Workbook 7: When and how should you hire a sales team

It’s now time to start selling your software and as a SaaS Leader, your thoughts are turning to what sort of sales team you might need to bring in and in what order. Should you bring in a VP of Sales to lead the line for example?  

The answer depends upon what stage your business is at, but for the benefit of this book we’ll focus on the early days. If you’re a later stage Founder, refollowing this process is still valuable as it’ll help you assess whether mistakes have been made in the past with your hiring process.  

We believe that there’s a clear process to run that avoids making potentially fatal mistakes and hiring too soon. We believe it’s vital you don’t press the scale button too quickly. In the early days, you’re in the process of establishing Product Market Fit (PMF) and this will be a great guide (timing wise) in terms of who you should hire.  

So, what does PMF actually mean and how do you know when you’ve got it? Before we consider who to hire, let’s understand this properly. 

What is Product Market fit really? 

Too many businesses (and indeed Investors) attribute the achievement of Product Market fit to the number of customers you’ve signed up and insist it’s all about the amount of revenue you’ve achieved. We believe, at an early stage, there’s far more to it than this and here are the reasons why.  

The PMF stage is also about confirming with absolute certainty that your product works for your customers at every level be it pricing, packaging, onboarding, customer support and most importantly of all – usage.  

Following the process detailed in this book, you’ve already invested time and resource confirming your customers’ have a problem. Now you need to make sure that your solution is fixing that problem because if for any reason you’re falling short, you have to know about it now. Anything other than successful customers would mean you’re planning to build your business on the shakiest of foundations and you’ll find real challenges scaling.

Before you hire an expensive sales team, you need to understand the complete customer experience including: 

• How easy the product was to set up? 
• How widely the solution has been adopted by the team? 
• Has it integrated seamlessly to other platforms and into the team’s processes? 
• Was it easy to get support and your questions answered? 

• Which features of the product have been the most useful and which not? This will be critical for pricing which we’ll cover off in a later chapter) 
• What adjustments need to be made to the product to increase its value?  
• What is the customer’s feeling is around pricing? 
• Did your initial marketing messages describe the solution accurately? 

Only when you’ve uncovered these answers and received confirmation that your software is being widely used across multiple early-stage customers, can you begin to feel you have PMF. Signing up 20 customers who don’t use your software is just churn in waiting, so you must obsess about this early-stage product adoption. And there’s only one group of people who should own this discovery. 

The importance of Founder led Sales 

We believe that achieving this confirmation MUST be the responsibility of the Founding Team and that is why, particularly in the early stage of your business, while you achieve PMF, we obsess about the importance of Founder led sales and account management. This is not the time to hire others – you need to lead the line. After all, who else is better placed to listen intently to customer feedback and ask powerful questions about your software’s usefulness? Who could possibly care about your product more? You might well need to make important refinements to your solution to really make it fly and you need to hear this from the horse’s mouth.  

As an aside, whilst we’re focussing here on early-stage businesses and achieving product market fit, this process and the responsibility for receiving customer product feedback is also valuable to businesses who have slowed down, growth wise, over recent months. Go back to the drawing board and sit down with your customers and find out what’s been happening. No-one is better placed than the designer of a car to see which parts of the engine aren’t working. Is your solution been widely used and if so by whom? Why have certain features never been adopted and why do some integrations not work? All vital feedback. 

Beyond evaluating early-stage customer success therefore, why else is Founder led sales so important? 

We can’t tell you the number of times we’ve heard from Founders that they are no good at sales and need to hire in people that are. In many cases this is nonsense, particularly if they’ve raised a seed investment from investors. If you’ve managed to sell 20% of your company to a sophisticated, informed institution in return for a significant amount of cash, you’re great at selling. You need to trust us about this – it’s hard and you’ve done it.  

Founder led sales are also vital to your early customers, as they are not buying into evidence of your software’s success because you haven’t established any yet. They are buying into your vison and your passion for solving their problems and this is not something that can be transmitted to a new salesperson. A Business Development Manager is nothing like as invested as you are and naturally have other priorities. You have to lead from the front here – this cannot be shied away from.  

