The term ‘fail forward’ was popularised by Will Smith a couple of years ago. In business, however, it’s long been used by entrepreneurs during motivational speeches. While there is definitely credibility to the idea of failing then quickly learning from your mistakes in business, there are areas where ‘getting it right’ on the first try is essential.
One of those areas where you can’t afford to go wrong relates to hiring a VP of Sales.
Yet, in the tech world, 70 percent of SaaS sales leaders don’t make it to the 12-month mark. It turns out that hiring a VP of Sales is one of the most frequent mistakes and mis-hires companies make.
But what are those mistakes?
In this article, we take a look at 9 mistakes (plus some inside knowledge from experienced CEOs) tech companies make when hiring a VP of Sales, and what they can do to avoid these pitfalls.
Mistake 1: Hiring for who you want to be. Not who you are now
When it comes to hiring a VP of Sales, the types of skills needed vary depending on the stage of your company. Below is an example of skill sets for different VP of Sales in relation to the current revenue of a tech company.
- The Visionary: <£1m
- The Organiser: £1-10m
- The Driver: £10-50m
- The Analyst: £50m+
Tech CEOs often feel the need to hire a ‘driver’ VP of Sales, someone who has experience with larger companies and has been there, done that and worn the t-shirt. It’s understandable, too – someone with a track record of doing business at the highest level is instantly appealing.
Going down the ‘top-level experience’ route is a common mistake, however. VPs at this level typically don’t have the knowledge needed to successfully navigate the stage where your business sits. Too often, hiring a ‘driver’ instead of a ‘visionary’ ends up being the wrong way to go about things, as CEOs think about what they want to be rather than who they actually are.
Before even deciding on the type of VP you want to install, think carefully about where you are and whether that prospective VP of Sales has the required experience and success for the level of your organisation.
Mistake 2: Not hiring for your market
The market you operate in will go a long way to deciding the type of VP of Sales you bring on board. If your market is particularly competitive and commoditized, the VP of Sales needs to be someone with a vicarious appetite for selling highly-charged environments.
Alternatively, if you function in a new market or one that is yet to be defined, you need to hire someone who can sell a vision – a hire with who can bring value to your clients by selling an intangible concept.
It is essential to ask yourself about the type of selling the VP will be tasked with. Are they selling change, or will margin and speed be more vital to your set up? Will they be required to tap into previous relationships with clients to sell in more competitive markets, or will they engage new stakeholders – e.g. Chief Digital Officers, Chief Customer Success Offices and Head of Global Trends?
Mistake 3: Not allowing enough time for the hiring process
Unfortunately, you can’t just swipe right on a high-level VP of Sales. We might live in a world where everyone expects instant gratification, but getting the correct VP hire takes time and patience. There are so many different layers that go into the hire, with many components happening in the background.
You are likely evaluating current profit and loss, working out budgets, waiting on news as to whether that next mega-deal comes in for the current quarter – all the while trying to find the right VP of Sales to take your company to the next level.
Finding a good fit can take six to 12 months, so it’s best to start early and not rush into the process. Spending too little time during the research and hiring stage could see you hire the wrong fit, with it taking a further six to nine months to decipher whether they are suitable for your company. That’s potentially six to nine months’ wages down the drain!
Take a bit more time with your hiring process, and what might seem painful in the short term is more likely to lead to long-term gains and profitability. Get the hire right, and they could make an impact from the moment they walk through the door.
Mistake 4. You are not prepared for growth
Too many CEOs expect the VP of Sales to be a strategist as well as a dealmaker. Yet their main job is to drive results and help the company scale and grow the business. If there isn’t already a solid foundation in place for your hire to succeed, problems will ensue as you’ll see a misguided and ambitious leader take you down the wrong path.
If you don’t have the required structure in place, your VP of Sales will likely deviate back towards old habits, create processes that work solely for them and act upon experiences that worked for one organisation but might not be in line with yours. The result could see an increase in business, but it will also create more confusion than clarity.
Look to hire with a scalable and predictable process in place, one that can be quickly adopted by any new employee. If you don’t have one, but want to get somebody through the door, think about bringing in an interim, part-time VP of Sales or a consultancy who can create something from scratch and are comfortable operating in times where you are uncertain and everything is not clearly defined and documented at your organisation.
