Sales Support · Sales Management

How do you find the right salesperson to grow your startup?

Helen Adeosun

April 26th, 2015

I just found a part time sales person after I spent three months honing in on our process for acquiring leads and then walking them through our offerings. I am paying someone per hour to help me make pitches to larger customers  and if she brings in 2 organizations a month she's covered at least the month's payment to her and I am offering her 5% as an incentive for any successful sale with an increase on that percentage should we revisit her contract in 3 months and she's doing better.

I want things to work out since she's a friend and I think we're both happy with those terms. I have two questions:
1- Where have you found sales people in the past and have been happy with the result?
2. What were the terms you set including % of sales?

Appreciate responses in advance!
Helen A
Growth-hacking isn’t about quick wins and shortcuts, although they exist. In this course, we’ll cover the six-step growth hacking framework, how to measure user retention for your business, how to increase engagement and retention, and a bunch of case studies.

Peter Johnston Businesses are composed of pixels, bytes & atoms. All 3 change constantly. I make that change +ve.

April 27th, 2015

The first and most important part of devising a startup is to get the market fit right. Usually this means creating it around people you really empathise with and creating something they think is really special. This Wow factor should take you through the startup phase and it is only at the scale phase that selling comes into play.

Growth hacking should also remove the need for selling. This should build awareness virally and ensure you are talked about everywhere your potential users/customers/clients look. Selling should only be a matter of converting this interest into paid partners for the business (not one-off sales). Most of that selling should be automated too, leaving staff to help with usability issues and simply building enthusiasm.

If you need salespeople at startup stage you've probably done one of those things wrong. Look into Market Fit. This is not just Product Market Fit and it is not a one-off.
Look at:
Process - how easy is it to get hold of your product/service, sign up, use it and learn what it can do?People - What interactions do users want/expect? How well do you meet and exceed these expectations?
Profit - Look at your revenue model. How do you move people from free to paid? How expensive is the service behind the product? How do you make it look great value while still making a profit?
Promotion - How are you generating awareness, interest and intent to purchase? How are you spreading the word? Overcoming barriers (Trust, Known name etc.)

How well you manage the modern 4Ps is key to success. As Marc Andreasson tells us - "those who obsess over Market Fit do better than those who accept normal ways of doing things".
And Market Fitness is not a one-off check. It is a constant match and evolve process. 
You need to do Market Fitness training continually in any startup.

I'm not saying you'll never need salespeople. But they should be a minor, not a major part of how you interact with and create customers.

Lucas Vargas Executive Vice President of Sales and Marketing at VivaReal

April 26th, 2015

1 - Turnover among salespeople is higher than average. Most salespeople are not comfortable with a lot of changes. To minimize risks try finding salespeople who have worked at other startups for longer that 1 year. Regardless of their previous industry experience, the most important skill is their resilience - such a rare trait of personality among sales people.

2 - Avoid setting commission as a percentage of sales. If your startup grows a planned, in a few months the salesperson will be making a lot of money, as X% of the total sales will be huge. So you will be forced to change the commission system frequently and this will create attrition. Create a commission system based on a sales target achievement. It will allow for you to keep the commission system structure for a longer period while you can adjust the sales target every month, accommodating for spikes in sales and fluctuations due to seasonality.

Steve Owens

April 26th, 2015

Focus on the sales process.  Create a written sales process and some KPIs to measure its effectiveness.  Have the sales group participate in improving the processes.


Anonymous

April 27th, 2015

Morning Helen - I wish I had more time today to send you a longer reply. Happy to chat if you need further advice. I just went through this with Chango, we had to take it from $0 to a run of $100m in 5 years, and as CRO I went through all the pains of that.

You have received some excellent advice above, particularly around process. However, I have a slightly different view. It is important for you to be aware of what the right process is, but not essential for your first seller(s) to be expert at it. Typically at the start you need someone scrappy, someone who can operate on their own, they have contacts, they can knock down doors and they can push for the deal. You might find these people are not particularly great at sales team process at all. They are tyoically hungrier for the deal, they will take a deal more weighted to commission than base salary, and they can be your early lifeblood. Be aware that as the organisation grows, they will need to be replaced, or they will need to accept someone more senior coming in above them to run the growing team. Therefore be careful with inflated titles at the start, and set the right expectations. The wrong setup could mean you get someone up to the right speed and pipeline, and then you lose them as new blood comes in, and you take a step back.

Think about how quickly this team will grow. If it's to many sellers in a short time, focus more on process. If it's a slower growth than that, focus on instant revenue, and someone that represents you and your brand.

And don't beat yourself up over sales commissions - they has never been a perfect sales commission structure, they are all flawed in one way or another. Get familiar with various models, understand commission splits, spiffs and bonuses. Know the benefits of 4 quarter payouts over 5 and vice versa. And then pay them well. Allow for product failures that aren't their fault. But don't let that go to far, otherwise a good salesperson will try and walk all over you in the future.

