“One bad sales hire could cost you at least a year's worth of revenue. And if you’re a young start up it’s even more dangerous.” Jakub Hon, co-CEO at SALESDOCk emphasizes from the moment we connect on our video chat. He’s on a mission to help both startup and established companies in the B2B SaaS sales industry build effective sales teams. He’s armed with his tried-and-true playbook—similar to one that accomplished sports franchises use. I’ve got a lot of questions for Jakub before he heads off to a leading industry conference in Amsterdam where, as it happens, he has a big announcement to make.
Jakub opens up his digital playbook, pulls up some diagrams, leans into the camera and our huddle starts. I’m about to learn all about what happens to companies that don’t build winning sales teams, how that affects their bottom line and how to remedy it.
The common sales hire cycle: hire, fire, repeat
“I see it in companies of all ages and sizes, but it’s particularly common in the tech startup sector,” Jakub tells me. “The core problem is that when the first salesperson is hired, it’s usually done in the same way as bringing on an IT guy.” As I learned, younger tech companies and startups are typically led by people with a background either in tech or product. Once companies begin to achieve a moderate level of success, they realize that they need a sales person or even an entire team in place.
When they set out to hire a salesperson or sales team, these companies then quickly discover that they aren’t quite sure whom to hire—much less the exact parameters for hiring. Some just even start with hiring people that they like, thinking they will be a good fit with their environment. “And that’s where this painful cycle of hire, fire and repeat typically begins,” says Jakub, “especially if you’re a young startup, getting just one wrong salesperson in your company can kill you at the beginning, because you’re going to burn a lot of money on them.”
Across the board, companies find themselves in this uncomfortable position all too often. “One of the main reasons I typically uncover is that there are no established parameters for the qualifications of the salesperson”—such as particular previous experiences or specific skill sets—“people rely a lot on gut feelings instead of verifying the accomplishments and testing the skills or the potential new hire,” Jakub says.
Throughout our chat he repeatedly underscores the importance of defining the exact criteria for any new sales hire. “Just because they’ve closed a couple of deals or are a whiz at Excel spreadsheets doesn’t mean they will be a top-performing salesperson,” he tells me. Jakub points to another diagram from his playbook: “It’s the same as in soccer: if you’re looking for a striker, you shouldn’t hire a goalkeeper—despite the fact that the guy was nice in the interview,” he laughs.
“Getting just one wrong salesperson in your company can kill you.” —Jakub Hon, co-CEO, SALESDOCk
Identifying underperformance in sales teams
“The issue of the bad sales hire even finds its way into established companies and their sales teams,” Jakub explains, “there are several red flags that leaders can look for in their team to identify underperformance.” He tells me about haze, or an overall sense of complacency. “Too many times, companies settle for a salesperson meeting only 60% of quota,” he says, “they think that 60% is better than nothing and that it will eventually get better and the situation will resolve itself—it never does.”
Another commonality in underperforming sales teams is a lack of prospects in the funnel. Alternatively the leads are poor or underqualified. “It’s understandable that in the beginning a salesperson may bring unqualified leads,” Jakub says. “It’s the responsibility of the team leader to more clearly define the types of leads the company expects to see in the pipeline, and how the salesperson can go about securing those leads. If they continue to bring you unqualified leads, then there is no coachability and no progress to be made in the future.”
The other primary red flag for sales team leaders: a high churn rate. “When sales leaders see that there is a lack of traction—or that salespeople are being fired frequently—that should tell them something; there’s something going wrong,” Jakub points out.
The painful effects of the bad sales hire: your company will bleed revenue, if it doesn’t all out kill you
“As I said at the beginning: one bad sales hire could cost you at least a year's worth of revenue,” Jakub says, “that was a comment echoed in your recent interview with my friend Petr Zelenka, where he talked about how losing a salesperson in the USA can cost on average $300,000 to $2,000,000.”
“Now let me show you some more hard math,” Jakub nods to his playbook, “when it comes to onboarding or replacing salespeople I want to show you just how long it takes.”
Jakub says, “Let's say you hire a new salesperson at the end of the year and he immediately begins working at the start of the next year. Assuming I didn’t mishire, it will likely be August before he starts selling and bringing revenue into the company.” I notice a painful look on his face emerge as he continues to describe the severity of the situation, “and if I have to replace that salesperson in the eighth month, it will be well into the next year before any revenue is generated.” I almost know what he is about to say next: “And that means more than a year will go by without any revenue.” Put that way, it makes me wonder how some companies can even afford to keep their lights on.
“It’s even tougher when it comes to startup companies with VC funding,” Jakub elaborates. “It used to be that your valuation was equivalent to ten times your revenue—these days it’s only seven,” while holding up the same number of fingers. “VC startups typically have about 18 months to level up—so it doesn’t take a mathematician to recognize the impact one bad salesperson can have,” Jakub says.
Breaking free from the painful cycle
Jakub’s insights make me wonder, what is the antidote to the cycle of the bad sales hire? “You start by creating your own playbook: you build your own specific hiring processes, formalize the type of people you need on the team and the exact qualifications that they should have,” he says. “Once the person is in house, then you have to onboard them in a way that will enable them to start selling quickly”—including things like the transfer of sales skills and specific product knowledge—”they have to be able to ask the right questions and speak about the product they are selling,” he adds.
“It’s exactly like what we do here at SALESDOCk,” Jakub points out, “we work with clients to ensure a formalized hiring and onboarding process, sales enablement, setting of quotas and expectations, and continuous education and feedback.” SALESDOCk even creates internal sales bootcamps where, as Jakub explains, “we guide the salesperson through the entire sales lifecycle journey.” All members of a sales team are encouraged to participate, so that everyone is equipped with the same methodology.
“In the end, I return to soccer as an example,” Jakub smiles, “even if you’re a natural salesperson, you’ve got to surround yourself with best practices as well as coaches and mentors if you want to become world-class.” Before breaking away to catch his flight Jakub adds, “there are a lot of sports players in the world, but only a few of them ever make it to the Olympics.”