Mistake 5: Not enough trust
Letting go can be one of the hardest things to do for anyone – especially a CEO who has been highly involved with every facet of the company for the last two to three years. But learning to relinquish an element of control is necessary for success.
Of course, doing so is much easier said than done. It is likely that you’re now a Series A company, or are about to become one, and that means every aspect of your business is tightly linked to you as a CEO and any initial investors who have all done the hard yards thus far.
All of that hard work was to get to the point where you can pay someone a good salary to further push things forward – but working with new people requires an element of trust. The VP of Sales will often have a differing viewpoint to you concerning the interpretation of the problem, the direction or the go-to-market strategy.
As a CEO, it’s now vital that you sense-check with other members of the team and the different departments. Your company is a democracy now, and the days where it was just you and your band of brothers are over.
At Series A stage, the key to success is the transfer of knowledge from the CEO’s mindshare to that of the VP of Sales, and you have to partake in this knowledge-sharing exercise fully. This is a feat that is often not achieved by many CEOs, as they struggle for power, ego and visibility as their role changes.
Mistake 6: Too much trust
Getting your VP of Sales hire right really does come down to fine margins. A lack of trust can see them becoming frustrated in their role and not producing. However, too much faith brings about its own set of problems.
Be wary of a VP of Sales who says ‘trust me’ all too frequently. When they start bandying about phrases like this, it often indicates that results aren’t visible, they aren’t good communicators, or they are fearful of the consequences of not succeeding. Maybe they’re even looking for an exit.
Trust is, of course, vital. However, there needs to be a reason for that trust, and being asked to trust someone blindly will only lead to poor results. Finding a balancing act between having trust and knowing when you need to step in is hard to achieve but also vital.
Mistake 7: Hiring someone who isn’t used to selling your way
On the surface, selling is reasonably straightforward, yet many layers funnel into its art. Some different types of selling involve:
- Selling through partners
- Selling to 10,000+ employee enterprises
- High-volume and low-value deals
- Low-volume and high-value deals
Just because a VP of Sales is good at selling doesn’t mean they’re able to sell your product or service. If you hire someone who knows how to close £7,000 deals, but you want them to do £75,000+ deals – you might have a problem.
Similarly, they might have experience managing inbound teams or work for an established brand that is well known in the marketplace, but now you’re asking them to go out into the unknown with an outbound team based on lead generation. It might turn out that they’re a natural and take to it like a duck to water, but expecting them to succeed in unknown territory is a risky strategy.
Mistake 8: They aren’t well rounded enough
Many CEOs make the mistake of thinking there are a few default types of VP of Sales.
- The high-volume people manager: Often seen as an equivalent to an Operations Manager, this type of VP enjoys allocating people and time to small tasks.
- The coach and mentor: Loves talking to sales reps, mentoring them on key sales methodologies and helps them close deals.
- The dealmaker/driver: Is used to being the top performer and had always aspired to move into management and reach their goal through consistent performance.
All three traits are commendable, but a top-level VP of Sales will display all of these attributes in some capacity. They will have the necessary skills to sell your product or service, strategically review your sales process and identify bottlenecks and common themes. Finally, they can be a coach and mentor to the sales team so they can help them progress to the next level of their careers.
Mistake 9: Lack of knowledge when it comes to data
Ideally, you want a VP of Sales who can act on their own instincts when the time calls but also places a significant emphasis on data. Many VPs still back their methods and aren’t trained on how to read data correctly.
They shy away from a CRM system – or they don’t implement it properly, which causes their sales team to misuse it, with the CRM becoming an expensive time and resource that yields little results. These VPs are often left sidestepping processes to close a last-minute ‘rescue deal’.
A modern-day VP of Sales is forward-thinking and utilises data analytics while building processes that work across the board – for themselves, their team and, ultimately, your company.
Getting it right at the first attempt
Sales hiring is no easy task, especially when it comes to the VP of Sales – who has the ability to lay the foundation for future success at your company. There might be times where the road seems a little rocky, and an element of risk is involved. But you can avoid many of the risks that tech companies make by following our steps to help you bring in a VP of Sales who adds to what is already a winning culture.