Vincent Roazzi Principal at JPM Partners, LLC

April 30th, 2015

90% of failed startups indicate lack of sales(revenue) as the cause of their bankruptcy. I believe the reason for this is that left-brained tech entrepreneurs try to be successful at hiring and managing right-brained salespeople. Much of successful sales strategy is counter intuitive and does not reveal itself to logic. It is difficult to hire base plus commission salespeople, so commission only is even more of a challenge. You cannot afford to use trial and error to find a performer no matter what you're offering because many times the best "talker" is the worst performer. If you want help solving this successfully go to jpmpartners.com

Lucas Vargas Executive Vice President of Sales and Marketing at VivaReal

April 27th, 2015

I agree with Ami's point that upside is never bad in sales. But you have to be careful with potencial unbalances. If you grow 100% per month, it doesn't make sense to see commission growing 100% per month, over 1000% per year. That's why you'd rather have other types of commission systems that also create a lot of incentives, also allow for salespeople to make more than the CEO, but that won't be changed every month or so. But in general I believe our line of thought is aligned. 

Julien Fruchier Founder at Republic of Change

April 27th, 2015

Helen, to elaborate on Peter's point, I'd suggest you consider a couple of things: 
  1. In a startup situation, you really need to understand product adoption. Different people sign up to different things for different reasons. The people sleeping in the streets for the chance to own the very first iPhone 6 is moved by different motivators than the person who'll wait a year to buy it. The innovators problem is "I don't have the newest smartphone", the majority's problem is "I don't have the same smartphone as my friends" and the laggards problem is "my flip phone finally broke and I need a new one." As a startup, You need to not only concern yourself with product fit but also with product fit with the people who'll be the first to buy into what you're selling. To that end, from experience, few of the innovators or early adopters will ever be too concerned with features because features don't solve their problems. Stories do. You need to focus your energy on creating a story that resonates with those who'll be the first to say, "I'm in". Absolutely no one can do this better than you. Why? Because it's your baby and only you understand every idiosyncrasy around it. So you have to become your startup's best sales person before you bring in somebody else.
  2. As an extension of the point above, sales people are generally good at assessing a potential customer's needs and matching your product's features to their needs. This is not what you need right now. Bringing a sales person on board right now is likely going to be a complete waste of time and create a lot of frustration for you and the hire. More the reason to consider my point above that it's you that needs to be the company's sales person right now. Once you have good market fit as evidence by sales traction and you've mastered your ability to sell your own product, then you can bring someone else on board and teach them how to do what you do.       
I'm not sure if this is the case for you but I've seen about three posts on FD related to hiring sales people before there is market fit and it seems like a way to deflect fear of selling. That's the best and easiest way to fail as an entrepreneur in my observation. Entrepreneurship is about selling. You have to sell your products to customers and your vision to investors, employees and other stakeholders. So, generally speaking, it bodes well to just take the bull by the horns and do the hard work of selling yourself to start.

Helen Adeosun

April 27th, 2015

@Peter Johnston your reponse is the first that I read this morning and had me doing a lot of thinking in the shower and I think your wisdom on product-market fit are something that I am always thinking about because while there is sales component she's mostly helping us really figure out what it means to be a business that delivers classes for nannies and care givers and how we may be able to expand or shift focus.

Lucas, Ami, Peter, and Steve I want to thank you all for the amazing and quality responses I have had to this question! All Upvoted!

Rob G

April 27th, 2015

Helen;  what are you selling and to whom and what ($$) is the typical value (NPV and LTV) of a typical sale? What Peter J says makes perfectly good sense IF you are selling to consumers and/or your typical sales is ~ < $5k (roughly).  If you are selling to medium to large orgs, i.e. 'enterprise' customers and/or your typical sales is over $20k or so (NPV or LTV) then, with all due respect to Peter, your focus on direct selling is appropriate, especially at an early stage as it gives you a tightly-coupled feedback loop to your market. You can't really begin to answer your question until you've answered these 2 - again:  
1) to whom do you sell (consumer, business (S, M, Lg), both)?
2) what is the $$ value -  Net Present Value and lifetime value of a 'typical' sale? 

the answer to these 2 questions informs your entire selling model. 

Ami <ami.vider@gmail.com> Content Writer / Editor at FinTech/Forex start-up

April 27th, 2015

Traditional sales people (bag carriers?) are usually good at translating the "technical" (features & benefits) in to an emotional (point of pain, great opportunity, keeping up with the Joneses) - they are also good at pushing prospects through the funnel (what was said before). What Peter says about "fit" is an excellent advice. Get the sales people to make this happen. Market condition and prospect feedback needs to drive the other elements in the company. I totally disagree with Lucas about X% commission. You want your top sales people making more than the CEO. In every start-up I have seen succeed over and above expectation, the top sales guys were always the best dressed (and drove the most impressive Mercedes / Porsche). Eventually they will get what they should get, but upside is NEVER bad (in sales) --  GOOD QUESTION