Sales Scaling & Hiring your first Sales Manager
So you have launched your start-up, achieving strong traction, high client retention and regular meetings with existing clients.
However, this is taxing on existing product/service iteration, marketing, head-count & operations. What do you do to continue scaling your SaaS?
Apparent in SaaS is that firms have low marginal cost. They also typically have high profit per employee. Especially at the lower end head count you are looking at potentially £250K+ per employee. The costs of a bad hire can impact you in your equity, recruitment fees, bad client relations, opportunity cost.
As a result, headcount growth is critical, and doing so can either turbocharge the firm or stagnate under a potential of culture clash, burnout & disengagement.
This is with evidence from First Round that highlights the Sales Leader role is the most difficult to hire out of all the Senior Management Acquisitions.
Jason Lemkin mentioned that, ‘70% of SaaS First VP Sales don’t make it to 12 months. It’s one of the most common, and almost most devastating mis-hires in start-ups.’
A Senior Level mis-hire is incredibly damaging at a start-up: Dr. Bradford Smart, the author of Topgrading, discovered that bad hires cost somewhere between 5 to 27 times a person’s salary.
So, what do you do? Who do you hire? Here are two factors to consider
Sales Director, VP of Sales etc.
Hiring a Sales Director can be a very effective way of giving an immediate boost but at the same time there are significant risks.
1) Cost, Equity & fit.
It is no denial that a Sales Director can be extremely expensive, either through salary, commission or equity. The particular issue is a drive to join a firm that can offer that growth, control or impact however the simple desire to join a start-up, a) doesn’t make someone a good fit for that start-up or b) will it be a user problem or a product they actually particularly care for.
As a result, the most effective employee at that VP/Director or even Senior Manager level cannot necessarily do the role of an SDR, BDE or AE.
Asking this of them can sometimes be demoralising, can be difficult & in addition a lack of onboarding, product understanding can result in a difficult process to actually begin.
How do you overcome this? here are a few questions to ask your new hire:
How long have you been following the company?
What do you understand of the User problem?
What do you think are the key reasons as to why the client should partner with you over ‘x’?
2) All Management, No Creation
Sales Directors, Sales Managers tend to have a decades worth of experience in management of sales teams, how well this translates into a start-up is largely negligent, some individuals can thrive in a supported system whilst others cannot thrive alone.
Anyone in this role has to be able to create their own workstreams, time manage incredibly effectively, delegate to other members of the team when able, but also able to receive no answer for a time and make executive decisions.
It is also likely the individual will feel burdened managing in particular more grunt work, such as out bounding that is natural for anyone in the sales world to undertake or to demean those systems that are not up to standard.
In this scenario, in a start-up they have to be the author, editor & publicist on your operation rather than just one of these roles.
Some questions to ask are:
What workstreams are you going to look through first?
We use x,y,z for our systems? Will that work with you?
Having looked at our sales operations, where can we expect to be in 1 Week, 1 Month & 3 Months?
What workstreams have you managed directly from end to end?
How much authority would you like?
Summary:
Sales Directors are by far & away the hardest to hire, the simple fact is the role is very externally facing & with usually unrealistic expectations on both sides can result in frustration, burnout, misrepresentations of roles & missed KPIs. Extreme caution showed by owed to this in particular, as well as an understanding of the project element needed to reach up to where this new hire will be most effective.