Agree with our tips for avoiding VP of Sales hiring mistakes? Perhaps you have your own to add? Let us know in the comments below.
Early funding for your startup is ultimately a reason to feel joyous. It shows that your efforts are being acknowledged and people believe you have a viable product or service on your hands. However, it’s the next steps that are the most vital.
How you use your newly acquired capital will not only help shape your business for the foreseeable future; it also sets you up nicely for further funding rounds, such as Series A funding. Yet, there are common pitfalls companies make after securing early funding.
In this article, we look at 7 mistakes tech companies make after seed funding. These tips are designed to help you avoid falling into any traps, leaving you to focus on maximising your bottom line.
Mistake 1: Rapid expansion
Whether it’s in our professional or personal lives, upgrading is usually the first thing we do after coming into a little pot of gold. So it’s easy to fall into the trap of thinking you need to make sweeping upgrades across the business after you’ve secured funding.
Too often, startups have their eyes on a shiny new office, something they acquire to accommodate their new team hires – especially in the sales department. Both a new office and employees might be necessary for your next steps, but don’t jump into anything before you have a product/market fit.
Excelling in business means that you need to take some calculated risks. Don’t run before you can walk, though. It might look good having a plush new office filled with a team of salespeople. But at this stage in your business, it’s unlikely that you’ll need to transform the look and feel of your company.
Mistake 2: Marketing overload
Extra funding opens up opportunities to have more of a presence in front of your target market. It’s only natural to generate more leads with a marketing push – but it’s important to avoid going overboard and splashing the cash on a full-on marketing assault.
You should budget accordingly and focus on a key area of growth, rather than lavish spending on multiple marketing methods like big PR campaigns, trade show booths, getting a new website, SEO research, PPC, and re-branding.
Ask yourself what’s more important – is it physical presence at trade shows? Could you do with some more visibility amongst industry press? Does your website really need an upgrade? By creating a plan for one particular element, you are likely to grow and be successful in that specific area.
Mistake 3: Partnership building
Your go-to-market strategy needs to provide a blueprint for delivering your product or service to the customer. Partnership building is one way that some tech companies identify opportunities to get their product/service out to the masses.
Unless you have an indirect go-to-market strategy, it’s probably not worth spending the time focusing on partnerships at this stage. Ask yourself what you currently have to offer them? What will you be trading with these potential partners?
The answer is most likely no more than a vision. Therefore, it’s best to wait until you’re further down the line with the business before spending time and energy on partnerships. A partnership needs to be equally beneficial, and if you’ve only just raised seed funding, you might not be at that stage just yet.
Mistake 4: Looking for trophy deals
It’s understandable that securing funding provides you with a confidence boost. However, you must explore any deals thoroughly. Having the extra capital might convince you that it’s time to go for the ‘big deals’ and secure the company’s future, but is it the right strategy?
Game-changing deals are great and do what they say on the tin. But they’re also unlikely to happen so quickly. You might hit the jackpot and pull a rabbit out of the hat, but having a more realistic strategy that is nuanced will help with steady and sustainable growth.
Mistake 5: Changing things too quickly
Undertaking a complete analysis of the business and changing everything based on “bare matrics” is something many startups do after receiving funding. However, it often proves to be in vain – you didn’t get to this point by changing everything radically. Why do it now?
You’ve likely read the motivational “how to succeed in business” books – the ones that say you need to look at specific KPIs. Suddenly, you’re convinced that the business needs to change part of the product or that your market has a new demand.
Or maybe you think pricing needs to change – either up or down. But how many people have you spoken with for clarification about new market fits and pricing? Many CEOs throw out the old line, “it worked for Apple, Google, Facebook etc”. Aiming high is great, but it’s also vital to stay grounded in reality – especially after the high of securing funding.
Mistake 6: Getting carried away with experimentation
Change is necessary for progress, but it needs to be organic. There’s a common theme in this article, and it’s the idea of getting carried away too quickly. Many companies like to experiment after securing funding, testing the waters and seeing what works.
