Sales Advice I Gave to SaaS Founders
Notes from a talk to an EO Forum
Big disclaimer here: I’ve not sold a SaaS company. So, if you discount advice on something like that, stop reading now.
However, I have worked with many over the years in my coaching and consulting work. As a result, I have noticed some patterns. Some even cross-industries, to the shock of everyone who believes their industry is unique. If you find that sort of thing valuable, read on.
I recently had the opportunity to meet with a forum from Entrepreneur’s Organization. Many of the members were founders of SaaS companies (software-as-a-service). They wanted to talk about “sales,” in all its confusing glory and myriad meanings.
Below is what I shared with them.
Big mistakes founders (and CEOs) make
They don’t go first.
This means that founders, especially technical founders, have this mistaken belief they need to hire a seller or a sales leader to do this thing called sales. So they hire someone to do it and then wonder why they don’t hit their numbers. Or why the pipeline looks great or closes look dismal. Or why they have no clue what the sales team is really doing (other than discounting and treating every deal like a unicorn).
When founders go first in sales (by selling), they quickly move past the belief that it’s some magical thing only a select few genetic lottery winners can do. They learn what questions to ask prospects (and thus, salespeople). They learn they can get deals done without concessions. And they hear what customers really want, rather than what sellers think the customers want.
When founders go first in sales management, they have the same realizations as above. They also have the advantage of building the processes they can understand and hold others accountable to execute. When they hand off sales management too soon, they end up frustrated inevitably with the lack of clarity, communication and accountability in the sales org.
They don’t outsource when they should
Everyone feels they need a BDR team. I have no idea why.
It’s so bloody hard. It’s not complicated. But it’s hard.
Try selling this: “Hey, come work for me in a low paying role where you’ll do the same thing repeatedly, all day, every day, and face rejection 85% of the time. What are you doing, you ask? Making cold calls, writing emails, spending time in a CRM, and chasing people on Linkedin. If you’re really good, you might get a better job in 12-18 months, if we have it and an opening. Otherwise, you’ll go somewhere else and maybe do the same thing or maybe get a promotion. You in?”
Oh. They need training. And coaching. And accountability. And someone who deals with, well, people problems. Asking for raises. Wanting to move on (and then needing a backfill and more training and paperwork and coaching). Having rough days. Time off. Reporting errors.
Outsource it if you can. Some groups are actually good at taking that off your plate. I know one, right here in Texas, too!
What else can you outsource? Sales/Rev operations. Most people, especially early on, don’t need a full time rockstar in that role. You can find someone to help you set up your CRM, track the metrics and data, and generate the reports.
Outsource where you can, especially early on.
They don’t pay enough
This is the source of many problems. Everyone wants a rockstar. For 50k or 80k or 120k or 180k per year.
If you want the talent, pay for the talent.
There are workarounds. Like amazing learning, culture, relationships, and a fascinating industry. But eventually, people want to get paid. So the bill comes due.
And here’s the truth: the delta between a FTE at 50 and 80k is significant. The same delta exists between 120 and 200k. You can get a higher caliber person. I think Steve Jobs said, “Better talents costs 30% more but does 3x the work.”
Look, I get it if you’re bootstrapping. When you’re wondering, “Can I pay myself that extra little bit to cover property taxes this year, or do I pay this guy or gal a little more?”, it’s challenging. Understand this: you’re the one writing the checks because you’re the founder/CEO. It’s also why you take the lion’s share of the upside when this thing goes well.
If you can, pay the extra to get the better talent.
They hire the sexy one. Too fast.
I’ve long joked that some of the best sales that sales people and sales leaders make are getting hired. They look like Brad Pitt on the front end but turn into Borat on day 10.
Slowing down on the hire is a big deal. It also helps if a founder knows what they’re looking for (because they’ve done the job themselves) and can vet that in the hiring process.
Otherwise, they fall for resumes in a desperate attempt to get someone in to drive sales. And find that the person doesn’t have the industry experience needed, or the deal size experience, or the coachability, or the pattern matching skills, or the ability to handle a higher level of buyer.
All of which are real.
So. Many. Times. Founders have come back to me, 6 months after hiring some “rockstar,” and said, “It didn’t work out.” And they burned 6 months.
What can you do here?
First, start asking people NOT, “Whom should I hire?”, but, “How should I hire?”
Get the process right.
Second, have a point of comparison. Look to have at least 2-3 candidates you can compare, not just the first one who fogs a mirror.ss
Third, have a plan they need to start executing. You’re not hiring a partner to build the plan (even if you think they should); you need execution.
Fourth, hold them accountable from the get-go. Yes, there’s a lot of talk about, “I hire adults and don’t micromanage.” What on earth is that? You still need results or this is a hobby. Every results-focused organization in the world holds people accountable. It’s ok. The good ones appreciate it.
