Sometimes founders scale their sales team too early, and too quickly. Like, before the first sale. Or after a few sales, but no demand gen machine, no clear ideal customer profile, and barely a sketch of a sales process.
I think founders need to make the first sales, and lead the startup sales team, until that becomes a blocker to growth. In the beginning, and in most cases, a founder-led sales team will be more efficient, more passionate, and more productive. Even if only for a few months, a founder-led sales team leaves an indelible mark and that founder will forever be connected to what it takes to land a deal. There is an intimacy with the sales process that can’t be replicated.
But so often I see founders who are afraid to sell, don’t want to get their hands dirty with selling, or who are too eager to pass the reigns to someone else. Hiring sales leaders too early can stall momentum when that person ends up not being the right fit (which happens often when you hire a sales leader too early). So, in almost all cases I advocate for a founder-led sales team for the initial startup phase.
But at some point, it will be time to scale the sales team.
When? Maybe after the first 20-50 sales, when you start to see a somewhat predictable sales process, you start to think about scaling the team–either by hiring more reps or by hiring your first sales leader.
Informally, I have couple of signs that show it’s time to scale the sales team.
When there are lots of leads! Maybe.
When you have more leads than the current sales team can handle. That’s the most common answer you will see to this question, and I while I agree, I know it’s also relative. Not all leads are created equal, and so I can never be certain that if there are untouched leads and I plug in more salespeople that more sales will be a result.
Theoretically, everything is static, sales is just a numbers game, and this works. But the reality can be messier than that. For instance, maybe the leads are sitting untouched for a reason (like low quality, or lack of engagement).
So, more leads than the current sales team can handle is one indicator it’s time to scale the team. But there are better ways to gauge this.
When you have predictable benchmarks.
When you have benchmarks that show you a predictable path forward with more salespeople, DO IT. For example, when you know that a rep can work 100 outbound leads per month and predictably produce about 10 opportunities from that and close about 2.5 customers per month from those 10 opportunities. That’s a benchmark. And you can plan what that yields if you add in another rep, and another. You can plan based on your benchmarks and current results to see how to scale the sales team and the results you can expect from that scale.
When you have sales efficiency.
When you have solid sales efficiency, it’s a great time to scale the sales team. I didn’t make this one up. This one comes straight from Tom Tunguz.
To make it more concrete, if a startup invests $500k in marketing and sales this quarter and generates $1M in incremental revenue, net of the cost to provide the service, for the next 12 months, the sales efficiency would be 2. Sales efficiency is a helpful, high-level indicator….When these figures exceed one, it’s likely time for a business to invest more capital into the sales and marketing efforts.”
When you have several, but not all, indicators of sales maturity.
Everything doesn’t have to be perfect to really start scaling the team, but without a few foundational elements of sales maturity, the efforts to scale are likely to be painful, unpredictable and wasteful. Lots of activity, little results. Lots of initiative, little momentum.
Don’t rush it, but don’t wait too long.
Rush scaling the sales team and there will be a lot of waste. But miss your opportunity to scale at the right moment and you’ll forever feel behind.
Sales reps take many months to ramp up, and pipelines take an equal amount of time to be developed and worked into delivering actual new customers. It’s not as simple as plugging in a few people and your revenue going up. So, scale the sales team when you have some indicators of maturity…but not before.