Inevitably, the time arrives in most early stage businesses when it becomes an organizational imperative to establish a real professional sales capability that is fundamental to the strategy of driving growth. For many, and in fact I would argue, for most entrepreneurs, achieving success in building an effective and predictable revenue engine is the most difficult component of path to scale. It generally proves to be far more difficult, and far more fraught with peril than the task of scaling production or increasing service delivery capability. Why is this the case and what can be done to address this? There are of course many reasons impacting success in scaling a sales organization, but there are two that from my experience are most often the culprits.
- Insufficient Rigor
It is quite common that the sales function is not viewed as a real discipline such as marketing or finance, nor is scaling sales thought to be overly complicated. Many founders believe they quite easily manage a handful of salespeople at the onset who will leverage the start they as founders initiated and begin the journey to scale. “After all, how hard can it be?” However, as most who have been on this journey have discovered, “getting sales right” has to be carefully planned out for each and every new business. What drives success in sales in a more mature and larger business will not necessarily work in an earlier stage business. There is no credit for brand, reputation, momentum, deal flow, or any of the other aspects that help to drive the growth of more mature businesses.
Given this, everything needs to be examined at a detailed level: the organization structure that is appropriate for execution of the business strategy. What selling roles do you need? What do these roles look like in terms of competencies, skills, behaviors and experience? How are you going to build a demand generation function? What is the value proposition for the product that will resonate and will be differentiated, customized of course, for each buying persona for each product or service? How should account management be handled? Yes, this is all very complicated, and it is easy to get wrong.
And remember, each and every salesperson hired who does not work out will cost millions of dollars in forgone enterprise value. Given this, it pays to exercise rigor and discipline and get the front-end thinking correct.
- Insufficient Commitment
The second major challenge in scaling sales is the failure to build a real sales team at the onset – with a dedicated sales leader – that has a minimum level of critical mass (no less than 4 to 5 people) Failure to do so will materially impact the likelihood of success in scaling the sales function. Especially in self-funded enterprises, my experience is that the founder will often experience a pattern of consecutively hired sales professionals, typically over a period of several years as different levels of experience and skill are brought to the task, none of which work. Institutionally backed firms are better at this – they have learned this aspect of “critical mass” and they can provide the capital to fund the investments necessary to do it correctly, but even so, they struggle.
Further, rather than hiring a dedicated sales leader, the founder has the new sales team report to her, regardless of whether she is a trained sales leader or not. Why invest the dollars necessary to hire an effective sales leader when the founder can fit this responsibility into his or her day in their spare time? However, even if the founder has great personal sales skills and has experience and success in sales management, it is unlikely that this approach will succeed for any sustained period of time. Effective sales management is a complex, full-time job. The CEO/founder will not have the time to perform this function successfully; there are just too many demands on one’s time to make this feasible.
Another approach that I have often seen in companies at the beginning of the scaling journey is to hire a “selling manager” as a way to make the scaling of a sales function more cost-effective. The idea of a selling manager sounds compelling. By giving the sales leader a territory, the role of sales leader becomes self-funding. However, the investment deferred by having the leader in a combined role as player-coach will be more than offset by his or her inability to properly support the sales team, and the team’s performance will suffer. For people in such a combined role, working with their own clients tends to put more money in their pocket; spending time with the team will be better for the business overall. This is a trade-off to be avoided.
For those who are at the point of building a sustainable sales function, be sure to undertake this take this task with full knowledge of the difficulty of the challenge you will face. It is not a surprise that overall more than half of all salespeople hired into large businesses fail. In smaller enterprises, the odds of success are even more daunting. Improve your likelihood of success by exercising rigor and discipline commensurate with the value this will bring to your business if you get it right, and don’t press ahead unless you can commit the necessary time and resources to build the function out in a fashion that gives it a chance for success.