If you’re going to hire a sales manager (or VP or director, or in some cases, a “CRO”….)
What should you look for?
Look, if you have salespeople reporting to this person, here’s what you want in that person. They need to be:
- Credible (they have done something, or are doing it now)
- Caring (for the people they lead)
This is a people management role. You need someone who is strong but well, good with people.
They must be able to:
- Make good decisions
- Hold people accountable
- Run a decent meeting
- Understand the economics of a sale
- Get past excuses from others
- Make decisions about the business that don’t involve their reps
- Build out a basic funnel
- Know how to generate some leads/prospect
That’s the “work” you seek in the role.
It helps if they have some grasp of finance and unit economics. I don’t need a financial engineer, but some grasp of the P&L, balance sheet, and cash flow statements is a plus.
This is what you’re looking for, not just a great salesperson. You can make some concessions on some of these, but have a plan for how you’ll fill in the gaps through coaching, training, development, or some other person.
So what do sales leaders need to do? Especially early on?
Great question. And here’s what I shared with these founders.
50% or more of a good manager’s time is coaching their reps. That’s pre-call planning, post-call debriefing, holding 1:1s, reviewing the pipeline, and role playing.
Stunning, I know. But great reps don’t come out of the womb ready to go. And they don’t come from other companies that way, either. It takes work to get someone who can knock down deals routinely.
If you think for a minute over your career and interactions with reps, you’ll realize this is true.
What else should a manager do?
They need to hire when it’s time, and onboard those people. And that onboarding is real work, which is what should give you pause on wanting to hire a lot of people: it’s expensive.
They need to hold people accountable. (Hear a theme?) Typically to prospecting, but also to CRM hygiene.
They need to provide the key reporting.
They need to mentor their people in their career. Because many people are looking for that, even if it’s not in your comp package.
And they need to understand how to motivate and inspire others.
That’s all, folks. Beyond that, you’re getting icing on the cake. If they can do that, you have a solid manager.
What should you measure?
Here’s what I’ve seen, and it’s in 3 categories.
- Activity – the “what” of their time. Are they prospecting?
- Pipeline movement – are we gaining ground, or just aging deals?
- Time to respond – if a lead comes in, how long does it take to move on it?
- 1:1s – are they putting in the time with reps? Do they have relationships with them?
- Time in field – do they have first hand knowledge of what’s going on with customers?
- Coaching – are they developing their people’s skills?
- Reporting – are they getting us the numbers needed to make decisions?
- Pipeline – do we have future indicators? Is it moving?
And across industries…..
- Margin – because making money is important.
- Aging of pipe – how old are the deals? I’ve seen too many aged past 365 days. (This can also be about velocity or speed through the pipeline.)
- Pipe by stage – does it look like a funnel, or a pencil? Do we have enough at each stage to predict future sales?
- Volume of pipe – do we have enough in there in total?
- Process in pipe – do we have milestones that opportunities need to hit to keep moving forward?
- Conversion ratios (by stage) – do we know know percent of opportunities convert by stage? Too often, we don’t.
- Lead source – do we know where leads are coming from, what percentage of of leads, and how they’re converting? We should.
- Lead scoring (eventually) – some leads are more valuable than others. If we have the above, we can nail this down and prioritize.
- Scoring opps (eventually) – some deals have markers that tell us, when we’re sober minded, that they won’t close. We want to move to a place where we know this and kill all efforts to win those deals.
What about leads? Especially early on?
Early on, build a lead channel around yourself. Every self-appointed guru and expert will preach the gospel of their way to drive leads: BDRs; affiliate marketing; channel partners; strategic relationships; email; content.
Here’s the problem. You have YOUR resources and talents, not theirs.
What works for a company with 50 million in funding may not work for you.
What works for a business selling to financial advisors may not work for you. Or a business selling to consumers. Or one that sells to dentists.
If you’re reading this, you have some marketing talents, whether you’ve come to peace with that or not. Lean on those because the more you lean in, the more you learn and the better you’ll get. And you’ll find a way to drive leads.
If you love data, a little bit of copywriting, and running A/B tests, paid search may be your thing.
Love to write? Content could for you.
Enjoy networking events? Leveraging that could drive your early leads.
In short, know that you don’t have to copy someone else’s playbook on every single thing, especially when those things cost significant cash.
Find your thing and dig into it. Experiment. Get a little better, and do it again.
Then, feel free to spend the mandatory 25% of revenue on marketing.
Get the above, and you’ve got the basics of a sales plan and sales management. In fact, you have the 20% of the inputs that generate 80% of the results in any sales organization.
You’re good to go.
There were a few more things we discussed around channel development, the founder’s giftings, and how to pull it all together. But this was the gist of it.
Keep it simple, keep it consistent, and good things happen.
If you want my help on some of the above, you can hit me up below.