I’ve been mentoring and advising startups for several years now. I’ve also had the experience of hiring amazing sales people and hiring (then letting go) terrible sales people at startups I’ve been a part of. And I like to think that I’ve learned a few things along the way; including how important a CRM is (more on Salesforce implementations for startups here). One of the most important things I’ve learned is that experienced enterprise sales people often turn out to be an anchor on company growth.
“Greg, we just hired our first sales team member – they have a decade of experience.”
I cringe every time I hear this. Don’t get me wrong, experience is great. Unfortunately when a founder says this, they are frequently talking about enterprise experience; experience selling at a big company. These sales people often have what I refer to as the “Phone Company Problem”.
The Phone Company Sales Problem
Selling for telecoms, or other well established technology solutions providers, is actually a (comparatively) easy type of sales. Some of my more former co-workers will hate me for saying this, but its true. Here is how a sale at a telecom might go:
“Hi Business owner. I’m Bob. I’m from the phone company and I know you need a phone system. You also know you need a phone system and you know who we are, because well, we’re the phone company. We are big and we are dependable.”
In this type of scenario, it is really up to the sales person to build a deal that is more compelling and provides more value to the potential customer than the competition. That competition may be the cable company, a VOIP solution or something else, but not getting a phone system isn’t an option. Moreover, companies don’t change phone providers often because the switching costs (in terms of mental overhead and training etc.) are very high. So renewals are easy, churn is low.
How Sales at a Startup Work
“Hi Business owner. I’m Bob. I’m from a company you have never heard of before. You have no idea who I am and in all likelihood we will never meet in person. I understand enough about your company to know you may have a problem we can solve, but you aren’t aware you have that problem. You don’t know you need my product. And even if you do buy our product, statistically speaking, there is a high chance you will abandon it.”
First You Have to Sell the Problem
Many (if not most) enterprise sales people that are used to working for an established organization fail at startups, not because they lack sales expertise, but because they are selling the wrong thing. A big part of solution selling for a startup is creating the need to solve a pain the customer might not be aware they even felt.
First you have to convince the customer they have a problem and that the problem is solvable. That might take 6 months, 12 months, more – it is hard. During that time, you also have to sell them on the fact that your company is a credible organization. This may be despite the fact that you have few or no referenceable customers, very little in the way of sales enablement materials and you can’t afford to fly to meet them in person. The low subscription cost of SaaS solutions can often make travel for all but the biggest sales unprofitable. Deals have to be closed on the phone and that takes an amazing amount of talent.
After all that is done and they are convinced of their pain and your company, then and only then can you actually sell them your solution.
Why Enterprise Sales People Fail at Startups
Enterprise sales people, who aren’t used to this type of situation, tend to make the mistake of trying to sell their solution right away. They don’t understand they have to establish a problem and credibility first. Not only does this cause them to struggle, it also means that they don’t get paid the commissions that their lifestyle demands for the first twelve months of their job. Add on to that how demoralizing it feels to go from being able to close sales in a few months to wondering if you ever will close one again and you have a fairly demotivated chair warmer.
What to Ask in the Sales Interview
It isn’t all doom and gloom. Some enterprise sales people do fabulously at startups. It depends largely on their training, coaching and personality.
Having experience isn’t a bad thing. But as a founder or early stage employee hiring a sales person, you have to ask very direct and blunt questions about how they believe your sales cycle will work. Ask how they envision the sales process, how long they expect it to take to close a sale and how they have historically closed deals.
Remember that talented sales people are often great in-person interviewees. But handshakes and smiles likely won’t be a component of their job. Take the time to have them do an online demo for remotely and have them call and sell to you on the phone. Be particularly cautious about candidates that talk about meeting with the client or closing in person. Startups often can’t afford the travel costs required for that type of sales tactic. The handshake closers are great at their job, but their selling style often doesn’t work over the phone.
The Most Important Thing When Hiring a Sales Person
Ensure that they understand that sales are going to be difficult and take a long time. They need to know that they can’t count on commissions for the first 6 months, so either you need to supplement their base salary in the short term or they may need to make a major adjustment to their lifestyle. Both parties not understanding this is a recipe for employee dissatisfaction and a higher turnover rate.
About the Author
Greg Poirier is the President of CloudKettle, a company specializing in helping B2B SaaS organizations increase their sales pipeline with Salesforce, Marketing Automation and by assisting with their Content Marketing, SEO and online advertising efforts. Greg has been part of three technology startups, including Radian6, and has over a decade in marketing and management experience. He also provides mentorship at his local incubator and lectures on technology and marketing at his alma mater.