Sales Hiring: 4 Hiring Traps that Stall Revenue Growth
Hiring enough good salespeople is one of the most important things a company can do. That’s because the rate at which you hire salespeople is one of the primary factors in determining how fast you’ll grow revenue. At it’s most basic level, sales is about establishing a company-wide revenue target, assigning an appropriate quota for salespeople, and then hiring enough reps so that you can hit the company-wide target. In other words, individual quota assignment multiplied by number of sales people = company bookings or revenue target.
Sounds simple, right? Not really, especially given the large number of dynamics that can derail your sales hiring. While some of these dynamics are obvious (e.g. hiring bad salespeople), others are less obvious. In this post, we’ll analyze four non-obvious sales hiring traps that can derail your sales team’s quota achievement, including:
- Accessing a large enough candidate pool;
- Shortening the average time it takes to achieve full quota;
- Knowing when to accelerate or decelerate sales hiring; and
- Covering rep attrition with your sales hiring plan.
Identify a large pool of hirable salespeople
High growth companies are able to hire salespeople at scale. For example, a few years ago, Salesforce.com grew its sales organization by aggressively targeting and hiring sales reps from major enterprise software companies such as Siebel and SAP.
It’s easier said than done though. To hire salespeople at scale, you need to develop a hiring profile for your team and match that profile to a sizeable, liquid pool of candidates. Too many sales leaders develop an ideal sales hiring profile only to find that there aren’t a sufficient number of candidates to meet the company’s hiring objectives.
As you scale your sales organization, try to tap a candidate pool that you can draw a sufficient number of salespeople from. There are a few pools you should keep in mind:
- Competitor sales reps – Hiring sales reps from the competition is a common way to tap into a large pool of candidates. These salespeople know your market, buyer, and product or service. Just remember that there are risks. For example, if you’re a startup hiring salespeople form larger market incumbents, those reps aren’t always well-suited to the sales dynamics of a startup. You should also be careful about that bright shiny rolodex that the rep brings with them. More often than not, their existing network yields zero booking dollars.
- General purpose salespeople – The general purpose sales rep is someone who has sales experience, but not in your market or industry. For example, a SaaS vendor might hire someone who has worked in pharmaceutical sales for 10 years. In this candidate pool, you’re looking to hire reps who have excellent “sales chops” that, with a little enablement, can be applied to your market. These candidates excel at sales effectiveness no matter who the buyer is or what the product is.
- Recent college graduates – There’s always a large pool of college graduates available to hire, although hiring inexperienced reps comes with risk. To mitigate this risk, make sure you’ve identified the innate traits and characteristics that will allow these candidates to succeed in your sales organization. It’s preferable to start these candidates as sales development reps (SDRs) and put them on a 12-16 month track to become a full sales rep. If you do pursue this option, you’ll need a world class training and enablement program to teach these reps how to sell effectively.
- In industry candidates – You can also consider hiring salespeople from the industry that you sell to. Typically used in markets where deep industry and product knowledge are required, the buyer community often presents a large pool of attractive candidates to sales leaders. Like recent college graduates though, you need to remember to train and enable these reps to effective salespeople. While these candidates are often very knowledgable about your market, buyer, and product, they also often lack the attributes of an effective salesperson.
Shorten time to full quota achievement
Just about every company struggles with the time it takes to ramp new salespeople to full quota achievement. At TOPO, we regularly see sales organizations where it takes longer than nine months to ramp a new rep to full quota. These companies experience much slower growth rates than those that are able to get salespeople to full quota in 3-6 months, although sometimes this is offset by higher average deal sizes that come with longer sales cycles.
Some of this comes down to bad hiring, but most of it comes down to poor onboarding, lack of continuous sales enablement, and unrealistic expectations around the quota ramp cycle. For a sales rep to get to quota achievement in 3-6 months, they need to participate in a high impact onboarding program that is substantially completed in their first 1-2 weeks on the job. They also need to receive continuous enablement, preferably weekly, to ensure that they are selling effectively. In fact, the guiding design principle of your onboarding and sales enablement programs should be to provide sales reps with everything they need to achieve quota in 3-6 months.
