/ Sales Leadership

Prove, Understand, Scale: Stack Overflow's 3 Phases of Building a Sales Team

Agile sales is about the team working together towards a common goal.

We've talked about how Agile teams work together, but what is your common goal? The simplistic answer is selling more, but that answer doesn't help your team. To define your common goal, and eventually scale your sales team so they sell more, you have to prove that you have something to sell and refine your understanding of how you sell it. Only then will you have the processes in place to reach that common goal.

As we build our sales team here at Heresy, we are following the process that we used at Stack Overflow. This is the process that Jeff Szczepanski, COO at Stack Overflow, pioneered as he built the sales team in New York. By starting from the elemental building blocks of your core proposition and following this process to iterate on that over time, you can get to the point where you can scale a sales team to any size knowing that each member of the team is working towards that common goal.

You have to prove and understand before you can scale

The growth of sales teams usually work one of two ways:

  1. When a company lacks money, a founder holds off hiring any sales professionals for as long as possible. When they do, they hire a single new rep to deal with the whole process.

  2. When a company has funding, a founder wants to spin up the sales organization rapidly. They hire a senior sales exec, who then brings their processes to the company and hires a dozen salespeople to fill the roles.

Both of these can cause problems. In the first, the single rep isn't set up for success and the sales process won't get off the ground. In the second, the sales process will be cookie-cutter and transferred from another product and not tailored to your specific needs.

When I was at Stack Overflow, Jeff taught me this valuable process for building a sales team. It breaks down the growth of the team into three distinct phases:

3_Phases_of_building_sales_teams

Each builds on the previous. When you are proving product value, you as an individual are refining your product and looking for the market that you are going to sell in. When you are understanding the sale, you are taking what you learned about the value of your product and trying different experiments with a few salespeople to refine your pitch. Only then can you scale the organization, hire a team, and build specific processes and roles for you and your team.

Let's go into a little bit more detail for each.

Phase one: Proving product value

The goal of phase one is to answer a single question:

Is there anyone out there who will be willing to give me money in exchange for what I'm working on?

You are proving product-market fit. Jeff sets out a few best practices to use in this phase of sales team development:

YOU SHOULD BE SELLING THE VISION

You might not start this phase with a product. In fact, you probably shouldn't. If you have built a product with zero idea of whether it is valuable for anyone, you are in trouble.

This is why this phase requires just a single person. This could be either the founder or someone brought in to build out the business or sales team. Because you don't yet entirely understand what you are selling, you can't farm this out to salespeople—you have to learn what works yourself before you can then teach that to others.

I have done this as both founder at Heresy and as MD at Stack Overflow:

  • At Heresy, this is what I spent the first few months doing as a founder. Selling the vision of the burndown charts and kanban sales boards, even before they existed. I wanted to see if there was even a market for these ideas.

  • At Stack Overflow, I had a slightly different role, but still one routed in phase one. There, the “product” of Stack Overflow Careers (now Talent) already existed. What I was tasked with in the first six months was to sell the vision of this product to the European market. I could point to a successful product across the Atlantic to sell to the first European customers.

At Stack Overflow in the US, both Jeff and Joel Spolsky, CEO of Stack Overflow, performed parts of this role. Joel would sell the higher vision of Stack Overflow and Stack Overflow Careers, while Jeff took on the more elemental parts of the market fit.

PROVE YOUR VALUE AND TEST YOUR PRICING

Giving your product away for free doesn't prove its value. You have to find paying customers for your product. If you have a product to sell, that means you have exchanged money for services. If you have a vision, that means you have willingness to pay data from your market. Freemium is fine, but freemium is for acquisition, not revenue.

This is the more specific part of proving value. Given all the possible sales options—self-serve SaaS, inbound leads, outbound prospecting—how are you going to sell to your market? What is the right channel for you?

At Stack Overflow, Jeff found that it needed that human touch and outbound prospecting worked best. But this was a discovery born of experimentation. Jeff ran pay-per-click experiments, tested podcast ads, reached out to hiring managers. All these failed to reach the market they needed.

