. What skills should I look for in a Sales Head?
Hiring a Head of Sales is probably the biggest decisions a founder takes in the early days of his / her start-up. It is so critical that this is one area the company cannot afford to go wrong. If the founder already has operational experience of managing sales people, he / she is all set to start hiring. However, if the founder’s past experience has not afforded him the luxury of managing a sales team or hiring senior sales people, it is a job left to people who have the experience / skills to bring in a senior sales resource.
Giving a mandate to a Search firm is a start but ideally all senior sales positions should be overseen by someone within the company or outside who has operational experience in hiring and managing senior sales people.
Sales is a function that a founder / CEO cannot afford to lose track of. Despite having a Sales Head, it is important for the founder to be in the loop on all aspects of the sales process like below.
i. The sales review process
While the Sales Head will be involved with the sales review on a day-today process, it is important for the founder to have a formal bi-weekly/weekly review with the Sales Head to keep track of what’s happening on ground.
ii. Sales team job description and compensation
Define the framework of compensation and stick to it. There will be situations where exceptions will be sought but by and large, following a consistent framework would be beneficial in future and will reduce sales team friction.
iii. Commission structure
Sales people love commissions. A well structured commission framework helps in keeping the sales team motivated and brings in better results for the company. Again, the founder should lay down the rules and be firm with the execution.
iv. Team culture
It is the founder’s responsibility to define the culture of the company and he / she should keep reemphasizing the same at every opportunity. Culture impacts performance and it is true for the sales team as well. While the Sales Head is functionally responsible for the team, it is also the founder’s job to keep the team in good humor. A happy sales team will bring great results for the company – however, if the team is happy because it is getting paid handsomely without having to work hard, it’s a problem that needs to be nipped in the bud.
While it is likely that a founder’s time is spent in all aspects of the business, sales is undoubtedly the part which will need high quality time of the founder. After all, this is the function that helps the company pay its bills. While it cannot be denied that a few entrepreneurs have been brilliant in managing the sales function even without prior sales management experience, the same might not hold true for all founders. Building a crack sales team is an essential in a start-up and experience rather than a DIY approach might be a better way to go.