Don’t Declare Sales Victory Too EarlyTweet
Anyone who has done sales in a start-up can attest to that fact. Great salespeople make it look easy – or at least hide the struggle well from non-salespeople. Once a great salesperson builds their pipeline, gets down their pitch and starts rolling with it, they can easily bring companies on the pipeline, and move them through, and can often do it with, what looks like, ease and finesse – and often with amazing predictability.
For people and managers who have never been the person on the firing line, especially in a start-up, this predictability and finesse look like a hands down victory. And in many ways it is a victory. The ability to get your startup to this point means that you have a product that people want, that people will pay for. You have identified a good sales team, and they have developed the pitch and the product offerings and pricing that allow sales to happen. It seems as if sales will just happen now – regardless of who or what is in the sales role. I’ve seen too many non-sales startup founders think that the product must be speaking for itself, and that the sales will happen regardless of who or what is in front of them. But in a start-up, it is often the case that these great salespeople are masking the actual difficulty that is going into this sales machine. In many instances, the sales team is still pushing the truck up-hill, even though the truck appears to be coasting just fine. These sales people deal with rejection all the time, and focus on the positive, so the message to the outside team is that everything is going well – even if it isn’t. And if numbers are getting hit – or near to being hit – then it appears that it is time for a victory lap.
This is most often very, very far from the truth. The predictability that you see is often completely dependent on the people making it happen, and when you take these people out of the equation, the bottom can fall out. If you are a start-up manager, you need to resist the urge to change something that is working – even if it is costing you money – ESPECIALLY if its costing you money. Since the process looks smooth and easy, the natural reaction will be, “OK, this is easy now, so I shouldn’t have to pay as much in commissions.”
WRONG…. WRONG… WRONG!!
Pay away and smile. Why? Because you’ve found a team that is bringing in revenue – and revenue is good. The more you are paying in commissions, the more this process is working.
True… it is possible that there are things you are paying more commission than you should – but until you know for SURE that this is the case, I would argue vehemently that you will lose more revenue than you will pay out in extra commissions. I can name significantly more companies that overpaid salespeople and succeeded than ones that cheaped out and succeeded. And, if you succeed and paid a little more to your salespeople no one will care. And if you fail and overpaid your salespeople, its highly unlikely that the commissions were the reason (after all paying commissions implies some degree of success).
One start-up I worked with tried at every turn to figure out when sales were “working” and they could scale back on what and how things were paid out. Sales were happening… but they were never automatic, and they were never easy. I was always amazed at how they would look to save a few thousand dollars in commissions, when if the salesperson left…. it would have cost them potentially HUNDREDS of thousands of dollars.
Cheaping out on a working sales team – even if parts of it feel bad – is never a good strategy in startup mode.
So… given this, when CAN you scale back and change your compensation plan. Well… if you built the plan so poorly in the beginning, that you are actually losing money – then I certainly would change the compensation package. If the compensation package isn’t working to bring about the goals that you need to set for revenue – then I would certainly change the package. Once you have a large sales team that consistently makes goals – even the weakest and newest of salespeople, and it is VERY obvious that there is no large effort, then perhaps it is time to scale it back (although again I might argue if you make your revenue and profit goals – keep it).
But unless any of that is true and if you are making money, then don’t change it! This is the sign that your plan is working! NOT that you are overpaying, and not that sales have suddenly gotten easy.
Too many start-up sales managers are quick to declare victory…”mission accomplished”, and to try to scale back what and how they pay on things in an effort to save precious cash – but I warn that this is very often penny-wise because a disgruntled or demotivated sales team will not take you where you want them to take you. And very often the reason you are paying a lot – is because they are doing exactly what you motivated them to do.
Don’t punish them now that they are doing it.