The answer is both and depends on where you are in your company growth – your sales model will evolve multiple times during the three typical growth stages. The goals for each stage are different, as is the team that will drive you to success. Finally, the most effective sales model and sales team for your company is based on your target market, your target customers and an accurate understanding how they evaluate and consume new technology.
Stage 1: At the Beginning, Customer Proof
The Customer Proof stage is characterized by having a number of early beta customers who may or may not pay for your software or services. Sales teams are small, if they exist at all, and without much structure.
Early success relies on a high level of marketing and prospecting activity targeted into specific profile accounts and a “do whatever it takes” mentality across the company. The sales model in this stage is pure art.
A small set of sales hunters, laser focused on prospecting into a vast market, is the most productive model. These sales pioneers need to determine what specific “pain” your product solves, how motivated prospects are to solve that problem against their current to-do list, and how much they value your solution. In other words, how much are customers willing to pay you to make their pain go away.
Initial sales hires must be able to successfully close initial deals, even when you have very few references and proof points. They enjoy the ability to leverage their creativity to identify new opportunities and can develop initial use cases for your emerging technology. There is an art to closing early deals and it takes the right type of sales person to get it done.
The challenge at this stage is every deal ‘feels’ different and it is probably hard to drive predictability into your business. It is critical to define your target market at this stage and focus your rep’s activity into those target accounts vs. trying to sell anything to everybody. Yes, you are trying to close new customers, but you are also trying to prove a thesis on who buys from you and why.
Stage 2: Sales Repeatability
Once companies successfully grow to the Sales Repeatability stage, it’s time to apply some science to the sales model.
The head of your sales and marketing teams need to work together to identify key data points that will become the basis for future sales and marketing strategies, for example:
- Connecting the dots between disparate customers to identify the common issue you are solving for them and what motivates them to move forward in a defined sales cycle.
- Developing content that best educates prospects about your value proposition and their Customer Journey with your company.
- Profiling the target buyer and determining what is the best way to reach them.
- Creating incentives to move this project to the top of their priority list, thereby closing sales faster.
- Determining how valuable this is to your prospect and how much of your product/service they consume over a defined period of time, i.e. the Lifetime Value of a Customer for you.
These steps validate and document the three Why’s of Sales:
- Why do Anything: Is there a big market for your product
- Why do it with Me: Is your product competitive compared to the best alternatives
- Why do it Now: Is your project important enough to move to the top of the to-do list
Stage 3: Market Expansion
The sales model during the Market Expansion stage is based on the science and mathematics behind capacity modeling, new hire enablement training and a rigorous sales process. Processes that were ad-hoc before now need structure and tools to fuel a predictable sales engine.
- A quota capacity model that assesses multiple factors, such as quarterly productivity, sales cycle and Average Sales Price and then outputs your quarterly capacity across your sales team. You will also need to consider rep turnover and the time to ramp a new rep. This exercise will make the lag between hiring a rep and generating revenue glaringly obvious. It is very important to use actual data from your sales history – many companies miss their sales targets because they model an aspirational capacity plan.
- A step-by-step sales enablement and training function to help ramp reps to full productivity faster. Enablement encompasses education for your product, target market, target buyers, competition and your sales process.
- A strong sales methodology for Territory Management, Account Management and Opportunity Management.
- Clearly defined metrics for sales success, such as:
- Ideal territory size
- Prospecting activity metrics
- Pipeline coverage ratios
- Sales cycle
- Conversion ratios from MQL to SQL to Qualified Opportunity to Close
- Average rep productivity
So sales is both art and science. Embrace the art early and don’t try to apply too much science until you have crossed over from Customer Proof to Sales Repeatability or more likely Market Expansion.
Some founders and CEO’s we work with believe there is a magic answer to sales. They want the document that explains everything you need to know about sales. There is no single best sales strategy for all companies. Every company’s sales strategy is somewhat different because their technology, value proposition, target prospects, routes to market, competitors and market timing are unique.
Your sales model, sales team and sales strategy WILL evolve as your progress through the three stages of growth. The key is recognizing when you are moving to the next stage and how to best tune your sales model for what’s coming.