Sales tales: Split your SDRs from Sales from Account Management from Success from Support. Really?
Today’s tale: Specialise your Sales Roles as you Grow but keep them in the Right Territory
by Tim Frankcom and Stephen Allott, Venture Partner, Seedcamp, Sales Tales
The Netcool story started with 8 sales reps. Over the next 6 years the global sales team grew to 120 reps in 20 countries. Named account territories were used to win market share in targeted industries. “Dominate to accumulate”. Maintenance renewals were run by Sarah Bernhardi’s super efficient admin team and we had a handful of sales trainees doing lead generation. Rep OTEs were around 100k.
It was very simple and very practical. Hire a great rep. Give them a patch, proper training and a quota and off they go. They either make quota or they don’t. That’s one metric.
So, what is this pod thing? Here is one from Sales Hacker. Although it looks like 5 people it’s actually 2 reps (paid 150k each) each with a junior each paid 50k making each rep cost 200k. Do they yield double the 100k rep? Look at how complicated the metrics have become. No less than 10 different metrics.
How did sales get so complicated when deal sizes are falling?
This started our quest to understand when, where and whether this complexity makes sense.
Structuring the customer contact roles in a commercial team is a common challenge for CEOs and commercial leaders. It depends upon the stage of your business, the complexity of your product and to some degree your own personal experience and opinion. A technical founder in a company’s early days will handle all the 9 aspects of customer interaction (see the Appendix at the end of this Sales Tale for the full list). What happens when you grow?
There are plenty of options for a Sales organisation.
Sales pods: Hunters or Farmers. Sales Development Reps (“SDR”), Full Cycle Sales Reps or Account Managers. New business, Renewals and Up sell. Delivery or Customer Success. Technical Services covering pre-sales, delivery and technical account management. Customer technical support.
What exactly is each one of these roles? When should you get each one?
Does it all vary depending on which Act of the 3 Act drama (Search, Focus and Scale) you are in?
Where does Sales territory design fit in? Can you achieve better results with bespoke territory design than pods?
Let’s follow the customer journey and see what each of the 9 roles does.
- Marketing driven lead generation: marketing do the website and more.
- Sales driven lead generation and nurturing: Sales get the customer inquiry. These are called SDR, BDR and MDR.
- Pre-sales: they do technical solution design.
- Technical Account Management or Sales Ops: they project manage a complex sale
- Sales: they close the PO and the customer orders the system
- Delivery/Onboarding/Implementation: they make sure the system works as promised per specification
- Training / “Customer Success” / Product Utilisation: they train all the users on the system and using all its features in production to get the customer to realise their ROI making system use Business As Usual.
- Technical support: they log and resolve queries
- Account management: includes renewal, up sell to more expensive versions of the product, cross sell new product, open up new accounts inside the customer including international expansion.
Back to our quest… our question ... and let’s go straight to the answer.
The answer emerges during the journey as you grow. It’s not a steady state, right or wrong decision. It’s about the sequence in which you split out each specialised role. It can vary by country you expand into.
For very early stage businesses, we wouldn’t recommend dividing Sales and Account Management functions (not initially anyway). The benefits of keeping these two roles together include:
- Product knowledge: speaking to and managing customers is a great way of learning about the industry and your product. This is true of all levels of your organisation and all functions
- Sales Knowledge: learning how to sell your product will benefit everyone. It will also inform what the customer pain points are and can help inform the product team as to what the product needs to address moving forwards.
- Simple target design using the net delta MRR system.
See how a Founder role changes during each Act of the 3 Act Drama.
As businesses grow, they are generally constrained by one or more of the following.
- Sales capacity — a lack of new business
- Delivery capacity — a failure to be able to integrate or manage customers
- Customer training / success: customers are not using the product as fully as possible.
- Product issues — your product has stagnated and refining the product is necessary
- Team skills and capabilities — the team needs new skills
We call these things constraints. The “governing constraint” is the one constraint stopping you grow at any particular moment.
Let’s follow some technical founders and how they de-bottleneck a constraint.
Peter Perfect has too much business coming in and cannot deliver all the solutions that have been sold. Delivery is the governing constraint. He should create a separate Delivery function and a Customer Training role.
Quentin Quiet has a brilliant product but not enough leads. Lead generation is the governing constraint. He hates prospecting but when he gets a prospect he gets the deal. So Quentin should hire an SDR and / or get Marketing to do more lead gen.
Roger Rover sells solutions to the water industry around the world. That needs local language and local knowledge. Expansion is by hiring a local country manager whose role is like a technical Founder, doing all 9 roles.
Let’s consider the case where you have full cycle reps who are all making quota by growing their existing accounts. They don’t need to look for new logo business. You can solve this by doing any one or all of the following:
1. Territory re-design, can either (i) give a rep a new business territory consisting only of new named account logos so they have no choice but to start prospecting. Or (ii) you can create a vertical industry territory which has as blend of new and existing accounts. That gives the rep industry specific knowledge to use in new business conversations.
2. Hiring SDRs to expand lead generation capacity
3. Splitting Sales from Account Management creates new business capacity.
4. Hiring more full cycle Sales reps which will mean you have to change your Sales territories and create new business capacity
THE RATIONALE FOR ROLE SPECIALISATION
Cost, personality fit and craft specialisation are the reasons businesses use more specialised roles as they grow in scale. You can hire entry level staff to do the SDR outbound prospecting role and pay them entry level salaries. It’s a tough job but a reasonable training ground for identifying and promoting new Sales talent into rep roles.
See how the 3 sales roles fit into the customer contact journey.
When you start splitting Sales and Account Management, be aware that the profile of a candidate for each function is likely to be quite different. Since they won’t be able to learn from managing existing customers, you need to replace the way in which knowledge is gained. The knowledge of existing Sales Reps and Account Managers needs to be transferred to the new hires. This can be done via in person training, remote video training, online training, job shadowing and followed up with a product knowledge check after the first month.
As your business continues to grow, refining your organisation structure will be necessary. You will need team leaders. Best promoted from within, first timer team leaders should have a maximum of 6–7 direct reports.
You may wish to make a “pod” of 1 x SDR, 3 x Sales reps, 2 x Account Management and 1 x Technical Solutions/Integration specialist. Pods can remove some of the friction between separate new business and Account Management teams but the team leader may be stronger in one function than the other 3 roles.
The alternative is to have a separate team lead for each function. (SDR, Sales, Account Management and Technical Solutions). This functional organisation should benefit the training of new and existing employees (provided your onboarding plan and existing team is strong). The downside is you can begin to have teams working in silos. This can be avoided this by bringing these two teams together at the next management layer.
It’s all about the journey as you scale.
Be agile, fine tune, split and specialise.
The full 9 roles grouped by function and the Acts of the 3 Act Drama
Further reading: Craig Rosenberg’s excellent guide