Hiring someone who specialises in selling is tricky. They can create wonder from ordinary ideas and convince people to act in ways they wouldn’t ordinarily consider. They (I mean we) are known as hustlers because they can’t help but see and get excited by opportunities.
Most you can see coming a mile away while. They are urgent. Their bravado and ego overwhelm and polarise audiences. They fuel the used car salesman persona.
And there are those people who balance the delicate tension between nurturing relationships and closing sales. They also balance urgency with patience. They look, sound and act nothing like a used car salesman or woman.
In both cases, however, their gift of the gab can land them in situations where they don’t live up to the expectation they consciously (or inadvertently) set.
This isn’t a beat up on salespeople because I’m one of them. The truth is hiring the first ten roles in a startup is fraught with risk. Making a mistake with any one of them can be terminal for a business. This is as true for hiring the Chief Technology Officer as it is the first sales leader.
But don’t take my word for it. The 2017 First Round Capital State of Startup’s survey has this to say:
For the first time, sales leaders take the title of hardest to hire.
In 2015 and 2016, engineering leaders were far and away the hardest executive hires to make. But this year, the tables turned, and sales leaders became the most coveted and difficult hires (with 26% saying sales was the hardest vs. 24% saying engineering). This looks like the start of a sea change as more enterprise companies enter the fray, compete for talent, and see firsthand how costly a bad VP of Sales hire can be.
I have been thinking about hiring plans a lot lately for a number of reasons. Here is the framework I use to think about hiring sales and business development people in a growing venture. I have shared this with mentees this past month and I hope it helps you too.
We need a salesperson
Accelerating momentum is the main reason why founders start the hiring process to find a sales leader. The reality is that one of three underlying circumstances trigger the decision to start looking. And each one should be understood because it informs the type of sales leader you’re trying to find.
First, the product is stable and the founder who has led sales to date needs to focus on market-facing activities. These might include opening new markets, strategic partnerships and managing investor relations. Second, the founders are deeply technical and need help convincing the market of their product’s value through sales. Third, previous sales hires haven’t lived up to expectations but there is still a need to build out a sales organisation to support growth.
Each reason is legitimate.
What happens next is a flurry of controllable activities.
Job ads are written (and by written I mean drafted based on other companies’ ads for similar roles), posted online and then the vetting begins.
Some applicants may come from professional networks who saw you share the post on LinkedIn but for the most part, you’ll be running the ruler over quick-to-respond albeit under-qualified candidates.
I call these actions controllable (and the outcome relatively predictable) because each step is known and can be executed with ease.
The uncontrollable aspects of hiring a sales leader are the unpredictable factors, the ones that if not carefully understood can bring a business to its knees.
The following nine factors help move these factors from the unpredictable column to the predictable one.
Do you know why you’re hiring a sales leader? No, really. Do you?
The punchline is that growth and momentum come from different inputs. Sales is one of them but it’s not the only one.
B2B ventures face long sales cycles with a relatively small number of potential customers. In the early years of a venture, founders handle these deals and relationships. B2B sales also attract the label of complex sales because of the number of stakeholders that need to be understood and corralled to get deals done. A sales leader might be able to engage with each of these people more effectively and engage with more clients but could a founder(s) do that if they were a little more organised?
A sales leader may not be the right choice for a B2C business facing shorter sales cycles and customers with a potentially shorter lifetime value and higher churn rate. In this case, and particularly in software businesses, a growth leader who can bring analytics and marketing to the challenge is a better choice.
Alternatively, the founders may be poor at sales and business development and want to focus on their strengths. In doing so they bring in a sales leader who quickly establishes sales disciplines, begins attracting new customers and stems attrition.
The point is to know why you’re hiring a sales leader. You may not need one for now. If you do, it’s important the person you’re introducing into the business knows why they are there.
2. Rate of momentum
How much momentum a sales hire can add to the business in their first 30, 60 and 90 days will be telling. And depending on the business, this may or may not involve a closing sales to match your spreadsheet that demands exponential growth. Momentum should equal sales but it can also include the rate of:
- Assessing current sales processes
- Introducing sales disciplines eg establishing sales and CRM processes and providing visibility of sales activities across the business
- Learning through sales experiments e.g. cold calling vs email campaigns
- Learning through customer relationships e.g. engaging with customers. This is particularly important in B2B businesses where customer perspectives may not have been updated for some time
- Filling the funnel e.g number of new leads for an existing product as well as a new product.
