Scaling a Sales Org
Creating a successful sales organization requires strong alignment around mission, messaging, and incentives. This guide features insights from Hayden Stafford, President and CRO of Seismic, on growing and scaling sales teams, team hiring strategies, and developing a flexible sales compensation plan.
Hayden Stafford has nearly 30 years of experience leading sales teams and currently serves as the President and CRO at Seismic, a leading sales enablement software company. Before joining Seismic, Hayden served as President of Global Client Engagement at Pegasystems, where he was responsible for all GTM functions, including sales, customer success, marketing, strategy and operations, and channel partnerships.
Prior to Pegasystems, he was the Corporate VP of Microsoft's Global Microsoft Business Applications (Microsoft Dynamics 365), Senior VP of Industry Business Solution Sales at Salesforce, where he helped scale the company from 1 billion to 4.5 billion dollars, and spent nearly 12 years at IBM, where he responsible for overall strategy, global profit, revenue, services delivery, and client satisfaction as well as experienced the shift from premise hardware to the cloud and applications.
3 Tips for Successful Teams
While monetary metrics are an important way to gauge sales teams' performance, the most successful teams are also assessing and prioritizing skill development and process optimization. Here are Hayden's top 3 takeaways for achieving sales success:
- Adopt a Consultative Approach to Selling: Shift the focus from product selling to problem-solving and understanding customer needs.
- Invest in Your People: Prioritize programs and processes that continuously develop and elevate your team's skills, particularly emphasizing management and bench development, as well as operational rigor. These aspects not only enhance output but also contribute to employee retention.
- Leverage the Power of the Channel: Maximize growth by leveraging channel partnerships and resellers. These long-term relationships can yield significant benefits when given proper attention.
Embrace a Holistic Approach to Sales
Sales responsibilities extend beyond the sales team alone. Everyone within the organization, including services teams, customer success, and marketing, plays a pivotal role in driving business growth.
Customer success teams possess valuable insights into expansion opportunities while engaging with customers. Encourage these teams to actively pursue cross-selling and expansion opportunities. Additionally, marketing can play a key role in the sales process by transforming prospects into advocates who promote the company through referrals and word-of-mouth.
To foster alignment across teams, adopt a compensation approach that encourages collaboration and shared responsibility in driving growth. Shift the focus from isolated targets to the collective goal of net retention.
A holistic, team-oriented sales approach unlocks the full potential of the company, leading to improved sales outcomes, increased customer satisfaction, and reduced growth costs.
Evolution of a Sales Team
As the company expands and matures, the sales team will also undergo significant growth and evolution. Early on, the focus is on acquiring new customers and exploring untapped markets with a team of driven "hunters." However, as relationships and accounts develop, the approach should shift towards becoming trusted partners and experts, known as "farmers." These individuals prioritize long-term customer success, possess vertical expertise, and are able to build trusted partnerships.
This transition to a partnership-focused sales process typically occurs with a critical mass of million-dollar accounts, requiring a balanced mix of hunters and farmers. In addition, as the company evolves, roles like account management, customer success, and SDR teams emerge to cater to different stages in the sales process. For more information about developing a Customer Success motion, check out our guide here.
Building a Balanced Team
Building a successful sales team requires careful consideration of the ratios between different roles. Sales Development Representatives (SDRs) and Account Executives (AEs) play key roles in prospecting and closing deals, while Sales Engineers (SEs) bring technical expertise to the sales process. Additionally, Customer Success Managers (CSMs) contribute to revenue retention. Below are a few recommended ratios for each role and how they are influenced by factors such as product complexity and annual recurring revenue (ARR).
SDRs & AEs
Companies with a strong focus on prospecting typically maintain a ratio of 1 SDR to 3-4 AEs. However, as companies mature, this ratio can expand to 1 SDR to 4-6 AEs. Moreover, the complexity of the product should also be considered when determining the ideal ratio, as more complicated sales may require a denser ratio.
SEs play a critical role in closing technically complex sales. The optimal SE ratio varies by industry, but a recommended ratio is 1 SE to 3-4 AEs. As the complexity of the product increases, the SE ratio tends to decrease, ensuring that each AE has the necessary support to handle highly technical sales.
