CONNECT WITH MIKE:
Tanner:
This week is the second episode of our three episode series with Mike Poledna from SalesLab Consulting in this series, we’re going to cover something that almost every business owner struggles with and that’s sales. In the first part of the series we covered when you should actually hire your first sales rep. If you haven’t heard that yet, go check it out. It was released last week, but to follow that up, we’re going to cover how to hire the right sales rep for your business with the second part of the series.
It’s really important to understand your sales environment.
Tanner:
Mike, let’s get into part two now, which is identifying how to hire the right sales rep. So Mike, if you’re a founder, how can you identify how to hire the right sales rep?
Mike:
You know, we talked about it a little bit earlier in part one of our conversation that it’s really important to understand your sales environment. You know, for example, are you a transactional type of sale? Are you more complex, consultative type of sale? You know, are you in an environment where you’re selling to one to two decision makers and your sales process is relatively short or you selling to four or even six or more decision-makers and you have a much longer sales cycle. I mean, all these factors play into the type of individual who’s going to be successful in your sales environment.
Tanner:
What should we be looking for what type of person should be you be looking for, depending on what your business is, your sales cycle and all that? I think it’s really important to differentiate between the different types of sales reps. And I’ll let you go into that, but, you know, for example, a sales rep for a fortune 500 company, probably isn’t going to do well at a startup with five people, with very limited resources.
Mike:
Yeah. I think there’s a couple of things that play into this. I think, you know, in that first part of knowing what type of sales environment you’re operating in, you know, having that kind of information is going to allow you to identify reps who are going to have similar selling experiences, you know, like you alluded to there, a rep who’s highly skilled at managing a long sales cycle where they’re selling into multiple buyer groups and only closes a deal a month is going to be more similar to a rep that’s selling for a fortune 500 company versus a smaller organization that has short sales cycles. They they’re going to have experiences and skill sets that support different environments. I mean, if you’re, you know, you refer to the fortune 500, if you’re selling for a fortune 500, you’re typically operating in a little bit, what we call a more complex sales environment with a longer sale cycle.
We typically refer to those people’s enterprise sales reps, not always, but generally they have more of those resources at their disposal, and they become very good and very skilled at quarterbacking deals. You know, they know how to get the right people to the table for the part of the conversation that’s occurring at that time. They bring those talents to the table, but in order to get deals done, they absolutely have to leverage other parts of the company. Now, if you go to maybe an early stage or growth stage or company or a company that just generally has a shorter sales cycle, those reps generally tend to be a Jack of all trades. They are good at doing a lot of things. And they’re generally able to manage every aspect of the sale because it’s generally not terribly complex. But you know, it’s not a good versus evil right or wrong, good or bad. It’s really just comes down to the sales environment that you’re operating in. What are the skillsets that are going to allow an individual to be successful? And generally speaking, someone who’s really good in an enterprise environment, like a fortune 5,000 company or a fortune 500 company typically is, has a different skillset than someone who’s operating in a more transactional environment.
Operating in a sales is a lot like being an athlete.
Tanner:
So Mike, what, what do you think would happen if an enterprise sales rep started working for an early stage startup?
Mike:
Well, I don’t want to say it doesn’t play out very well ever. It just, it doesn’t happen too often. You know, an example of what you will find when you bring an enterprise rep into an early stage company or a smaller company with, with more transactional sales, is that they’re used to having PowerPoints done for them. They’re used to the marketing messaging sales and messaging being crafted by another department, signed off by marketing and sales leaders and then handed to the reps. And it’s not that this makes them a lower quality rep. It’s just, it’s expecting them to exercise skills in a manner that they haven’t before. And that they’re not used to, and that they’re not trained in. Operating in a sales is a lot like being an athlete in one sport and then being asked to play something completely different where you’re being asked to move and operate and think in a different way. It doesn’t always translate.
Tanner:
Yeah. Yeah. And I think that’s a really good point, you know, sales and marketing can overlap and if you’re working in an early stage startup, I mean, you’re going to be wearing many hats. Right? And that’s not for everyone.
Mike:
Yeah. I think the important thing there for anybody that hears this is, it’s not a good versus bad. It is truly just looking at the environment that you’re selling into and what are the skill sets that are required. And generally the people that operate in enterprise roles are very good at what they do in an enterprise environment. And generally, like I said, I think of them as more often than not, very good at relationship building, selling across multiple departments. They’re very good at quarterbacking deals. They also close, you know, and in the enterprise space, they might only close one deal a month or even one deal a quarter.
