
A Technical Founder’s Notes on Sales Team Management - kwindla
https://medium.com/@kwindla/a-technical-founder-s-notes-on-sales-team-management-60e1a93d4648?r=hn
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rcarrigan87
Some very good points. Most of this advice is more relevant for latter stage
companies and it's an important distinction to make.

Founders often make the mistake of hiring closers (the kind of sales people
this article describes) too early. They should really be looking for biz dev
types who can go out and identify target markets, quality referral channels
and refine the pitch to be eventually handed off to a true "sales person."

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AndrewKemendo
So what I don't really understand is what exactly the "right" sales people are
doing that the others aren't. I totally understand that there is distribution
of competence for anything - but what is the real difference?

I can only come up with a few things I can figure out on my own so maybe
someone can tell me if I am missing one:

1\. Understand the customer better through research/interaction and pitch a
cleaner "value"

2\. Drive the CTO/CEO to refine the product to match customer need better

3\. Find the right person in the organization

4\. Have personal contacts prior to joining the organization that convert
better

5\. Use "psychology" or whatever to gently coerce a sale

*6. Manage other sales people well

What am I missing?

It seems like the better a product is the less variability in competence would
matter - so in that sense the difference between ok and awesome is just the
speed at which they can convert.

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takinola
From my interactions with sales people, here are a couple differentiators I
have noticed

1\. Sheer relentlessness - A good sales person will follow-up on a lead to an
extent you and I may consider excessive. They will make call after call,
bouncing back from rejection with an unsettling ease.

2\. Preparation - Good sales people are very prepared. Customer says they
can't afford it, sales guy has a prepared comeback to keep the deal alive.
Customer suggests a free pilot, sales guy gently deflects back to closing a
revenue deal. These aren't off the cuff interactions but studiously prepared
counters to sales objections.

3\. Ask good questions - Really good sales people are great at asking
questions that help them understand what the customer needs so they can
customize their pitch to hit the sweet spot.

4\. Are honest - Ok, this one surprised me. Like most people, I had the
stereotype of the slimy sales guy in mind but I have been very pleasantly
surprised at the number of sales people that pull the product guys aside
before a customer visit to basically say "don't bullshit". They care more
about the trust the customer has in them than the quick buck. Yes, really

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pbreit
Great article. I don't totally grok #2 about not turning over existing
leads/deals to sales. That seems like a decent place to get started with
minimal downside (as long as person has even the slightest discretion on
shedding suboptimal situations).

I also get concerned when sales learns that it can ask product for anything
and get it. My experience is it's generally better to "sell what's on the
lot". This avoids the endless delays in closing pending some future
enhancement.

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jusben1369
Yes in general I thought this was a good article. But I also found some of it
odd. In general sales people hate coming in with a clean slate. They want to
pick up some existing customers and existing deal flow so they can learn
quickly how the product is actually used (to help with positioning it
accurately) and what the objections and issues are in the sales cycle. Perhaps
the author was more implying "don't stick them with weird old BD/partnership
stuff that isn't really 'real' to bog them down early)

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oostevo
I think you're absolutely right about not wanting to bog down your salespeople
with old relationships. Here's why:

It seems to me that a lot of companies who are at the point where they'd hire
a full-time sales staff struggle with their early clients and not-quite-
clients. In hiring salespeople, companies are defining themselves as
established players with an established product to sell, whereas the
relationships with early customers centered much more around being the new
guys on whom the buying company is taking a risk and often getting a say in
feature development and a discount compared to the competition.

Re-framing those early relationships, especially "with middle managers from
dinosaur companies," is a very long and frustrating process for all the
parties involved.

I could absolutely see why you'd want to avoid your news sales staff getting
sucked into those relationships and instead do what they're fantastic at:
parachuting in, developing new relationships quickly, and pivoting those to
closed deals.

(Background/assumptions: I do bizdev-ish things for a large tech company. From
the tone of the article, I'm assuming that we're talking about B2B businesses
with products priced such that the relationship with individual clients takes
time to develop.)

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nissimk
Why should lead generation be outside the control of the sales group? Isn't
marketing about a lot more than just lead generation? I always thought the
best salespeople either come with there own long list of leads, or they are
good at generating new leads, or both.

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yannyu
Even when lead-gen lives inside the sales organization, the salespeople who
generate leads and the salespeople who close deals are generally not the same
people. It's a different skillset to hammer the phones and repeat scripts than
to gauge technical fit and negotiate.