However, successful experiments often take time. Startups aren’t set up – nor do they have the staff – to see them through before getting itchy feet and reverting back to the norm. You shouldn’t be afraid to try new things and be innovative, but make sure you have everything in place to carry ideas forward.
Mistake 7: Recruiting the wrong people for your stage of growth
Recruitment is necessary for expansion, so it makes sense to look at increasing team numbers after securing seed funding. However, you need to make sure that you’re in the right stage of your recruitment growth.
It’s easy to get carried away with hiring people – perhaps there were two outstanding candidates for the role, so you hired them both. Or maybe your sales hire doesn’t have a sales background but demonstrated a great attitude, has an analytical mind and used to be a consultant or operations manager.
Unfortunately, below par talent in a small company is always destined to fail – and will only drain more resources as you spend time trying to make the hire a success.
Avoiding seed pitfalls
With the right plan, seed funding has the ability to properly your startup to new heights. These tips are designed to stop you going down the wrong route after you’ve secured seed funding so that you can be on the right track for unprecedented success.
Do you agree with our tips? Perhaps you have some to add from your own experiences. Let us know in the comments below.
Securing Series A funding is a big step for many tech companies. You have likely had some experience with seed funding and maybe even angel investment. But Series A represents that first power move, one that will hopefully see the ascension of your company with no looking back.
Series A is the optimisation stage where companies look to take things to the next level after securing a substantial windfall. The goal is to go bigger and go harder. Yet, sometimes tech companies can go too big and too hard, undoing all the hard work that initially got them to this phase.
It doesn’t need to be that way, however. If navigated correctly, Series A funding is another step on the growth train – with Series B and Series C on the horizon.
In this article, we look at 7 mistakes tech companies make after securing Series A funding. With these tips, you will avoid any perils and position your company in a healthy place that’s ready to win.
Mistake 1: Hiring too aggressively
Increasing the employee count is often the first order of business after securing Series A funding. Whether it’s sales, marketing, product, operations, or a combination of every department, one of the first stages of growth entails more team members.
Yet, too often, companies bring in new hires without having a proper onboarding strategy and therefore aren’t prepared for a significant increase in team numbers. How will you communicate effectively to the team if its size suddenly doubles?
It’s not a case of merely hiring talent and expecting instant results that include increased sales, a more aggressive marketing output, and improved products. Three new sales hires won’t automatically equate to doubling your sales in the next quarter.
Instead, you need to grow at a pace that fits with your model. You’ve already made it this far – there’s no need to rock the boat to the point where the company suddenly looks like a different set up. Focus on quality over quantity – are there existing employees that need replacing before the headcount increases?
More doesn’t equal better. Quality should always come first.
Mistake 2: Hiring salespeople before having a market/product fit
A common theme with B2B tech startups sees them hiring salespeople and onboarding with hope and ambition but with no real understanding of their target audience. It creates unrealistic expectations and often leaves the sales rep unsure about the target market, essentially leaving them throwing enough mud at a wall in the hope that something will stick.
Hiring a VP of Sales too early ties into this mindset, and is often something we see with US big “tech influencers” who talk about hiring a VP of Sales after your first 10 customers. This is not a wholesome metric, however – you may have two customers that contribute 90% of the revenue, with the rest being pilots and short-term engagements. It will be hard for a VP of Sales to thrive in such an environment, and most likely end up being a costly mistake.
Mistake 3: Not being honest to yourself about your sales cycle
Impatience can lead to a quick unravelling after securing Series A funding. Your first significant deals took nine months to close, but now you want them done in three. Expand the team, be more aggressive and, voila, shiny new sales deals secured in record time.
Such a method is eminently understandably but, more often than not, it won’t hold up. Nor should you base your strategy around changing everything too soon. By all means look at your sales cycle and refine, but don’t change the landscape overnight.
It makes sense that you aim to improve your metrics when it comes to closing deals. However, ambitious targets – along with lying to yourself about where the company is in the sales cycle – won’t help.