I mean, if you’re in an early stage or startup environment, you need 12, 15, sometimes as many as 20 deals a month that’s a very different individual and it takes a very different skillset. Again, it’s not good or bad one versus the other it’s just different, but it comes down to knowing what you need and how to identify that in the reps.
If you have a quality sales rep they know what their value is.
Tanner:
Yeah, absolutely. So I keep going back to startups. That’s what I like to talk about. But as you’re probably aware, startups, don’t generally have a lot of money unless they’re funded. So let’s say a lot of startups probably aren’t funded. But they still have a need for building a sales team. Right? And usually the fact that they don’t have a lot of money coming in as the reason why they’re trying to build a sales team or hire a sales rep.
So, you know, because of that, it might be really tempting for them to offer commission only as compensation. What’s your recommendations there?
Mike:
Yeah. There’s a lot of documentation on compensation plans and I highly recommend any business owner consume that research. Simply put you get the behaviors you incentivize, and the compensation plan is the ticket to ride. So if you’re planning on offering or creating a position that’s commission only that’s fine. But you better have the right environment in order to capture a rep to be interested in that. Because like I said, the compensation plan is the ticket to ride. If you have a quality sales rep they know what their value is. And generally they’re not going to be as excited about say a commission only plan, but you know, if you are fortunate enough to catch fire and you’re growing and you have an absolutely solid pipeline and you can prove that you have deals that just need somebody who’s solid closer to get those deals over the line, you can probably get somebody on board. But you’re going to have to prove that to them.
I think, you know, right now, good reps they don’t need to take a chance on a commission only sales position. There’s plenty of opportunity out there. And I think, you’ve probably seen this as well Tanner. There’s a lot of data out there and you can even see it flying through LinkedIn. People are changing jobs like crazy right now. I mean, I think I’ve read multiple times over the last week and a half or so. They expect about 55% of folks to change jobs in the next six to 18 months. And a lot of those are going to be in sales because there’s plenty of opportunity out there.
You know, if you’re an early stage company and you need to generate revenue, you can create a compensation plan that has a little bit of base and a high upside on your commission. You know, a classic or typical move for an early stage company is offer commissions over an extended period of time. You know, you maybe can’t afford to pay a $60,000 base, but you can afford a $40,000 base. Well, rather than pay commission just on year one, pay commission on up to three years, you can stretch that out. You could do, let’s say for example, maybe you pay an 18% year one, 12% year two, and 8% year three, you know, you can create sort of golden handcuffs that make up for the fact that you may not be able to pay out on a higher base.
You better be able to prove it to them.
Tanner:
Yeah. I think that’s a really good point. And yeah, I’m seeing that too. All over LinkedIn everyone’s changing jobs. And like you said, especially in sales, because it almost seems like the typical path of a sales rep is to just hop from one company to another. And they’re probably thinking that they’re just leveling up every time they switch opportunities, which they probably are because they’re probably getting really competitive offers. And that’s why I think it’s really important to give them a compelling offer. That’s how you get them in the door and that’s how you’re going to motivate them. No one wants to, I mean, they would have to really believe in your product or service to take on something risky, like a commission only position.
Mike:
Yeah, it is. It’s very tempting to say, Hey, I’ve got something that’s great, but you better prove it. You better be able to prove it to them. And you better show that you’ve got a pipeline that’s going to support the statements that you’re gonna make. Anymore, you generally don’t see commission only sales roles out there. I think those are nearly gone.
Tanner:
Yeah. And let’s be honest that people offer a commission only are doing that because they don’t have any money and they don’t have any leads in the pipeline. They’re starting from ground zero. They don’t know how to sell and that’s their solution because it doesn’t cost them anything if they don’t perform.
Mike:
Yeah, you’re absolutely right. And I think, you know, going back to one of the things I said, a good reps going to sniff that out and they know that.
Tanner:
Yeah. And I mean, it’s a two way street, right? I mean, you need to show them that you trust their ability to sell and paying them a base salary is a great way to do it.
Mike:
Yeah, I agree.
Have a process, back yourself up.
Tanner:
So, Mike, what are some good ways to make sure you’re hiring the right sales rep during the interview process?
