The whole idea of innovation is that it gives you a competitive breathing space. In the good old days, a decent innovation could look forward to a year or two of advantage in the marketplace before the competition could catch up. Not so today: you’re lucky if you have a couple of months at the most. As a result, many companies are questioning their reliance on innovation as a growth strategy. It’s for this reason that an increasing number of leading companies have a new mantra — organic growth.
You cannot succeed in today’s B2B sales world unless you embody many of the disciplines that are part of good engineering training: numeracy, logic and analytical ability.
Mark brought with him to HubSpot the engineer’s way of thinking. He analyzed the success factors, set up logical processes and incorporated measurement and analytics. His four steps to success:
- “Hire the same successful salesperson every time. (The Sales Hiring Formula)
- Train every salesperson in the same way. (The Sales Training Formula)
- Hold our salespeople accountable to the same sales process. (The Sales Management Formula)
- Provide our salespeople with the same quality and quantity of leads every month (The Demand Generation Formula)
Today’s buyers are empowered to find the products they want, when they want them, with near – perfect information on the competitive landscape.
Over the past few decades, the business world has experienced so many advancements in the way Finance manages its budget, HR manages its people, IT manages its data and sales executives manage forecasting.
The Sales Acceleration Formula completely alters this paradigm. In today’s digital world, in which every action is logged and masses of data sit at our fingertips, building a sales team no longer needs to be an art form. There is a process. Sales can be predictable. A formula does exist.
The Sales Hiring Formula
Closing that next big customer in order to make the quarter helps win the battle. Finding a top salesperson, one who will bring in hundreds of big customers for years to come, helps win the war. The ideal sales hiring formula is different for every company.
I realized that every salesperson has her unique strengths. Some are great consultative sellers. Some crush their sales activity goals. Some deliver exceptional presentations. Some are amazing networkers. Some just know how to make their customers feel like family. When the unique strengths of the salesperson align with the company’s sales context, it is a beautiful thing. When they do not, it becomes an uphill battle. The ideal sales hiring formula is different for every company … but the process to engineer the formula is the same.
- Step 1: Establish a Theory of the Ideal Sales Characteristics
- Step 2: Define an Evaluation Strategy for Each Characteristic
- Step 3: Score Candidates against the Ideal Sales Characteristics
- Step 4: Learn and Iterate on the Model while Engineering the Sales Hiring Formula
I simply went back to the Interview Scorecards for the top performers and asked myself the following questions:
- Which characteristics do these top performers have in common?
- Which characteristics do not seem to matter?
- What am I missing?
“Statistics suggest salespeople who are intelligent and helpful, rather than aggressive and high – pressure, are most successful with today’s empowered buyer.” The Internet’s rise in prominence has caused a shift in power from the salesperson to the buyer. World-class sales hiring is the biggest driver of sales success.
There were five traits that correlated most significantly with sales success:
- Coachability
- Curiosity
- Prior success
- Intelligence
- Work ethic
Coachability: the ability to absorb and apply coaching.
- Step 1: Set Up a Role-Playing Exercise That Models Your Buyer Context
- Step 2: Evaluate the Candidate’s Ability to Self – Diagnose
- Step 3: Evaluate the Candidate’s Ability to Absorb and Apply Coaching
Don’t expect perfection, but rather look for effort. If you witness perfection, hire that candidate at all costs!
Curiosity: the ability to understand a potential customer’s context through effective questioning and listening. Great salespeople ask questions of potential customers in a manner that does not feel interrogative. Great salespeople educate potential customers through the questions they ask.
Does the candidate lead with great questions? Or does the candidate “show up and throw up,” as we say in the industry?
Prior success: a history of top performance or remarkable achievement.
Intelligence: the ability to learn complex concepts quickly and communicate those concepts in an easy-to-understand manner. Our salespeople needed to keep pace as the industry around us took shape. They needed to understand new concepts and communicate to our target customers exactly how those concepts impacted optimal marketing strategies.
