From Impossible to Inevitable: How SaaS and Other Hyper-Growth Companies Create Predictable Revenue

by Aaron Ross

At Talkdesk, our first rep closed $150,000 in his first 30 days. That's not luck. You won't always see sales numbers rise that fast, but if you're gut tells you that a person was a mis-hire, your gut is probably right.

Again and again. Folks who know how to make a lot of money together want to continue to do so. You should see very little churn among your top sales team members and managers—if any. If you see material churn, there's a real problem somewhere.

To-Do #5: Outbound (Spears) and Inbound (Nets) Aren't Either/Or, They Are “Yes” Always be doing both. The question is just the relative ratio, and when to begin or expand each.

Ineffective: Experienced sales people hate to prospect, and are usually terrible at it. Plus, why have your most expensive people make cold calls?

Erratic focus: Even if a salesperson does do some prospecting successfully, as soon as they generate pipeline, they become too busy to prospect. It's not sustainable, and leads to up-and-down rollercoaster results.

Unclear metrics: It's harder to break out and keep track of key metrics (inbound leads, qualification and conversion rates, Customer Success rates …) when multiple functions are done by the same team. Having different roles makes it easier to break ...

Less visibility, accountability: When things aren't working, lumped responsibilities obscure what or who is going wrong, making it harder to isolate and fix problems.

Specialize people so they can do fewer things, better.

When salespeople multitask (overtask), 90% of them end up doing many things poorly.

Specializing your roles is the #1 most important thing for creating predictable, scalable sales growth.

Prospectors need to prospect. They shouldn't close, respond to inbound leads, or act as part-time telemarketers when marketing's trying to fill events.

If you're seeing recurring problems in your team, or some vital function just isn't happening or is weak across multiple people, look first to structure. Maybe changing roles and responsibilities is the Forcing Function needed to deal with it. For example, with the right Sales Development team to help prequalify inbound leads or focus on prospecting, any “sales and marketing” divide mostly goes away.

The Four Core sales roles. Inbound lead response Outbound prospecting Closing new business Post-sales roles, such as account management, customer success and professional services

When not to specialize, or do it very differently … because exceptions exist for every rule: You have a very simple sales process, like a one- or two-call-close product. You're in a business or segment currently succeeding with generalized salespeople (like financial services advisors). Don't fix what ain't broken … but also don't be afraid to try new ideas. Common sense or proven experience—not tradition—says it just isn't right for you.

Creating a junior sales/SDR role that mixes inbound lead response with outbound prospecting. You better have a really, really good reason to do this.

Dashboards and metrics that lump together inbound lead metrics and outbound prospecting metrics. Step #1 to create clarity in your different funnels: Measure and track them separately.

To make this transition, Clio had to rework a lot of important sales systems: designing new roles, new quotas, new comp plans, creating a territory system (which they'd never had), figuring out which rep should go into which team, changing Salesforce.com, and a lot more. They dove in headfirst.

Lesson #1: Simplify comp: Previous comp plans had a ton of rules and regulations around the kinds of deals that would be eligible for quota. Clio was trying to drive the right behaviors with those rules, but they created too much confusion and too many obstacles.

By removing confusing comp goals and triggers, salespeople partner, collaborate, and close much more because everyone's aligned. Salespeople partner, collaborate, and close much more when everyone's aligned.

Lesson #2: Overpay salespeople during the transition: During their restructuring, Clio paid the team a flat fee/fixed bonus for three months while gathering data and figuring out new quotas and goals. Clio wanted the team to feel comfortable helping switch to the new model, without distracting them.

Lesson #3: Create a collaborative, not competitive, sales environment: Fun or friendly competition is helpful and energizing. Hurtful or “real” competition kills your team.

Even if there's some part of your sales process that you don't like to do, it's valuable to do it for a while first so that you have hands-on experience. It'll help you better hire and manage someone else when you're ready.

Prospects and customers get better service when you specialize.

Effectiveness: When people are focused on one area, they become experts. For example, in 10 years, we've never met a team of generalized salespeople that didn't struggle with generating or responding to leads.

