The Biggest Mistake You Can Make When Hiring Your First Sales Rep
Jason Lemkin, author of the popular SaaS blog, saastr.com, explains why one of the biggest mistakes companies make when hiring their first sales rep is hiring just one instead of two.
Editor’s note: This guest post by Jason Lemkin originally appeared on his blog, SaaStr.com as “When You Hire Your First Sales Rep — Just Make Sure You Hire Two”
The time will probably come when you have to build a sales team in SaaS. It may be Day 1 if you have plenty of capital and are selling to large enterprises. It may be X months down the road, once you close a few deals large enough ($x,000 ACV) to justify hiring a sales rep. It might be 5 years down the road, like DropBox and Evernote, when you decided to add a corporate/enterprise edition to your freemium app.
The point is, if it even happened at DropBox, it will probably happen to you — at some point you’ll need to consider hiring your first sales guy.
Now you may somehow have enough capital to hire a VP of Sales and a bunch of reps right then and there. I’ll talk about this — a lot — in some other posts because I learned a lot having an awesome VP Sales and sales team.
But most likely, you won’t have the resources to hire a whole sales team upfront. You’ll want to start with one experienced rep.
And there’s only one problem with that: no matter how well that rep does, you won’t learn anything. You need at least two to learn.
- If your first rep does poorly, you’ll have no idea why. The rep will blame you, your crappy product, your crappy company, your crappy lack of marketing. Which may all be correct. But if the rep is a bad fit, that may be the real reason. You just won’t know.
- If your first rep does well (our experience), you’ll still have no idea why. Does the product sell itself? Is it the rep’s suave phone skills? Is it your deal size, and are your customers representative of the ones you’ll really get in the future? Or is this rep only good at a a certain type of customer — and are you leaving other potential customers behind? You just won’t know.
Are you looking to develop your own in-house lead generation program?
I once got this advice from one of our advisors with more experience than me — but I ignored it in order to save money, and really, in a mistaken attempt to Keep It Simple. For our first rep, I had it narrowed down to two guys. One, super smart, super eloquent, who explained our product well. The other, well … less sharp. But great at outbound. At prospecting. Never discouraged. He’d do 50 calls a day, 20 days a month, even if he got 1,000 hang-ups.
You can guess I went with the first guy. And he was and is great. I mean, great. He let me focus on closing a few key strategic accounts, and just banged out the rest. The engineering team worked with him well. They loved his smarts and insights. And the customers love him. He’s still with EchoSign and Adobe to this day, and has done amazingly well.
The only problem was I learned nothing — about building and scaling the sales processes for our company, at least.
Looking for some inspiring advice from sales veterans?
It wasn’t until we finally had a second great rep that I could learn. I learned about new segments we could sell into. About how to sell at lower price points and in higher volumes. That I could compare and contrast.
I could guess before, squint at data. But I didn’t know until I had two good ones.
Look, if you’ve been a VP of Sales yourself for 10 years, ignore this. But most of you haven’t built or led an inside sales team before. So you’re gonna need to learn.
So even if it seems expensive — hire two, at least to start. Then learn and go from there. It will be better, and thus cheaper, in the end.
How many sales reps do you think should companies hire when building their first sales team?
OpenView’s Steve Melia shares how to widen your talent pool, identify sneaky red flags founders commonly overlook, and foster a more diverse C-suite.