Work ethic: proactively pursuing the company mission with a high degree of energy and daily activity. Work ethic is probably one of the most difficult characteristics to evaluate.
The hardest part of the hiring process is finding great salespeople to add to your recruiting pipeline.
Great salespeople never have to apply for a job. Great salespeople never need to pull together a resume. Truly great salespeople have multiple job offers at all times, even if they are not in the job market. Great salespeople are passive candidates, meaning they are not being proactive about changing positions. Shaping a passive recruiting strategy that caters to this demographic is a necessity.
“Don’t hire a recruiting agency. Don’t build a corporate recruiting team. Build a recruiting agency within your corporation.”
Step 1: Leverage the Search Capability within LinkedIn to Source a List of Qualified Candidates
Step 2: Screen the Search Results Using the Details in the Candidate’s LinkedIn Profile
The top elements I looked for in candidate profiles were: Indicators of sales excellence. Longevity at their current/former employers. Alignment between the prospect’s current buyer context and our buyer context. School and major. Quality of LinkedIn profiles.
Step 3: Engage with the Prescreened Candidates
The “forced referral” is a specific tactic used within the context of sourcing LinkedIn candidates, in which a hiring manager leverages the existing network of his team.
Who should be your first sales hire?
- Candidate 1: The SVP of Sales
- Candidate 2: The # 1 Salesperson
- Candidate 3: The Entrepreneur
- Candidate 4: The Sales Manager
The SVP of sales (candidate 1) is my least favorite hire.
Pros of the SVP of sales:
- Rolodex.
- Industry knowledge.
Cons of the SVP of sales:
- Hesitancy to roll up his sleeves.
- Lack of recent front-line experience.
- Low pace.
The #1 salesperson (candidate 2) is a step up from the SVP of sales but is not advisable in my opinion.
Pros of the #1 salesperson:
- Industry knowledge.
- World-class sales fundamentals.
Cons of the #1 salesperson:
- Ability to succeed in an unstructured environment.
- Lacks leadership experience.
I like the sales manager (candidate 4). She’s not the ideal fit for the role but I like her.
Pros of the sales manager:
- Willingness to roll up her sleeves.
- Leadership experience.
- Proven track record.
Cons of the sales manager:
- Industry knowledge.
- Entrepreneurial instinct.
The entrepreneur (candidate 3) is my most desirable candidate.
Pros of the entrepreneur:
- Entrepreneurial instinct.
- Sales fundamentals.
- Leadership potential.
Cons of the entrepreneur:
- Sales management fundamentals.
- Industry knowledge.
The Sales Training Formula
The Sales Training Formula. This “ride-along” approach to sales training is very common in the industry. However, the approach concerns me.
My best salespeople are individually great for very different reasons. Having a new hire learn exclusively from one of our top performing salespeople would provide a limited view of the ideal sales process. I needed a way to expose new hires to the blueprint of best practices for our entire sales cycle. This “best practices blueprint” is often referred to as a “sales methodology”. I needed to expose my salespeople to these critical learnings, but also provide them with the flexibility to apply their “superpowers” to the process.
There are three aspects of a well-designed sales methodology:
- the buyer journey,
- the sales process and
- the qualifying matrix.
The buyer journey represents the general steps through which a company progresses as it purchases a product. The sales process supports the customer along his buying journey.
The exercise of calling and emailing a potential customer is often referred to as “prospecting” and is a common stage in the sales process. Stages are:
- Connect call
- Discovery call
- Presentation or demo of the solution
The qualifying matrix defines the information needed from a potential buyer in order to understand whether we can help the prospective buyer and whether the buyer wants help.
A very common qualifying matrix that has been used for many decades is BANT. BANT stands for “Budget, Authority, Need and Timing.”
Once the sales methodology is defined, structuring a training curriculum is relatively straightforward. Introduce the elements of the sales methodology in the same order in which you created them.
