Hiring your first sales rep can be absolute rocket fuel for a company. It’s that magical time where an owner sees new contracts from people they didn’t know, and all the stress of finding work doesn’t fall solely on the founder. Plus there’s some time freed up to go work on the business….
But this doesn’t happen 80% of the time. Most companies first swing at hiring a salesperson is a big miss. It’s usually 9 months of not knowing if they’re any good, the sales rep saying they think they can ‘close this one deal’ and seeing minimal success. Eventually the person mentally quits while looking for a job on your payroll. You burned +$50,000 of precious cash and are convinced a salesperson just won’t work for your company.
My last blog post mentioned that failing on hiring a sales rep can be one of the most costly mistakes going from startup to consistent revenue over $2M. It’s hard to get it right; but if you do the rewards are MASSIVE. The revenue roller coaster is more consistent, the owner’s time gets freed up, you can plan proactively for growth, and your company is much more ‘sellable’ down the road. Plus if you can get 1 sales rep producing, you can get 5…
This will be a gamble. You have a 1 in 3 shot of making this hire profitable following the steps below. Most new companies make critical mistakes that give them a 1 in 10 shot. The goal of this post is reduce your risk so you invest $10-20k and know within 3 months – instead of +$50k and 9 murky months like most startups see. Reduce your risk and give it a shot. If you miss on the first person, you can try again quickly.
Before we get into all the right ways to do it, let’s cover the wrong ways. Here is what NOT to do:
- Do NOT try to hire on straight commission.
- It rarely works in B2B, and it only works in B2C when you have strong lead flow and a proven process.
- Do NOT try to hire a VP of sales.
- They don’t want to hunt themselves anymore, they’re too expensive at this point, and you don’t need one until you have +5 reps
- Do NOT offer a big base pay and hope someone can come in to figure it out
- Do NOT create an unrealistic comp plan that shows super high earning potential. That’s moon math.
- Do NOT hire someone simply based on a logo on their resume. ‘Oh they worked for our best competitor, they gotta be good.’
- Do NOT blend the sales role with another one. ‘Maybe if our marketing person also does sales part time this will work.’
- Do NOT believe the Hubspot sales rep who says you can rely on inbound and scale forever.
Before we try to find this rockstar salesperson, there’s a few things we really need to iron out that will greatly increase our likelihood of success. As a founder you’re closing warm word of mouth referrals…we need this person to close cold leads with less industry knowledge. The prep work:
- Nail down the proper sales process
- Document how you book the first call, talking about unique differentiators, what you say on the initial call, how to build a proposal, closing, proper onboarding
- Map out your customer journey and sales metrics
- I.e. we know it takes 5 leads > 3 calls > 2 proposals > 1 closed deal. On average it takes 45 days to close.
- Calculate your average lifetime value of a customer and acquisition cost
- Recently a property management client did the math and realized his average client is worth +$7000 over two years. And now he estimates he’d be willing to pay up to $1000 per lead. These numbers will inform your marketing budget and comp plan a lot.
- Create sales collateral like a capabilities deck, case studies, white paper, testimonials, etc.
NOW we’re ready to go interview folks. You’ve successfully reverse engineered most of the blueprint so they can come in and hunt – they’ll know what to say, what activity to strive for, and have the necessary tools.
How to recruit a salesperson:
- Map out an ideal schedule with activity goals
- I.e. each week 15 hours outbound calls, 8 hours email, 8 hours talking to prospects, 5 hours follow up, 5 hours social selling. This will lead to 8 proposals per month > 3 deals per month, etc
- Show a clear, exciting comp plan for years 1 and 2
- Make sure the sales plan realistically matches the ideal schedule above
- Offer a base pay that’s enough to cover some bills but still have them hungry
- I.e. base pay of $3000/mo + 15% of anything you close and 5% of renewals > first year comp of $55-75k and $70-90k year 2 if you’re on target
- Show a forecast with 2-3 scenarios including medium producer, high producer, etc
- Create a thorough interview process with multiple steps and get a LOT of candidates
- Screen +30 candidates, talk to +10, have multiple calls/meetings, do a shadow day with +3
- Hire and support
- The work above will save you lots of time, but the owner should still plan 5-10 hours per week in month 1, then hopefully 2-4 hours/week in months 2-3
- Manage to habits and activity
- Hold them accountable to the proper sales process and activity goals above – sales will come with time. You can fix the pitch or help them close deals, you can’t always fix if they don’t strive to do enough activity.
- Throw them a bone and celebrate wins like CRAZY
- Help them land their first couple deals, pay them commission on a warm lead you brought in if need be, go bananas when their first client lands, create mini contests, etc
- If they struggle, coach to defined activity and work alongside them. Don’t be afraid to set minimum proposal and closed deals targets after 90 days.
Do the pre-work, take your time interviewing, and support them. You’ll be on your way to breaking through a plateau most SMBs can’t push through.