Chad Peets: Why Most Sales Reps Underperform & Remote Reps Ignore Development | E1193
26 Aug 2024 (24 days ago)
Intro
- A connection exists between working in an office environment and accelerated professional development, particularly in sales.
- Individuals seeking exceptional achievements must possess a strong work ethic and a willingness to make personal sacrifices.
- The speaker expresses excitement for the upcoming show due to a pre-recording conversation and acknowledges positive feedback from previous interviewees.
The Way into Sales
- An individual's interest in finance was sparked at age 12 by the movie "Wall Street", leading them to pursue a career as a stock broker.
- After graduating from USC with a Finance degree and briefly working as a stock broker, this individual transitioned to software sales recruiting at 22 years old.
- This individual believes that while sales skills can be honed, the fundamental ability to sell is innate and cannot be taught.
Focusing on a Horizontal Customer Base
- Companies that only sell to one specific industry limit their potential size.
- When interviewing sales representatives, it is important to determine their motivations beyond just making money, such as a desire for professional development and selling a high-quality product.
- Bringing in a Chief Revenue Officer (CRO) before a product is developed helps ensure that the product meets market needs, as they can conduct extensive customer discovery and gather feedback throughout the development process.
What Sales Leaders Bring Pre-Product that Founders Can't
- Sales leaders bring an extensive and deep understanding of the questions that need to be asked during the product development process, which is often lacking in founders who are typically product or engineering focused.
- Hiring a sales leader allows founders to focus on their strengths, such as product development, while the sales leader conducts extensive customer outreach, gathers data, and creates a sales playbook based on real-world market insights.
- While securing a large seed round of around $10 million might be necessary to hire a CRO and a sales team, this investment can be justified by the value they bring in terms of customer acquisition, market validation, and building a robust sales process.
What the Right Type of Sales Org Means
- The Chief Revenue Officer (CRO) should collaborate with the product organization to design the product roadmap based on customer needs and market demands.
- Sales representatives should focus on selling to ideal customer profile (ICP) accounts and provide feedback to the product team on common product requests to expand the ICP.
- The CRO, with CEO support, should foster collaboration between sales and product teams, ensuring alignment between product development and market demand to avoid silos and mistrust.
Fixing a Broken Culture Between Product & Sales
- A CEO should encourage collaboration between the sales and product departments, emphasizing their interdependence and shared responsibility for revenue generation.
- Sales teams should communicate their reliance on the product team to meet revenue forecasts, highlighting the impact of product delivery on sales performance.
- Sales compensation plans can be structured to incentivize desired behaviors, such as prioritizing expansion sales by offering higher commissions on expansion deals.
How Big Should ACV Be to Justify a Sales Motion
- To determine if a sales motion is justified, it's important to consider whether the organization is inside sales, outside sales, or both, and to aim for a balance between velocity and enterprise business.
- A rough benchmark for productivity is that sales representatives should be able to generate three times their on-target earnings (OTE), and scaling should be avoided until that productivity level is reached or data indicates a positive trend.
- An ideal ramp time for an enterprise seller is six months, but it can often take longer, potentially due to factors such as sales cycle length, enablement issues, product problems, or the nature of the business.
Are Founders Hiring Sales Enablement Early Enough?
- Companies with 10 sales representatives likely do not need a dedicated sales enablement person, while companies with 30 to 40 should consider it.
- Sales enablement should be implemented programmatically and consistently across the organization, with managers executing on a unified plan created by the enablement person.
- Customer success representatives should focus on ensuring product implementation, utilization, and value realization for customers, working closely with salespeople to drive expansion opportunities.
Common Mistakes in the Sales & CS Relationship
- A common mistake is to separate sales and customer success, leading to sales representatives prioritizing deal closure over long-term customer relationships.
- This separation can result in overselling, where representatives prioritize booking high-value deals even if the customer's consumption patterns don't justify it, leading to future churn and expansion challenges.
- Sales representatives should be incentivized to consider the entire customer journey, including expansion opportunities, rather than solely focusing on initial deal closures, shifting away from the traditional software sales model.
Key Lessons from Building Snowflake's Sales Team
- A well-defined and consistent process is crucial for building a successful sales team at scale and with speed.
- The hiring process should be streamlined, with a limited number of interviews and a binary decision-making approach at each stage.
- Involving individuals who are not directly responsible for qualifying or selling in the interview process can introduce unnecessary complexity, risks, and potential conflicts.
Hire Fast & Fire Fast?
- To scale effectively, it is crucial to hire quickly while adhering to a defined candidate profile to ensure suitable hires.
- When evaluating potential sales representatives, it is essential to consider the specific demands of the role, such as the target market, product complexity, and required sales approach.
- Determining when to dismiss an employee involves recognizing patterns of underperformance, exhausting all efforts to support their improvement, and considering external factors that might be influencing their performance.
Why Do Top Reps Turn into Non-Performers
- A major reason high-performing sales representatives become less productive is burnout from the demanding nature of pipeline generation.
- When hiring sales representatives at a rapidly growing company, it's crucial to maintain high standards while also recognizing the need to fill positions quickly to meet growth targets.
- When building a successful sales team, it's essential to ensure that everyone, including managers, is aligned on consistent messaging about the company and its products to maintain credibility with potential hires.
What Makes a Great Sales Rep
- Great salespeople are willing to put in the work and make sacrifices to achieve exceptional results.
- Inside salespeople should be willing to work in the office to develop faster and improve their skills.
- Effective content marketing and a vertical approach are crucial for startups to succeed in sales, especially when targeting specific industries.
Mistakes Founders Make in Timing Enterprise Expansion
- Companies should focus on achieving success with smaller accounts in the mid-market before expanding to enterprise-level clients.
- Gross revenue retention is a measure of product satisfaction, while net dollar retention reflects factors like go-to-market strategy and customer success.
- CEOs should avoid setting unrealistic revenue goals that pressure sales teams and lead to unsustainable growth strategies.
Quick-Fire Round
- A desire to continuously learn and improve drives daily work ethic.
- The most important advice for new sales representatives is to prioritize professional development through networking and hard work.
- A common misconception about salespeople is that they are solely motivated by money and lack genuine care for their companies.