I needed a sales training system in which success could be measured. I needed a sales training formula that could be iterated in a scientific way. For this reason, I added an exam and several certifications to the training process. The exam was focused on factual information, such as product knowledge. New hires were subjected to a 100-question exam at the end of training to ensure they left the program with a satisfactory level of product acumen. The exam was a stressful event. New hires crammed for the test as if it were a college final. On some occasions, trainees were let go for a poor performance on the exam. Needless to say, the tests were not taken lightly.
Exploring correlations between hiring characteristics and eventual sales performance, the same set of analyses were conducted to correlate training performance to sales performance.
“Buyers should not be asked to understand the salesperson’s solution and how it can help with their own goals. Instead, the salesperson should understand the buyers ‘ goals and how his own solution can help achieve those goals.” In this new buyer/seller paradigm, salespeople must prove their worth by adding more value to the process. Sales is no longer about memorizing the call script, the price book, and the top 10 objections. It’s about being a genuine consultant and trusted advisor to potential customers. Salespeople need a high degree of business acumen in order to fully understand their buyers’ goals. Salespeople need to transform their product’s generic messaging into a customized story that resonates with the buyer, addresses the buyer’s needs, and uses the buyer’s terminology. The best-trained salespeople have experienced the day-to-day job of their potential customers. They published blog articles, set up landing pages, ran A/B tests, segmented leads, created email nurturing campaigns and analyzed the conversion of website visitors to leads to customers, all using the HubSpot software. Sales hires felt the pain of a marketer because they lived through it. Modern selling feels less like a seller/buyer relationship and more like a doctor/patient relationship.
Social media presents an opportunity for all salespeople to be perceived as trusted advisors by their buyers. Salespeople should take some time normally spent prospecting and reallocate it to social media participation. The rewards are greater.
The Sales Management Formula
In many ways, a sales manager’s title should be “sales coach”. Maximizing sales managers’ time spent on coaching is one of the most effective levers to drive sales productivity.
“A common sales management mistake is to overwhelm the salesperson with coaching too many skills simultaneously. Pick one skill and focus”.
What skill will you work on this month with this salesperson? How did you decide on that skill? What is the customized coaching plan you will use to develop the skill?
“So, reflecting on your qualitative observations and the metrics that we ran through, which skill do you think we should work on this month and what’s the best way that I can help you with that skill?”
Some real time situation:
Last month, he worked the fewest leads. Here are some possible diagnoses and corresponding coaching plans for this scenario.
- Overinvestment in unqualified opportunities
- Time management
- Personal motivation
- Call reluctance
She worked a good number of leads, but she had the lowest number of demos and in turn the lowest number of customers.
- Prospecting depth
- Lack of prospecting personalization
- Trust development on the connect call
He’s doing really well with high volumes of leads worked and demos delivered. However, he has a very low number of customers closed, especially for that amount of activity. Here are possible diagnoses and coaching plans for this salesperson:
- Lack of urgency
- Lack of “decision maker” access
- Digging below the surface pain
Whether you’re a CEO or a VP of sales, the sales compensation plan is probably the most powerful tool in your tool chest. The ideal plan is contextual not only to the type of business, but also to the stage of growth that business is in.
Plan 1: The Hunting Plan
The first compensation plan we ever had at HubSpot was very oriented toward “hunting” new customers. The first plan paid each salesperson $ 2 upfront for every $ 1 of monthly recurring revenue they brought on. To protect the company from customer churn, we implemented a four-month claw-back on the commission.
Plan 2: The Customer Success Plan
The customer retention issue needed to be addressed. We analyzed customer churn rates by salesperson. We did not have a customer onboarding problem. We had a sales problem.
Plan 3: The Customer Commitment Plan
“What criterion is 100 percent in the control of the salesperson and highly correlated with customer success?” The commission would be paid out as follows:
- 50 percent on the first month’s payment
- 25 percent on the sixth month’s payment
- 25 percent on the twelfth month’s payment Under this plan
If a customer signed up paying month-to-month, the salesperson would need to wait an entire year to earn the full commission from that customer. If the customer signed up paying a year in advance, the salesperson would earn the entire commission immediately.
