Did you know that over 80% of Series A companies fail?
Think about all of the sweat equity you’ve put into building your company through pre-seed, not to mention the countless hours spent pitching to investors to achieve Seed or Series A funding. You’re now faced with tripling revenue growth this next year because your investors want to see results and the overall odds of success are stacked against you.
Do you hurry to hire 15 reps and see which ones make it through to the final round of Hunger Games? Do you have the sales leadership, training, and revenue operations in place to support that level of hiring? How much recruitment effort will it take to hire the best rep for your company?
Before you scale your sales team you need to ensure that the following areas are proven within your organization:
Product Market Fit: Founders that have proven out their go-to-market strategy, acquired customers themselves have the best chance at being successful when handing the reigns over to their first sales team. Sales and marketing do have a component of experimentation to it but you shouldn’t rely on your first sales hire to proven market fit for you. That’s setting them up to fail and for you to spend $100k+ on rep churn and additional priceless go-to-market resources.
How do I know if I have a product-market fit? Which indicators tell me that we have a winner?
While lagging indicators point to metrics such as revenue, profit, and retention rates, as a software company you should look at the current speedometer.
Systematic Growth Leading Indicators
Measuring lagging indicators is helpful when reviewing last year’s results not setting the future state of your business. Technology markets and buyers are evolving at light speed so how do you know that your customers are currently finding value in your product?
I recommend that my clients look at the following leading indicators (Note these should be adjusted based on your overall goals):
- Meeting Conversion Rates
- Number of Meetings – 14 Day Lookback
- Number of product upgrades recommended
- Net Promoter Score
- Product Adoption Rate
Organizing your sales using as much data modeling as possible is so important so you can prioritize your investment of time and money into the right buckets between increasing the marketing funnel, recruiting for the right sales team, and support ongoing revenue performance.
At Relativity Sells, I partner with tech startup founders to grow their revenue through this 3-step process which builds the level of sales readiness and ongoing sales leadership a company needs when transitioning from founder-based sales.
I believe that when setting up your startup to support a sales rep or team it takes a systematic approach to ensure that you’re setting your business and new hire up for success.