Common assumptions regarding jumpstarting a SaaS sales organization can prove deadly if you don’t question them.
Building the foundation for a strong sales organization is undoubtedly one of the most impactful undertakings for a CEO. It is also one of the least understood. In many of the board and executive team meetings I have attended as a part-time CFO, I’ve come to realize that CEOs share many of the same struggles when it comes to creating and growing their sales organizations. Many of these struggles are a result of making important decisions based upon commonly held assumptions which aren’t fully examined before the decision is made.
At an event we organized for our client CEO’s, Mitch Morando, CEO of Whalr, presented us with five commonly held assumptions we should be questioning. His insights walked us through why these assumptions prevent CEOs of SaaS companies from creating sales teams that effectively scale. Many of the bold, organization-building actions that CEOs need to take in relation to sales seemingly defies common sense and are certainly departures from the norm.
In his presentation, Mitch explained that when decoding the structure that makes a strong foundation for a winning sales team in a SaaS organization, the findings are often counter-intuitive. Building an effective, scalable sales team involves abandoning some traditional notions of business development and sales. In this article, I will discuss the five myths that stand in the way of creating a highly productive sales practice for your SaaS startup. I hope you find them useful.
Myth #1: SaaS Sales is a Numbers Game
Myth number one relates to the fact that an effective early-stage SaaS sales organization does not grow linearly with sales. It’s all about staying small and agile initially. I’ve been at meetings where advisors urge the CEO to hire as many salespeople as fast as they can. Pause and think about this: if the number of SaaS sales were a direct result of the number of salespeople, sales executives would be more popular – and scarce – than engineers in Silicon Valley.
The fact is that the number of salespeople in an early-stage startup is seldom in perfect correlation with sales performance. Many times, it is the genius of one sales person that carries the whole organization through the critical periods of growth. Often, this genius originates from none other than the CEO, which is related to the next myth.
Myth #2: You Need a VP of Sales Right Away
If you think you need to hire a big shot VP of Sales right away, think again. You may be surprised to learn that seasoned growth hacking experts like Mitch would advise you not to hire a VP until SaaS sales are well under way and thriving.
Why? Often, a startup’s best sales person is the founder/CEO. The CEO has the persistence and passion to keep making calls despite rejection, has the ability to give a visual pitch rather than showing a demo, and is able to answer questions in the most credible manner. There is often someone behind the scenes who is responsible for the administrative tasks, like project management and tracking sales metrics, but the CEO should be driving customer conversations early on.
Myth #3: Product-Market Fit has a Final Destination
The day when you achieve the perfect product-market fit doesn’t exist. Product-market fit for SaaS companies is always a moving target that needs to be re-formulated every time you successfully sell to a new customer.
When you see product-market fit as a path with milestones along the way, rather than a destination, your team will be enabled to quickly incorporate new features into the product that help you expand sales – as opposed to making the product more complicated. Most importantly, realizing that product-market fit is a path will enable you to adapt and follow the traditional product adoption curve (innovators, then early adopters, etc.) without struggling to find the next group of natural users.
Myth #4: SaaS Sales Compensation Should be Transparent and Uniform
The next myth relates to SaaS sales compensation from the perspective that it should be customized for each person, and cemented in reality, simplicity and fairness – not on predetermined rules. A sales comp plan should be tailored to a specific person based on elements such as, their skills, the contacts they have access to, their roles, and even their particular stage in life.
I wrote another blog entitled “The Secret to a Successful Sales For compensation Plan? Think Strategically“ that expands on this point. Specifically, I use an analogy comparing sales hunters to sales gatherers – both come with skill sets that your sales organization needs to thrive – but it is important to know the difference in those skill sets and the variety of ways to compensate your sales organization in a way that is fair, real, and simple … yet not equal.
Myth #5: SaaS Sales Compensation Should be Planned for the Long Run
The final myth Mitch debunked may surprise you: a sales compensation plan shouldn’t stay consistent throughout the company’s existence, but instead, there should be a new compensation plan put in place each year, possibly even every six months. Your product will change in ways you can’t predict, and those changes should trigger the variables that go into the design of your sales plan. Knowing that product enhancements impact your sales compensation structure means that you build flexibility into the way you compensate and reward your sales team — and in doing so, you’re keeping your employees productive, motivated and focused.
Stay Outside the Box
Mitch, and others with similar perspectives, have identified these myths throughout years of trial and error. I see these myths sneak into the collective conscious of many CEO’s. I challenge you to question the status quo, and that may mean you will make decisions that go against the advice of traditional advisors. To develop a strong, scalable foundation for your sales organization, you’re going to need to think outside the box and make decisions that are based on what is right for your company, not what everyone else tells you to be true.
Photo courtesy of Christopher Michel.