Sales · Education Sales

What is the role of the sales director in a new company?

Mike Guerena CEO of ThinkWrite Technologies

April 11th, 2015

My one year old company has developed great mobile device accessories for the education market. We already have about 50 schools or districts as customers and are adding more every week. That being said I was expecting to have higher sales at this point as there is a great need for our products. I have been working with my co-founder on directing sales with four independent reps in different parts of the country. My partner and I have generated about 80% of the sales for the company from our efforts. I feel that my reps could be doing better if we had someone with experience in this area that could manage and motivate them. 

We have been holding off on bringing in someone specific for sales until the company grew enough to be able to afford to pay a vice president level salary. We also thought that we could provide some equity as well, especially as we still sacrificing to get the company to better financial state. 

This is my first experience in a company that sells products. My background up to this point has been in education. I know the education market very well, but I also want to still keep my credibility high by not being the guy that is persistently bothering my education colleagues about purchasing our products. How much would hiring a sales director or VP help with getting our product wider exposure that could lead to more sales? 




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Rob G

April 13th, 2015

Mike;  Assessment tools and collateral and "bringing a sales specialist in house" are getting the cart before the horse.  you need to figure out the economics first which will dictate the appropriate selling model which will dictate the type of person you hire (or don't hire as the case maybe - we don't yet know if you can even afford to sell direct).  We still don't know if your typical sale is $200 or $200,000 and if the LTV is $100 or $1M.  At this point you don't know whether to recruit from Radio Shack or Oracle (i use those 2 extremes simply to make a point). There is a tremendous difference between the type of sales person who will be challenged and motivated making 5 $3,000 sales/week over the phone VS 5 $1M deals/yr selling strategically to large accounts.  And maybe neither of those work and you should focus on marketing and/or SEM.  Without numbers you don't know whether to focus on inside sales, outside sales, SEO and automation, or some combination.   These scenarios also require very approaches to recruiting, evaluating, compensation, training, managing, etc.  The economics of your selling model will dictate the profile(s) you need to hire for and then you can consider assessment tools and sales execution details (CRM, collateral, remote selling tools, etc.).  

Dan Seidman 2013 International Sales Training Leader of the Year (Stevie Awards)

April 11th, 2015

Mike - with no sales background you'll have a difficult time holding independent reps' feet to the fire.

IF you can hire a great sales employee, that'd be good. Equity for a sales exec could also tempt the right person. The key is to focus on people who have already sold to your existing customers.

I'd be happy to give you some starting steps on your decision-making here and getting your approach in place. Contact me and we can talk Tue or Wed this coming week.

Karl Schulmeisters CTO ClearRoadmap

April 13th, 2015

What Rob said.

Mike you haven't talked about how you have structured your compensation schemes and what winning a typical deal will get a sales person.   I've only had a peripheral involvement in technology sales to Schools and SDs  but what I remember from that is that the sales cycles are simultaneously long and compressed  -

ie you often have a long cycle engagement with multiple clients and then suddenly in the space of a few months, 75% of the good prospects want to close.   This has to do with how the budget cycles work in SDs.   So you may have unrealistic expectations of the sales reps and similarly your sales reps may have unrealistic expectations of the process.

Frankly though, if you are not willing to get involved in a weekly engagement with your sales teams,  and to use your passion to close the "borderline deals" - then I'm not sure you have what it takes to be an entrepreneur.   Either you are "all in" or you are not.  

Think of it this way - lets say you DO become "that guy".  

  • What will that cost you professionally
    • in the short run
    • in the long run
  • What will it cost you professionally if you succeed
  • What will it cost you professionally if you fail

Frankly at the stage you seem to be at,  I would expect your sales folks to be 100% commission based, no salary  with a solid quota set on a monthly or quarterly basis with an expectation of hitting the quota 3 out of 4 quarters or 10 out of 12 months.

And if after a year (assuming a sales cycle under a year long)  they haven't met that- then you find a replacement.   You are not in the position of having the cashflow to spend on sales evaluation or training programs.  