I also look at how quickly the new sales leader starts getting in front of customers by themselves. The quicker the better.
3. Discipline in execution
It’s one thing to plan sales activities. It’s quite another to do them and follow up leads to their natural conclusion (which is hopefully a sale).
I can tell a lot from the follow-up tempo of a sales leader. It takes discipline, skill and organisation to follow up a large universe of leads and engage with them appropriately and personally given their stage on the decision journey. It’s different for B2B, B2C and direct to consumer businesses but ask each candidate for their philosophy and concrete examples of how they have managed follow-up.
4. Sales and business development are different
Salespeople sell products. Business development people create relationships to open new businesses. Both require expert relationship management and resilience. But each one demands a different psychology.
Salespeople (often) follow a well-established method to identify, approach and convince prospective customers. There is an expectation that a proven method will deliver results in a relatively short timeframe. The approach to business development is more opaque as you navigate uncertainty to identify and open industries that will buy your product. This requires playing the long game. And while it can be slow going to generate results in both sales and business development, it is often frustratingly slow in business development due to the lead-time in building and capitalising relationships.
The same person can do both sales and business development but they will often prefer one over the other. Understanding this early is important to reduce lost time.
5. Crowd-vet talent
Key hires, including sales leaders, should be vetted by people outside the business. Ask board members and investors to meet with people who are nearing the end of the hiring process. At least one board member or investor should have deep sales and business development experience. Use them to identify the pretenders.
6. Focus on a number
The business, regardless of business model, should have a clear idea of forecast annual revenues. That might sound obvious but I always find it amazing how many new sales hires enter a business not knowing what they’re up for.
The bottom line is that sales leader candidates should be aware of these targets as you vet them and as they size you up. This is because the quantum of the targets will attract (and dissuade) people from applying. And those who express an interest are likely to be in the capability ballpark.
7. Have a clear proposition
The best sales leaders are excellent at soliciting customer needs but they aren’t there to manage product development, their job is closing sales and partnerships. In other words, make sure you have a clear product to sell before you bring on a sales leader. Otherwise, the business runs the risk of losing focus on sales while the product evolves.
8. Understand incentives
Know why the sales leader is deciding to apply and join your team. There will be the obvious reasons like career development and developing skills or credentials in a new industry.
Look beyond those reasons. Appreciate their ‘why’ because that’s where their incentives live. As Charlie Munger says, incentives are a superpower. Understanding why someone is doing something is the quickest way to develop an alliance.
‘You’ll be get paid and get access to equity and you’ll have a chance to be a key part of our mission, but what’s really behind you wanting to join [company]?’
I often ask this of candidates, and particularly sales candidates who have tried to convince me of their suitability using an elegant explanation. I’m asking them to be vulnerable. Not to be uncomfortable because at this point they almost have the job. I want to know their incentives for joining me and the team.
And for the most part, this question unlocks a conversation about how they are trying to get their mojo back after a business they were leading failed. Other explanations can include they were let go due to their performance or that they are trying to find their way and they have skills, they just don’t know exactly how to apply them but they are drawn to the company’s vision.
These reasons could be cause not to proceed with the appointment but that’s not my perspective.
These explanations form the basis for how I can build incentives with a new ally. And the logic is simple. We (and the company) will be more successful if we can help one another achieve their ambitions over a two to a three-year term. This simply won’t happen if the normal financial incentives are offered.
Incentives are powerful. Get to know them for each of your people and anyone thinking of joining the team.
9. Go with paid auditions
There’s an excellent chance you won’t get this hiring process right the first time. I’m a big fan of getting really good at paid auditions and here’s why.
One last thing …
Don’t underestimate the importance of great sales and business development leaders. And never underestimate how difficult they are to hire. Take time to understand pedigree, incentives and fit. It will help your business accelerate momentum while saving it from making decisions that could be terminal.