Mistake 4: Thinking you can switch marketing on and off like a light switch
Many startups think of marketing like pouring petrol on a bonfire: it creates a huge flame that attracts plenty of attention. Once that attention has come your way in the form of leads, you then dial-down on marketing, safe in the knowledge that you have more potential clients than you can handle. No more SEO, PPC, trade shows, Social Ads Spend, networking events or PR agencies.
In reality, marketing isn’t an ‘on/off’ solution – it’s part of the long game and helps build your brand awareness over time. There may be an uptick in leads at the start of a campaign, but that doesn’t mean the job is done.
Choose flexible marketing tactics, so they can be adapted if necessary. But don’t go hot and cold on marketing, expecting to stop it for a few months and pick up where you left off. The whole medium of marketing is too nuanced for such a strategy to succeed.
Mistake 5: Not having an alternative plan for when there is a sales drop
It is easy to get carried away after Series A funding, but part of running a successful business is the ability to think of the best and worst-case scenarios – and be prepared for the latter. Doing so involves planning and budgeting accordingly.
We often set unrealistic goals based on nothing but blind ambition, then go into panic mode when those goals don’t come to fruition. As they say, failing to plan is planning to fail – and faster scaling doesn’t necessarily mean a quicker route to success in the long term.
Keep your day-one customers happy for those times when new customers aren’t pouring in at the rate you anticipated. Being prepared, correctly estimating costs and having a clear idea about how your market works will help maximise your chances for sustained success.
Mistake 6: Not thinking that you’ve already made it
When a commercial or marketing founder raises consecutive rounds of funding, they can start believing they’ve got all the answers – especially if a well-known investor has invested £1m+. The thought process goes something along the lines of, “If investor A believes in me, I must be doing everything right”.
Investors spread their bets, rather than putting all their eggs in one basket. If they invest in 20 companies, then only one of those needs to be acquired or go into IPO for them to make their money back and wipe out the losses of the other 19 companies. In other words, you’ve done a great job securing Series A, but there’s still plenty to learn.
Your company might have an inflated valuation, but does that line up with your revenue in the cold light of day? Do you have £150k-200k revenue per employee? What is your gross profit % change year on year? How much cash do you accrue in the business?
Many companies now raise Series A funding at a lower recurring revenue than ever before. What was once £80-90k monthly recurring revenue is now raising millions off just £20k MMR.
Be open to learning and apply a growth mindset as you move through the stages of expansion, especially after Series A funding. From new strategies, tactics and team members, to a new vision if necessary, having that open-mindedness and understanding that you haven’t cracked it all just yet will go a long way.
Mistake 7: General inconsistency
Change is a crucial component needed for true evolution, but it shouldn’t be forced. In fact, trying to change too much too quickly can be one of the biggest downfalls for companies that just secured Series A funding.
Talk to your employees. Most of them will likely cite unnecessary changes as disruptive and unproductive. If you go down this route, employees may start doubting your leadership as a CEO, as they have to adapt to your yo-yoing.
If they begin asking questions along the lines of “how would you like me to do it”, it could be an indication of your indecisiveness and desire to take things in a new direction without any real strategy.
Let change happen naturally, or because you’re adapting to new markets. But don’t force it because you think it should be the next step.
Thoughts from the pros
As well as our own experiences, we’ve spoken to some other professionals on what they’ve learned after securing Series A funding. Here are their thoughts:
Ben Prouty, Shepper
“Hiring from a standstill: Starting the hiring process for your post-raise team before closing your Series A funding might seem time-consuming, but it’s essential to do so. This can be a challenge for the senior management team and hiring managers who are wrapped up in closing the round and have heads that are rooted in a bootstrap mindset.
However, overnight you go from zero to being able to hire against the plan; it’s that binary. Therefore, get an in-house talent acquisition manager in (even for a couple of days a week) to start the process of lining up the people you need and aiming to align start dates with the close window. Not easy to do, but the alternative of losing a few months post-fundraise by starting from a standstill is an amount of time that a post-Series A company cannot afford to lose.”
Mike Kenedy, Downing
“Avoid overspending or adding to the operation that gears towards Series A cash burning a hole in your company’s pocket.
- Getting a big office on a 5-year lease!
- Hiring too fast, hiring the wrong people.
- Losing focus on product market fit and scaling the sales team too quickly.
