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What is the best way to engage a sales pro for a highly developed, early stage business startup?

Our startup is in great shape. Our 2 co-founders bring a wealth of expertise and hands-on ability that have driven us to build a highly developed platform for Real Estate Sales Professionals and onboard our first 1000 users. Our organic growth has been a little slower than anticipated but our product has been validated as we are upgrading free members to paid. It is becoming clearer that old fashioned sales can make an impact on this business. There is revenue to be made now. The challenge is our 2 co-founders are bogged down and on the-street selling is not an option. Is it realistic to engage someone with a very aggressive commision package? No one worth their wait will work for free and I would never expect them too. However, there could be an opportunity for someone with good leads to possibly build some equity or take home high commissions on sales. Is this an avenue worth pursuing or are we dreaming that an appropriate person would be interested in such a package?

15 Replies

James J. Rossiter
2
0
Technology Executive
There are several excellent tech sales and marketing companies that can augment your sales bandwidth and capability. If you have a platform that is ready to scale and a value prop that has proven ROI metrics,
it may be a more effective and less costly approach to align with one of these firms rather than try your own hit or miss hiring of a sales team.
Chris Carruth
0
0
Chris Carruth Advisor
VP/Director. Strategy | Business Development | Operations | Product | Solutions
I think it is viable but it also depends on the conversion rate you are seeing and the sales cycle timeline, not just the comp structure.

- is the conversion rate high enough that the commissions generated will be high enough to motivate someone to "kill it"?
- is the sales cycle short enough so that the commissions are generated frequently enough to continue to drive the sales process? Longer cycle times can support large ticket items and their commissions but long cycles and low commissions just produce churn.
- most "hunter" roles have a base that provides enough peace of mind that they can focus on business and not "how am I going to feed my kids". As a startup you don't have an existing book of business the rep can tap into to provide enough cushion that hunting for new business makes sense. This role would solely be hunting - right?

I always advise to provide some amount of base + commission, with accelerators as well. 100% commission basically puts all the risk on the rep's shoulders. That's not a situation that most people are willing to enter into, and if they do you have to question not only why but also question how long they will stick around if the sales cycle takes longer than you/they think it will.
James Hogan
2
0
James Hogan Advisor
Vice President of Worldwide Sales at ShareVault
Whenever I've heard this kind of question I'm reminded of the old adage "you get what you pay for..."

Seriously, run the numbers. Are leads converting at a pace that can support hiring a SDR or outside sales person? What quota would the SDR carry? What is your retention goal? What net return will you generate on the SDR?...

It nets out to a data informed business decision that needs to be made every time you hire a sales (or marketing) person.
Paul Stefunek
1
0
Paul Stefunek Advisor
Managing Director at ZRG Partners, LLC
I echo Jim Hogan's comments.

A model you can consider if the numbers support building your own sales team, is a sliding scale compensation plan. Provide the sales team or leader - with a higher base/draw at the onset for x months and a lower commission rate. As the pipeline builds over time (x months), slide the scale to a lower base/draw and a higher commission rate.
Dan Kaminsky
1
0
Dan Kaminsky Entrepreneur
Executive Producer, Spice DNā, Digital Content Specialist, Video, Web & Social.
Thanks for all of the insight everyone. Our platform offers premium subscriptions much like you'd find on LinkedIn. Tiered services based on user requirements. So payments are immediate and the potential audience is very large. Also, because we are currently focused on Real Estate, direct sales to brokerages with multiple users at once is a very real strategy. Being "very" early stage revenue makes some of the suggested formulas and forecasts very difficult. The platform dev is very scaled and the business model is quite early. A major sales spike is a very real scenario which is the reason we are even thinking about an equity/commission strategy. I know many startups at an MVP stage sometimes talk like this but we are real, developed and validating. Fully bootstrapped our cash resources are not unlimited so we need to get creative with our first foray into a sales business.
David Telleen-Lawton
4
0
David Telleen-Lawton Entrepreneur
Using Customer Discovery to mold innovative Master of Technology Management degree
Dan,
Realistically, you are not validated until you have a sustainable business model. You HAVE likely been doing some important validation, but if you were validated you would know the conversion rates, etc.

I've been the first sales person at a number of startups. I was always willing to take the risk for an opportunity that was promising, but I always required equity (stock options) as well as commission and base. If you in fact have a real business opportunity, as Paul and James point out, you CAN figure out the numbers...the equity is attractive to someone that wants to grow the business.

What I would suggest is that when you identify and engage with someone that is promising, ask them to suggest a compensation plan. They won't be able to until they spend a bit of time with you and your product, but anyone worth their value is willing to do this upfront....if the opportunity is really there.

