Thanks for coming back to read part 3 of our series on startup sales hiring! In today’s installment, we’ll talk about how you should measure your first salesperson’s success. Here is what else we will or have already covered in this series (links will appear as these posts become active):
- Part 1: When Should You Hire Your First Salesperson?
- Part 2: Who Should You Hire For Your First Salesperson?
- Part 3: How Should You Measure Your First Salesperson’s Success?
- Part 4: Why Should You Fire Your First Salesperson?
Your Startup’s Metrics Drive Your Salesperson’s Metrics
Different types of startups have different types of metrics that determine how successful they are in growing their business. For some startups, their key metrics revolve around revenue numbers.
Other startups’ key metrics are all about audience and eyeballs. And some startups? Their key metrics revolve around how closely aligned their businesses are with the key metrics of their potential acquirers (in modern times, mostly Google and Facebook). So what matters most to your startup? Whatever the answer is, that should be your guidance on how to evaluate the success of your first salesperson.
Measuring Sales Success May Require Thinking In Stages
Here’s an example. Let’s say that your startup revolves around building an active base of users. It’s all about user acquisition and retention, which then creates value for advertisers. Therefore, your revenue model likely revolves around monetizing all those eyeballs with CPM-based advertising. Because of this, your salesperson should be focused on different paths to achieving that monetization. Most likely, that would be selling advertising inventory on your website to advertisers. But it is altogether possible that your startup may not yet have enough traffic to be interesting to advertisers. Therefore, your salesperson’s tasks may also include temporarily acting in a business development role selling partnership deals to other sites that can deliver additional traffic and eyeballs to your own site. In turn, that reinforces the primary goal of selling CPM-based ads to advertisers.
In this particular example, then, we have two metrics against which we can judge our salesperson, and they are sequential in nature. One has a direct revenue component, while the other has an indirect revenue component. Therefore, the compensation structure should likely be staged as well, and it should include different buckets of bonuses based on success metrics for each stage.
What’s the conclusion to draw from this? Measuring your salesperson’s success is a matter of aligning their goals to the goals of the company, and then measuring the impact they have on helping the company achieve those goals. It may be one simple goal, two simple goals, or a sequenced set of goals like the example above. Your job is to constantly evaluate how the salesperson performs in context of those goals, and to occasionally reevaluate the best way to deploy the salesperson based on the company’s needs at the time.
The Cost Of Hiring A Poor Salesperson
Before I forget, there is one more key thing to consider. A good salesperson is almost never cheap. However, they’re often worth it, because they’ll recognize that they need to support their base so that they are having a positive effect on the company’s burn rate. That means they’ll hustle to bring in deals, and also work closely with management to establish and exceed the success metrics set for them. The flipside is the bad salesperson. A bad salesperson costs a company money no matter how low their base is. They increase the burn, and all they focus on is their base and commission. Bad salespeople need to be weeded out as soon as possible. And that’s what we’ll cover in tomorrow’s final installment in our hiring sales for startups series. See you then!