- Hitting the road on international expansion too soon, and or over-committing – the US is a typical example.
- Trying too much too soon just because they have the cash.
- Very occasionally going far too slow.
Agree with our tips for avoiding mistakes after Series A funding? Perhaps you have your own thoughts to add? Let us know in the comments below.
I’m often asked this question by prospects and even now customers. How much does sales consultancy cost?
I wanted to go above and beyond the classic answer of “it depends”. And give you and others in the market an idea of what the pricing framework looks like. We already discussed in a previous blog entry “The 3 Most Common Consultancy Models Used At Technology Companies To Grow Sales”. I’d like to give an overview of what are the costs associated to enlisting sales support.
There are different ways in which sales consultancies charge technology companies, here are the different frameworks:
- Time – Hourly/Day Rate
- Recurring – Monthly Retainer
- Project – Fixed Fee
- Availability – Retainer Model
- Risk v Reward – Performance Fee
Some of these are similar in their nature and can be referred to differently by consultants but they normally boil down to these key five elements.
Time – Hourly/Daily Rate
Range = £60-180 p/h OR £500-£1,500 per day
This how many consultants charge their clients. They think how much would I like to earn, how many days would I like to work, what is fair in the market. Then they go and pick that number. Moreover, the rate has normally either been charged to them or someone in their network has charged this amount. It’s network-pricing in essence.
The variation in rate is dependent on experience, output and desired results. A lot of consultants will charge higher fees as they have run a similar business in the past as a Sales Director or Non Executive Director. It is important to really understand the personal motives of the consultant as this will dictate the pricing. Costs can certainly rack up using this pricing method as the consultant is incentivised to do less and higher rate, or to garner more days of work and charge more. The benefit of this approach is within 1 week you can call it quits and end the relationship without massive financial risk.
Recurring – Monthly Retainer
Range = £3,000-£6,000 per month
A monthly retainer is commonly based on amount of time that a consultant will spend working with and focusing on your business. Mostly this is a negotiation default of both consultant and client to keep costs low and at a fixed amount. This is contrasted with the daily and hourly rate where costs can fluctuate on a weekly and certainly monthly basis.
The range is dependent mainly on time and to a degree the experience of the individual. There are some nuances, which could mean that there might be additional resources provided like plans, templates, videos or training sessions. Additionally, some marketing and lead generation agencies have started blurring the lines between sales and marketing. Often this means that they say they’ll help you generate and close deals. These are two very different skills, beware of this approach.
The benefit of this approach is that you limit your exposure and know your monthly outgoings and committed time. A reduced monthly retainer is normally obtained when you agree to an initial 3 months with a 1-month notice period.
Project – Fixed Fee
Range = £25,000-£50,000 per project
This is where a sales consulting company is typically looking at a 8-9 month engagement. This could include the analysis, review and recommendations, the plan and the execution all within this period. An approach like this works well when there are specific and set outcomes to be achieved in a short period. Often the consultant will know the business already and be confident that they can drive growth quickly. They might have worked in a similar company, completed an identical project or they already know the route to extreme growth.
A fixed fee arrangement means that you do have an outcome-based arrangement rather than time-focused one. I would encourage you not to confuse these cost arrangements. Often clients think that because they have agreed a fixed fee, whatever time is needed will be given to them. This is backward thinking as you are paying someone to get results for your company.
The fixed fee model would require a payment up front, either 33% or 50% depending on the size of the financial commitment and resources needed from both sides. Additionally beware that a fixed fee model is not a results-based model. Therefore just because you pay in installments it doesn’t mean that you don’t pay them the extra 50% if they don’t hit the KPIs.
Availability – Retainer Model
Range = £1,500-£4,500 per month
An availability-based retainer model is one where the sales consultant will give you allocated time in their diary. This can be a set day(s) or it can be the equivalent total hours over a month or quarter. I’ve often seen this with sales training and Non Executive Directors. It can work well when there is a support-based arrangement after a sales transformation has taken place too. Hence the sales consultant is coaching and supporting the CEO long-term.
In contrast in the early parts of the relationship this is seen as too early by clients as they need you right now. They want results and they want them quickly.