Evaluate a sales compensation design through the lens of three factors: Simple. Aligned. Immediate. One factor in the success of our evolving compensation plan was my decision to involve the sales team in the design process. I was very explicit that the commission plan design was not a democratic process. For example, the plan would not be put to a vote. It was critical for the sales team to not confuse transparency and involvement with an invitation to selfishly design the plan around their individual needs.
Besides the commission plan, there was another important element of the sales compensation structure: a formalized career growth plan. The promotion tiers were a powerful structure within the overall sales compensation model. Salespeople are competitive, financially motivated and always looking to achieve goals.
The promotion tiers were also great for culture. We did not have to manage annual reviews and the often-arbitrary compensation increases. The promotion tiers took the subjectivity and politics out of this process and empowered the salespeople to ascend as quickly as they could.
“Sales contests are an effective tool to drive short-term behaviors and build team culture within the sales organization.” Align the contest with a short-term behavior change desired for the majority of the team. Make the contest team-based. Make the prize team-based.
Send out updated contest standings every night. Choose the time frame wisely. The time frame needs to be long enough to drive home the desired behavior change but short enough that salespeople stay engaged. Avoid contest fever. Run one contest at a time for a given group of salespeople.
“Don’t promote your best salespeople to sales management.”
Of all the professional functions within an organization (e.g., marketing, product, finance, HR and so forth), sales has the largest variance between the general characteristics that are conducive to success on the front line and the general characteristics that are conducive to success in the management ranks. Sometimes really good salespeople are selfish, egotistical and competitive by nature. Those traits do not translate well into management.
In order to develop my frontline salespeople into managers, I set out to establish a sales management course.
- Coaching.
- Negative feedback delivery.
- Team motivation.
- Conflict management.
These were the skills the managers needed.
“Develop your leadership bench by using a formal leadership curriculum for your salespeople who earn the opportunity.”
There were three skill areas we evaluated as a prerequisite to the leadership class: performance, sales skills and leadership potential.
“Performance” was the easiest to evaluate.
For “sales skills” I looked for well-roundedness. I needed sales leadership candidates who had a well-rounded grasp of the entire sales methodology.
“Leadership potential” was demonstrated through a candidate’s contribution to the team.
“Before formal promotion, let qualified leadership candidates hire, train and manage one new salesperson while still carrying their individual quota responsibilities.” The “team lead” position, in which a salesperson is simultaneously in charge of managing a small team and carrying an individual quota for an extended period of time. In my observations, the “team lead” struggles to balance both aspects of their role.
New managers have an unrealistic perception of how much coaching they can actually do with each of their team members. They need to learn quickly that success as a manager is about the efficiency of their coaching—their ability to diagnose the issues, customize a coaching plan and execute the coaching in a time efficient manner.
“Avoid the common pitfalls of new managers: exhibiting weak time management around coaching, acting as a glorified salesperson and giving up on new hires too early.”
The Demand Generation Formula
Outbound marketing just doesn’t work anymore. Buyers dislike outbound marketing so much that they actually invest in technology to keep these tactics out of their lives. Today’s buyers are empowered by the Internet. They are empowered by Google and social media. At HubSpot, we refer to these channels as “inbound marketing”.
Here are the two simple actions you need to take in order to drive inbound links and social media following: Create quality content (e.g., blogs, e-books, webinars) on a frequent basis. Participate in the social media discussions in which your target prospects are already conversing.
Building your content production team is not easy. But once you have the team in place, the hard part is over.
