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Updated August 22, 2022You’re reading an excerpt of Founding Sales: The Early-Stage Go-To-Market Handbook, a book by Pete Kazanjy. The most in-depth, tactical handbook ever written for early-stage B2B sales, it distills early sales first principles and teaches the skills required, from being a founder selling to being an early salesperson and a sales leader. Purchase the book to support the author and the ad-free Holloway reading experience. You get instant digital access, commentary and future updates, and a high-quality PDF download.
We talked about the basics of role specialization earlier when discussing how hiring an SDR rep early on can be a force multiplier when you’re running through your first few dozen sales cycles. Whereas that goal was to help you free up your time to do more selling meetings (demos and follow-up meetings) and do customer success activities, now the business of specialization is about preparing your sales team for scale up—we are proving that AEs other than you can successfully sell the solution, and that CS staff, again, other than you, can successfully implement, monitor, and drive success of customers. Doing so prepares you for hiring and managing many of these successfully, which allows you to ramp your organization’s revenue.
importantEven as you abstract the selling behavior into other staff, you’ll also be working on specialization of those staff as well. This will likely happen in a stepwise fashion, as discussed in the maturity model to follow, but ultimately specialization of sales and success staff is a very powerful modern way of selling.
The benefits of specialization are an extension of what you found when you hired an SDR to help set appointments for your calendar. Not only does specialization lead to individuals being better at the thing they are specializing in, due to doing more of it (~AEs doing demos and closing calls constantly versus Account Managers doing QBRs versus SDRs cold calling and emailing), but you also remove the cost of context switching between different roles that would otherwise be present within a single person. And of course this has all been enabled by the trusty CRM, which acts as a repository of truth with respect to the state of a prospect, from lead to opportunity to customer to renewal.
Ultimately, assuming you have the revenue model that can support it, specialized roles, with SDRs setting appointments, AEs pitching and running deals, and CSM/AMs farming accounts, is the gold standard of a B2B revenue acquisition apparatus in the twenty-first century. That said, there can be situations where specialization is not merited. If the majority of your deals are one-call-closes—transactional, with low average sales prices—then it might just make sense for you to have junior reps who act like closing SDRs.
Generally speaking, specialization makes sense when efficiency gains offset enlarged coordination and complication overhead—which for higher-sales-price, longer-sales-cycle situations is typically always the case, with some exceptions.
importantOf course, I don’t recommend jumping straight to the end state of a fully specialized sales organization just as you start to scale up. Rather, you need to approach the scale out of your sales and success organization by validating hypotheses like you did when proving your sales motion—by getting more complex, step by step, and figuring out what’s broken along the way, and then fixing it before you take the next step. This is your number one job at this stage of the organization.
What are the steps? And what do you need to be focusing on at each stage, and what are the exit criteria for moving on to the next? We detail them below.
This is what we’ve largely been addressing up to this point in the book. A business founder engaging in lead gen, outbound appointment setting, pitching, demo, and closing, and then customer success for an early set of customers. The goal of this stage is to prove that you can reliably convince customers that your solution is valuable, get them to use it in a way that demonstrates that your product moves the relevant business metrics for the customer in a way that they desire, and prove these customers will pay for the right to have those business metrics positively impacted like this.
The exit criteria for this stage is a handful of early customers paying money in exchange for the value your product provides. And, after being implemented and using the solution, that group of customers continues to both use the solution (acceptable levels of engagement) and believes the solution provides the value being paid for—such that if another prospect asked them about the solution, they would say it’s worth the money. And when it comes time for renewal, they will do so.
The main anti-pattern for this stage (as is largely the topic of this whole book!), is hiring a “salesperson” to figure it out—throwing the product over the wall to someone who was not involved in customer development to execute. “Sprinkle some sales on it.”
Other anti-patterns are not charging for the solution, thus not proving the actual value exchange and, a common one, selling the solution but not investing sufficiently to prove that the customer attains the promised value (you got money, but they did not get value, and they’ll eventually churn).
