I need to admit something. I have a problem with pure sales people. I have met some real nice ones. But the model just doesn’t sit with me. I worked all my life in professional services. Built on the principle that you must do AND sell. No separation. It is true that my former firm did hire the occasional pure “sales” person. It never worked. Those people did not add value. And our professionals did not value them.
I like to think of services in the words of a good friend of mine “We are all selling a little bit.” Hairdressers, plumbers, accountants, bankers. All services where the sale depends on people as well as the service delivered.
I have also had the experience of building global partnerships. Alliances between professional services and clients/ partners with strong and successful direct sales models. This mix never worked in the real world.
Sales people are great at selling a product but not at delivering a service. For me this creates an inherent conflict in SaaS.
One consequence is a negative reaction to the wall of advice out there on how to more, organise and reward SaaS sales teams. I specifically hate the word quota. With a vengeance. All this material seems to be driven by an inherent assumption. That the the model for direct sales in traditional software companies is not broken. The advice and recommendations and even the basic language have this imprint. They bear an uncanny resemblance to the words you will hear inside Oracle or HP or whoever.
This led me to work on a post called something like “Why you will never need sales in SaaS.” I have had versions of this kicking around for a while. But I realise that nothing in any of them is helpful or constructive.
So let me try a different approach. Some SaaS companies will end up with a product which is best for large enterprises, government organisations and the like. The buying process in these customers is complex. The culture is unique and often challenging. Such sales need real people to spend time with the customer. Logic says that hiring people to engage with these customers will be necessary. For some SaaS companies at least.
In my career I have worked with some of the best services sales people in the world. As leader I have been in charge of teams of professionals across the world. Generating billions of dollars of revenue. What have I learned? Below are a handful of truths. Things that work. Or at least reduce the risk of failure. This is not a system of success. But I hope it will be helpful if you are trying to build a SaaS sales capability.
It is not just a numbers game
The funnel analogy is common in sales. Feed enough leads into the top and revenue will flow from the other end. Inevitable. Hire more sales people and generate more leads. Growth will follow. If this doesn’t work for any reason tweak it. Improve conversion. Fire your team and find better sellers. Market to a bigger audience. Build more product features. Until you have the economics working.
Is this a real philosophy? Crunch enough data and you will have the answer to life, the universe and everything? Of course not.
Metrics are a great way of figuring out what works and what doesn’t. But real revenues only arise form quality relationships with real customers. In an enterprise environment those relationships are complex. They are also few in number (at least until you are SAP).
If you are SaaS is for large companies you need a clear plan for each relationship. Who do you need to meet? How will the target make its decision? What is the purchasing process? And much more. It is a long slog. You will have to listen to every nuance in each meeting. Understand and respond to different problems and agendas. Find features and benefits that work for the whole audience.
Pumping numbers through is not the answer. Quality not quantity will win.
Who will be the real sales person for your SaaS?
Get a clear idea who will truly sell your product. In the early days it is always the founder(s). By definition the team selling are also doing. Why then jump straight to a “pure” sales person? What you need is someone who can persuade your customer to buy your SaaS. Not just someone who says they can sell anything.
The best professional services sales people I worked with had the right combination of three things. Skills and track record that were credible with the client. The right personal and cultural fit for the client’s way of working. Enough knowledge and patience to navigate the buying process. Remember what counts is not your sales process. It is your customers way of purchasing.
In an established business I had to find these people and allocate them to accounts. It was a combination of personal experience from working with them and instinct. Not always right. In a startup you don’t have this. Instead apply a principle from the other side of the equation. Build up a persona for your ideal sales person. Then go out and find people who match.
Hiring is a real jungle
Sales are built on relationships. You need the right people. No matter how big your company gets. No matter how tough the economy is. Finding the right people is always tough. Get over it. And be patient. I said it in a different context last week. Maybe means NO. You will still make mistakes. But only hire when your gut tells you it is right. This applies to sales as much as any other role.
My firm went through a big hiring exercise a few years ago. We needed senior people. Partners who would generate real revenue. Headhunters told us to expect an attrition rate of 20%. We achieved 6% over 5 years. There was no process. All we did was have people in the team meet candidates. If anyone who met them was unsure we said No. We kept going until we were sure. Every time.