What you do need is at least a monthly meeting with your Sales Reps to discuss what is working, what isn't, and what their sales pipeline looks like (that's another thing that its hard to help you with.  You are simply saying you don't think you are selling enough.   But you haven't told us where in the sales pipeline things are falling down - I wonder if you even know)

Tradeshows can be a good source of sales - but more ideally they are a source of qualified leads for your sales team to go after.  And you should be following up with every customer to gauge their level of satisfaction.

Then with the satisified ones you need to either ask for references or ask for case studies to take into future sales engagements

Rob G

April 13th, 2015

Mike is getting lots of advice... from a lot of angles :-/    which is likely making his job harder not easier.  My earlier point is that i think Mike likely needs to take a step back and analyze the economics of his business which will inform his basic selling model:  direct, person-to-person selling with in-house team? (inside sales or outside sales or some combo???) OR direct person-to-person selling through independent reps/distributors? OR online sales via an ecommerce website with demand driven by marketing and/or growth hacking and/or affiliate marketing, etc. with a skill set more focused on SEM, online advertising and other inbound demand-generation efforts?   This discussion thread has been focused on who he should hire and how and understandably so given his initial questions: "what is the role of the sales director in a new company?" and "How much would hiring a sales director or VP help with getting our product wider exposure that could lead to more sales?"  I submit that these are the wrong questions given his situation.  The questions are somewhat akin to saying "i'm in the transportation business, what kind of a vehicle should i buy and how much will it cost?".  The answers are different depending on a number of factors.  Are you transporting people across town? Are you transporting shipping containers across the country?  Are you shipping perishable goods around the world? Are you shipping oil from ND to TX?   He may need a ship or a cargo plane or a pipeline and we are debating Prius VS pickup truck VS 18 wheelers.  What we do know is that he's selling some consumer-electronics-like hardware (head phones and USB charging devices for mobile devices) to the education market (presumably in the US and presumably to public schools, and a number of other assumptions). You don't see too many manufacturers of consumer electronics selling directly with a face-to-face sales force unless you are Apple and that's a very difference animal.  We know that his products are somewhat differentiated from your run of the mill consumer versions of these products, but we don't know the price points or transaction volume or margins (not surprising on a semi-open forum that likes to auto-post to LinkedIn).  So, for example, if we assume that Mike is the foremost expert on his products (good assumption) and that he is the foremost expert on the buying process and habits of public school districts (based on his post on another thread) then if Mike was also an experienced sales person then his is the perfect candidate to sell his product.  So let's say Mike quit his job and is selling his product full time.  We don't know if a "typical deal" for Mike is $500 or $50,000 or $500,000.  So given my limited knowledge of consumer electronics and my limited knowledge of public school budgets and buy processes let's say in a good month mike can sell 1 - $10,000 deal to 1 school district every 2 weeks ($20k revenue each month) and his margins (GM) are 50% (fat for consumer HW i think?) then he's generating $10k/month in GP.  Mike has the contacts, he knows all of his competitors so he knows his differentiators and competitive advantage like he knows his own name.  He is articulate and motivated.  And he has nothing else to do but sell.  forget all of his other expenses for a moment.  If mike were to hire a sales person that is smart and articulate and has the capacity to learn what Mike knows and has the drive and ambition and skills to be successful with minimal supervision then Mike could be looking at a comp plan of say, $150k/yr. ($12.5k/month) - commission only and no base salary.   I don't know Mikes market so that's a wild guess, but reasonable.  The market doesn't know much about Mikes products because they are new to the market and this is a startup so Mike will have to pay a premium to get a qualified clone of himself.   He could go to Best Buy or Fry's or Verizon or Radio Shack (lots of Radio Shack sales reps available now) and recruit a $50k/yr sales rep. or he could go to Oracle or Salesforce or SAP or ? and hire a rep who's been making $300k/yr or $500k/yr.  At $12,500 in commissions/month that exceeds Mike's entire monthly profit - not a recipe for success.  To slice this another way, if we assume Mike can pay out 30% of his monthly profit in sales commissions (that could be a stretch) then each sales rep needs to generate about $42k/mon in GP or $84k in gross revenue. If the average sales is $1,000 that's 84,000 sales transactions/month/rep - 4,200/day/rep - not likely - clearly he needs to sell online and automate.  At an average deal of $5,000 that's about 17 transactions/month/rep or about 4/week. That's more reasonable, but still many stars need to align. And that leaves Mike and his partner about $29.4k/mon in profit left over to build and run the company (and my assumptions could be WAY off in terms of margins in either direction). In that scenario i would look closer at a direct sales model with a high ratio of inside to outside sales and heavy emphasis on building market awareness (marketing in it's various forms).  If the average deal is $500,000 and Mike can close these whales once per quarter then he clearly needs to have a direct sales force - people simply won't spend that kind of money online without a personal relationship with the vendor, but this also means he needs to recruit highly skilled sales people at more than $150k/yr (commission only).  These scenarios indicate clearly different skill sets, different recruiting approaches, different comp plans, etc.  If i were Mike i'd build a spreadsheet and do some 'what if' modeling to see what the numbers look like - this should have already been done before he hired independent reps.  A common problem with using independent reps to sell technology (even simple tech) is that they tend to sell what they know, what is easiest, what generates the most commissions and what they are told by their boss is important ...this month.  Getting and keeping their mindshare is difficult especially for a new product and new company.  If the $$ just isn't there then sales reps whether in-ouse or independent just won't get the job done.  He may find that he is better off selling online only and concentrating his efforts and $$ on advertising and marketing and demand generation and eCommerce capabilities. That's a long way of getting back to my original question:  "what are you selling, to whom and what is the value of a typical deal".  