The reason to have lead-gen live in marketing is because modern lead-gen is
often based on marketing initiatives. For example, a good source of leads are
people who attend webinars, read blog posts, or watch videos, all of which are
organized and pushed out by marketing. You're correct that a marketing team
does much more than just generate leads for salespeople to follow, but
generally the entire goal of marketing is to generate targeted awareness in
the market which raises the value of the company through mind-share or
revenue.

There's a lot more to say about this shift, as the job of a salesperson today
is very different than the same job even 5 or 10 years ago. This has a lot to
do with the relative amount of knowledge out in the wild. In the good old
days, you didn't really even know what a Xerox machine was until a salesperson
told you about it, let alone all the ways you could use it to help your
business. Nowadays, customers are doing more and more research (through
marketing materials) to guide their decision making process before ever
talking to a salesperson.

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kwindla
What yannu said. Doesn't really matter whether marketing lives inside the
sales org or not. It can work either way. (And your new VP of Sales will
always tell you that marketing should report to her.) What matters is that you
a) have enough and the right kind of marketing in place to fill the top of
your sales funnel, and b) instrument and evaluate marketing performance at
least as quantitatively and aggressively as you do sales performance.

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shostack
What is interesting is the conflict of interest that can lead to. A sales
leader who is responsible for both sales and marketing might have a vested
interest in tossing marketing under the bus if they can't get traction or
close.

It also makes it hard to get projects off the ground that can have a long-term
payoff since Sales tends to be very focused on the short-term tangibles, even
if the former are critical to healthy growth in the big picture (think SEO,
branding, laying the infrastructure for automation, etc.).

Having marketing as a distinct group can help make sure there is a healthy
conversation between the various priorities, and also make sure there's a
voice that is empowered to say "look, we mutually agreed on these lead scoring
criteria, and fact of the matter is you're not following up on all leads
within 24hrs, that's not marketing's fault."

I actually had that conversation once before when the sales lead also owned
marketing. This was also an individual who ignored my need to have all sales
conversations logged and categorized correctly in our CRM, so there were other
issues.

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derefr
What happens when you do it the other way around: having salespeople work for
your marketing team, essentially being their "finishers"? It seems like you'd
get not-necessarily-good-or-bad effects like marketing feeling empowered to
offer discounts and bundles through "their" sales force.

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shostack
You might get that, or you might get undo blame on the sales team if lead
quality is an issue. Of course, that's why it is critical to understand what a
quality lead is, and have objective criteria for it.

Ultimately, I think the two disciplines, while related and needing to work
together, are relatively separate. Their incentives should be aligned, and
that is not always possible to implement in some sales organizations.

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bernardom
Thanks, this is helpful. You mention having marketing by the time you hire the
VP Sales, and you link to a few posts on hiring VP of Sales- do you have any
links/thoughts on hiring marketing?

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kwindla
Jason Lemkin, again: [http://www.saastr.com/hire-the-right-type-of-vp-
marketing-or...](http://www.saastr.com/hire-the-right-type-of-vp-marketing-or-
youll-end-up-with-a-bunch-of-blue-pens/)

My experience is weighted towards building and selling enterprise products
(so, selling to Fortune 500 companies). I actually think the VP of Marketing
hire is even harder, for enterprise-oriented startups, than the VP of Sales
hire. Most of the candidates you'll find with "big company" experience will
want to do a lot of "big company" style marketing -- focusing on branding
rather than lead gen, hiring expensive agencies, and positioning via high-
profile partnerships. All of which strategems are problematic for startups, to
say the least.

A VC friend of mine told me once that one of his investments had hired and
fired 9 VPs of Marketing, I think over something like an eight-year span. (We
were having a conversation about how hard it is to find -- and to evaluate
before hiring -- marketing people who understand both enterprise selling and
startups.)

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somehnreader
How much commission is typical for sales people? Is it a percentage of the
amount the deal is closed for? Is it a percentage of the customer LTV?

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rcarrigan87
It really depends on your biz model and there are many variations. At my
company we do 1.5% of the monthly revenue of each client the sales person has
"closed." Typical monthly value of a client is around $20k and we have no cap
on commissions.

Reps are also the first line of defense when it comes to customer service for
their clients. This works great for us because the reps who provide the best
customer service typically get most of their new clients from referrals from
existing clients.

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somehnreader
Thanks. Just for your example, do they only get their commission after the
client has paid?

Just general curiosity as I am technical and I have no idea how their models
work. The three things that I am familiar with are:

1) I give you a small discount of my dayrate in exchange for a slice of equity
(low single digit percentages)

2) You are an employee and take a paycut to participate in their vesting
schedule with CAP table (the same as 1) really)

3) You are a cofounder and get a solid stake in the company but instead of
providing capital as a technical person you are more likely to build an MVP
for not much money in exchange for solid double digit percantages or equals
pequals in the company.

