Dharmesh Shah has yet another great post on his blog about building a sales team. He mentions the need to set compensation structures correctly, making sure you are tracking sales metrics thoughtfully and talks about the culture shock of experiencing a sales team from an engineer’s perspective.
When I was a VC I noticed that portfolio company boards spent a long time talking about the sales team. Assessing progress vs. the company’s goals, talking about lifetime value of customers vs. acquisition cost, and putting together compensation plans. Now that I’m playing the entrepreneur game, I myself am trying to understand exactly where the the fine line lies in setting a company’s sales projections. I’m really getting the feeling that it is much more of an art than the illusion of “science” given by spreadsheets! It is much harder on the inside, and now I wish I had provided more support to my portfolio companies when I was a VC and when they were working through these issues. I guess the numbers have to “come from the management” so that they are totally bought in, but the amount of effort required to do this thoroughly is pretty amazing.
August 5th, 2009 at 1:09 pm
Healy,
Paradoxically, some of the greatest startups in history had a compelling product that sold itself with sales clerks taking orders. Sales teams and incentives may be necessary if the product is faster, better, cheaper than the existing offerings in the market. But if it is transformational offerings like IBM 360 Mainframe, Xerox Copier, Apple II, IBM PC, MS DOS, Novell NOS, Lotus 1-2-3, WordPerfect, Apple Macintosh, CISCO Routers, eBay, Facebook, Twitter, iPOD, iPhone etc. then it is not clear incentives are needed until the startup grows big. Every entrepreneur's and VC's dream is to find the latter kind and profit immensely rather than slog it out with sales force and incentives from the get go.
Nat Kannan
CEO
Jeeva Portas, Inc.
August 6th, 2009 at 7:49 pm
[...] to implement an effective sales process. There is a lot of information on the web about designing sales incentives and how to sell, but there is a surprising lack of information on how to design and manage the [...]