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Sales & Marketing
Aaron Rinberg  |  October 10, 2019
Growing Sales Doesn’t Always Mean More Hiring – Instead, Think About Selling Smarter

If you’re debating which career path is right for you, my advice would be to go into sales. I’d argue that the skills you learn as part of a sales organization are 100% transferable into every other aspect of your life (both personal and professional). I’ve spent my career selling financial products and now, as a member of the investment team for a venture capital fund, I sell the ultimate commodity: cash.

But in my current role, I also have a special interest in the sales organizations of the companies in which my firm invests—specifically, how to make them work better and more efficiently. And often, I find CEOs go about this the wrong way.

The knee-jerk reaction of most leaders who need to rapidly increase sales—which is just about everyone running a venture-backed startup–is to hire more people. More reps equal more revenue, right? But in today’s sales environment, I believe that’s actually the wrong approach. Advances in sales technology, and increased specialization by certain classes of salespeople, like SDRs, mean that CEOs should instead be focused on building an optimal sales stack. And this includes people as well as technology.

In the movie ‘The Pursuit of Happyness’, set in the 1980s, stockbroker Chris Gardner (played by Will Smith) illustrates the early version of a classic inside-sales model – sit at a desk, call prospective companies, and work your way from the doorman to CEO all in order to sign clients. Fast forward 40 years and you’ll find a highly refined version of this same model, though with multiple personalities, working within sales teams to close deals. Marketing leads are handed over to sales development reps (SDRs) who are tasked with following up with the prospect, qualifying them (ranking how likely a deal is to close with that prospect), and connecting them to an account executive (AE, nomenclature for salesperson).

The AE will then demo the product for the prospect and negotiate key business terms (e.g. price). For some companies there may be additional follow-up by field salespeople that visit the prospect at their office and technical salespeople (aka sales engineers) to discuss integration and installation of the product.

Once the AE is engaged with a prospect there are a number of best practices for closing the deal (in fact my colleague Neeraj Agrawal outlines a number of them in a 2015 blog post here). I would argue, however, that inside companies today, there’s often not enough focus on engaging and then escalating the correct leads in the first place – coupled with the conventional wisdom of ‘hire more people’, it doesn’t seem like we’re positioning ourselves for the best win-win scenario we can reach entering 2020.

It all goes back to the simple fact that it doesn’t matter if you’re selling enterprise software, a consumer product, or commodities—customers usually break down into five groups, and you need to reach each one a different way, including jettisoning some leads that aren’t worth pursuing at all. The groups are:

  1. Those that will actively seek your product and jump through hoops to purchase it
  2. Those that are happy to buy, but aren’t willing to do any work (you need to come to them)
  3. Those that are on the fence
  4. Those that don’t want to buy your product
  5. Those that so strongly don’t believe in your offering that they will go out of their way to try and convince other people not to buy (and potentially try and convince your staff to stop selling)

Intuitively, your sales team should be focused on reaching out to groups two and three (marketing should be focused on group one), with the majority of their time spent on courting group three, the prospects who are on the fence. A strong marketing channel and friendly sales rep should be all that is needed to sell to group two, since they’re already happy and willing to buy your product.

Drum this focus into your sales team. You’re training your salespeople to sell your product, and invariably that includes arming them with persuasion tools to help close deals with those undecided group-three prospects. At the same time, you should train them to recognize leads that fall into groups four and five and quickly end those processes, since they’re not likely to work out. Too many salespeople believe that if they can just spend enough time with a prospect, they can win them over. But this rarely works and is usually an enormous waste of time.

The best way of ensuring that your salespeople are spending their time with the correct bucket of prospective customers is qualifying leads – typically by injecting SDRs (sales development reps) between marketing and salespeople. SDRs are people who qualify leads for both product/market fit and decision-making capability. So, the solution to handing over high-quality leads to your salespeople is hiring SDRs to engage with the leads marketing sends over, right? Well yes, but also no.

Hiring more SDRs may enable you to engage with and qualify more leads, but not necessarily in a systematic manner that will scale. Unsurprisingly, technology can be leveraged to help qualify leads efficiently, augmenting or potentially replacing SDRs. In fact, every step of the inside sales funnel can be made better with the use of some sort of sales-automation platform. Below is an illustrative (most likely incomplete) map of companies that have built platforms aimed at lending technology to each part of the inside-sales funnel.

*Leadspace and Gong are both Battery portfolio companies.

To help drive home the value of qualifying leads: The further down the funnel a ‘bad’ lead is, the more expensive it is. The average Account Executive (AE) earns ~$90K  and the average SDR earns ~$60K . From a simple ROI perspective, you’d much rather have your SDRs doing a good job qualifying leads upstream than having your AEs trying to sell to prospects that won’t buy.

To sum up: While people do indeed do business with people, nowadays in almost 75% of sales situations, your customer would prefer not to spend time meeting you face to face  – so let’s create that win-win situation and leverage technology to both better engage leads that are genuinely interested in our product and stop spending everybody else’s bandwidth.

Battery Ventures provides investment advisory services solely to privately offered funds. Battery Ventures neither solicits nor makes its services available to the public or other advisory clients.  For more information about Battery Ventures’ potential financing capabilities for prospective portfolio companies, please refer to our website.

*Denotes a past or present Battery portfolio company. For a full list of all Battery investments, please click here. No assumptions should be made that any investments identified above were or will be profitable. It should not be assumed that recommendations in the future will be profitable or equal the performance of the companies identified above.

Content obtained from third-party sources, although believed to be reliable, has not been independently verified as to its accuracy or completeness and cannot be guaranteed. Battery Ventures has no obligation to update, modify or amend the content of this post nor notify its readers in the event that any information, opinion, projection, forecast or estimate included, changes or subsequently becomes inaccurate.

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