When it comes to hiring there is one absolute rule. Maybe means No.
Adding the right person to your team is the most important investment decision most founders and CEOs will ever make.
Every SaaS investment is spent on 3 things
In a SaaS company all the investment money raised goes on 3 main things:
Hiring is make or break for a startup
These people will make or break your business.
No hiring decision is easy. In a startup there are so many roles to fill. So many gaps in the skills and experience of your team. Such intense pressure to show results to your investors. And even with the cash from a successful fundraise in the bank, capacity to hire and pay is so limited.
A confusion of choices and compromises
On the surface each hire is a black and white decision. Yes or No. Yet as soon as you start reviewing CVs, you will find that one person seems to present an array of choices:
Over time the process starts to feel like a series of compromises. Remember you are looking for a person. Can you work with them? Will it be fun? Would you trust them? These questions are much more important than any specifics.
It will never be easy. You need to be patient. Prepared to spend the time. The effort will be worth it in the long and short runs. Consult with other people. Listen to their views. Take up references.
In the end it is your decision. So try not to compromise. Only hire someone who is a definite yes.
We are in the middle of the rolling centenary remembrance of World War 1. In Britain this summer has been marked by the anniversary of the Somme. And earlier in the year France remembered the millions lost at Verdun. For me honouring the sacrifice is only part of the process. I have also been taking time to reflect on the lessons of the conflict. The mistakes and the legacy that we live with to this day.
The history of the causes and conduct of the war make depressing reading. The catastrophic legacy of the peace is still unfolding across the Middle East. One thing stands out. Leadership. Or to be more accurate the lack of it. The egotism, lack of vision and shortage of talent amongst the upper reaches of politics and the military across the world. In stark contrast to the sacrifice of those on the front line.
Living in Europe or the US today, who would disagree that our leaders today represent an uninspiring bunch. Every bit as limited as those grey and undistinguished men (and they were all men) from a century ago. Politics, business or the media. Everywhere you look dull, dispiriting and downright dangerous choices are on offer.
Startups offer hope and inspiration
The startup world provides a refreshing contrast. I am lucky enough to work with entrepreneurs and great teams. And I see courage, tenacity and vision in action every day.
Yet I was not surprised to read Joe Lonsdale’s recent article. It highlights a deficit of leadership in Silicon Valley. He is talking about a higher and wider goal. Beyond simply driving and directing a successful business. His analysis resonates with my own observations. But I see this as an opportunity not a problem.
The opportunity: Realising leadership potential
The entrepreneurs I see have limitless potential. And a lifelong journey of learning and development ahead of them to realise it. It is natural for many successful leaders to find and follow this path. But if that seems a bit scary, here are some things you can do to help along the way:
Our best chance
The most fun I have in this business is working with great startup leaders and founders. The energy and inspiration needed to build a business is amazing to witness first hand. I know this is replicated in cities and countries around the world. These are some of our best and brightest. People who have the potential to become leaders across our communities. If we want a better future, the entrepreneurs of today are our best opportunity.
Delighted that this blog is a guest post from Steli Efti, CEO of Close.io, startup selling guru and all round top man. Thanks Steli.
Not all customers are created equal, and selling to the wrong customers is one of the quickest ways to kill your business.
But who are the “wrong” customers? Or the “right” customers, for that matter? Many founders and salespeople aren’t sure, so they make educated guesses.
But here’s the problem: At best, those guesses are usually incomplete. At worst, they’re 100% wrong.
The customers you sell to are too important to leave to chance, so let’s take out the guesswork. We’re going to take a look at a simple system to identify your ideal customers with pinpoint accuracy.
But first, let’s talk about what’s at stake when you sell to the wrong customers.
The dangers of selling to the wrong customer
1. Bad Data
Data is the most valuable tool you have for diagnosing and resolving problems in your business.
But data is only as reliable as its source. If your product is in front of the wrong people, the data will be be inconclusive at best, and harmful at worst.
2. High support costs
Selling your product to the wrong customer is like giving a hammer to a seamstress.
They might be able to get the job done, but they’re going to have tons of questions, require a bunch of attention, and ultimately get frustrated when your product doesn’t meet their needs.
