Every startup faces growing pains. Perhaps the most painful of these growing pains is getting the sales process right and generating a steady stream of revenue. Let’s take a look at how startups can build a high velocity sales team.
Before diving into anything else, it’s important to understand three central concepts that every business should be aware of – Touch, Volume and Margin. Here are simple descriptions for them:
– Touch indicates how many customer interaction cycles there are in the development, marketing, sales, delivery, and support areas of your offerings. It basically refers to the amount of time you spend getting in touch with a potential customer, closing the deal, and onboarding a new customer.
– Volume is the measure of new customers within a given time period. You need to do some competitive analysis here to understand the average volume of new customers in your industry within a given time period.
– Margin includes both gross and net margins of the business. Regardless of what type of product or service a company sells, these depend on the relationship of direct and indirect costs with price.
Getting the right mix of these three important components is at the crux of building a high velocity sales machine.
Understanding where you currently are:
Like it or not, here’s what the touch, volume, and margin grid looks like for most startups, and with good reason too.
Here’s Grid 1 –
Most startups will spend time trying to identify and define their target market, pursue leads, nurture customer relationships, and spend more time onboarding customers. Since startups spend more time focusing on touch, they may very well be lower than industry average margin and touch. While there is nothing alarming about having high touch (it is great for stickiness with customers), the low volume and low margin parts of this grid can cripple growth and even threaten stability.
While it’s natural for most startups and early-stage businesses to have a combination of High Touch, Low Volume, and Low Margin, it takes foresight and collaborative effort to move to a more desirable combination. Many businesses that want to scale have struggled to move past Grid 1.
Where you should strive to be:
Here’s Grid 2 –
As a startup, if you want to build a high velocity sales machine, Grid 2 is where you want to be. Here’s a different combination of the Touch, Volume, and Margin grid – this version has low touch, which frees up time and energy for focusing on higher volume and margins. This grid is often found with web-based or cloud software and consumer products. It happens when there is a large addressable market, a good amount of penetration into this market, and many repeat buyers or customers in this market. This is a scalable and repeatable business models for startups. This business model also generates tons of free cash, which is always great for any business.
In an ideal world, you can go from Grid 1 to Grid 2 in a natural way by just selling more and making sure more people know about your business. However, in the real world, it isn’t that simple. It happens when you have a tight sales process that can crank out revenue at a good speed. To attain this model, you need to strategically manage the growth of every aspect of your business. Below are a few actionable items to help you start building a high velocity sales machine for your startup.
Get these aspects of your startup rolling
- Hiring and onboarding
The hiring and onboarding of your sales team needs to be infinitely scalable. While it’s great to have an expert HR team, startups and early-stage businesses that are looking to scale often have to hire without an HR team. As an entrepreneur, you need to be good at influencing, onboarding, training, and creating a sense of accountability in your team within a short time span. I would strongly recommend asking your team members take to a good StrengthsFinder test to identify their core strengths and work on improving them.
- Consistency is key
There needs to be a central pitch your entire sales team can use. Team members can refine it further during conversations they are having with leads. Your sales team cannot have scattered conversations and share mixed messaging about your offering. Consistency is key, and this comes with tight messaging
- Relentless Focus
You need to constantly keep looking at and probing into what conversations are happening, could happen, and how they can be made better. If there are any problems, you need to understand where the hang-up is and fix it in a timely fashion. Be tenacious.
- Simplify messaging
What you want is for anybody to understand your value proposition in a couple of minutes. Members of your sales team should be able to communicate effectively to a lead in order for the lead to be able to understand your offering quickly. When you communicate effectively on a call, you either find the right buyer because he or she gets your message quickly and wants to learn more, or the listener gets your message quickly and lets you know that he or she is not the right buyer. This is the way to move ahead with a good pace and not be stuck on futile sales calls for an hour or more!
- Align tasks to revenue
It’s not just your sales team’s job to think about revenue. Revenue is important for any business, and every member of your startup needs to understand that his or her efforts need to affect revenue in a positive way. Be it marketing, operations, or delivery, everyone needs to think about how they can support and work with the sales team. For instance, marketing should guide the sales team in terms of target market, messaging, and so forth.
Here’s a disclaimer: Depending on the business model, you may want strive for various combinations within the Touch, Margin, and Volume grid. I chose Grid 1 and Grid 2 since they make the most sense when you want to build a high velocity sales machine. You can share your opinions about the ideal combination your business would strive for in the comments.
Edwin has authored 9Lenses Insight to Action:A Social Approach to Business Optimization and Snapshot9 What’s Your Picture?:Accelerate Your Business Performance. Click here to download the first chapter of 9Lenses Insight to Action for free!