Labcast: The Pitfalls of Building an Inside Sales Team
A sound strategy is critical to putting together the right inside sales team for your organization. In this episode of Labcast, OpenView’s Brian Zimmerman and Devon Warwick sit down with Trish Bertuzzi, CEO of The Bridge Group, Inc., to discuss some of the common problems managers run into when hiring inside sales personnel. For more insight and advice from Trish, be sure to check out the free eBook, Building Inside Sales, from The Bridge Group website.
The Pitfalls of Building an Inside Sales Team
Corey O’Loughlin: Thanks for joining us for this episode of Labcast. Today we’re joining a discussion hosted by Devon Warwick from OpenView Labs, which features Brian Zimmerman, Managing Director of OpenView and Trish Bertuzzi, CEO of The Bridge Group, Inc.
Devon Warwick: Here today with Brian and Trish. I thought we would dive into building inside sales team. Trish, I know that you just created a new e-book, which is featured on The Bridge Group, Inc., your
website. I thought we would actually talk about one specific area of your e-book. It’s the pitfalls to avoid when building an inside sales team. Could you expand at all on that? I know that our expansion-stage community is probably pretty curious about some things that they should avoid as they’re building out that
Trish Bertuzzi: Yeah, I’d be happy to. I actually think probably one of the primary pitfalls is when people view the building of this team as tactical as opposed to strategic. We all know inside sales is an umbrella term. There are many ways you can implement and it’s not just as easy, well, I’m going to hire some kids out of college. I’m going to give them a list. I’m going to give them a phone and they’re going to pound that phone and revenue is going to shoot out the other end of that effort. That’s absolutely not how it is nowadays. Things have changed. Inside sales is much more strategic, and it really needs to be approached that way.
Brian Zimmerman: I agree completely with what Trish is saying. In our portfolio companies, it feels tactical early, and when you’re looking at building a scalable model where inside sales fits in that model, it needs to be part of the overall go-to-market strategy and the strategy as it exists.
Trish: One of the challenges that we see on a pretty regular basis is when people are starting an inside sales team and they hire a manager, because that manager has built teams before. Sometimes that’s great and sometimes that’s not because that manager has built one model and knows one way to apply inside sales, and
oftentimes it’s the wrong model for the company they’re coming to. So it’s really critical that before you implement your model you really step back and look for someone with the kind of experience that’s unique for where you are, who your buyer is, where you are on the technology adoption life cycle, and what your go-to-market strategy looks like. You really have to be careful of that.
Brian: I’ll completely agree with that point as well. What we see in first-time managers, you’re looking for a high level of experience, and you really can’t afford to hire a manager that has basically managed a process that was already in place or an organization that was already in place. So you need to find a profile of someone who has developed a process around those buyers, around that market. So that’s a real good point.
Trish: I actually think that’s why your OpenView Labs is so important, because sometimes before you build your strategy you need to test it. I think it’s a great opportunity, and I think you guys do a great job of that with your portfolio companies. I also think we do a great job of that with our clients, but you know what? Testing and piloting is a positive, not a negative. It doesn’t slow down your time to market. It just ensures that you get there with something that is more repeatable and scalable more quickly.
Devon: Trish, one of the other pitfalls that you mentioned in your e-book was expectations not being in alignment with reality. Can you expand on that?
Trish: Sure. Especially in an early growth company, but sometimes in later growth as well, but people come up with quotas based on what they want them to be and not on any proven success rates, and that’s a challenge, even when it comes to just pipeline development or assigning people quotas for leads. You can’t make the market want you and wishing doesn’t make it so. Once again, getting back to that piloting and testing, it is critical that you don’t set your teams up to fail and that you have some sense of what small wins look like and what your conversion ratios look like and what your close rates look like. Then you can
build out solid quotas. But until then, it’s going to be frustrating for all involved if your expectations are out of whack with reality.
Devon: To sort of expand on that, is there a specific time period in which you should be testing and refining? Or is it different for every company?
Trish: Many of our clients actually test while still in the beta phase. So before they assign revenue quotas or even build out their distribution strategy, they’ll engage with us to do a market validation program or something like that where we’ll go out, become their inside sales team and gather some baseline metrics. Baseline metrics are a key component of any strategy, and I know you do that as well with your labs, so I think we’re both on the right track.
Brian: My thoughts are, at this time when you’re building these inside sales teams or sales teams in general, you need to focus highly on the leading indicators to success, and what I mean by that are those actions that are necessary to be successful. An organization just puts out an unrealistic quota in terms of revenue, it’s going to fail. People are going to be miserable. You’re going to actually lose great people or people in general. So if you’re actually focusing on figuring out what are those behaviors that will exist, examples are number of calls someone should be making, number of converted opportunities, number of conversations, number of appointments, whatever that may be in that process, again the process needs to be defined.
But if you can focus on those early, figure out what those are, you’re going to figure out how many deals someone can close, which then translates to how much revenue and you’ll get closer. Another thing is just that early on you never set an annual objective. You need to really work in quarterly vacuums and then hopefully get to a monthly type of compensation as well. That will be successful because you can adjust, and I would always suggest aim low before you aim high. It’s easier to increase over time than to set an unrealistic objective that you’re not going to hit at all. So I agree.