3. High churn rates
Churn measures the ultimate sales failure: Customers who have tried your product and decided it isn’t worth paying for.
If you’re selling to the wrong people, they’re going to figure it out eventually. And when they do, you’re going to bleed customers at an unsustainable rate.
4. Damaged reputation
When your customers churn, they aren’t going to be happy. As far as they’re concerned, it’s your fault for selling them a solution that didn’t meet their needs. And they’re right.
In a social media-driven world, it doesn’t take long for bad reviews to get around. When they do, and they will, you’re going to develop a reputation you might not be able to recover from.
5. Poor morale
All of this will eventually lead to poor team morale.
Salespeople won’t be motivated to sell when the majority of their accounts churn. Developers won’t be motivated to develop a product everyone complains about. Support won’t be motivated to support when most of their tickets are users wanting refunds.
The solution: Create an ideal customer profile
You can avoid that mess by making sure you sell to the right customers.
But how do you know who the “right” customers are? Simple: Create an ideal customer profile.
An ideal customer profile is a tool that describes a fictitious individual or organization that gets significant value from your product and provides significant value to your business in return.
The profile is highly effective, but it requires at least 10 current customers. Without them, there won’t be enough data to create an accurate profile. If you aren’t at that stage yet, check out our guide to landing your first 10 customers.
Now, here’s how to create your own ideal customer profile in three steps.
Step one: List your best 10 customers
Your best customers are those who are the most successful with your product, not necessarily the ones who pay you the most money or “like” all your social media updates.
When compiling this list, make sure to separate happy customers from successful customers. Happy customers like your product, but successful customers need it. Your most successful customers should receive measurable, quantifiable value that proves they get more than they pay for.
Step two: Identify their defining attributes
Create mini profiles for your top 10 customers that describe their defining characteristics; things like industry, location, and annual revenue. Not sure where to start? Here’s an outline to get you going:
Step three: Define commonalities
Place your 10 mini-profiles side-by-side and look for similarities. What characteristics do they have in common? In most cases, you’ll find a handful of key elements that most (if not all) of your most successful customers share.
If you’re having trouble finding commonalities, it probably means you weren’t detailed enough in step two. Go back and dig a little deeper. Identify more defining characteristics. If you need to, get on the phone with your customers and ask them a few questions.
Create your ideal customer profile by compiling all the shared traits into a single form. This new profile should now serve as a benchmark for all incoming leads.
If you find a lead that matches the profile, you’ve found a high-value deal. But if you come across someone who wants to buy but doesn’t match the profile, you know to let them go; they’ll end up being more trouble than they’re worth.
Types of ideal customer profile
You can arrange your new profile however you see fit, but here are a few common formats you might want to consider.
A detailed, long-form profile (5-8 paragraphs) makes it easy to identify high-value prospects. It also makes it easier to identify low-value prospects, which can save you major headaches in the long run. I recommend starting with a more detailed profile like this, then creating a simpler version for your sales reps to memorise.
The summary profile is usually little more than a 3-5 sentence paragraph detailing only the most important characteristics of your ideal customers. By keeping the profile short, you make it easier for your reps to memorise.
Structuring your profile as a list makes it easy to review on the fly. If you organise your list well, your sales reps can quickly and easily find the information they need to make on-the-spot decisions.
My challenge to you
If you don’t have an ideal customer profile, set aside a couple hours this week to create one. And if you already have one, set aside some time to update yours. If you can, make it a company-wide project.
Bring everyone together to get insights from all sides of your business. If sales and engineering have two totally different ideas on who the ideal customer is, that’s something you need to know and resolve.
Create a profile, then follow it exclusively for a month. Compare every incoming lead against your profile and, if they don’t match up, let them go.
If you aren’t impressed by the quality of customers you’re onboarding by the end of the month, forget about it. Shred your profile and go back to the way you were doing things.
But trust me: You won’t be going back. Once you’ve had some success with your profile, come back and share your experience in the comments below.
I’ll look forward to hearing your success stories. Until then, get back out there and crush it.
About the author
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.