6 Mistakes You Don't Want To Make When Building Your First Sales Team
Updated: Jan 13
Sales teams are an integral component of start-up and early-stage SaaS companies. A SaaS CEO's goal is to generate as much revenue as possible and grow their company, and a sales team can help them do that. But building a team of sales rockstars is easier said than done. CEOs make many mistakes when starting on this journey; we'll talk about six of those mistakes in this blog post.
Mistake #1: Hiring a VP of Sales Too Early
It's typical behavior to want to hire a VP of Sales first. After all, they have played this role for years and understand the SaaS world inside and out. But before you make this hiring decision, think about it carefully. If your SaaS company has less than $15 million in ARR, you don't need a VP of Sales; you need more account executives.
Hiring a VP of Sales before you have the requisite number of AE's will only slow down your growth. A good rule of thumb is to hire a VP of Sales when you hit $15 million in ARR. This gives them enough time to ramp up and help grow the company. Until then, focus on hiring more account executives who can drive the top-line growth you need.
Mistake #2: Hiring Account Executives from your Competition
When you're looking to hire your first few account executives, it's tempting to look at the competition and poach their AEs. But resist this urge! Doing so could be detrimental to your company. Nowadays, anyone can say anything about their performance, and you can't verify it. You just might be hiring an account executive who was already being pushed out the door because of poor performance. Instead, focus on hiring AEs who can sell first, know SaaS second, and have industry knowledge third. There are exceptions to this order, but you can proceed as suggested unless you are selling mid-to-high six-figure, multi-year deals.
Mistake #3: Not Screening for Culture Fit
Your company's culture is everything to your customers, employees, and investors. You have worked hard to establish this unique culture that separates you from the competition. Please don't take any risks by hiring AEs who are not fit for your environment. Failure to screen candidates carefully enough for culture fit usually results in high turnover rates and a disenchanted sales team.
Mistake #4: Not Training Sales People Properly
If you want to build a great sales team, you need to train them on how your company works and its value proposition. If they aren't adequately trained by the time they start selling, it won't be easy to close deals. This is why you should have a well-defined onboarding and training program in place before you begin hiring account executives.
Mistake #5: Don't Spend Enough Time on Sales Strategy
Not having a solid sales strategy in place is another mistake many CEOs make. It would be best if you had sales reps to sell the way you want them to, and that means having a well-defined sales growth strategy in place. SaaS companies who don't put enough effort into crafting their sales strategies usually end up with lackluster results, which can be financially detrimental.
Mistake #6: Poorly Designed Compensation Plans
Compensation is one of the most important factors for attracting and retaining top sales talent. Many start-ups and early-stage SaaS CEOs make the mistake of designing their compensation plans without considering what's important to their sales reps. They also fail to align incentives properly with company goals, leading to a lot of discord within the team. The bottom line is, you get the behaviors you incent. Don't cheap out here and make the comp plan so complicated it requires a spreadsheet with complex formulas to track a rep's pay. You won't like it, and they will hate it.
In summary, building a sales team is not an easy task. But by avoiding even a few of these common mistakes will put you on the path to building a winning team capable of helping your start-up or early-stage SaaS company get to the next level.
Building a successful SaaS company is hard. The odds of failing are high and it creates a lot of pressure on CEOs who know they need to grow sales quickly. But how? To address this question I've written, Sales Growth Simplified, a step-by-step guide for how to build and implement a SaaS sales growth strategy in days, not months. You can check it out here.