This is the first step of abstraction we referred to quickly in Down Funnel Selling. Because the process of prospecting qualified accounts and contacts, and then engaging them with outbound email and calling behavior with the goal of setting up appointments is more basic and packageable than pitching and giving demos, assisting a founder-seller with an SDR can be one of the first ways of putting specialization into your sales org. It’s a tried and true way of getting leverage for a founder-seller, and leaves you with more time to focus on nailing repeatable selling and success activities by filling your calendar with new pitch meetings, relieves you of prospecting work, and leaves you more time for doing customer success.
Source: TalentBin
That said, another way of providing specialization can be by adding a Customer Success management resource to assist the founder-seller in supporting these early customers that you’re onboarding. This approach can make sense when lead generation and appointment setting isn’t a time suck for the founder-seller. If, for instance, the founder-seller is very well networked, and getting access to new prospects to engage is relatively easy, then the more important place to get leverage can be in packaging up the to-date validated customer success model and handing that to a CS rep or CS lead to run with and evolve, so the founder-seller can focus her time on scaling up customer acquisition faster. In both cases, the notion is to abstract off part of the founding seller’s workload into another specialized resource.
Source: TalentBin
The exit criteria for this stage would be a few dozen customers acquired, onboarded, and getting to success, along with a clear, repeatable, documented sales motion, ready to be tested on one or more new, non–founder-sellers, all while maintaining healthy sales KPIs, like win rate, attainment (in a monthly or quarterly period), and so on.
cautionThe anti-pattern here would be trying to get someone else to do this for you—hiring a “salesperson,” or even worse, a VP of Sales to prove out that this is repeatable a handful of times. Another is acquiring a bunch of customers, only a fraction of which get to success—also known as “spraying and praying.”
This is the stage where we start seeing the beginnings of true leverage setting the stage for scale. The goal of this stage is to prove that someone other than the founding seller can sell the solution. The key activities here are the hiring, training, and management to success of one or more sellers (typically two, to start), aside from the founding seller. There can be continued selling activity by the founder, but increasing time should be focused on proving that these additional sellers can sell the product, in a repeatable fashion. Training, management, coaching, inspection, correction, and tooling are more and more the focus.
The exit criteria for this stage would be those sales reps engaging prospects, presenting, and closing ideal customer profile customers, who are then getting to success and value, at least as efficiently as you were previously.
cautionThe anti-patterns in this case are twofold. This is a Goldilocks scenario. You want to do it just right. The first anti-pattern is gaining too much leverage by hiring too many, too fast. Hiring too many raises burn rates without proof of success, and too many reps makes it difficult for the manager-founder to get each to critical mass. Instead, you try to boil the ocean and none of them end up succeeding.
The second anti-pattern is non-leverage. Instead of focusing on proving AE1 and AE2 can get to success, the founder spends too much time still playing instead of coaching. Doing so robs the future of the company by slowing the process of packaging and distribution of the sales motion into something that can be dropped into 5, 10, n reps in the future.
Source: TalentBin
This is the next step in specialization and scale out, where the founding seller now steps entirely out of the day-to-day work of selling. The goal of this stage is to prove the successful performance of a complete unit of revenue production, including lead gen, selling and closing, and onboarding. The founding seller is now focusing her time fully on sales orchestration refinement and management, sales process definition and implementation, along with tooling creation and adoption. If previously there were no specialized customer success or sales development staff, now is the time to introduce that specialized role and work to cement the interaction and rules of engagement between the various functions to ensure they are tight and without gaps.
The exit criteria for this stage is the unit producing revenue at a predictable rate, all members hitting their goal KPIs (meetings product by the SDRs, deals closed for AEs, onboarding customers with high NPS scores for CS), with smooth handoffs and proper back-checks to prevent dropped balls. The unit of revenue production and retention performs with solid unit economics—where the unit more than pays for its own salary costs and throws off cash to the business. You are confident you can now clone this.