Risk v Reward – Performance Fee
Range = 5% – 30%
A Risk v Reward model is a contingency based model. It’s cost is dependent on achieving set outcomes or goals in a specific period. There are two main types of performance fee:
a) Set Reward Fees
b) Set Percentile Fees
Set Reward Fees are those where you charge the client a set fee based on the results. Therefore you could charge them £25,000 for a 50% increase in sales, £50,000 for a 100% increase in sales and £125,000 for a 200% increase in sales.
Set Percentile Fees are those where you agree to take a percentage of the new increase in sales. It’s similar to a commission. Therefore if you increased the sales by £500,000 you would agree 5% cost. if it was £1,000,000 you’d take 10% and if it was £1,000,000+ you’d take 20% of all those monies over £1,000,000. This is only an example and there are many variations of this arrangement.
There are a lot different pricing models available out there for those looking to buy sales support. As you can see the ranges can be quite large and the costs are dependent on many factors. My advice to Tech CEOs would be to review what you want the individual to achieve, what your current situation is and what arrangement will bring the best behaviours. To create a win-win relationship you have to understand what’s important to both parties and look forward continuously.
What other types of pricing models have you seen?
I’m often asked this question by Tech CEOs…how much should my salespeople know about my product? I feel the reality and the need for product knowledge has increased as we have seen greater levels of access to information. I’m certainly not going to write a whole blog about the amount of information has increased over the last decade. Many people write about this topic everyday with little correlation to the topic or issue at hand.
There are many great phrases and metaphors that sales leaders come out with including my favourite, “you need to know enough to be dangerous.” The real challenge is that a salesperson learns a lot about the product in their first month or two and then reduces their dedication to learning. This is a real problem for Tech CEOs in today’s agile world where a product that you were selling 4-6 months ago could be completely different today. Secondly, the salesperson or sales leader is very keen on becoming operational and to delivering results as soon as possible. Often when you feel you know enough to start talking to prospects and positioning the value of the product, you rest on your laurels. This thirst to get going and to deepen sufficient technical knowledge is a fine balance.
Above all the drawback with this approach is that the rate of development of the product doesn’t match your own learning. Additionally, if you are new to the industry then you’ll need to get to know the product and the industry language.
How can I measure the level of product knowledge?
There are a couple of behaviours that as a CEO you can spot and predict that a sales leader or salesperson is not learning at the desired rate:
- Ask the salesperson to explain the new product features and how they are different to the previous configuration.
- Quiz them on why you have chosen your configuration of the platform, what’s the advantages?
- Understand when was the last time they setup a product demo, even if you have technical sales support.
- Request if they can build an A-Z of industry lingo and company jargon to help onboard staff.
- Hold a 5-10 minute pitch review and understand their product knowledge depth.
What are the effects of low product knowledge?
In today’s modern world salespeople are having to improve their digital skills and knowledge constantly. This is due to the rate of innovation exponentially increasing each day.
- Your sales leader won’t be the right candidate to take you forward to the next stage. Put simply, you’ll have to hire again.
- The quality of the onboarding of new salespeople won’t match up to your standards and knowledge transfer won’t happen efficiently.
- New product development will be undervalued by your sales team and not leveraged to gain incremental value in the marketplace.
What should my salespeople know about my product?
- The market landscape and the reasons why we built our product
- Why did we select the technology and platforms we did when building our product?
- The security configuration of the platform
- Integration options with the customer’s environment
- Programming languages used
- Where is customer data stored?
- Types of access rights? What configurations or adjustments can be made?
- What technical knowledge does a customer sponsor need to run your platform?
- How can updates be made? Do customers need support to perform these updates?
- What differs between old configuration and new updates? What does this mean to the customer?
- The different tiers of support and how do they relate to technical issues
- Common industry language and jargon used, including various acronyms.
This is not the exhaustive list but it’s an overall recommendation on what the person should know. In contrast, it’s not to say that we should select salespeople on prior industry knowledge on each occasion. Besides, a salesperson can be technically brilliant at sales and can then fill in the gaps by boosting their technical know-how.