Trish: Absolutely Brian. One of the things that we have been seeing a lot of our clients do when they’re early stage and they’re SaaS companies in the land grab phase, so everyone wants to focus on MRR or whatever the case may be, but if you’re in a land grab situation, you need to build a compensation plan and a strategy based on metrics that are based on something else. So what we’ve seen our clients do lately – and it’s really kind of interesting – is go with a units goal, so it doesn’t matter how sizable the deal is. Just get them. Get them, close them, move on. So if you have a land grab strategy, you know you really do need to be
creative with building out the metrics and the compensation to address that particular go-to-market vision.
Devon: All great points. Next, I want to talk about ineffective recruiting and the hiring process. A lot of our portfolio companies now are in this growth mode where they’re hiring new candidates in all different areas of the business. What are some pitfalls that they should be avoiding, particularly with the sales team?
Trish: Well, Devon, I think you said it. You need to have a process. So many people just wing it when it comes to hiring, and it scares the heck out of me. You need to have a process for even just processing resumes. Have a checklist of your requirements. Have some way to look at a resume that subjective, not
objective. You need to have a process for peer interviews. You need to have a process for collecting feedback from everyone that’s involved in the interview process. This is not a place to wing it. This is a place where process is as important as it is anywhere else in your organization.
Brian: I can add to that. I think it all starts with it goes back to your aspirations and your company culture and truly putting that on paper and defining what that profile person fits into your culture. Those questions should come up. I recommend highly on, especially inside sales teams, because you’re going to get
people early on in their career typically, highly motivated, highly committed, not as much competence as some others, but that’s okay if you have a way of developing that.
But are they going to fit in the culture? Are you going to talk to them in a behavioral standpoint when you interview them? What are those traits that are necessary? The job description is critical, and you can’t just go copy somebody else’s. It needs to be driven by your culture, and what I’ve seen is they’re not a right fit. It had nothing to do about their ability.
The right fit tends to lead to they didn’t fit into the culture. They didn’t have the same goals or the same aspirations or their behaviors would be different. If you have a highly aggressive, highly motivated team, you’ve got to find that type of candidate. If you have long sales processes where people are methodical and it’s all about relationship building, that is a different behavior.
I think those are all pitfalls. But no question, if you don’t have a process in place of what you want to do and maybe Trish we could keep talking about when do you stop interviewing or do you? That would be my question. My recommendation is you’re always interviewing as a manager. You’re always looking for top talent. You never know when you’re going to lose somebody for any reason in the world. I recommend over hiring. I don’t know your thoughts.
Trish: I agree with you 100% on both issues. One, that cultural fit is probably right up in the top two things that people need to figure out, and secondly, that you need to always be hiring, and no one ever does that. It’s hard. It’s not easy. It’s a huge investment in time. People need to get creative on where they find people nowadays. Going to a networking event like the American Association of Inside Sales Professionals chapter meetings or maybe some of the other local events. You’ll meet great salespeople. It doesn’t just have to be all recruiters and online methodologies. Get creative. Get yourself out there and find good talent. Get yourself ahead of the curve, because you’re never going to make your goal if you’re down a couple of salespeople.
Brian: Yeah, and I think that definitely adds credibility to you as a manager or a sales leader, because your A players want to sit next to A players. They want to be challenged. They’re all going to identify the B and C players before you will as a manager, and they don’t want to sit next to them. If you’re continually interviewing, that shows you have the best passion to continue to find the best players, and it will also allow you to either replace or upgrade your talent at any given time based on the fact that you’re continuing to look for that top talent. It is time consuming. It is an investment, but if you’re committed to your organization and the success of it, it’s an investment that is a must-have.
Trish: The other thing to do is think outside your norm. We all think when we think about hiring, we think about hiring we tend to think of one profile of people. Well, if you look at the demographics of our country, we’re baby boomers and baby boomers are getting laid off and they are retiring and you know what?
They have great skills. So don’t always just think young, out of college or second or third job out of college. There are baby boomers out there that you can hire that will bring maturity and skills to your team. Diversity is good. Based on where you’re located, think outside the box.
Devon: Excellent points. Next up, I want to talk about the lack of effective training, coaching, and ongoing mentoring. So you’ve got a great candidate. You’ve gone through the recruiting process. It’s their first day. What’s the big pitfall now?
Trish: The biggest pitfall is most people ignore them. You hire great people, and then you leave them alone and keep your fingers crossed and hope for the best. You and I, Devon, have had many conversations about onboarding. You’re also publishing a video series about effective onboarding, but I think that part of your
process has to be rock solid. It takes 3.2 months on average to get someone ramped in a SaaS company. If you can shorten that, you’re shortening your path to revenue. Just really thinking through that training, coaching, onboarding, mentoring program, you’re going to reap the benefits.
Brian: I’ll speak in simple terms. I look at two core things, and it’s competence and commitment. Commitment is usually coming from someone that has something to prove. They’re highly to committed
to the success of what they want to do. Competence can be developed. Competence is expensive. The better you have an onboarding program, a training program that you keep shrinking and shrinking, the more you could get talent less in their career. Early on you’re probably going to have to hire talented people. You just don’t have the time, the training, and the onboarding process put in place.