There are two other best practices in this phase that you should think about:

  • Use lean startup concepts to get ideas in front of customers. Though you can use vision in phase one, you need a product at some point to prove that value. This is where lean startup and Agile methods can help, allowing you to build a minimum-viable product to show to prospective customers.

  • Talk to everyone all along the sales and product pipeline. You need feedback. At this point, if you have a product it probably sucks. So you want to understand from users why it sucks and what they would truly want from it. You also want to talk to those more involved in the buying decision to understand what their needs are and how to make the sale.

Phase two: Understanding the sale

This is refining your pitch. Taking the nascent ideas from phase one and experimenting to find a process that scales. It includes:

  • The way you are going to go to market with your product
  • How you are going to position the product in the marketplace
  • How you are going to actively sell the product

The fundamental mistake that most founders make at this point is hiring a single salesperson. They have had success in phase one selling the vision or the MVP themselves. They see the next logical move as hiring a salesperson to take over this role and move it towards a standardized process.

This doesn't work for an incredibly simple reason. If that person fails, what does that mean?

  • Does it mean that they are a bad salesperson? Or,
  • Does it mean that the sales pitch is bad?

You have no way of knowing. This is still an experimental phase and you have no control. You need a minimum of two salespeople at this stage. If one person is performing badly and one person is performing well, you know the problem is the person. If both are performing badly, you know the problem is the pitch. You haven't explained it well to the salespeople and set them up for success.

In fact, three is the magic number. As Jeff puts it, you need “multiple Petri dishes.” With three people all working on different ideas, you can start to see the collaborative element that works so well in sales. Each can take good ideas from the other and refine the pitch to its core idea.

Sales_Coaching_3Phases-copy

As they learn from each other, the pitch improves. If one still struggles it will probably be an issue with just that salesperson and you can bring in another to replace them to keep multiple Petri dishes running. If all struggle, it is you!

The salespeople you need at this point are young and hungry. They shouldn't be neophytes, but early career salespeople that want to try new ideas and prove themselves. You have to reward them for doing so. The compensation package should be set up so that if they refine the pitch well and turn the vision in phase one into a process in phase two, they will be rewarded.

From this, you can see why companies falter at phase two. It costs. Founders only want to outlay for a single salesperson. In this model you need 2+ and with significant compensation. But only through this can you accelerate the learning that you need to scale your sales team and revenue.

Phase three: Scaling the organization

You can now build your sales team however you see fit. We advocate an Agile sales team and have already dug into how to run these Agile teams here.

But if you are moving through these phases to build your team, there is a consequence of the previous phases that can impact your team at this point—you have to think about support mechanisms.

In phase two, you are hiring people who you don't know will succeed. As you experiment, some will fail. How you support those that are struggling then will dictate how you can scale your team now. In the above diagram, salesperson 3 gets let go. But this shouldn't be a rash decision based on their closing rate.

Closing rate is an output defined by a large number of inputs. When someone lags behind others, the question isn't why aren't they closing? The real question is what is the specific skill they don't have further up the chain? You have to dig into this to gain a deeper understanding of what the skill set needed to sell your product is.

If you want a team to scale, they have to be invested in each other. If they have seen people come and go quickly, they will be less inclined to invest in the person sitting next to them, and less inclined to share their knowledge.

This is the point that you also can bring on sales managers (or promote those first hungry salespeople that have helped you define your process). This will help in two ways:

  • They will help keep everyone on track with the process that they’ve helped refine.
  • They will help everyone share knowledge so that you can keep refining that process.

As long as you have those two concepts in mind as you scale, you can scale as aggressively as needed.

Scaling a common goal

Jeff and I talked extensively about this on the first episode of the Heresy podcast. You should definitely take a listen to learn more about the details of Stack Overflow's scaling in the US and Europe. I also talked about how I've used this process to build sales teams at the Startup Conference in 2014.

If you want your team working together towards a common goal, then you need both a team and a common goal. This process allows you to build both organically, using experimentation to hone in on what matters to your customers and where you will provide value to them. Prove that value, understand what you sell, then scale the team out—follow that simple line and you can have a team that works together and closes deals.