There’s also a popular misconception among technical Founders that good salespeople need to have bags of charisma, to be gregarious and extrovert in order to succeed. This too is incorrect – some of the very best salespeople we’ve ever seen have been introverted. They are great listeners; they empathise and reflect on what they’ve heard. We’ve worked with some amazing pre-sales consultants, for example, who come from a technical background who do more to close a sale than the shiny salesperson (with a great smile) sitting next to them. Think about how Jony I’ve talks about his products at Apple – with introspection and thoughtfulness.  

So, if you’re a technical Founder who has convinced anyone to part with money for a share of their business, you are already a great salesperson and are more than capable of fulfilling this early-stage function. 

Your early customers 

What are you after from your first handful of customers? As described at the top of the chapter, the Product Market Fit stage is all about experimentation. This is where you’re learning and evaluating and like any great scientist you’re hypothesizing and iterating concurrently and at great pace. This testing phase is the ball game as you are building a wealth of evidence that your software really works, is being widely used and is valued by customers at the centre of your ideal market map. If you know for sure you have the antidote, you just need to find more people with the pain. This is your only job in the early stages, and it needs to have your full attention. Trying to build a business without this critical feedback is doomed from the start – you’ll be building on truths that are not self-evident. 

So how to you go about finding these early customers? The answer is you need to hustle like crazy; you need to ask for introductions and referrals, you need to cold call, and you need to ask friends and family. Essentially you need to do whatever to takes to find them. They may be companies you used to work for, or you might select the ones you know from your Market Map. Take out that list and look at who you know that works at one of these companies or who you know that knows someone that works there. They may very well be the businesses you tested your thesis on in the first place. This is not a time for sales process or overthinking things and don’t worry too much about pricing. This is a time for find 5-10 early customers who have a ‘hair on fire’ problem and who buy into your vision for solving it.  

Whilst this may seem initially daunting, again, you’ve done this before when you hunted down your first 5-10 investors. You know how to do this, it’s exactly the same process. And in the same way you wouldn’t hire someone in to do your seed raise, you wouldn’t let someone else make your first sales. 

Only once you’re absolutely convinced your solution works, can you move forwards to the next phase. The software world is littered with businesses who brought sales resource too early, who saw their burn go up and their runway reduce, and churn begin to creep into their business like a silent killer. Revenue growth started to fall, the market changed and suddenly they’re facing the dual nightmare of being un-investable at the same time they’re running out of cash. You have to be 100% sure before you move forwards. 

Establish a usage metric 

You also might want to consider what usage levels you want to monitor that gives you a lead indicator of customer success and proves your software is being used extensively. Slack for example set the bar of 2000 messages sent in the first 60 days and HubSpot knew they had PMF if someone downloaded 5 of the 25 available features in their first 2 months. Dropbox set the metric of 85% of customers uploading 1 file, in 1 folder, one 1 device within 1 hour.   

So, what should your metric be? Think deeply about this as this metric would give your onboarding team, your customer support team, your investors and indeed the whole business the confidence your software is being adopted at good pace. Remember that closing the deal is only the first of a 10-step process – monitoring usage and customer satisfaction are vital too. 

Begin adding to your team 

It’s about now that you should start making your first hires as you’re going to need two individuals to help support you.  

1. Customer Support representative 

You might be surprised to learn that very often the first hire you should make is not a salesperson at all but a customer support representative. This is because the process of continuing to learn from your first dozen customers is perpetual, and their usage metrics should always be monitored.  

Successful customers don’t churn, listened to customers refer you to others. A hard working and much-loved CS person could be invaluable here. They could be collating feedback from early customers that rave about your product, which really helps get the flywheel spinning and gets you picked up by VC algorithms. Or reviewing NPS scores and stars and comments on product review sites – all of this helps create positive kinetic energy on your early growth. This early feedback will also be invaluable when it comes to pricing, and we’ll look at why in the next chapter. 

Your CS representative will also be highly effective at helping build the sales playbook as they’ll have first-hand knowledge of the features that are most valued by customers and the emphasis that should be put on them from a marketing point of view. They’ll know the key user and buying personas intimately and what really bothers them – all of this is invaluable feedback for a new salesperson.   

        2. Fractional Revenue Operations person (or agency) 

Before you build a sales machine, it’s vital you get the core engine firing correctly and that is built around your data and CRM. Too many businesses end up in a mess of leads, sales stages, spreadsheets, and customer feedback if they don’t get this bedrock in place immediately.  

