Your tech company is growing fast. Almost too fast.
“Maybe it’s time to scale our sales program?”
First of all, remember: This is a good problem to have. (On that note, congrats.)
His advice is built on 15+ years of corporate sales, operations, and channel.
His experience spans from COO to Director of Global Channel Sales, from VP to SVP, so he’s seen the entire sales picture.
He came on the B2B Revenue Acceleration Podcast and gave us this message:
Essentially, there are 2 paths that lead a B2B tech company to scale its sales operations: reaction and proaction.
Smaller companies usually decide to scale (or consider scaling) their sales programs because they are reacting to their environment. Maybe they have tons of leads but not enough manpower to track them all down, or perhaps they have a partner model, and their partner is pushing for expansion to increase joint sales.
Usually, for these smaller companies, their growth is a surprise, and they weren’t prepared to scale so quickly (again, a good problem to have).
Larger companies tend to be more proactive, and there is a top-down approach to scaling sales operations. Leadership determines that growth is necessary, which leads the head of sales to hire more personnel, or re-energize the program in some way.
The most obvious way to scale any sales program is to dip into another geography. However, Chris says this is quite often not the easiest way to scale, even if it’s the most obvious. People often discount factors such as political differences, taxation, market or cultural nuances that have a large contribution or detraction from success in expansion.
On the other hand, you could also scale by adding new products (or services) to your portfolio, or even by acquisition.
Or, you could scale by partnering with another organization or a retailer to reimagine your sales program.
If you expand your sales program via partnership, be choosey. Far too many organizations snag as many channel partners as they can, and hope a sale or two sticks. Instead, Chris says you should double-down on the best-fit channel partners.
Choose those channel partners whose business models are complementary to your own. Further, consider how each runs their business — the cultural fit, their goals, their attitude towards the market, etc.
Once you’ve narrowed down your channel partners to the best choices, strategize and structure your business model around your goals and the strengths of you and your partner’s organizations.
Maybe you already have several channel partners, and you’re considering upgrading to a distributor. But … How do I know when it’s time to get a distributor?
Here’s Chris’s very simple rule of thumb: You know it’s time to have 2-tier distribution when your channel network begins to strain your operational capacity. (That strain could come from the quoting process, the billing process, inventory, etc.)
Typically, there are few inventory issues with software companies, but quite often, the other operational pieces often start to fog up the rest of the business.
Pro tip: Don’t wait too long to go the tier-2 route. Here’s why: When you first jump to a tier-2 distribution model, you will necessarily give up some short-term revenue to the distributor. If you’ve put off obtaining a distributor for too long, that short-term revenue loss could easily be in the millions, which will be quite a jolt to your bottom line.
An obvious KPI that comes to mind is growth rate. Most people know to watch their growth rate when they scale their sales team.
But you can’t look at growth rate in a vacuum.
Something as simple as growing customer acquisition costs could put your business in the wrong place in the long run. So, the other 2 areas you must consider are efficiency and productivity.
Efficiency, would be the cost of sales as a percentage of revenue, or customer acquisition cost, or any metric that determines the cost of new customers.
Productivity is a KPI that describes how much business each salesperson is bringing in.
Yes, you may have an initial loss in revenue if you are taking on a distributor, but an overall goal should always include some sort of economy of scale.
As you grow, your costs should come down. When you were in the infancy stages of your business, most likely, you weren’t very efficient. But hey, that’s how we all start.
However, as you grow, you realize efficiency in your niche, your streamline processes, and your sunk costs stabilize.
Don’t forget your people as you scale. Those who started out with you as SDRs or BDRs, are often where your greatest human assets still lie.
Sure, it may be easier and faster to hire someone from the outside who’s already done a leadership role. But look at their CV: If they are making yet another horizontal move in their career to join your company, you’ll end up being the next 6-month entry on their resume.
Often, promoting internally is better for your organization, creates a stronger culture, and has a lower risk.
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