My main recommendation is that a true understanding of your customer’s environment is the most natural way to garner this knowledge. Otherwise if it’s not market-focused for the salesperson they will switch off and ultimately you are not leveraging their skills in the proper way. Often this knowledge is in the heads of the CEO, Customer Success Managers, Head of Product and other long-standing salespeople.
What have you found to be good ways in evaluating salespeople’s product knowledge?
I wanted to share the number one hack used by Tech CEOs to gain serious results. I’m writing this blog as many have asked me to explain more about this hack and what I call the “moving train technique” and how it can apply to their tech business.
Most Common Mistakes
The most common mistakes seen at tech companies while trying to grow their company, market share and team:
- We try to strategise too early without enough market intelligence.
- Create pricing that is too low as “we’re a small company”.
- Make decisions purely based on experience and not a recognition of the status quo and the current environment.
- Yearn to create new products before really exploring and investigating alternative ways to grow our business.
- Neglect resources in front of us whether it be people, partnerships or publicity.
- We often shoot for the moon or follow the “shiny” things instead of picking up the business shovel.
- Let our knowledge gap become a hindrance by making emotional rather than logical decisions at times of need.
I could list many more. The point is that often we are trying to create something new as we are entrepreneurs. We are creators and it’s certainly a lot easier to create something new; rather than to mine for the gold in our own team, proposition or process/
In essence, we neglect opportunities to reignite or uncover already existing momentum in our plans and businesses.
What is the moving train technique?
The moving train technique is a phrase that I coined to describe how people, partners and customers like to jump on a moving train. They like to back something that is already moving and has momentum and where we can see a realistic improvement in that plan or endeavour. Here are a couple of examples:
Hiring A New Account Executive:
How would you like to join a team where you had a Top 200 prospect list with customer names, contact details, previous communication and their key challenges and issues? Often we hire salespeople to create brand new pipeline rather than enlist them to do what they are here to do, sell and convert prospects to customers.
Hiring A New Marketing Manager:
You want to build out a resource or education part of your website which involves creates plentiful content including ebooks, whitepapers, videos and blog posts. What about creating a top 50 questions that your clients have including pricing, problems, reviews and comparisons, best of, big trends, mistakes and secrets. You can even go one step further and create a provisional workflow, branding, a guided screenshare for uploading the articles into the relevant part of the website. Then once you have this you could then go out and hire your new Marketing Manager and say can you amplify and expand on our original ideas and content?
Hiring A New VP of Sales Or CRO:
You are hiring your first VP of Sales as a tech firm and want them to hit the ground running. You design the “real job spec” to include outcomes, activities, skills and character required. Ok, sounds simple. Now what you can do is create a provisional 90-day plan as to where you see the potential improvements could be made, the attributes of the staff, real opportunities to close revenue in the pipeline and ask them what do you think of this project?
A lot of people talk about how they “love to back a winning horse” but we hardly ever do so in our business. And in any case this metaphor is limited. We love to back things that have momentum – things that are moving forward. Life is really about progress and hence it’s human nature to want progress and to follow others that are engineering or experiencing progress. We neglect this common trait in our everyday lives.
We have ushered in an era of experimentation to create amazing and innovative products in our sector. Sometimes with the fundamentals of sales, marketing and account management we have lost a sense of clarity and direction in our actions.
Implementing The Moving Train Technique
Here’s my advice for ushering in and leveraging the moving train technique in your own business and life:
- What is an action or step that I could complete in the next 2 weeks to amplify the results of my new plan, strategy or hire?
- What are the resources that we have immediately available that we can leverage to make this so much easier when it comes to crunch time?
- Where are the resources in our business that we’ve neglected or not made the most of in the last 6 months?
I hope you found this article interesting. And I’m pleased I finally got round to writing it after much persuasion. I know we could all reduce complexity to free up resources, time and accelerate our results. This is my wish with the moving train technique is that you focus on gaining momentum and then asking other people to join your tribe.
I’m grateful to say that this is what my company Sales for Startups does each and every day. We help technology companies scale their sales results by making tactical changes that have a meaningful and lasting impact.
I’d be interested to hear about what occasions have you used initial momentum to tackle seemingly insurmountable tasks.