How to Know When You`re Ready to Build a Sales Development Team
In the early days of any business, your main goal is just to hustle and get customers.
If you're part of the founding team, chances are you'll be out there making calls yourself, sending emails, scheduling appointments, qualifying customers, and closing deals.
And it makes sense. There's no point in building a team when you don't have the revenue to cover the costs yet.
On top of that, selling can be a great way to understand your customers at a deep level -- you'll get insight into your prospects' objections, fears, hopes, frustrations, and more.
But after a certain point, once you have some revenue coming in, it's probably not worth it for you to be selling.
Your time is better spent managing team members, defining strategy, speaking at events, or doing other higher-level tasks to grow your business.
Even if you decide to continue doing sales, it may be smart to scale. For example, if you're making 20 calls per week and closing one out of every four prospects, your results could potentially triple by adding another one or two sales reps to your team.
How do you really it's the right time to build a sales development team?
Build a Scientific Sales Process
"If I could just find a rock star sales rep in my industry who can just help : you know, close deals :"
Nope. Nope. Nope.
CEOs, founders, and management -- it is your job to learn and build your sales process. Only after you have a tried-and-tested blueprint should you begin hiring salespeople.
In other words, you can't simply educate them on your market and your product and expect them to bring in sales. If you do, you're more likely to lose money than make it.
You must first build your sales process or hire someone to help specifically with developing it. And make sure that someone has experience building sales teams at young companies or startups (not a "rock star" sales rep at a Fortune 5000 company).
What do I mean by "sales process"?
At the very least you need to have a sales system that is reliable and consistent enough to measure your sales activities (inputs) and predict results or sales (outputs).
Why? Because you want to understand your total costs of hiring an experienced sales development rep to help you grow sales versus the potential total revenue you can bring in. This helps you hire at the right moment.
To illustrate, here's a simplified version of the sales process equation I use with the sales teams we work with.
The Sales Process Equation
TL x LC (%) x OC (%) x WD (%) x ADS = SF
- TL = Total Leads
- LC = Leads Converted
- OC = Opportunities Converted
- WD = Won Deals
- ADS = Average Deal Size
- SF = Sales Forecast
Now it's more science than art.
Take Jon Snow (no, not that Jon Snow.)
This Jon is CEO of Snow Shovelers. He lives in an area where it snows a lot, so business is pretty good for Jon.
But Jon begins to wonder if he can get even more business with some additional sales help.
Jon knows his current outreach efforts generate approximately 50 leads per month.
He reviews average conversions for the year and finds 80% of his leads agree to a phone call.
He then looks at his phone calls and sees 75% ask for a quote.
Finally, he notes 50% of quotes lead to customers.
He also calculates his average deal size is $1,000.
Using the sales process equation, we can understand how much 50 leads are worth to Jon.
50 x 80% x 75% x 50% x $1000 = $15000 in total monthly sales
Jon realizes that although an experienced sales development rep may not be as successful as he is (since he's the CEO), he does know the right person can come close to hitting $15,000 every month.
And since Jon has a well-documented sales process, he's ready to start interviewing applicants for his first sales development rep.
You want sales today. I get it.
But no successful builder builds a house without a blueprint first.
Blueprint. Builders. House.
Sales process. Sales reps. More sales.
Build your sales blueprint before your sales development team -- and instead of having a "good sales month," you'll have a good sales system capable of generating business for many months to come.