Mike:
Well, I think Tanner, what you said right there is key, that last piece of it: having an interview process. So, you know, you need to be consistent, like the same measure twice cut once, you know, have a process, back yourself up. So having a defined interview process with a key set of questions that you’re going to ask every rep, every candidate, having a scorecard to evaluate them. Because if you rely on memory and come back later, you’re probably going to stick to one or two things that really stood out in that interview. And those may be misleading indicators that you’re going to stick to. And having third-party data, something that’s going to help you remove human bias and subjectivity from the process. So things such as, you know, sales specific assessments that are going to help you uncover the things below the surface that good interviewers are going to be able to mask in the process.
Tanner:
So, you mentioned some sales assessments, what other forms of third-party data do you usually employ?
Mike:
Yeah, well first, you know, sales specific assessments, so that’s the one. The other thing that you can look at is the hiring background. So the things that you’re able to ask of a previous employer believe it or not, I think people brush over that, but there’s a lot of value in confirming some of that data. I think data that you can get that is maybe not scientific, but it’s going to carry a little bit more subjectivity to it, but even references now I’m not talking about the references that a candidate is going to provide you, I’m talking about references that you can find on your own. And that could be things such as common, LinkedIn connections or folks that you know that they’ve worked with in the past that maybe are not even connections of yours.
If you can reach out to those folks and confirm, you know, certain details about previous work history I think that’s additional data that will serve you well.
I think a lot of companies fall into that trap.
Tanner:
Yeah. I mean, absolutely. You know, having a solid interview process is super important for your business, not even just as sales reps, but any hire that you make. So Mike, the golden question we talked about this a little bit earlier, but do you recommend poaching sales reps from competitors or even just other companies?
Mike:
That’s a great question. I think there’s a lot of different ways you can answer this one. You know, my first thought is only if they fit your environment. So I would highly recommend you don’t seek out someone else’s rep just because of where they were employed, you know, a competitor or a company you idolize for one reason or another.
I mean, specifically poaching, you know, I think it really just depends on the industry too. I mean, there’s some industries where it’s very incestuous and it’s very common for employees to move around and on their own or because they’re poached. But in others it’s a bad idea. It creates a lot of bad blood between companies that while they may compete with each other, also have some areas where they collaborate. And so I think that can be disruptive, I think most important, or most importantly you know, having a process to ensure you’re not hiring someone else’s cast off is key when you’re trying to take someone from a competitor or someone else in the industry. You know, I think a lot of companies fall into that trap. I think they’re trying to find a shortcut to grow revenue and they don’t always take into account the negative implications of poaching or even just pulling somebody from the same industry at times.
Tanner:
Yeah. And I mean, I’m sure people or companies and competitors getting in fights where they just poach each other’s people and they end up probably in a bidding war with, you know, the compensation that they’re offering. They just keep having to go up and up and up with that.
Their values must align with your values, if you truly want it to be a good fit.
Mike:
You know, it also reminds me of the old saying, and I’m going to get this wrong. You’re probably familiar with this. What is it you know, are you hiring somebody with the right experience or are you just hiring somebody with 20 years of experience doing the same thing wrong? You know, I know there’s the right version of that somewhere in there, but I think that’s the other thing that happens if, you know, in those industries that trade employees, are you really bringing in new thought processes? Are you bringing in different ideas, different values, different cultures. I mean, now you’re getting into a whole bigger conversation about the culture of your company and what are your values that drive your company and are you constantly innovating? You know, there’s some industries where you can trade employees over the course of a decade or so. And all you’re doing is just, re-circulating the same old concepts and unproductive ideas.
Tanner:
Yeah. And that’s a really good point. And I’d also like to touch on the culture and values a little bit because for sales especially, like I said, every other hire that you make, that should be part of your interview process. They must be a good fit culturally, their values must align with your values, if you truly want it to be a good fit. And for it to just be a thriving environment for everyone.
Mike:
Yeah. I think, you know, that’s admittedly, I would say looking back on my own career as a sales leader, I think that is an aspect that I undervalued. And I think a lot of that had to do with who I am as an individual and my natural traits and characteristics that I downplayed the power of that. And I think I’m going to get closer on this saying, what do they say, culture eats strategy. You know, if you have the right people on the team and everybody rowing in the same direction, you will eventually get it right. But if you have a strategy and not everybody gets along and can execute, then what good is it? So I think there’s a lot to be said for thinking about your culture and who you’re bringing into it.