Peter li.blueoyster~@~gmail.com] Peter Jones creates solutions for product USP, market messaging, team building, venture and other commercial capital

April 12th, 2015

I tend to agree with Zack and Rick, especially Rick.

His passion for his subject comes through naturally, and you have this personal advantage over a brought in sales hire.

What you need to do is develop what I call sales collateral.

This is printed or e-material you can offer to prospects to back up the verbal discussions you have.

You also need to structure your discussion much more towards a sale.

Think how you would put a lesson plan together in education.

Here, though, you are looking to build adult relationships however, and usher prospects gently but firmly down your pipeline towards buying product. You don't have to rush to sell (that's very old hat now), and need to be willing to let prospects walk away if timing is not right.

What are the tell tale signs at each stage of your pipeline? How must you vary your message at each stage? How do you keep busy distracted adults engaged with your dialogue when they have a million and one things to organise and do?

Once you have decided this, your sales collateral is what you hand out to pay per sale agents. Once they are enthused by this, it makes their job selling so much easier.

I recently saw one such document for a company that helps brands reach out in social media. I got the gig immediately, and actually offered to help myself.

One caveat. If your product isn't so great, it will make it much harder to sell. You will of course be your own biggest fan, but it's what customers think that matter.

So a truly great sales person will always feed back to you about the responses they are getting when they go to conventions and the like.

Good luck, but even as CEO, you still need to sell your company and product, so you had better get used to selling!

Vincent Roazzi Principal at JPM Partners, LLC

April 12th, 2015

Mike, Lane is right on. If you don't have someone who knows what they are doing in Sales then hiring a sales rep is a waste of capital. Salespeople sell. They don't create strategy, develop lead programs Train themselves, or hold their own feet to the fire. That's what sales managers do. If you did find a salesperson who does all those things chances are you couldn't afford him or know one when you see one. And he would probably insist on straight commission because nobody can pay him what he is worth.

The average startup (and most sales depts. in mature companies) do the same thing you did because they can't evaluate salespeople on an interview either. One of the things we do here at JPM Partners is to recruit salespeople using a proprietary software to separate the performers from the talkers, and then we go one step further and tell our clients where the salesperson is strong and needs more training in the sales process. Guess who 95% of our customers are? Sitting down? Other recruiting firms who specialize in tech, education, healthcare, etc. Because sales in so specialized that they know what they don't know! Also because they've already made enough mistakes hiring the wrong peopleand spent enough money on the costly trial and error process.