Customer Success Managers
Rather than focusing solely on the ratio of CSMs to AEs, it's best to consider coverage based on Annual Recurring Revenue (ARR). A typical ratio is 1 CSM to approximately 7-10 million ARR. This approach aligns the responsibility of CSMs with the revenue they are responsible for renewing, rather than the number of accounts they handle.
Outcomes Over Features
Many companies make the mistake of relying solely on their product's unique tech or differentiated features to drive sales. While these qualities undoubtedly are important, they alone will not result in new customers. The secret sauce is in aligning technical value with customer outcomes—how can the product directly address the customer's specific challenges. When building a sales organization, it's essential to recruit team members who possess technical aptitude AND can identify how the product is uniquely suited to solve specific business challenges.
Focus on Ramp-to-Tenure
Sales leaders should prioritize ramp-to-tenure, the timeframe it takes for teams to achieve peak productivity. In the SaaS industry, this typically ranges from 8 to 12 months. Even reducing this period by just 1 month can have a substantial impact on revenue. To drive consistent alignment and improve ramp timelines, it's crucial to establish a scalable training and onboarding program. For companies starting from scratch, a strong onboarding program (guidance here), clear value propositions and messaging, and comprehensive process documentation are the most important components to start with.
Compensation & Incentives
Compensation plans should be tailored to different stages of a company's journey. Leaders should prioritize a focus on acquisition and growth in early stages, while transitioning to a more team-based performance plan as the company matures. Balancing hard metrics like revenue and retention with transformative leading indicators (TLIs) will drive desired behavioral changes and align with long-term business goals. For a more in-depth look at compensation frameworks, take a look at our guide here.
Transformative Leading Indicators (TLIs)
TLIs (Transformative Leading Indicators) and KPIs (Key Performance Indicators) serve distinct purposes in a sales comp plan. KPIs assess past performance and track defined metrics, while TLIs are forward-looking indicators that drive transformative changes. TLIs predict and influence future outcomes, aligning with the long-term goals of the business - this could include securing new logos or owning a specific vertical. TLIs incentivize actions that drive change while KPIs focus on accounting for past performance.
A well-designed comp plan should provide financial rewards/ bonuses for hitting both KPI and TLI targets, maintaining a balance between immediate results and long-term growth. Regularly evaluate the impact of TLIs to ensure they are driving the desired behavior and outcomes.
Retention & CSQLs
Incentivizing sales teams around critical metrics such as gross retention and Customer Success Qualified Leads (CSQLs) is vital for driving growth. By prioritizing gross retention, companies have a better chance at retaining existing customers, resulting in more stable revenue, increased customer satisfaction, more cross and upselling opportunities, reduced operating costs, opportunities for referrals, and a stronger brand presence.
Incentivizing CSQLs is crucial as they play a pivotal role in bridging the gap between customer success and sales. By aligning the goals of both teams around customer satisfaction and revenue growth, companies can foster a collaborative approach that prioritizes the needs of the customers. Identifying customers with growth potential and ensuring their ongoing satisfaction enables the sales team to cultivate stronger relationships, leading to long-term partnerships. This incentive structure shifts the focus from solely chasing metrics to a more customer-centric approach, emphasizing the importance of nurturing customer relationships and delivering value at every stage.
A SPIFF, also known as a SPIF or SPIV, refers to a sales incentive aimed at achieving a short-term boost to sales performance. Sales reps receive a small, specific bonus for successfully closing a sale or securing a demo booking. Unlike traditional sales incentives, SPIFFs often involve real-time monetary value, offering additional motivation for sales reps to achieve immediate results. While these incentives are common, Hayden generally recommends against them. SPIFFs can often encourage short-term thinking and prioritize immediate gains over long-term customer relationships. Team members can wrongly focus on these quick wins, potentially neglecting important parts of the sales motion such as customer satisfaction, retention, and upselling opportunities.
Instead of relying on SPIFFs, a more effective approach is to align sales incentives with key performance indicators (KPIs) and transformative leading indicators (TLIs) that drive overall business success. Link incentives to metrics that reflect the company's strategic goals.