Sales Team Lifecycle for Early Stage Companies: Establish a Sales Process and Hire the Right People
Once you have nailed the product market fit in the seed stage, your focus in Series A is determining whether a small set of sales reps can meet your target revenue number. In other words, can they convert interested, relevant buyers into real opportunities and deals? At this point, you should be looking for ways to optimize the sales process so that you can prove your model is viable at scale.
Establish a Sales Process
Companies should build their sales process over time to support what they need to accomplish at each stage of growth.
Even at the seed stage, companies can stand up a viable sales process. Eventually, the sales process will be customized but initially, it should be focused on enabling meetings and conversations, which is why TOPO recommends hiring SDRs in the seed stage. Companies must figure out who to meet with, how to set up meetings, and what happens after each meeting and conversation, and must also track these interactions.
Scheduling and debriefing on the meetings and conversations is heightened at seed because startups are trying to figure out how to reach the target market, whether they are engaging the right people, and what resonates with them. Though seed companies should loosely define a qualified lead, the key handoff process is closing the loop on meetings and conversations, with a focus on learning and refining the qualified lead definition.
Based on insights gleaned in the seed stage, Series A companies should optimize the process for engaging the right companies and people with the right message so reps can create opportunities. Once at Series B, companies should have captured enough knowledge to create an Ideal Customer Profile and decide on key stakeholders. They should also be in a position to create a well-defined and standardized sales process, and a revenue process outlining key marketing and sales milestones.
Series C companies can shift their focus to sales coverage and predictability, as enabled by processes for territory mapping and forecasting, respectively.
Hire the Right People
Some roles in the Sales Lifecycle Team roadmap are only relevant in certain stages, while other roles will overlap stages. The roadmap clearly prescribes the key roles by stage to guide companies in their hiring practices and focus.
Sales leader – In the seed stage, every founder should be part of the sales process, even if the company has hired an official sales leader. In Series A and B, companies should hire someone who is willing to work deals and has experience evangelizing products. This person might not make an ideal sales leader at Series C but is proven at delivering opportunities and bookings on their own (many later-stage sales leaders no longer contribute meaningfully on deals). At Series C, companies need a leader who knows how to hire and build a sales organization, someone capable of making decisions about sales operations, sales enablement and customer success.
Sales rep – From seed into Series B, companies need evangelizers with experience pitching new offerings, discussing business and industry topics, and moving buyers out of the status quo. At Series B, the three new hires will be professional account executives with significant sales experience that excel at winning deals in a structured environment, guided by a well-defined sales process.
AE – Initially, at seed, companies will hire a small number of reps to help flesh out the strategy. At the Series A stage, companies want to prove out their strategy and sales approach. At Series B, companies are proving their ability to scale the strategy and approach. TOPO’s rule of thumb at the Series A and B stages is to hire three more salespeople but focus on getting two to quota. At Series C, companies dramatically grow their sales team.
SDR – TOPO believes in hiring SDRs early because seed companies need to front-load conversations and meetings to figure out market demand. We recommend maintaining tight ratios through Series B. Even at Series C, we advocate keeping tight SDR-AE ratios as long as the economics still work (CAC). 1-to-1 ratios are hard to maintain at this stage. For most, the tightest ratio will be one SDR to two sales reps.
Frontline sales manager – Growth companies don’t need to hire a sales manager until the Series C stage. Two drivers influence the frontline coaching hire: maintaining an 8-10 rep to 1 manager ratio and/or the segmentation of the sales force (e.g., an inside team focused on mid-market and field team focused on the enterprise). Because each group has a different set of needs, each will need a dedicated manager.
Sales operations – This role is unnecessary in the seed stage, but helps establish an operational foundation at Series A. The ideal Series A sales operations hire can handle the entire revenue operation, from setting up a CRM system and integrating marketing operations to forecasting and reporting. Series B companies want a dedicated sales ops leader, while Series C must build out their sales team by making three key hires: a sales leader, someone assigned to technology operations, and someone focused on reporting.
Sales enablement – At the seed stage, the company’s founders will enable sales, while Series A and B will hire a true marketing and sales leader. Once the sales team scales to about 20-25 reps in Series C, the company should hire someone to manage sales enablement.
You should support your sales professionals at Series B with a well-defined, standardized sales approach and increasingly sophisticated processes and technologies. The focus is enabling them to consistently convert opportunities into bookings based on a documented ICP and personas, and value messages that resonate and convince buyers to abandon the status quo. Once you reach Series C, you should feel confident about your go-to-market approach, and be ready to scale your sales team and their supporting framework.
At all stages, it’s essential to abandon preconceived notions about what drives sales success, and be open to changing the makeup of your sales team as your company progresses. Smartly aligning your Sales Team Lifecycle with your company growth stages will set you apart from the competition and set you up for success.