- As a startup grows, the path to success starts with professionalism
- Success = setting expectations + delivering on them
- Introducing the role of the Chief Customer Officer
As startups grow, we see an interesting layering of capability building from each stage to the next. As they move from founder-led sales to team sales, as they find repeatability, as they test and validate different models and sales motions. This article is based on a conversation earlier this year with Melissa Di Donato, CEO of SUSE and Executive in Residence at Notion Capital.
You can listen to our conversation in full here:
As a startup grows, the path to success starts with professionalism.
Every tech founder must understand, early in their journey, that nothing can replace professionalism in sales. Regardless if you’re at $1m or $100m million in ARR, the importance of professionalism during the sales cycle, particularly when you’re headed for growth, is very important.
This concept of professionalism covers all aspects of the business. From putting in professional communication to your customers, and creating a professional setup for your employees, so they understand how they can find success and grow the business, to establishing KPIs. This is irrespective of the size of the company.
I often hear, “early on in the journey, well, you know, we just jumped in and we did it, no problem!” And yes, you do want that can-do, all-hands-on-deck kind of mentality, but at the same time, it’s really important to understand that a lack of professionalism will lack professionalism! The only way to grow a company, starting from the very first day, is to build a professional sales cadence and to operate your business in a way that is good for your employees and customers.
So, my first piece of advice for any founder is always to create a professional sales organization that is built for growth.
The second thing to bear in mind, is that early on and in later stages, success is not linear to revenue. Success is a sum of setting expectations and delivering on or exceeding them. So, setting expectations that are appropriate during the growth cycle is very important. To say, ‘we’re going to do $10 million next year’ is great, but make sure that you’re going to hit $10 million!
Setting expectations + delivery on expectations = success.
How can founders find the right sales model for their business?
Do they go direct or indirect? High-touch field sales or no-touch inside sales? In my last 20 years, I’ve gone through every different type of sales methodology: going direct to the customer and building a field sales team, building highly leveraged and channel markets, reseller markets, and more. There are so many different ways, models, and routes to market.
So how does a founder decide?
First, you have to look at what you’re selling. Is it high-value and high-cost to sell? In other words, do you actually need a human being to interact physically with the buyer? And if the answer is yes, you’re not going to have a lot of options. Should you use one or two channels? Should you use a highly leveraged reseller channel or go direct?
The only startups that go fully “inside sales” are the ones that are doing high-volume, low-value transactions, over and over again. In those examples, selling to niche SMB buyers, it can work, as we’ve trained those buyers to buy on the phone.
However, if you’re dealing with a very complex solution that requires your people to be physically together (tough in today’s climate, I know), then obviously you need to go with a direct sales team, or to utilize a reseller channel, where they already have the bandwidth, people and the engine built.
One thing’s for sure, I don’t recommend new founders going out and hiring loads and loads of salespeople on day one until you’ve tested different models to see what works. Take a long hard look at the kind of product and the value of what you’re selling. How is it priced? Is it priced per user and you’re going to sell somewhere between $50,000 a year and less with ACV? If that’s the case, it could be highly leveraged for an inside sales team.
Once you start getting over $50,000 to about $150,000, you can begin to really think through high-volume reseller channels, because again, those are not the ones you need to control. And I don’t mean control of just the sales cycle, but I also mean controlling customer success.
Then you have the complex sale, which is when you’re dealing with a couple of hundred thousand dollars to start with ACV, and the implementation of your product requires some hands-on work. The second that you have risks to your customer and their success, you need
to have a live salesperson. They need to be in control of the sales cycle, and own the ongoing relationship with the customer for life. This move will pay back dividends, because they take on much more of the role of not just selling, but of managing the relationship.
Are there some great examples of early stage businesses rapidly finding sales models that work?
One example that comes to mind is a high-value SaaS based product, actually in the Notion portfolio, that has a very complex sale to a very particular buyer.
This company is quite early, but felt that field sales was the right approach and set up a pod model. So for every one field salesperson, they had two inside salespeople who walked the hall, gathered the information, worked on the contracts, and had very particular tasks. This divide and conquer approach, enabled the field sales team to focus on way more than they’d ever been able to focus on as they’re not doing the “busy work”. As the team grew bigger, they then went from one field sales to two in the pod, and from two inside sales to three in the pod. Once they added the third in the pod, they then took on a marketing leader who began to take a quarter of their responsibility to generate opportunities and leads.