Don't be afraid to promote from within
Your best option may already be on the payroll. I can already see this happening with a couple of the SaaS startups I work with. Youngsters who have started as interns are growing before the founders eyes. Take a chance on someone you know. Who fits into the team culture. And has worked for it. This is much lower risk than insisting on someone who has a CV that ticks every single box.
Seeing people grow and succeed. In roles they would never have imagined a year or two earlier. This is one of the most rewarding experiences you will ever have as a leader.
The fallacy of reward
Sales theory is often based on a pure, individual financial incentives. You pay on personal performance. You match or exceed the going rate. You hold individuals accountable and fire them if they fail. This is great for getting hard driving mercenaries. And high staff turnover. It is bulls**t for your business and your customers.
The more complex your SaaS and your customer’s business, the wronger it becomes. Selling products or services to large enterprises requires a team effort. Everyone from the PA who makes the appointments to the CEO who seals the deal has a role to play.
Startups are small teams by definition. Everyone and everything depends on everyone and everything else. The last thing you need in your culture is a high paid outsider. Motivated only for him or her self.
Ditch those individual quotas. Get everyone working as a team in development and in sales. Reward team success. You will be more effective and have more fun.
The myth of CRM
CRM must be the wrongest named software category in history. It implies that the system is about managing customer relations. In reality CRM is about building and tracking sales funnels and pipelines. Nothing wrong with that but call it what it is.
The wrongness doesn’t stop there. CRM is a crowded space with hundreds of companies - most SaaS based - offering solutions. The basic proposition is the same. A system and the metrics it drives will transform your SaaS growth. The trouble is sales is tough. And overcoming the challenge is not just about process and numbers. It needs thought, analysis, effort and a bit of luck.
In the early days your success is not about being more organised. Or a more precise measure of progress. It will be about working out and guessing the right path. Through the messy world of the right corporate customer. There will be a tiny number of real quality leads. You will not win by trying to impose a pattern on these. Rather you must treat them as individuals until you see something that repeats. This will take a long time in the enterprise.
The right choice at the right time
In enterprise SaaS sales the biggest decision is right at the start. Are we selling to the right customer? Most times this is followed by the other key choice. Are we selling the right thing to this customer? These things are true in every business. They matter more in enterprise sales. Because the time and cost of investing in a sales relationship with the wrong customer is so high. It can be enough to kill and early stage SaaS company.
The second choice (what to sell) is not about changing your product. It is about focus on the benefits that will make the biggest difference.
Do not allow CRM or logo blindness to distract you from this fundamental. Dig deep to find out if you can add real value to your target customer. Listen to every contact. Direct or indirect. Even if your product is what they need, are they ready to adopt it and realise the benefits.
Every culture is different
The sales model I have disparaged throughout this post does work in some places. National cultures vary. Industry cultures vary. Every large organisation has a culture all its own. You will build your own culture for your own organisation. Whether you like it or not. Once your SaaS is established it will have a culture.
You should respect and grow that culture. But you must understand and adapt to the culture of your customer. In enterprise sales buying is a reflection of culture and process. You will need to navigate both.
I had a period where I looked after relationships with the Europe, Middle East and Africa (EMEA) business of two Fortune 50 clients of my firm. We were trying to sell the same portfolio of services to these clients. Their total procurement spend was similar - $14Bn per annum for one and $12Bn per annum for the other. As far as we could see the spend on professional services was also close.
Yet the experience was different. There were many reasons. The first signal lay in procurement itself. One client had 180 people for its entire global spend. The other had 1,100 just for EMEA. At the same time, the buyers in the first client were happier to spend time with us than for the second. Despite having one tenth the resources.
If you must hire sales people....
There are a series of process mistakes that are common in sales. Quotas too high. Measuring and rewarding the wrong behaviour. Hiring the wrong people. And so on. In enterprise SaaS you need to think deeper and more strategic. Fixing the wrong system is not the answer.
If your SaaS needs a sales force it is because your customer wants and need personal relationships before they buy. This is true for most large organisations. And it may be true for some things in the SMB sector as well. Professional advice is a great example.
This is a great opportunity to learn about your customers and deliver real value. Instead of “How do I create the right sales process?’ Ask yourself “How can I best learn about my customer’s business and help them improve?” Build your sales team on that answer.
Being in front of customers talking about their problems is fun. The rest is bull.
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.