As the founder of two market-leading tech startups, and now a third up and coming market leader, I’ve experienced a lot in building sales teams. One thing that I’ve picked up along the way is that you have to be extremely aware of your company’s stage to determine the best time for adding sales team members and driving them. Below are three stages we experienced and the strategies we implemented based on the specific stage – mostly focused on the first two stages that are about figuring out the sales model. I’m giving you my personal account of what we did and why.

Early Stage

It was important for me as a founder to stay very close to customer opportunities –  to find out the right market segmentation, customer needs and eventually the beginning of the sales model. In all of my companies, I had the role of the person I was selling to, and I spent hundreds of hours interviewing other people in similar roles of that market. This front-row seat in the sales process made me the best product manager and the best salesperson for early development and initial customers. I tapped into my personal network and also into the networks of my advisors. At this stage, it was crucial that I listened to potential customers and translated their needs to our engineering team. It was a way of figuring out what needed to go into the product as well as winning and keeping the trust of customers.

When I acquired enough customers through product trials, I focused on messaging and experimenting with the initial marketing awareness and thought-leader program. After building a great team of engineers, I learned that my first hire should be a marketing executioner to help me with the awareness and thought leader programs. During this phase, I leveraged my advisors in thought leadership. It was important to get all of this going prior to hiring my first sales rep. And right before I hired my first rep, I started the sales development team – a model borrowed from the book “Predictable Revenue” by Aaron Ross.

During this stage, it’s important to have everyone on “pioneer mode.” Instead of setting heavy quotas, it is more important to learn what works and what doesn’t to improve the strategy. We were focused on sales process discovery and messaging, the value offering, product features and who we sell to – the types of selling skills needed in this phase are different than subsequent phases as the company matures.

During the early stage, the sales team needs to be small and made up of self-starters who can operate in an environment where every day is an experiment. It’s common for reps to create their own collateral at this stage and to have heightened listening and experienced communication skills – more than normal. Customers have to trust the sales reps and the reps need to be able to present the vision and value – a valuable skill at this stage of the company. This is another reason to have the founder involved in most deals at this stage.

Acceleration Stage

At this stage, the sales start to take off as the product and market fit are taking shape. This is the point when customers find the value offering compelling and are willing to pay a transaction price that is profitable enough and easily justified with the promised return on investment. Fine-tuning the product and market fit is an on-going process, but at this stage the company is close enough to feel confident that you have a real business.

At this point, the marketing, sales development and sales model are close to being repeatable. Lead generation is increased and sales development activity and/or resources are increased, in that order, prior to adding the next sales rep. At the acceleration stage, sale reps are added cautiously but continuously to match growth based on the model. The pace of hiring increases as the marketing, sales development and sales model become more mature and repeatable.

Sales reps transition from learning “Pioneer” mode to refinement “Execution” mode – utilizing a near repeatable model, knowing what content is compelling to what person in the buying process and playbooks on deals based on stage and opportunity type are created. Everything and everyone is moving faster now – and accountability toward quota is much more important. It is important to study the ratio of Sales Development to Account Management employees to prepare for the breakaway sales stage and sustainability mode.

Metrics are very important at this stage, the most important being numbers focused on conversion rates of opportunities and closes. The company must track qualified opportunities and sales process milestones that occur in the funnel. The subject of Sales Metrics in itself is worth a separate article – which is forthcoming.

Once you have four or five reps – you should consider adding a vice president of sales to drive the team.  The founder should have enough information at this point on the product and sales model, making it the right time to find a dedicated person to put in charge. It’s a challenge to find the right VP at this stage. For most startups of this size, it’s too soon to attract a seasoned sales executive with decades of experience – which could prove detrimental to an early-stage company. It’s better to find a hard-charging sales leader who is on the way up, possibly someone who has built a small sales team from scratch recently and brought it to the next level.  This VP will have to live by the sales metrics and will have to transition at each stage of the company – you want to make sure their leadership scales at each stage of the company.

Deal cycle times and transaction size should be under scrutiny.  In all three of my companies, we implemented an Enterprise sales group and SMB (small to medium-sized business) group – carefully analyzing the contribution margin of each market.

Sustainability

At the sustainability stage, you are now officially at a place where your product and market fit are in balance. The instrumentation is synchronized by marketing, sales development and direct sales. The company has a blueprint for hiring sales reps and incentivizing behavior to hit quotas and focus on the market within the company’s wheelhouse. Content is mature, the market is segmented and processes are very well defined. The VP Sales role must transition to scaling the reps and processes for breakaway velocity. The VP must act as a coach – making sure the team adheres to the culture with the appropriate training and new hires.

Sales team size

Adding to the team is based on the actual contribution margin per rep and the growth velocity of each stage.  This has to take into account the sales model evolution at each stage – closely tracking sales yields and careful sales planning based on assumptions at each stage.

Obviously, quotas have to be very conservative early on with productivity gains happening as the company matures.  Thus, figuring out the right team size, while at each stage can drastically reduce burn, further confirming that you have to be at product/market fit before you add most of your sales reps.  For example, at sustainability, you might only require 15 reps for “break-even” but if you calculated the break-even point at an early stage, it could require more sales reps based on relative contribution.

Once you get your marketing, sales development and sales model metrics right you can set yourself up for growth, and have better conversations with investors.