Org Series

How to Build Out a Sales Team

By: 
Megan Hemmings

Welcome to Part 5 of our Organizational Structure series. In this post, we’ll be focusing on how to build and structure your Sales team.‍

Why Should you Hire a Sales Team?

As a startup, the ultimate goal is to grow your business as quickly as possible by closing deals. In the early days, your CEO  is likely to be your Sales person. They know the business better than anyone else and have been responsible for selling the vision to investors, giving them the chance to hone their pitch. However, a point will come when your sales needs will expand beyond the capacity of your CEO and they will need to focus on other responsibilities. At this point, hiring a salesperson to take over the business of closing sales makes more sense.

How is Sales Changing?

As more customers become empowered to do their own research before ever reaching out to a salesperson, sales reps need to become more adept at understanding individual customer data and working across multiple channels. A report from McKinsey found that buyers use ten or more channels throughout the buying process. This means that Sales now needs to understand how customers interact with the information available at a high level as well as on an individual level. By digging into the data available, Sales will be able to understand which customers prefer email, phone or chat follow-ups as well as anticipate questions that may come up.

For B2B companies especially, this is taking the form of solution selling where tailored value propositions are presented to prospects rather than focusing solely on product features. The same McKinsey report found that “approximately 85 percent of sales leaders said they believe solution selling will be a core sales capability, requiring strong product knowledge and solution design as well as account-planning skills.” This shift requires the Sales team to deeply understand the needs of each prospect and be able to adjust their pitch based on those needs rather than approaching every conversation with the same pitch.

To that end, Sales needs to become more agile - able to rapidly test ideas and implement findings. The best sales teams are taking part in more frequent trainings and sales coaching to allow the team to share their findings and work together to create better sales processes.

When to Begin Hiring a Sales Team

Once you’ve closed a few customers, thus proving at least some level of product-market fit, have created a basic, repeatable framework for how the sales process works and are generating more leads than you can handle, it’s time to bring on a dedicated Sales person. This typically happens very early on, shortly after Seed funding. TruePlan data shows the first Sales hire is typically employee number 10 - 30.

This first Sales hire needs to be able to think like a sales engineer, taking what they hear from prospects and relating it back to the internal team. Zachary Van Zant, VP of Sales at Persona, says to look for someone who has a “passion for engaging with customers, solving problems and translating that into something a product manager or engineer can use effectively. Find someone who is really focused on how they are closing business and solving problems at a technology level.”

In addition to providing feedback to the product team, Brian Reavell, Partner, Sales Effectiveness at West Monroe, says the first Sales hire is going to be expected to cover “the entire customer journey -  business development, lead generation, opportunity management and closing deals.”

At this point, you are not looking for a VP of Sales. Rather, you are looking for someone with a few years of experience in hands-on sales with ambition and a passion to grow your business as well as the ability to handle the ambiguity that comes with start-up life. While you may be tempted to go straight for someone from a big name company, you’re better off looking for someone who has helped grow a business and had to work to close deals.

When to Scale the Sales Team

Once your initial Sales hire is in place, keep a close eye on performance metrics to decide when to bring on the next Sales person. Things such as the number of leads coming in, performance targets, and conversion and win rates can all be good indicators that it’s time to bring on a second Sales hire. Depending on the pace of your growth, this can happen very quickly - often in the 25 - 40 employee range. 

From there, it’s a numbers game. How many leads are coming in versus how many leads your current Sales team can handle. As Van Zant explains, “If you're thinking about how you actually start to scale Sales, you really want to look more at those base foundational metrics. There will always be revenue projections. But you don’t want to worry about revenue projections against head count and Sales capacity. That's more of a future state. You really want to look at what you think the demand is in a shorter, condensed period of time, and then staff accordingly against that.” 

Reavell recommends taking “a conservative lens due to the potential risk profile. Weigh the number of Sales people you need relative to the data and investment you are willing to make and the customer success retention of existing clients. If you only have X dollars to spend, then it will dictate what your risk of headcount is and your coverage model.”

How to Structure a Full Scale Sales Team

TruePlan data shows that Sales teams are typically built out in the following manner:

Sales Hire Number 1 2 3 4
Company Hire Number 10 - 30 25 - 40 30 - 50 40 - 60
Role / Title Chief Revenue Officer or
Account Executive
Account Executive or
Sales Development Representative
Account Executive or
Account Manager
Head of Account Management or
Account Executive
Timing (Yrs) 2.0 2.7 3.0 3.2

 

Following this logic, by the time you have roughly 60 employees, you can expect to have roughly 4 members of the Sales team, though this will vary based on your company’s exact needs. Note that initially, you are looking for a roughly 2:1 Account Executive to Sales Development Representative ratio. 

A typical org chart for the Sales team at this point looks something like this:

Typical sales org chart at a 60 person company has a CRO at the top with two account executives and a sales development rep reporting into them.

As your Sales team grows, it’s important to consider how you support and segment your sales reps. As Van Zant states, “Staff the segments that are needed to give the buyer and the customer the best experience possible. Then, when you can no longer effectively clear forecast or effectively coach every single individual and give them the tools they need, it's time to bring in the additional layers to support it. You always want to put it in the context of what’s best for the customer.”

Reavell expands, “ Don’t fall into the trap of trying to solve product-market fit with headcount, You need to really understand the market and your customer before you start trying to scale your Sales team.”

Closing

When it comes to evaluating your Sales team, be sure they’ve been given the best chance possible. As Reavell states, “You can evaluate success based on two things: talent and performance conditions. Performance conditions means enablement, support structure, messaging, value prop, coverage / territory design, product market fit, quotas, etc. You have to find balance - you can have the best hunter, but if you set them up to fail they will only be able to pull off too many miracles. You may have the most optimized environment for a hunter and/or CSM to come in and knock numbers out, but if you don’t have the right talent, then it won’t work out the way you want.”

Additionally, while there can be big egos in Sales, it’s important to always put the customer first. Your sales process and Sales team overall should be built to accommodate customer needs, not the ego of your sales manager.

Be on the lookout for our next Organization Structure series post where we’ll focus on how to build out another business function. ‍

If your team is growing, TruePlan can help. Book a 15 minute demo to learn how.

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