One article that got shared around the InsightSquared office this morning was the most recent news from Groupon. In addition to laying off 80 sales people today, it looks like they’ve been laying off hundreds of employees over the last 6 months. They are hittings some serious bumps.
Groupon is an extraordinary story of growth. You’d be hard pressed to find a company that grew and grew its sales and marketing team as rapidly as Groupon has.
It is very hard to follow Groupon’s example with respect to growing a sales team. Few companies are on a rocket ship ride like they were. But it got us to thinking about answering the question “What is the best way to scale up your sales team?” Here are 3 steps for the sales metrics-driven organization to follow for scaling a sales team.
1. Do you have a sales engine that works?
Really, the first question you need to ask yourself is “Should I be scaling this team up?” Think of your sales and marketing team as an engine. Is that engine running smoothly? Are you ready to step on the gas?
You make this determination with the metrics. Ask yourself some key metrics-centric questions about the state of your business.
First, is your existing sales team hitting their bookings goals? Have you been hitting your bookings-per-rep goals, based on your business plan?
And don’t stop at your bookings. Is this a long-term viable business? How efficiently are you able to collect on those bookings? How efficient are you on recognizing revenue and collecting the cash your sales team is booking?
If your reps are selling business that ends up being bad business, you probably aren’t ready to scale further.
Furthermore, is your marketing team delivering more leads than can efficiently be worked? Is there a surplus of leads or is marketing currently struggling to provide enough? A surplus might be indicated by a decreasing lead-to-opportunity conversion rate.
Lastly, are your activity levels, on a per-rep basis, at their maximum levels? Are your reps working as many leads as they can per week? Have their effort levels plateaued?
If the answers here are “yes,” it is time to hit the gas station and push your sales and marketing engine harder.
2. Scale . . . what?
Ok, great, your business is ready to scale up. Let’s pour in the gas. But how?
You likely segment your business in some manner. It might be based on geographic regions. It might be based on customer size. It might be based on industries. Use these customer attributes to segment your sales funnel and determine which segment is ripe for more growth.
To judge these segments, it becomes a question of efficiency. Which market segments is your sales and marketing engine operating on most efficiently? And when it comes to answering questions of efficiency, it is again time to use conversion rates.
Look at your sales funnel and your step-by-step conversion rates. Which market segment has the best conversion rates from Opportunity-to-Deal? The segment with the best rates is the one you should target for scaling.
But before you dive into that segment, make sure you will be able to execute on that segment effectively. Do you have a surplus of leads in that segment? Look to see if you have leads that have been aging badly in this segment. Do you have unworked leads in this identified market segment that new reps could come in and pick up?
3. Scale . . . who?
Great. You’ve got a strategy for scaling up. A market segment identified. But good ideas are easy. Execution is hard. Who are you actually going to hire? There are probably 100 more blog posts we could write about using metrics to hire a team, but here are some basic steps.
Dig into your employee-by-employee performance metrics to find the employees you wish you could replicate. Start with high level comparisons, then bookings by employee. You want to look for highly efficient employees, especially the ones that currently do well in the market segment you’ve identified. You’ll generate a list of high performers. Then begin to look for common attributes among them. Look at how they divide their efforts and activities.
But of course pull in some other attributes about them personally that will help you identify good sources for the kinds of reps that succeed in your organization. What were their previous jobs? Where did they go to school? Where do they live? Build a persona that typifies your ideal sales rep based on the top performers in general and the most efficient performers in your new targeted segment for scaling your business.
How have you gone about scaling your sales and marketing teams? What has been your approach?
Need guidance on best practices like these?