For those who follow my articles you know that they originate from personal experiences as a military jet fighter (large complex) salesperson for Boeing and Lockheed or in encounters I've had as a 16-year consultant for privately-held businesses and startups here in Atlanta. I've had this article in the back of my head for some time but it wasn't until a recent encounter with a two-year-old startup that it got the jolt needed to come to life. I hope you like it.
I am an advisor at Atlanta Tech Village, the fourth largest tech incubator in America. In that capacity I make myself available every Friday for 2-hours to listen and offer advice to the Village’s startup community. Last week two founders of a two-year-old startup came to me to talk about sales. They told me it was time for them to hire their first salesperson (a major milestone for any young company) so the founders can free themselves to work on other aspects of the company.
Their objective was to get some advice about how to do it properly. This is a common question from both startups and established businesses, “How do I go about hiring our first salesperson?”.
Over the years I've witnessed how making a bad hiring decision here can bring a company to its knees due to the outlay in cash and impact on company reputation and potential customers. And if you, the owner/CEO, are not personally trained in the field of sales you are in essence gambling your money on the HOPE that the person you hired is competent in the job.
So the first bit of wisdom I shared with them was this:
The success of a new salesperson is less dependent upon the skill-sets of the individual but instead has more to do with how well the owner/CEO has laid the groundwork for that person to succeed.
What do I mean by that? Well here is where company strategy comes into play.
At a minimum, it is incumbent upon every owner/CEO to know and be able to share (in writing) specifically what they want the company to look like 2-3 yrs from now. By that I mean he/she should be able to define the future state customer mix and product/service mix. In addition, he should know and be able to share what competitive forces they are likely to encounter and how specifically your product/service differentiates itself. These are some of the basic elements you can expect to find in company’s strategic plan.
Having done a little research prior to these two founders coming to meet me I knew they weren’t ready to hire a salesperson. The reason? Because their website indicated that their services were for, “property managers, real estate agents, architects, interior designer, marketing AND creative agencies”. Six wildly different customer demographics. Yet their company consisted of just four people (the two founders and two operations personnel). There is just no way a company of four people can effectively communicate and sell their complex services to such a broad market. What it told me is they had no strategy but instead built a service for a particular customer type and then brainstormed all other customer segments who MAY also benefit from their services. I refer to this as “the more is better” approach to market identification. This “here is our products and services now go find customers, any customer” approach to selling is a sure way to failure. And a very common approach taken by a lot of business owners.
I was asked the other day why and how my complex sales consulting practice morphed into growth strategy creation for my clients. It was easy to answer this question. Simply put, sales is the pointy end of your company’s strategy spear. For example, if your strategy says that three years from now we want a more diverse industry customer mix to mitigate risks, guess who will be leading the way to make that happen? Your marketing and sales team. Or if your strategy calls for increasing the sales of a more profitable product or service, it is the sales team that will leads the way. Like any other discipline in the company (manufacturing, operations, HR, accounting) the sales team too needs guidance and direction and the strategic plan provides this. You can see then why success in sales is so inextricably linked to having a strong company strategy. One cannot exist without the other. I learned from experience that no matter what sales process I introduced to a company, if the strategy is weak or non-existent (the vast majority of time) so too will sales performance.
When Michael Porter wrote, “What is Strategy?” for the Harvard Business Review he said strategy is about setting a future state based on how we answer questions like these:
Strategy is a destination. A realistic painting of what you want your company to look like in two or three years. A good strategy reflects current resources (talent, capital equipment and cash), the competitive landscape, market conditions, and a brutally honest assessment of how your customers feel about your product or service over all alternative solutions - including inaction. And sales is vehicle you ride in to get to that destination.
Funny thing is that every publicly traded company has a 3 or 5-year strategic plan because the Board of Directors, acting on on behalf of the shareholders, demand the CEO follow sound business practices and produce an updated plan every year. Ask any gathering of business savvy individuals if they believe that Starbucks, or Boeing, or Ikea has a strategic plan and they will look at you somewhat baffled for asking such a silly question. Of course they do!
The idea that the CEO of Starbucks would one day break from the norm and say to his Board of Directors that, “I am going to forego updating the strategic plan this year and instead wing it and operate the next three years by gut instinct and feel.” is preposterous. Right!?
But survey private business owners and you will will find that very few (less than 10%) operate to a written strategic plan. In the case of these two startup founders, they justified not having a written strategy saying, “that’s just for the big companies”. Nothing could be further from the truth. In fact one could argue that given limited cash reserves and talent, the devastating impact of wandering aimlessly with no plan can be exponentially worse for smaller companies than for large corporations.
Related article: "8 Shortsighted Reasons Business Owners Don't Plan"
So you see now why it is so important that you set your new salesperson up for success by defining clearly and narrowly the target market he/she should be pursuing and how best to effectively compete in that space. It is also important that the marketing plan is also aligned to that specific market and generating the qualified leads for your new salesperson. A sound strategy assures this.
The two founder acknowledged they had some work to do before pursuing a salesperson. Their first task was to build a strategic plan. The good news is they had two years of market knowledge in their heads to work with. But before they left I hit them with an important question. What sales process do you expect your new salesperson to follow?
And I got the deer in the headlights look.
Neither founder had any sales training. They've both have been selling by the seat of their pants. I reminded them this was their company and as much pride as they placed in the documented processes they created to deliver unique services to their clients there should be equal pride and ownership in how it is sold. They cannot let the sales process for their firm be dictated by a new hire. This is another common mistake made by privately-held businesses.
Related article: ""Bob" Is Not A Sales Process"
Remember my opening statement, "The success of a new salesperson is less dependent upon the skill-sets of the individual but instead has more to do with how well the owner/CEO has laid the groundwork for that person to succeed."
Having a proven sales process in place and ready to train all new members of the sales and marketing team is part of that groundwork. A replicable sales process provides for a common language for how we talk about a prospective client and where they are in the sales cycle. It also sets clear expectations for how a sale is to be prosecuted, and what activity and information about a prospect your salesperson is accountable for. And lastly, it provides a means for both coaching, helping to overcome specific sales barriers, and assessing competence.
With a written strategy in place and a teachable sales process you now have done your job as CEO/owner to give your new/first sales hire the best chance for success. You last obligations are to (1) be realistic about setting sales goals and (2) be willing to commit time on you daily and weekly calendar to both support AND assess your new salesperson. Is he/she adhering to the process they were trained? Are they learning and growing or asking the same questions and requiring the same hand-holding with clients? My experience says you will know within a month if it was a good hire or not. Trust your instincts here and cut away early. And don't worry, there are good people out their who would gladly work for a owner/CEO so well prepared to hand off this vital role.
Want to give your sales team the best chance for success? Allegro can help. Call now.