Whereas their model is completely different and more comparable to real estate
agents or similar.

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notahacker
Generally the principle behind designing sales compensation works along these
lines

(i) First figure out a notional target amount of revenue you would expect a
salesperson doing reasonably well to generate over a time period. [1] (ii)
Then offer sales role(s) with a base salary and a higher[2] OTE (on target
earnings) figure reflecting their expected earnings (including salary) if they
hit this notional target. This is what the compensation will be advertised as,
and how it'll be benchmarked against rival company salaries (iii) In the
simplest case, the salesperson gets paid the base salary plus (OTE -
SALARY)/TARGET per unit of revenue they book during the course of a reporting
period[3]... As they probably over or undershoot their target by quite a bit,
chances are they earn more or less than the magical OTE Common variations on
the simple case include increasing the commission percentage for sales over
the target (or various other thresholds) to weight incentives in favour of the
lowest performer, setting a base threshold so the salesperson doesn't earn any
commission at all until they've reached this minimum tolerable level of
performance, and offering fixed cash bonuses for various other achievements.
Salespeople looking after a mixture of new and existing accounts might find
their OTE composed of separate targets for new and retained business with
different percentages, or they might have a single target with new sales
required to cancel out the losses.

Either way, the compensation is usually calculated based on when the revenue
gets booked and paid at the end of the quarter, month or week. So salespeople
might get paid before client pays, but they might get paid three months after
if they're on a quarterly commission scheme.

[1]Of course definitions of reasonable vary, and any kind of targeting might
be more alchemy than science, especially in a startup. [2]Maybe a mere 15%
above the base salary (if the sales role is mostly admin and the salesperson
isn't expected to boost the figure through excellent work) or it might be more
than triple the base salary (typically promoting above-market achievable
earnings as an upside for accepting below-market base salary, much like the
high-equity offers for developers) [3] the reporting periods is probably a
quarter or a month, but possibly weeks for very transactional sales or years
for the 4-deals-a-year enterprise roles).

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nobody_nowhere
Thanks, lots of great insights in here. Jives with my instincts, but important
to hear it from someone else as well.

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asanagi
How to manage salespeople: round them up, pile them into a dump truck, and
release them from the edge of a high cliff.

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angersock
Interesting to see the justification for screwing engineers on the pay.

EDIT:

To clarify--the idea of commission is effectively an equity stake in either
the revenue or profit (depending on the setup, right)?

So, the sales folks see an immediate return on their work. The engineers,
while salaried, have no such visceral link to the performance of the
product...just some trivial paper and the thin sliver of hope they won't be
fucked over during an exit.

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davideous
Here's a good article on why Fog Creek does not pay sales commissions:

[http://blog.fogcreek.com/why-do-we-pay-sales-
commissions/](http://blog.fogcreek.com/why-do-we-pay-sales-commissions/)

We don't pay sales commissions at my company, and it works well for us. It
does help the sales department to work more as a team.

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kwindla
I'd definitely be interested in knowing more about your company, davideous. I
have no doubt that not paying commissions _can_ work for some companies. And
getting comfortable with paying commissions to salespeople took me,
personally, a really long time. (Too long, from the perspective of being a
good CEO and doing what needed to be done to move my company forward.)

The arguments in the Fog Creek post sound right, and really resonate with
those of us who are engineering/product people. But they don't match the
reality of my own experience. At least for the high-cost, high-touch, long
sales cycle stuff that I have the most experience with, the best salespeople
all want their compensation to be heavily weighted towards commissions. So if
you want to hire the best sales reps -- and, just as with engineers, you
really, really want to hire the best -- you have to recognize and understand
that preference.

But I'd be happy to be wrong about this! In addition to Fog Creek, I remember
reading another blog post about a startup that doesn't pay commissions. Maybe
a Foundry Group company: Moz? I can't find that post now, though.

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davideous
We sell enterprise email server software. It's high-touch and sometimes a long
sales cycle. Lots of demos of the software via screen-share.

Right now we have two people in sales. They are collaborating multiple times a
day on Skype and help each other out on basically every sale.

Much of your concern seems to be about the ability to hire the best people,
given the preference for commissions. I've been fortunate here: I've been able
to hire my sales reps through personal connections, based off of reliably
knowing their prior performance -- and I know I have really good people.

Perhaps it would have been harder to start the sales organization without
commissions without these connections. But it's working for us right now.

