3. Building Sales Efficiency Before Leadership Expansion
- Abishek Murthy CGO at Locus, Ex-COS at Freshworks
One of the things that I’ve had a failure at, or several founders have also done, is hiring too early. For example, hiring a sales manager too early, a sales leader too early, a VP of Sales too early, or a marketing leader too early.
You should only hire when you know somebody else can do your job better than you, either because you don't have the time to do it to the best effort or you don't have the skill.
As a founder, you’re in better visibility of what the product is built for, what the ICP looks like, and what the engagement looks like than a PMM will do, for example. In the early days, you double down and focus on building a world-class Sales team all by yourself.
You run the Sales team until you know that a rep could do better than you, and then you stop being a rep and start mentoring that rep. When you know your mentorship is no longer making sense to the rep because you cannot add depth to a sales conversation, you hire a Sales leader from outside.
I would strongly urge all of you not to rush into hiring a Sales Manager. While I think it’s okay to hire a rep, don’t rush into hiring a Sales Manager. You should only do that when you know somebody else will do it better than you.
You hire a Sales Head only when you know you can't manage a 10-member sales team when your lack of sales efficiency is visible. You don't hire a sales head on day zero because then you're not building sustainably. Be critical about why you want to hire this person.
Have you hired this person because of a lack of time? Or have you hired this person for your lack of skill? Or have you hired this person for the lack of contacts or depth in this industry that you don’t have, which somebody else has?
If you’re hiring them because you don’t have time, I would say that there is no bigger motivator than growth, and Sales is the most critical aspect of your business. So, figure out if there is something more critical for you that you can deprioritize and get to sales.
When it comes to hiring SDRs, you only hire them when there is an efficiency problem. For example, suppose a signup comes in, and you are demoing somewhere. In that case, the SDR needs to get on a call in the first 10 minutes or, 20 minutes or one hour or eight hours or whatever it is, still engage, and then set up a time efficiently.
If you’re a 5k ACV, you can afford to do that. But I suggest not bringing these roles as SDRs, BDRs, etc, until much later. SDRs will not have the depth of product understanding, engage customers as deeply as a sales rep, or understand the customer’s problems. They are guards in the proper sense to fix an appointment or an opportunity.
That’s not required at an early stage. It’s important to consider it when you’re a $20 million company, but I don’t think it’s needed now.
Lastly, before you go about hiring you need to make sure that your performance metrics for the Sales teams are also set up.
At the start, you should have ease and focus on X number of signups to X number of conversions. Again, purely focus on leading indicators. Your assumed ACV, your assumed engagement, and your assumed conversions can change in a quarter or two. You focus only on your leading indicators.
Of course, when you talk to your team, you speak to your team of lagging indicators. But as a leader and founder, you focus on leading indicators.
You figure out what an MQL looks like and define what you call a lead. First, determine if the correct number of leads is coming from your personas — in this region, with this title, pay parity, etc. You can define your MQL using a tool, and there is no right or wrong. It’s your canvas.
Once you have that, measure the time of the first response and, if possible, the proper response. Are your reps being crafty? Are they saying the right things in the first 90 minutes?
Inbound sales historically meant assisted buying. Sales is a very classy word; rep is a very classy word. That’s why you’re doing it. In reality, it is assisted buying.
The very fact that somebody is searching for something like this means that there is a need, right? Clearly defined MQLs mean that the leads are looking for your solution. But they might also be looking for five other things. So you need to be crafty enough to showcase that you’re better than the other five they’re trialing.
So you focus on the leading indicators of first touch, the right touch, great engagement, crafty response, etc, and see where in your funnel things are breaking.
Measure leading indicators initially, and your lagging indicators of revenue and conversions will come. Leading indicators of time to engagement, leading indicators of crafty emails, leading indicators of reply rates, and leading indicators of pipeline generation. You focus on all this, and lagging revenue indicators will come to you.
Suppose you focus so much on your lagging revenue indicators. In that case, you will lack focus on craftiness, engagement, and enjoying the smaller journeys. Focus on the smaller journeys, measure those smaller journeys, and you will perform better.
Fostering the right behaviors is all about the early indicators you measure.
Early-stage startups focus too much on revenue. This is true for every company that I’ve worked for. All of the focus is on the net outcome of revenues. What gross revenues can we get by the end of the year? And that’s it.
If you’re focused on the revenue each rep is doing, that is the only thing that will be measured, and all behavior will spring from that.
Happiness is in small things, and we must focus on the small stuff. You will always get to the revenue if you have a good product and a high TAM, but only if you have great customer engagement. You need to realize there are small steps and celebrate the small wins to incentivize these behaviors.
Celebrate a fantastic email an SDR has sent out, appreciate and recognize a series of great engagements the sales team has gotten, push it on your Slack channel when a rep has had a world-class call, push it on your Slack channel when somebody has won a deal that nobody thought will win.
Measuring the engagement and what brings customers happiness, for example, if you can measure time to first response and then incentivize that behavior, that will become the norm.
For example, you can have a leaderboard for who gets in touch with the customer the fastest — call it ‘Fastest Finger’ or something. Give that person a 2000-rupee voucher, a 5000-rupee voucher, or something like that every month, every 15 days, and you will see behaviors changing.
We are all driven by incentivized behavior. If you can incentivize these behaviors, they become a practice. Once they become a practice, you don’t have to incentivize them anymore.