The sooner you can get there, the more you can go out and invest in a one-year, two-year type person or someone even you get to a point where they’re out of school. I completely agree that diversify your portfolio, if your will, of salespeople. But the sooner you can, get something in place that builds that
competence on a quicker basis and then continue and vest in that person. Hopefully we’re going to talk about that.
Devon: We talked about it in the video series actually, that you’ll be able to check out on OpenView Labs, the importance of vesting in your employees. You will pay these salaries to these new employees, but what about when they come onboard? What about investing in opportunities for them to join local associations or new books? These are great ideas, and I think it oftentimes gets overlooked.
Trish: Yeah, it does. We’re in such a rush to see what they can deliver that we forget about the investment part of them. I think actually think Brian nailed it when he said commitment and competence. That’s a great framework with which to look at this, and I’m actually going to liberate that from you and use it
myself moving forward. So thanks for that Brian.
Brian: You can have that.
Trish: Thank you.
Devon: Next up, talking about the lack of supporting infrastructure, and this seems to be a big one. Let’s talk a little bit about that.
Trish: Infrastructure means different things to different people, but with this whole Sales 2.0 revolution that’s out there and it’s such a buzzword nowadays, technology is becoming an ever bigger
part of how inside sales becomes more productive. The bright, shiny toys are so fun to play with, but are they really adding value? So you really have to think about what am I giving my people to do their job? Are they using it? Are they using it well? Is it meeting our requirements? What else do they need?
You really need to think about that, and sometimes you need to go beyond just the technology infrastructure. But am I giving them what they need from a personnel perspective, pre-sales and post sales? If you have a hunter, the worst thing that can happen is he’s taking care of your customers. You really need to think through all the components of that supporting infrastructure from technology to resources and make sure you’re providing your people with what they need.
Brian: Technology resources is probably, when you’re looking to build an inside sales organization, it all starts with your process. What are the milestones that work you through the process? Figure that out. The next thing is, what is that methodology? So if you had a transparency and laid it over – I don’t know if I’m
dating myself – but a transparency to lay it over the process, what are the actions? What are the things necessary to move it from stage to stage? That’s what I refer to as methodology. Then what are the resources that are needed to support that?
Then, what is the technology or those shiny toys that can do to support it? I think some organizations fail when they start with the shiny toy and they start building everything around it. All of a sudden, you start looking into your automation tool, and you’ve got data of irrelevance that takes time to enter, time to
gather, and it never maps back to the process. So, unless those things are in place, it’s just irrelevant, but it is extremely relevant to support a great process and a great methodology.
Devon: Well said. So the final pitfall that I’d like to touch upon today is compensation plans, and this can be a tricky one, right? I mean, should I pay them a little bit more than my competitors, a little bit less? What are your thoughts on that?
Trish: Well, compensation is easy. It really is, because compensation drives behavior. So before you start thinking of what components you’re going to put into your comp plan, you really need to think about what behavior you’re trying to drive. When you build a plan, it doesn’t necessarily have to be a forever plan. Just
think about what do you want your reps to do? How are you going to measure them against that, and then pay them well for accomplishing those goals. Revenue is almost always the end- game, but it doesn’t necessarily have to be 100% of your comp plan. You need to be creative and really focus on the behavior
you’re trying to drive.
Brian: It is starting to dive down, Trish, into more of the leading indicators. I do suggest people be careful how far you dive down into that. I’ve seen people pay for calls, pay for conversations. Really define where it starts. When does a real sales cycle start? Is it a conversion from a lead to an opportunity with confirmation? I think those are valuable assets. It depends on how your structure is set up.
I always look at it this way. You created a job description for a salary. It all depends on where you’re at. If you’re paying 100% leveraged commission, you can probably dive down into some of those things. But typically there’s a salary attached to the behaviors or leading indicators, but it is diving down more and
I do suggest to some of our portfolio companies that they should be recognizing some of those conversion points, specifically in long, drawn out sales cycles.
You always want to be careful that it meant something and it was confirmed, and if you can nail that, which takes time, that’s why even with compensation, you want to test things. The one thing I always suggest though is when you commit to a compensation plan or an amount of money, make sure it’s aggressive and it’s hard to hit, but it is attainable.
That’s why that quarterly rhythm from a compensation standpoint or even monthly is just critical that people start seeing success. I would err on the fact of whatever that multiple is that you want to get out of that representative. Is it 10% cost to revenue or what is that number? Don’t be overly aggressive early and say I’m getting 2%. Those are crazy numbers, but maybe it starts at 25 and you start easing it on. As you scale, things can change. From a compensation perspective, consistency rules, and just one other thing I’d like to suggest is don’t make it complicated.
Trish: Simple is better, and don’t knee-jerk it all around every time you have a new data point. Once again, I agree.
Devon: It was so good having you both here today, Trish and Brian, having two great sales minds here in OpenView Studios. Thanks for joining, and I hope our audience had a number key takeaways.
Trish: Our pleasure. Thank you.
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