Tanner:
Absolutely. I mean, the culture and the values, they set the vision and everyone needs to be on the same board going towards the same goal on the same path. And if you’re not like that, then you just have chaos and people are just going to start undermining each other. And it’s just going to be a mess.
Mike:
You know, it’s interesting. I’ve seen this play out in some of my own years of being employed. There was a time I was working for a publicly traded fortune 1000 company. I think they’re like 716 on the list at the time. And I personally was responsible for running sales in two different business units that did about 48 million in top line. So it was sizable, but there was one dynamic that was abundantly clear in this organization, not just in my business units, but in other business units that I had to interact with. You would have new people that would come in and bring new fresh ideas and thoughts and practices that in some cases were really beneficial. In other cases, maybe not much, you know, you could left them on the cutting room floor. But you had the other side, which were often employees who had been with the company 7- 10 years plus, and I’m telling you when they wanted to squash an idea, they could band together and just kill it. And in the time that I was there, you would see a lot of really good people who are very capable of doing fantastic things, come and leave the company within 18 months, they knew within six, there was a problem. At 12, they were confirmed that there wasn’t a good fit, and they’d be out the door by 18. And over time you just watch these seven and 10 year employees who had abandoned together and created a culture, not necessarily a great culture, but they created a culture. And that culture just was devastating to innovation and growth.
Tanner:
Yeah, that sounds incredibly toxic.
Mike:
It was.
Tanner:
And that’s a reason why I’m an entrepreneur because I don’t like that kind of stuff, but like, you gotta value your employees. You know, as a manager, you got to at least hear them out and at least validate them and make them feel heard, or they’re just going to leave.
Mike:
Yeah, absolutely. I think in the long run, I think you can get away with that for a period of time, but in the end I believe that I rarely stick around in those types of environments long enough to actually see it play out, but you usually see it play out later. And in this particular case, that company is no longer public. They were purchased by a private equity group and they were taken private and they were broken up. They are now shadow of themselves. It just was overall the culture wasn’t just in the business units I operated in and the ones nearby, but it had permeated the entire organization to the point where the company could just no longer meet growth expectations because it was getting over its own way.
I just don’t think, I think that’s probably belaboring the point, but I think you and I are both on the same page that you cannot underscore enough the importance of culture and the impact on your performance. And so when we bring it back around to our conversation, which is bringing reps, how do you know when to bring in and how do identify? I think you absolutely have to make sure if you’re bringing in someone who’s incredibly capable of doing the job, you have to make sure that they’re a fit with your organization.
You hired them for a reason, to let them do what they do. And you have to be prepared to adjust with that.
Tanner:
Absolutely. So Mike, to kind of close out part two, what do you see changes with sales once you bring on your first rep compared to, let’s say to CEO handling all the sales internally?
Mike:
You know, there’s a really interesting dynamic that happens between the customers and the CEO or the founder or co-founder versus the dynamic that will happen between the customers and your employees, who are your first reps.
You know, a lot of CEOs don’t always realize it, but their initial customers or early customers, their first, you know, real group of customers that help lay the path for their success are usually buying from that CEO or that founder because they have a common vision or goal or passion. Customers will buy from that CEO because they know they’re dealing directly with the person in charge and there’s some value in writing, going along for the ride with someone who has a great vision for changing the way businesses or organizations operate.
But when you bring on that first rep, that’s not going to be the case. They’re going to buy from your rep because your company, your product, your solution, the challenges that you solve for them, and how, how successful you can make them as a company and as the individual, even in their role, that’s buying from you.
So the reason people will buy from you early on when you’re the CEO who’s selling will change when you bring on your rep, your first, your first one or two, or even could be even your first four or five reps. And as a CEO, you need to realize that what made you successful, certain intangible values or assets that you had as an individual that made you successful, are not going to transfer. And you can’t hold your first reps to that expectation. They’re not you. They are them. And you hired them for a reason to let them do what they do. And you have to be prepared to adjust with that.
Tanner:
Yeah. And in the agency world, I hear this a lot. No one can sell better than you. Now of course, if you want to scale and you want to get the freedom that you started that business to achieve in the first place, you gotta let go. You gotta let them do their thing. They’re not going to produce the same way that you can, but that’s okay because it’s a stepping stone.
Mike:
That’s right. I agree. A hundred percent.