There is one key resource of the content production process—the journalist. Journalists hold the keys to the future of demand generation! Nobody recognizes this opportunity, not even the journalists themselves. Take advantage. Your job as an executive is to develop this journalistic capability within your company to drive the modern demand generation process. Anyone at the company who understands your industry, your product value proposition and your customer’s needs should be considered for the thought leadership committee. The interview should be on a niche subject. Don’t choose your product as the subject. The interview should be about a trend in the industry, a question buyers have early in their buying journey, a phrase that likely resonates with an individual your business can help and so forth. At the end of the blog article is a call to action to the reader that states. “Did you like this blog article on XYZ? Perhaps you will like the e-book we published on the same subject.” The content production process is powerful. However, its impact can be significantly amplified by complementing content production with frequent participation in the online discussions where your target buyers are already conversing.
I like one-third of my social media messages to be about my company and two-thirds to be about other people.
Christopher Anderson in his book, The Long Tail. The long tail refers to the fact that, within a given population, a large percentage of overall data will be represented by the multitude of small data batches scattered farther down the curve.
Each piece of content attracts hundreds of highly qualified buyers to your business. The more you publish content along this strategy, the larger the portion of the long tail you can own. As we stated earlier, the long tail can often be more valuable than the head. Focus your content on “long-tail” topics. They are less competitive and more likely to attract your target buyer.
The Most Common Mistake: Don’t Pass All the Leads to Sales
Outbound sales campaigns start with a list of leads that are presumably a good “fit” for the business. Then, Sales and Marketing go to work on that list as aggressively as possible with direct mail, email spam, targeted advertising and cold calls hoping that 1 percent of the purchased leads respond to these forms of interruptive, outbound selling. The leads that indeed respond probably have some form of “pain”, which triggers the response. Most of the leads generated from inbound marketing have a “pain” that needs to be solved. Unfortunately, not all of the inbound leads are a good “fit”. Once marketing teams increase their inbound lead flow volume, they often introduce a lead scoring system. In general, implementing a lead scoring system is a smart move. Unfortunately, lead scoring is often implemented in a manner that causes more harm than good. Issues arise when the lead scoring algorithm becomes too complicated.
“Buyer Persona/Buyer Journey” matrix, or buyer matrix for short. The vertical axis (y-axis) shows the different buyer personas the company targets. Buyer personas are defined by primarily static attributes about the buyer that will not change. Example attributes include the size of the business, the industry of the company, the role of the buyer, and so forth. We are targeting three buyer personas: Small Business, Mid – Market and Enterprise. The horizontal axis (x-axis) shows the different stages through which the buyer progresses during the buyer journey. These stages of the buyer will likely change, hopefully as quickly as possible. In this example, we have three stages of the buyer journey: Problem Education, Solution Research and Solution Selection.
When you first set up the matrix, do not feel pressure to create a highly customized, thoroughly tested experience for each buyer state right away. Instead, implement something basic for each box. Use your gut. Form some theories. As you become more of an expert with your buyer matrix, you can introduce microsegments to address these complications. The buyer context sales approach is in perfect alignment with the experience the prospective buyer has had with the company thus far. It is educational. It is insightful. It is personalized to his context.
For whatever reason, the “going negative” voicemail has the highest callback rate. There must be a psychological phenomenon at work here. In any case, if you have done a good job adding value through the contextual prospecting process, the prospect will likely call you back after this voicemail. Call the contact from the lead first and then call the decision maker as a follow-up. I call this strategy “call low, then call high”. When the salesperson calls the contact from the lead, the salesperson needs to engage the contact with a relevant value proposition, which is not necessarily the most appropriate value proposition for the decision maker. The engagement of the lead is the best criteria around which to prioritize prospecting calls. Unfortunately, few sales teams take this approach. Selling to an inbound lead requires a new set of skills.
Marketing needs to filter the leads. Avoid passing all inbound leads to Sales. Avoid the lead scoring trap. Use a Buyer Persona/Buyer Journey matrix to decide when to pass leads to Sales. Sales needs to call low and then call high. On the call, scrap the generic elevator pitch. Prioritize prospecting by engagement, not call cadence or alphabetical order. Consider specializing the team by inbound or outbound.