They created a very fast-moving high-growth engine that, from the start, was built around the customer’s communications preferences. The pod model, particularly for startups in complex sales cycles, works very well.
How is the transition from founder-led to a professional sales team? Is it tough?
Moving away from founder-led sales is hard and very emotional. After all, this is their baby! They’re given birth to this idea, this concept, and they want to make sure that everything’s done as if they would do it themselves. The only way to get a founder to let go, is to bridge the gap of competence. The sales leader must be appointed and must be openly communicative with the founder. They must be able to say, “I’m going to take this job on and when I need you, I’ll let you know”. In addition to, “you have to give me the space and the authority to make decisions, and to do the right things for our customers”. Quite often this means pulling the founder out of being the head of sales, the head of engineering, the head of marketing, and the list goes on and on. It’s a very emotional journey.
It’s important for sales leaders to show success to the founder so the founder can feel comfortable about letting things go, walking away, and moving on to other things. It’s hard for them, as it would be for any of us.
The first VP of Sales is a critical hire.
My advice, particularly on sales, is find someone that you know. Find someone in your network that you can call on. I strongly feel that it is largely about the DNA of the person you hire rather than their skills alone. It’s not about, “I got this crazy good sales guy that kills the numbers no matter where she goes. And you know, look at the track record!” It’s not just the track record, it’s much more than that, particularly for your first hire. So my advice, find someone in your network, ask for help, ask for recommendations and people that you know. This is my number one top trick.
Number two, in the early stage of a company, you really need a head of sales that’s willing to do everything and be everybody. They have to wear many hats – they’re going to have to be the pre sales guy, the engineering expert, the customer success person, and customer for life person, and so on and so forth. You have to find someone who’s not precious. The minute you start attaching titles – VP Sales or Chief Revenue Officer, for example – everyone becomes very precious, and they don’t want to do the hard grunt work. You need to find someone who will do anything – and that includes painting the walls in the loo. Because that’s what we all have to do when a company is starting out in the early stages, is for someone to really want to get their hands dirty.
My third tip, is to make sure that you like the people you hire – don’t underestimate this. Life is short and you have to spend a lot of time with these people, you have to invest in them and their future. So, find someone that you can really spend time with and work with. You are going to be with them for the next five to 10 years so it had better be good.
How do you create professionalism across the whole customer lifecycle journey that will truly lay the foundation for future growth? Introducing the Chief Customer Officer.
To be a professional sales leader, is like being a doctor. You have to go to school and then practice for 15 years before you are ready. Some people are naturally good, some take time to acquire the skills. And I think that, in the truest sense, it is really important to make sure that you are hiring professional sales leaders. There is an innate professionalism that’s very important. And mostly because a lot of these buyers are used to buying professionally. We don’t build businesses based on relationships that much anymore, so you need to meet the professionalism of your customer with a professional sales organization.
At SUSE we have taken a different track. I do have a head of sales, but the head of sales reports into the Chief Customer Officer (CCO). The CCO is responsible for all of the communications and every interaction with your customers across the lifecycle. From lead gen to sales, and then ongoing customer success, and renewals. The Chief Customer Officer is in charge of the professionalism of how and what your company communicates to your customers. I would go so far to say that these days, the Chief Customer Officer is almost more important than hiring a head of sales as your first hire. They’re responsible for sales, you’re going to get two for the price of one, if you will. The CCO has the KPI of ensuring that every interaction with your customer is not just professional, but that it is thoughtful and meaningful in every regard. This includes how we communicate, how we pitch, how we sell, how we close the deal, and then how we manage that relationship forever, for life, literally.
My advice to all founders is to think about what’s most important to you. I am willing to bet every single one of you will say two things. Number one, we have good sales, and number two we have customers for life – that we win great customers that we never lose.
The Chief Customer Officer is an important hire.
How do you create a culture of success?
The best way to create a success culture is to create success that’s measurable.
I would encourage founders as they build their company to create their vision collaboratively with their leadership team and key stakeholders. This ensures that everyone understands what great looks like. From there, create a series of programs and initiatives to deliver against your success and create measurements.
The only way to create a culture built upon success is to be able to identify what success is, and then to celebrate it.
If you understand early on, what your measurements are going to be and what your vision for the company is going to look like, then you can celebrate those successes as you pass key milestones that lead to a successful quarter, month, or year.
You have to celebrate the wins.
You have to measure your successes.
You have to talk about it and communicate..
You need to win loudly and celebrate every success; the sum of every single small success will be huge successes long-term.
And whatever you do, don’t win quietly!