Farm team/talent: Having multiple roles in sales gives you a simple career path to hire, train, grow, and promote people internally. This creates a much cheaper, less risky, and more effective way to recruit, rather than relying too heavily on outside hires. (A rule of thumb: Over the long term, grow two-thirds of your people internally and hire one-third externally for new ideas and blood.)

Insights: By breaking your roles into separate functions, you can easily identify and fix your bottlenecks. When everyone is doing everything, it's like having a...

Scalability: Specialization makes it easier to hire, train, measure, grow, and promot...

It's hard for a manager to be effective with more than 10 direct reports.

But … those VCs are right. In startups, it seems as though the majority of first VP Sales fail: They don't even make it past 12 months. The average tenure for VP Sales in Silicon Valley averages 19 months, so that includes the winners—ouch. (And marketing leaders average 18 months in fast growth companies.)

Recruiting. You hire a VP Sales not to sell, but to recruit, train, and coach other people to sell. So recruiting is 20% or more of their time, because you're going to need a team to sell. And recruiting great reps and making them successful is the #1 most important thing your VP Sales will do. And the great ones knows this.

Backfilling and helping his/her sales team. Helping coach reps to close deals (not doing it for them). Getting hands-on when needed, or in big deals. Spotting issues before they blow up. Seeing opportunities ahead of the horizon.

Sales tactics. Training, onboarding. Territories (yes, you need them). Quotas, comp. How to compete. Pitch scripts. Coordinating FUD (fear, uncertainty, and doubt) and anti-FUD. Segmenting customers. Reports. Ensuring everyone on the team, including themselves, can get what they need from the sales/CRM system.

Sales strategy. What markets should we expand into? What's our main bottleneck? Where should our time and money go? What few key metrics tell us the most a...

Creating and selling deals themselves. This is last of the top five. Important for select deals. But last on the list, because if your VP Sales (or CEO, for that matter) is doing the closing rather than th...

So … don't hire a VP Sales until you are ready to scale, build, and fund a small, growing sales team. Usually this means you have at least two salespeople—who are no...

Don't hire a VP Sales until you are ready to scale, build, and fund a small, growing sales team.

The problem with Evangelists? They've never actually built or scaled or systematized sales. They know how to think creatively and cross-functionally. They're fun to work with. But 9 times out of 10, this is a waste of a hire and your time. Why? Because the founder/CEO has to be the Evangelist, along with the first one or two reps you hire.

Here's what happens with Mr. Make-It-Repeatable: Everything seems much simpler and clearer. Almost immediately, revenue goes up. Because they know how to close, recruit, hire, and coach. And they know how to build the basic processes you need to make it predictable.

Don't let a resume blind you—or your investors.

Before we get there, we strongly recommend that you hire one to two sales reps at a minimum (ideally two) before you hire a VP Sales. And make them successful first. So you can practice what you preach, knowing what success looks like before hiring. Also, to get big enough so a “real” VP Sales can actually help, not hinder you.

Practice what you preach, knowing what success looks like before hiring.

If any of the answers are terrible, pass. If any don't make sense, pass. If you don't learn something in the interview, pass. And if you know more about any of these questions than the candidate does, pass. Your VP Sales needs to be smarter than you in sales, sales processes, and building and scaling a sales team.

Your VP Sales needs to be smarter than you in sales, sales processes, and building and scaling a sales team.

Your people and culture determine your destiny.

delegate work in sales, but don't abdicate your understanding of sales.

At least until you've seen sales become predictable and profitable enough. Whether you're a business, technical, finance, or product founder, YOU are responsible for figuring revenue out. Not your VP Sales. Not your sales hires.

Technical leaders: Even if you're an introvert or too busy coding to meet with customers … do it. It doesn't matter how fast you code the wrong feature.

Mistake: CEO gets tired of selling, and hires a closer to do the selling for them. CEO lets go of sales too fast. Closer takes far longer than expected to ramp, and fails.

salesperson should bring in 3 to 5 times their total compensation. So if they are earning $150,000 a year, they should bring in $450k–$600k-plus in annual contract value.

Within one sales cycle, you'll know in your gut if a change worked out. Listen to it.