Finally, there are certain conditions outside of the sales organization’s control that may cause a salesperson to not reach full quota in 3-6 months. For example, sales reps need to receive a sufficient number of leads early enough in their tenure at the company to achieve quota. You should also make sure that buying cycles support your desire to ramp salespeople to full quota in the desired timeframe. In some markets, the buying cycle (as defined by the buyer, not you) might be too long for a salesperson to fit within the desired 3-6 month ramp cycle.
Know when to accelerate/decelerate sales hiring
Most sales leaders create one hiring plan per year. The sales hiring plan is usually part of the annual budgeting process and, as such, is an annual effort. It’s the rare VP of Sales who will revisit the hiring plan monthly or even quarterly. For many businesses though, sales hiring is something that should be adjusted monthly or quarterly.
There are a number of dynamics that you should analyze to determine whether to accelerate or decelerate sales rep hiring. Aggregate pipeline size is one of the more traditional metrics that sales leaders will examine. With this data, you’re looking to answer the simple question of: do we have enough reps to sufficiently cover existing pipeline. While it’s helpful, it does fall into the “rear view mirror” category of analysis because that pipeline will likely be gone by the time you hire, onboard, and ramp new reps to full productivity.
To get in front of this issue, make sure you look at additional metrics such as number of sales qualified leads generated each month, as well as month to month growth rates for SQLs. You should also keep an eye on the time it takes for reps to ramp to full quota achievement. As that number shrinks, consider accelerating hiring.
Finally, it’s usually time to hire more sales reps when you’ve achieved product/market fit and your sales organization has a set of standards in place that demonstrate predictable, scalable growth. Key standards that your sales organization should have in place include: the number of leads a rep will receive each month; standard territory design; standard quota and comp plans; a well-designed sales process; and a standard set of sales plays that reps run at each stage in the sales cycle.
Hire enough new salespeople to cover attrition
Many sales leaders also fail to account for attrition when it comes to creating their sales hiring plans. With average sales rep turnover rates in the 25-30% range (it’s even higher in some industries), it’s critical that you bake a reasonable attrition rate into your plan so that you don’t fall behind on bookings.
Sales leaders often optimistically assume that they’ll defy the odds and have lower sales rep turnover rates. It almost never works out that way for common reasons such as: the economy improves and other companies begin aggressively recruiting your salespeople; you make some bad hires who are managed out of the sales team; or salespeople voluntarily leave because sales management lacks leadership skills.
In order to account for sales rep turnover, focus on a few hiring and organizational tactics. First, make sure that you are interviewing and hiring at least 20% more candidates than you would need if you had zero turnover in the sales organization. Second, using historical data, refine your hiring profile so that you hire sales reps that data suggests will stay in the seat for 3-4 years. Third, analyze when non-productive reps typically turnover and build that cycle into your sales hiring plan so that you get in front of the rep turnover issue. You don’t want to get caught reacting to sales attrition. It can set the company’s growth rate back an average of 9-12 months given hiring, onboarding, and ramp cycles.
Remember that your goal is to achieve predictable hiring growth when it comes to scaling your sales team. If you can do this, our simple formula of individual quota assignment times number of sales people = company bookings or revenue target actually works. Just make sure you account for these four sales hiring traps when scaling your sales team.
About the author: Scott Albro is the CEO and founder of TOPO. TOPO is a research and advisory firm that helps companies grow faster. We do this by identifying the patterns, plays, and behaviors that drive exceptional revenue growth. It’s this data that helps our clients (some of the world’s fastest growing companies) enable their sales teams to drive more leads, higher conversion rates, larger average deal sizes, shorter sales cycles, and lower churn rates. The result? Our clients grow 2X faster than the competition.
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