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The data about average sales-team size in this post comes from our ongoing benchmarking analysis of hundreds of B2B SaaS companies. We will be releasing more benchmarks and key findings over the next few months.

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At a tech industry event a few weeks ago, respected VC Jeff Bussgang found himself in a conversation with a woman who was considering changing jobs. Her plan was to move from the large public tech company where she worked to a much smaller startup, but she was worried that her skills wouldn’t translate to a younger, growth-focused setting. Naturally, Bussgang asked her what her role was.

“Sales Operations,” she told him.

“Holy crap!” Bussgang responded. “You’ll be the most valuable hire a growth-stage company could ever make.”

In his recent post recounting the encounter, Bussgang explains why he felt so certain about this woman’s success ‒ why, in other words, he believes that “sales operations is the secret weapon to scaling startups.

“One of the largest friction points to rapid scaling is the sales force,” he wrote. Startups trying to double (let alone 10x) revenue in a short period can’t afford to double (or 10x) their sales force ‒ it’s just not financially sustainable. Instead, they need to find ways to get more from their sales team without simply adding more to their sales team. Indeed, the challenge of increasing per-rep revenue generation as a company matures is one of the most important components of effectively scaling.

One of the largest friction points to rapid scaling is the sales force”

In Bussgang’s view, achieving this increased productivity comes down to one thing: using sales ops, technology and training to make your AEs more efficient.

In this post, we will look at our recent research revealing that sales teams shrink (proportionally) as companies scale, as well as dig in a little deeper into Bussgang’s thoughts on how to ensure that sales teams book more revenue per rep as they scale.

Jeff-Bussgang1
Jeff Bussgang, VC at Flybridge

How to Make Your Sales Team More Efficient as You Scale

The Incredible Shrinking Sales Team

InsightSquared recently completed a comprehensive sales benchmarking analysis, and one of the most important findings was that the size of sales teams (relative to overall headcount) decreases as companies grow.

In fact, the trend is incredibly clear: As startups mature (surpassing 100ish employees, 10 years of existence, and/or $10 million in annual bookings) the proportional number of AEs is fully sliced in half, from around 40% to less than 20%.

Here’s a way of visualizing that trend:

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CoffeeClosers

Why is this trend so important? Quite simply, it means that more mature tech companies need to maintain (or even accelerate) revenue growth even as their salesforce shrinks proportionally to the company’s overall headcount. In other words, every quota-carrying sales rep must book more and more revenue as their company scales.

This finding directly supports Bussgang’s belief that increasing the efficiency of your sales team (without significantly adding to its headcount) may be the most critical project for the modern startup.

That’s why when the woman he was speaking with told him she was in sales operations he was so excited. As Bussgang sees it (and he’s not alone), increasing the efficiency of your sales team starts with sales ops.

1. Using Sales Operations to Improve Efficiency

The best sales operations leaders allow the sales team to spend more time selling and less time worrying about reporting, cross-functional coordination and operational management.”

The more time your sales reps spend actually selling, the more revenue they’re going to bring in. Unfortunately, there are a lot of things sales reps have to do that don’t fall into the “selling” bucket: inputting information into Salesforce, researching prospects, sending nurture emails, forecasting opportunities. These are all important parts of the sales process, but they’re also countless hours AEs aren’t spending closing deals.

That’s where sales operations comes in. As Bussgang told the woman contemplating a job change, sales operations is the number one factor in getting more from a scaling sales team.

A recent report from IDC bears this out. The report identifies many ways that sales ops can help your sales team more efficiency, but it all boils down to this: “[Sales ops allows] sales management to focus solely on revenue-generating activities.”

This quote helps illustrate an important piece of the puzzle for making your growing sales team more efficient: economies of scale.

Economies of Scale

As your go-to-market machine grows, you have more opportunities to streamline, batch and automate parts of your sales process. The report from IDC highlights a few of these ‒ the quote-to-order process, forecasting, performance measurement ‒ but the broader message goes beyond these specifics: Companies that find ways to move non-closing-related tasks off the plates of closers and put them in the hands of more specialized colleagues are likely to reap the benefits of an economy of sale.

This philosophy, of course, is not new, but it is something that the modern startup must pay close attention to. If you’re paying a dollar (in headcount) for every new dollar you bring in, you will never scale efficiently enough to become truly profitable.

But sales operations isn’t the only way that growing companies can help their closers become more efficient.

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2. Using Sales Training to Help AEs Reach Their Potential

The difference between ramping a productive salesperson in 3 months versus 6 months could be life or death for a scaling startup.”