When we helped the team at Keaze (www.keaze.com) set up their sales team, the first thing we did was work with a Revenue Operations agency. They bought us the right HubSpot licenses, structured the fields correctly, integrated the correct marketing tools and calendars and deduped the prospect database. They owned the sales and marketing tech stack, built us sales stages and brought us structure.  

This saved us hundreds of hours down the line and most importantly gave us some vital early insight into what sort of customers were responding to what sort of messages. We emailed everyone out of HubSpot from day 1 so we could see who had opened what, could use the data to see who visited our website and could set alarms to follow up calls. Great data is everything to a sales team. 

Too often we see this good housekeeping done too late down the line, often by a tech centric sales guy who tries to implement a new CRM one year in. Hours are wasted trying to gather together random data from a variety of people across the business and platforms such as Mailchimp are integrated ineffectively. This is so much harder to do later – consider getting it right from the start.  

Hiring for these two roles shouldn’t have cost the bank and are great first investments in your Go to Market team. You’ve now got confirmed PMF, a good CS person to continue the learning and a fractional Rev Ops person to ensure your data and sales tech is set up correctly from the get-go. Your first customers have brought in say £200,000 of revenue and you’d like to scale to £1m – it’s now time to think about your Head of Sales. 

Let’s assume you’ve signed your first 5-10 customers, you’ve thoroughly tested the full customer experience and you’ve proven you’re solving a genuine problem. Most critically of all you’ve discovered that your customers are actually using your software and it’s fully imbedded in their processes. You can now believe you’ve established PMF and it’s time to expand your sales efforts beyond the founding team. 

Who should you look to hire next and in what order? 

1. Fractional Head of Sales 

 Who (and if) you hire as your Head of Sales will very much depend on the solution you’re taking to market. The shape of the team you hire will depend on the annual contract value. If you’re selling mid-market to enterprise solutions for example, with an ACV north of £10,000, then the process listed below will work. For more Product Led Growth cadences you’ll need a slightly different shape with less SDR’s (see more below). But the main pitfall to avoid here is trying to hire a full time Head of Sales, when actually a Fractional VP of Sales might offer more value, especially at this early stage.  

Let’s look at a nightmare scenario that could happen if you head down the full-time route. Basically, you can waste a lot of time with no guarantee of success. Very often the Founder may never have hired for such a role before and may not be sure of what qualities they are actually looking for. They might spend three months interviewing (often ineffectually) and once they have selected their candidate (sometimes spending an expensive search fee) they then discover they have a three month notice period.  

But eventually they start, and the Founder is not sure how to manage them and leaves them to their own devices. Three months after joining, things are starting to meander, and the Founder starts having doubts and Investors are starting to wonder why the dials haven’t started to move. The culture across the team seems to have changed and some ill-fitting salespeople have been hired. Six to nine months later the Founder decides to make a change and the expensive VP of Sales is moved on. Far too much time and money has been wasted.  

Clearly not every engagement works this way, but we’ve heard this story too often for our liking. The alternative might be to hire a fractional VP of Sales who comes at a significantly lower cost and can be hired almost immediately. There is a plenty of agencies out there who can deliver such an individual, but we’d recommend a call to Tom Glason at Scale wise (www.scalewise.com).  

In return for 2 days a week initially, your fractional VP of Sales can begin to build your sales engine and professionalise your sales function. They can deliver a couple of sales cycles and begin to think about sales stages. They can be plugged into both your CS representative to download that critical early-stage customer feedback and they can integrate into the Rev Ops fabric you have created. Very soon they’ll want to expand the team which they might do so as follows. 

      2. Sales Development Representatives (SDRs)  

 Often hired in pairs for both company and appraisal reasons (one might be better than the other), your SDR’s will be responsible for researching the personas on your Market Map and thinking up innovative ways to get on their radar. Their job is to manage the top of funnel from an outbound perspective and make appointments initially for you’re the Founding team or where time allows, the fractional VP of Sales. Again, these people should be hired for mid-market to enterprise sized sales – for PLG you’ll need to bolster your Marketing spend further.  

       3. Marketing Executive and Content Manager 

If you can afford two people here, one of each, then that is optimum. But if budgets are tight you need to find an individual who will own your website ensuring the messaging is kept bang up to date via customer feedback and 90% of your customer’s learning can be done on the site (see the earlier workbook). They’ll also own all your outbound content such as e-books and user guides and any social channels you’ll be running. 