For many organizations, the relationship between Sales and Marketing is dysfunctional. Dysfunctional relationship between Sales and Marketing is the kiss of death in a buyer-driven world. Our mission with the Sales and Marketing SLA was to establish similarly quantified agreements between the two teams.
We established that leads with a “Mid-Market” buyer persona would be passed to Sales when they reached the “Solution Research” buying journey stage.
- “The Marketing SLA provides a framework to put Marketing on a revenue quota, similar to Sales”.
- “Every lead from the website should be called within one hour of converting”.
- “Sales is accountable to Marketing just like Marketing is accountable to Sales. The Sales SLA defines a series of behaviors expected of the Sales team to ensure each lead is worked effectively.”
The optimal number of times to call a small business lead is five. For mid-market leads, the optimal number of call attempts is eight. For enterprise companies, the optimal number of call attempts is twelve.
We created a daily report distributed every evening to both the Sales and Marketing teams, holding both organizations accountable for the SLAs established.
Technology and Experimentation
Most sales technology does not work for frontline salespeople. It creates work for salespeople. It creates admin tasks for salespeople. It takes salespeople off the phones. It takes salespeople away from selling.
Modern sales technology enables two opportunities:
- Sell faster: Accelerate the current sales process by eliminating admin work and mundane tasks for salespeople. Sell better: Create a better buying experience for customers by capturing buyer context and making that context available to salespeople wherever they are.
As a result, salespeople can engage buyers with the most helpful information at the most helpful time.
One of the most time-consuming steps of the sales process is simply finding qualified buyers to call. I call this step “lead sourcing”.
“Sales technology enables faster selling for salespeople by eliminating admin tasks and automating data capture.” Companies should strive to adopt sales technology that enables better buying for customers and faster selling for salespeople.
Great teams have a core philosophy of continual improvement. Whether succeeding or failing, there is always a way to improve existing execution, adapt to changing market dynamics, or consider expansion into new areas. Maintaining a culture of experimentation is a great way to foster this philosophy of continual improvement.
Our job as an executive team was to create the environment in which this innovation process could occur. Our job was to incubate this innovation passion rather than come up with the big ideas ourselves. We ran experiments on new demand generation tactics, potential addressable markets, sales methodologies and new products.
Generic process required to execute a successful experiment. The process is as follows:
- Define a clear goal and measure of success
- Design the experiment execution
- Choose a leader
- Assemble the team
- Establish routine check-ins
VAR program. For most early start-ups, this approach fails. These partnerships required significant effort to establish, especially with resellers of reasonable scale. Furthermore, getting an agreement in place is only half the battle. You still need to capture the mindshare of the partner’s sales team.
The other major issue with a partner strategy is the lack of a feedback cycle from the partner’s front line to your product team and executives. It is rare that a start-up nails its product-market fit right out of the gate. For you SaaS experts out there, we measured LTV/CAC, payback period, salesperson productivity, customer retention and a few other metrics. The results were phenomenal.
We came up with an improved matrix that better summarized the discovery approach our most successful salespeople were taking with potential buyers. We called this qualifying matrix GPCT (Goal, Plan, Challenges, Timeline).
- Goal: The business goals around which the prospect’s company is rallying.
John McMahon once eloquently stated: “A well-developed goal is quantified and implicated.”
“Quantified” means there is a number attached to the goal (i.e., the prospective buyer needs to increase lead flow by 20 percent). “Implicated” means we understand the implication if the buyer does not achieve the goal
- Plan: The business plan put in place to achieve the goal.
- Challenges: The challenges associated with implementing the buyer’s plan.
- Timeline: The date by which the prospective buyer needs to achieve the goal.
The HubSpot culture of innovation and disciplined experiment execution empowered employees to constantly challenge the norm, enabled us to fail without causing operational catastrophes and incubated some of the most important strategic shifts that propelled the company to the next level.