In early-stage startups, sales is often in the “let’s learn this together” mode. There are rarely sales managers or different tiers of reps ‒ it’s just a small group of people trying to fine tune a sales process, learn how to sell a new product, and build a working team as they go. More often than not, these early-stage sales reps are happy doing all of this at once. There’s a reason they’re often called “evangelical sales reps” after all.

But as sales teams (and the companies that contain them) grow, this dynamic changes. All of the sudden, you’re hiring different types of sales reps with vastly different skills and experience levels. You may split your team up into closers and development reps. Perhaps you add a sales manager or two. So now, instead of a cohesive, small team of evangelical reps, you have a diverse (and rapidly) growing team.

This is when you need to ramp up your sales training.

A recent article from Harvard Business Review explains the benefits of and strategies for improving sales training: “The decision to create a coaching culture must be done in the context of a broader corporate goal ‒ a growth strategy to increase revenue, perhaps, or a need to speed the time it takes new salespeople to become productive, or a desire to decrease costly sales turnover.”

In this way, it’s easy to see how sales managers make your quota-carrying reps more efficient. They help them learn (and follow) your sales process, they onboard reps more quickly, and they identify areas of weakness (on an individual rep and team-wide basis).

It may seem weird to add a non-revenue-generating salesperson to your team with the intention of bringing in more revenue per rep, but it’s been proven to have enormous returns.

But there’s one more common way that growing sales teams can book more revenue without adding much more revenue.

3. Capitalizing on a More Well Known Brand

Getting your product to ‘sell itself’ will allow you to scale your sales process efficiently.”

In the previous two sections, we’ve discussed how adding non-closing salespeople ‒ like sales ops and trainers ‒ can increase the overall efficiency of your sales team as you scale. But we’ve ignored one huge part of the equation of achieving an economy of scale: Over time, your product should actually become easier to sell.

Why is this the case? There are two main reasons:

  1. You have more brand awareness
  2. Your product gets stronger and more targeted as it matures

Let’s take them one by one.

Order Takers

First we’ll look at the role of brand awareness in scaling. In the early days of a company, you have to work pretty hard just to educate your market, especially if you’re selling software. You have to educate them about why they need your product or service and how it will help them. But you also need to educate them about who you are.

Time spent convincing prospects about all of this is time your reps aren’t able to spend closing that deal or working others. And it also reduces your reps’ win rate, as prospects may ultimately end up going with a more recognizable (read: trusted) competitor.

Order Takers

First we’ll look at the role of brand awareness in scaling. In the early days of a company, you have to work pretty hard just to educate your market, especially if you’re selling software. You have to educate them about why they need your product or service and how it will help them. But you also need to educate them about who you are.

Time spent explaining this to prospects is time your reps aren’t able to spend closing that deal or working others. And it also reduces your reps’ win rate, as prospects may ultimately end up going with a more recognizable (read: trusted) competitor.

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This is where marketing comes in. Marketing is not only responsible for bringing in leads, but also for expanding your brand recognition and incrementally improving your product’s position in the minds of prospects. Done right, your reps incrementally become more like “order-takers” and less like traditional salespeople. Securing positive reviews or getting influencers to endorse your product are just a couple of ways that the best marketing teams make the jobs of their sales reps easier.

The Responsive Product

The second piece of the puzzle is an improving product-market fit. Evolving your product over time, and making it more essential in the eyes of your target market, is critical for increasing revenue in a nonlinear fashion. This is especially true for software companies, who are always (or should always be) iterating their product to increase its perceived value to prospects.

Over time, highly requested features must be added, experience-harming bugs should be squashed, and your product, overall, should generally become an “easier sell.”

Of course, these product improvements won’t sell themselves ‒ they must be explained to sales reps so that the reps can position them correctly. Product marketing, the product team in general, and sales enablement are all essential tools for improving the “build-measure-learn feedback loop.”

feedback-loop

If this happens correctly, your product will always be growing easier to sell. And this means that your sales team will be able to closer more and bigger deals on a per-rep basis.

Unlike traditional business models, where a product launches and then it’s left to the go-to-market side to find customers, SaaS companies are built around the belief in agile product development. Understanding how customers are using your product (or, conversely, why prospects aren’t buying it) is essential to improving your offering so that it becomes more essential over time.

The Hyper-Efficient Sales Team

These 3 factors ‒ sales operations, sales training, and brand awareness ‒ are the critical ingredients in a more efficient sales team. Together they can help you solve the difficult problem of growing revenue non-linearly to AE headcount.

Of course, they’re not the only pieces of the puzzle. The right VP, an effective and efficient sales process, and a strong recruitment program are all important too.

Mike Baker
Mike Baker is the Content Strategy Manager at InsightSquared, where he helps distribute original eBooks, articles and guides about data-driven sales and marketing. He has a BA in English and Journalism from Oberlin College.
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