Source: TalentBin
This is the point at which you can really start to see the power of scale out via replicability, where, by cloning that initial sales pod, you are able to double or triple through throughput of your team.
While the activities to focus on here are largely the same as before, there will be more managerial complexity, as you will be adding more staff, and thus there will be more of a focus on metrics and analytics. This might be the stage at which you add a professional sales manager—though there can be value in proving the successful hiring and onboarding of another cohort or two of additional reps in order to fully develop those management motions before handing them off to someone else.
The exit criteria for this stage is for the complete unit to be producing revenue at a predictable rate, with all members hitting their goal KPIs and successfully returning lots and lots of contribution margin back to the business. You are now confident that you could hand a unit like this to a professional sales manager, and she would be able to manage it, and start cloning these units out, herself.
cautionThe anti-pattern here, though not entirely clear, potentially could be handing the beginnings of this unit off to a manager before fully baking it yourself; or racing through this stage to the next one before proving that this stage was successfully achieved. Another could be not tending to the additional complexity or ensuring that there is sufficient lead generation to power the incremental AEs.
Source: TalentBin
Source: TalentBin
As a note on sales operations as part of scale out, as described above, sales operations (and also sales enablement, sales effectiveness, and sales strategy) are efforts that are focused on making the entire machine that is the sales organization more fluid and effective, using metrics analysis, process refinement, and technology adoption to facilitate that goal. You might think that this is something that is the responsibility of sales leadership and management, in general, and of course you’d be right. But sales operations is a pure refinement of this—where their job is purely focused on those efforts, whereas those efforts are just one thing of many that sales management and leadership are responsible for.
Typically, introducing sales operations will make sense when you have enough reps that a single sales ops headcount salary, blended across all the reps, will be worth the time savings and revenue lift that stems from the addition of that headcount. It can vary, but this could be as early as ten reps.
exampleIf an ~$80K sales operations person can help each of your five sales pods composed of one AE and one SDR each deliver ~$50K more in bookings per year through better process, automation, and technology adoption, then ~$80K of salary for ~$250K in incremental bookings seems like a sweet deal to me! Now imagine that leverage with ten sellers. Sales ops is a powerful tool.
Even before you decide that your sales org is ready for that investment, that doesn’t mean that this isn’t anyone’s responsibility. Rather, it falls on the shoulders of you as the leader, other leaders and managers, and even to the reps themselves. I like to think of this as product management of the sales org, where we are constantly looking to enhance the go-to-market through the removal of existing friction and problems (product bugs), and by adding functionality to the sales org (product features).
Sales management is the practice of enabling, coaching, inspecting, correcting, celebrating, and, generally, managing groups of salespeople in the pursuit of taking your product to market. And understanding what drives the success of a B2B go-to-market is instructive in how to think about your role as an early sales manager.
Ultimately what drives sales and customer success performance is a high quantity of high-quality customer-facing selling activity. We can improve the output of this formula through raising either the quantity of sales activity, the quality, or both. We can raise the quantity of this activity by improving focus and effort through better management of staff in their execution of these activities—like helping staff focus on customer-facing activities rather than internal-facing communications or other non-work distractions. We can further raise the quantity of activity, through the specialization or automation of tasks that are automatable—like by doing mass prospecting and filling the CRM with accounts and contacts for reps to target rather than them splitting their attention to do so themselves. And of course we can also raise the raw quantity of this customer-facing activity by simply adding more sales people doing this selling activity—this of course being the crux of scale out in a modern B2B sales org. Adding more cylinders to an engine adds horsepower and makes it go faster.
The quality of customer-facing activity also matters—the discovery, presentation, pitching, demoing, and deal running. This can be raised through better training and messaging—by ensuring that reps understand the pain points that the product solves, the conditions in which those pain points exist in a prospect’s business, and being able to effectively discuss these points. Quality of customer-facing activity can also be improved through better process—by preventing reps from losing track of their opportunities, being diligent in their follow up, and generally running a good sales process across their opportunities. You can think of this as ensuring that these cylinders in the engine are burning cleanly and not leaking.