After 25 years of running sales organization for corporate turnarounds and startups  I can talk about this all day. Make that all week! LOL There are other options open to you and if you contact me offline I will share with you what they are - some of which are risk free and perfect for a budding startup like yours. Email me at vinny@jpmpartners.com

All the Best,

Vinny

Rob G

April 13th, 2015

Channel sales works when the company (product owner/manufacturer) drives market awareness which drives sell through. that means Mike would pour his efforts into product development and marketing and advertising to generate name recognition and demand that his channel partners can then leverage with their contacts/customer base. For its entire history until recently Microsoft was 100% channel - you could not buy a MS product from MS (unless you were government) and they are now putting more emphasis on selling direct. Google is a hybrid of direct and indirect, but mostly direct, but with high levels of demand generation, and automated fulfillment - when was the last time you got a call from a Google sales rep or channel partner selling a google product? You can buy their products retail, but we're not talking retail here.  DropBox sells direct but with heavy emphasis on online marketing and sales automation/fulfillment. As they put more emphasis on DropBox for business they will likely need to put more emphasis on relationship selling especially as they compete agains Box, MS, Google, etc.  It all 3 examples these companies are selling SW not HW and they have very high margins.  It all comes down to economics - can i afford to have a live body (whether said body is on my payroll or a partner's payroll) reaching out and touching live prospects/customers or not?

Karl Schulmeisters CTO ClearRoadmap

April 13th, 2015

Dan I would point out that I and others have said that there really isn't enough information in what Mike is asking to fully answer.   So the rest is an interpolation based on experience and interaction.

Dan Seidman 2013 International Sales Training Leader of the Year (Stevie Awards)

April 13th, 2015

Karl - really? You said this, to essentially a complete stranger? 

Frankly though, if you are not willing to get involved in a weekly engagement with your sales teams, and to use your passion to close the "borderline deals" - then I'm not sure you have what it takes to be an entrepreneur. Either you are "all in" or you are not.  

There are so many factors and a variety of business models where this being made as a blanket statement is simply unfair. What about funding? Mike could have funding where he can hire someone to completely oversee sales. He might have light funding and hire a single sales pro (then the issue is getting the right one). He could go the partnership route or find distribution networks that already deal with his prospects, all day long. He could buy a block of telemarketing time and play the numbers game with contacting buyers (as long as it's the right firm and they are well-scripted). 

Remember how mama always said, "be careful who your friends are? Who you hang out with?" Entrepreneurs can build their business by surrounding themselves with people whose expertise complements their own. That way they don't have to quit, just because their skill set or passion doesn't match one piece of the success puzzle.

Mike Guerena CEO of ThinkWrite Technologies

April 12th, 2015

Thanks for the great advice. Reviewing the responses I am able to pull a narrative out that I can use going forward.

More specifics on how we sell and who we sell to. Generally we sell larger quantities to educational organizations. 40 customers could account for 10,000 units of one of our products. Right now we are seeing smaller orders by schools and district that would like to test out our products. We already have several repeat customers. 

I did not mention that I am building the company while also still working at my day job as an ed tech coordinator. My partner is running the day to day operations, but still is learning himself. I ended up taking on most of the management of the company where decisions need to be made.

A majority of sales have been generated from trade shows where I can "sell" to people walking by the booth. We have improved several products like headsets and multi device USB charging that differentiate us from competitors. Since I have the passion behind the product and directly solved some problems with my designs, I don't think the other people selling are able to do the same pitch. I have done some training on this for reps, but based on the smaller amount of sales they are bringing in, I don't think that they are able to sell the differentiators. Judy is right on about having to give them more of my time and resources if I am going to be the one supporting them. All of the reps that I am working with have educational sales experience and existing contacts with customers in their area.

Zach said that we need some hustlers at this stage of the company and that independent reps may not have the motivation. Dan is correct in that I do not have the experience (or time) to hold the independent reps to the fire. This is actually one of the reasons I wanted to bring someone on with that experience and that could focus on this as part of the job. 

Jeff made a great point that we need to grow sales professionals that were so passionate about our products they had to tell others about it. I see a varying degree of this in our independent reps. I recognize that I may have done a better job vetting those that I brought on. Though it is hard to tell until you give them a chance to try and see the product. 

Lane is correct that we need good sales people to build a direct model. Most of our competitors go through resellers and do not sell direct. I am working with a few resellers right now, but I think they need to be equally motivated to push our products. 

Several mentioned a sales coach could help me out at this point. I have engaged an organization that specializes in recruiting managers for educational companies a few months ago, but have not done anything since initially discussing my needs.

After reading all the responses I still think I need to bring a sales specialist in house, they may not be the manager now but could grow into the the role.