        4. Account Executives (AEs) 

We’ve talked a lot in this book about leads before sales and ensuring your market is reacting positively to your messaging before bringing in tonnes of sales resource. Your Fractional VP of Sales has limited bandwidth across the couple of days they are with you each week and they’ll mainly be focussed on creating the sales machine and hiring in others. But once you have too many meetings to attend personally, you should start bringing on one or two Account Executives who’s job it’ll be to attend meetings, run the sales cycle and deliver their stretch targets that map into your agreed financial model.  

At this stage this is all the team you’ll need to get your business to £1m ARR. And don’t forget along the way you are constantly measuring usage of your product and ensuring continued PMF with your core Market Map customers. 

Once you’ve achieved your £1m of ARR it’s almost certainly time to move to a full time VP of Sales. After all you’ve now significantly de-risked this expensive hire and the business can now afford the investment. Either your Fractional VP of Sales can join full time as they have fallen in love with the business, or they can help you source their full-time replacement because they’ll have an invaluable insight into the type of individual needed.  

The characteristics of your VP of Sales  

So, what qualities and characteristics are you looking for from in a sales leader? There are plenty of schools of thought here but some useful guidelines would be: 

1. They are not from a big brand. As you’re an early-stage business, you’re not looking for someone with big brand experience. Ex Microsoft and Google sales leaders are not going to be used to selling without a well-known brand behind them and at this stage you don’t have that. They’ll expect enormous support teams and marketing budgets to be successful and again, that’s not you right now.
2. They’ve done the stage you’re at before. Whatever stage you’re at, they need to evidence they’ve been successful at a similar stage before. If it’s £1m ARR to £3m ARR growth you’re looking for, they need to explain where they have delivered this in a previous life.
3. They have built a team. Again, this is mandatory as they have to have built a team where at least 2 or 3 have gone on to be successful. 
4. They have sold at the same price point before. If you’re retailing your product at £30,000 ARR they need to have sold at similar levels before. If their success has been at £5000 ARR then the £30,000 will spook them. Equally well if they are used to selling at £1m ARR then the £30,000 might bore them. Also consider their experience of selling at your sales cycle lengths too
   
5. They can bring a few sales reps with them. Might they be able to bring some people with them? It’s a great sign if they can as they have others who will follow based on past experience. It might be a red flag if they can’t.
6. They are the right cultural fit. Absolutely vital or you might see a staff exodus if you hire the wrong personality. They must fit in with your core team
   
7. Look for the 3rd hop. The perfect hire here is someone who has been wildly successful in their first role and then taken that playbook into their next role and maybe hit a few bumps in the road. Hopefully they will have quickly learned that you need more than one playbook and that there are lots of nuances in sales. Then when they arrive at your company, they have gained valuable experience and have the humility to build a revised playbook for you. These people are hard to find but it’s important to have this important cadence in mind. 
8.  We’re often asked about whether this individual should have domain expertise and come from within the sector you’re in. We recommend you don’t over index on this as what you’re selling can be easily learned by the right individual.  

Get evidence your hunch is right 

Once you think you identified your perfect VP of Sales, it’s a great idea to verify your hunch is right. Speak to sales reps he or she has worked with before and also speak to former peers. You’re looking for confirmation that they are who they say they are, and you need to structure the supplied reference calls well too.  

We can’t emphasise enough the importance of your reference calls – Chris Tottman, co-author and a partner at Notion Capital, makes two or three every week. Reference, reference, reference – too many Founders don’t reference enough and some not at all. It’s a recipe for disaster if not done properly. We’d thoroughly recommend the book Who? by Geoff Smart and Randy Street as they provide an excellent question set when speaking to referees. 

Also, sweat your network and work on any back channels you can to find out more. This might seem like over-kill, but it will save the time, money, and embarrassment of hiring the wrong person. 

Workbook Actions 

• Assess how close your business is to PMF based against your usage stats as well as revenue. Successful customers don’t churn! 
• Be prepared to lead all new sales as an early-stage Founder or re-engage with customers if you’re later stage. 
• Consider hiring a Customer Service representative and a Rev Opps individual or agency before your hire your first salesperson. 
• A Fractional VP of Sales may well be worth considering before you hire someone full time – certainly up to £1m ARR. 

Let’s take a look now at some hints and tips on the best way to sell your software, particularly if this is your first time. It’s all about discovery before demo as you’ll see in the next workbook.