Don't focus on what "leads" they can bring! Those "leads" run out real quickly. Focus on someone that can tell you the process they would use, shows you the evidence (your own or theirs) that suggests it's true, and lays out a plan that makes sense to the two co-founders.

Meanwhile, if the co-founders really do not have time for customers, I'd be a bit worried about the long-term prospects of this venture. If key management doesn't understand the business model (which includes the sales model) and they don't care to understand it, my experience is that you have to have luck on your side, too.

If you DO understand the sales model, then it ought to be easy to structure the compensation, too.

Wait a minute...you're the CEO...what are YOU doing with YOUR time if it's not focused primarily on revenue for a "validated product" with "1,000 users" and "premium users" that is the first place to find your first sales pro...hardly any marginal cost!
Dan Kaminsky
0
0
Dan Kaminsky Entrepreneur
Executive Producer, Spice DNā, Digital Content Specialist, Video, Web & Social.
David,

Thanks for your insight. Text snippets do not always convey full meaning. The co-founders (including myself) are very active in growing the business. My partner focuses on marketing through engineering and I am working on advocacy strategies and as much sales as I can, while still operating and maintaining the site and current members. We are supported through a government funded start-up assistance program that assigns an advisor to our team. We have great support. That's why the confidence is high we can break through. While our goal is to stay lean for the short term we are evaluating possible sales models, early investment or strategic partnerships to accelerate our potential. Conversion rates etc will slowly become clearer. We just need to start the process now. Finding that key individual seems to be the biggest challenge.
Rob Edenzon
1
0
Rob Edenzon Entrepreneur
Acting Vice President, Sales at Armorway Inc.
Dan: I am currently engaged with 2 start-ups in the capacity you describe. I have over 30 years of sales experience. My goal with these start-ups is to close an initial group of customers to prove out the model for a round of funding that will allow them to build out a sales team.

There are many financial models available to start-ups to gain access to resources like me. Too many to describe here.

Let me know if you'd like to talk.
David Telleen-Lawton
2
0
David Telleen-Lawton Entrepreneur
Using Customer Discovery to mold innovative Master of Technology Management degree
Well, that does paint the picture a bit more clearly. By implication, you're saying that "marketing thru engineering" and "advocacy strategies" are a higher priority than converting users to paid customers.

That would imply one or both of those activities will lead to sustainable cash flow or an investment that substitutes for that.

I can't help but suspect converting users to paid customers may be a bit more important than one or both of the above.

What I'm suggesting is NOT that you change roles, but rather you act the role until you understand it...then hiring the right person is easy. Hiring someone to do something you do not understand is a good way to find the wrong person and that's very expensive for a startup at your stage.

Select three users plus ALL of your Premium users (take no more than 30-60 minutes to do this...no stalling!), call them or contact them to set up a phone conversation (face to face preferred).

When you meet with them, ask them:
How they heard of you?
Why did they sign up?
What problem were they trying to solve?
When was the last time they used it?
Why not more often?
Why not a premium user? Or why converted to Premium?
What would it /did it take to be a premium user?
When will they use it next?
Do you mind if I get back to you if I have any other questions?

Call the next one.

Discuss your findings with your co-founder.
Decide who (what type of user) you want to talk to next
Call
Repeat

I guarantee you that before you get to 15, you will know a ton more about your business model, what features are most important to work on, what type of sales person to hire (a recent college grad may do the trick...you'll find out with your calls), what better ways there are to "market through engineering" and what better "advocacy strategies" to pursue....or you will find out you need to talk to a few more because none of these users are going to lead to cash flow and help you keep the lights on.

Or maybe you find that you need LOTS more development for an essential feature to convert to Premium, and you use this data to attract an investor.
Ken Queen
1
0
Ken Queen Entrepreneur
Income For Baby Boomers
It depends on how serious you are to want to hire the best salespeople.

The good ones have heard all the smoke and mirrors stories so you have to offer something substantial.
I would say you would want to take the best salespeople out there that have or are doing the super sales level now, the leaders or wake up some old leaders.

Put your self in their shoes and ask yourself what you would want if you where in their position.
For me I would say some basic salary but most of their profits tied to the success of the company.
It can't be some vague promise, they have to feel they have actual shares in seeing the company make it.

You could have some statement that you could buy back those shares at a certain price if certain things don't happen that are bases on their performance. With this approach they will do all in their power to make it happen.

Again the principle being how real is this opportunity and what are their guarantees if they work out.
They need some skin in the game but they have to know if they preform they get their share in the success.

Always put yourself in their shoes, what would you want an agreement to look like if you where them?
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