Scott Sambucci is the CEO and founder of SalesQualia, a thinktank that helps young businesses improve sales performance. He’s also the author of “start-up selling – How to sell if you really really have to and don’t know how”. Scott has extensive experience in sales, customer development, and company management in startups and publicly traded companies.
He has held several important positions in companies including Blend, CoreLogic, Pearson Education etc. He has also been an academic as a professor of marketing at Hult Business school.
This article is an edited excerpt of Scott Sambucci ’s conversation with Team Alore. (Link to unabridged webinar recording at the end)
Scott’s story in his own words:
Scott Sambucci: I had the idea to start my own company after having spent about 15 years in Silicon Valley. During this while, I worked with three start-ups and was the first non-engineer. I would help them sell their products or in a couple of cases helped them grow and scale the sales process. While working in those three start-ups, it occurred to me that this is the same problem that I’m personally solving for all these start-ups. These startups have smart people and smart teams solving important problems in different markets, be it education technology or banking and mortgages or others. They have good products but they do not know how to sell their stuff right. I realized a lot of companies have this issue and that’s the time it dawned on me that I needn’t be a part of only one start-up at a time but I could help many start-ups. That was the time when I decided to step away from working in a start-up to working with start-ups and teach them the different systems, techniques, and tactics that I had deployed myself in my career. My aim was to help those companies scale up.
Scott on his first sale:
Scott Sambucci: I started working while I was in college where I was a waiter waiting tables at a restaurant. That’s where I learned some really effective selling techniques as you are constantly selling your customer service to get a higher tip. So that was the start of my learning curve to interact with people and their needs and respond to them accordingly. But after college, my first real sales job was with Pearson Education.
I was hired into the “higher-ed industry”. We call them publishing representatives here. We were sales representatives selling textbooks and educational materials in colleges. The book would be used by the students (end-customers) in class. So while the students are paying for the book, the real sale happens with the professors. I was hired as a publishing representative in North Carolina and given a set of universities to call in every day. I used to go from one campus to the other talking to 20 professors asking them how they teach and helping them find the right textbook for their class and for the students.
About doing things differently during the growing years
Scott Sambucci: I don’t think I would have done anything differently but I am the kind of person who always looks at ways to improve things. So early on in my career I just devoured as many books as I could to accelerate my learning mode. So that was one of the ways that I was able to be successful really quickly in my very first year as a sales representative at Pearson. I finished that year as the number five sales rep in the whole country and the first in my specialization out of a total of about 300- 350 salespeople in the “higher-ed division”. I was just a 23-year old kid standing on stage getting the top awards when senior colleagues were like why is the intern standing on stage.
I also made a promise to myself to read one book per week and then try to implement one idea from that book immediately. This helped in fast acceleration in selling my product and it’s also helped me as a coach. Now as a sales coach I tell my clients that we are can implement just one idea per week that could change business over the course of a few weeks.
On techniques of sales – Inbound, Outbound or a Hybrid model
Scott Sambucci: If I’m an early stage company, I probably have identified a problem in the marketplace that I feel like nobody is resolving or the people that are solving are not doing it right. So there’s a gap and my job is to fill that gap with my product or with my service. A lot of companies, unfortunately, fall into a trap of looking at others and their sales techniques, for instance, some use emails, cold calling or conferencing. They copy those strategies without even checking if they are effective for their market. So one thing that I tell my clients is that it’s not about me teaching you a sales process and telling you how to implement it. My job is to teach you, your sales process.
Every company is different so that needs rapid experimenting. The right way of doing it is to make a list of about 20 different ways to find potential customers including conferences, LinkedIn, email, phone calls, webinars, and white papers and more. Thereafter, shortlist a few of them that are suitable for your business. e.g., for me personally in my business, LinkedIn is a really good place to find people that are entrepreneurs, B2B sort of people. Therefore we developed a specific way of generating conversations with people through LinkedIn.
We also found that live workshops worked well in our business. So if I go and I’m able to teach in a live setting, where there are 10 to 20 people in a room and I can spend a half a day with them and teach them some of their sales processes, people find it extremely beneficial. They go back thinking that imagine if I was to work with Scott every day for the next 365 days. So for us, those tend to be the two places for our business that work really well. The key is to experiment but first identify the perfect prospect such as who is the ideal person I can work with. Thereafter think about whose problem I can solve. Secondly, think of how I can reach that person? Once that’s done experiment with different ways of doing that over the course of a couple weeks or months. Doing that will help any entrepreneur, figure out what their sales processes are. So it’s not about whether inbound or outbound is better but about finding out what works best for your business.
On sales strategy being top-down or bottom-up driven and revenue projections
Scott Sambucci: Our model has three main stages or phases of start-up life. The first phase is the start-up phase, the second phase is ramp-up and the third phase is to scale up. In the first phase try to find the first 10 paying customers. If you are underpricing your product to cross what’s called the “penny gap” you have to figure out how you’re going to deliver value to the customer. The only way that we globally have decided value is decided is by the exchange of money. So the start-up phase is all about getting those first 10 “paying” customers. Once you’ve got that, then you move into the ramp-up mode and typically in the ramp-up, you try to hit the first million dollars in annual recurring revenue, though it is a loose benchmark. In this phase, most venture capitalists usually say that if you hit a million dollars annual recurring revenue, then we can talk about a series A round of funding. Then you slowly scale it up. So those three phases- start-up, ramp-up , and scale-up can take anywhere between six months to three years. In some cases even never, because a lot of times companies never get out of start-up or a lot of start-ups, get out of start-up mode and into ramp-up mode but then they level off.
On the first sales pitch:
Scott Sambucci: Usually, the CEO or the founder does the early selling, hence, they are the ones who should develop the early sales process and pitch. They make the basic framework and get the first 10 customers. They decide the sales process, pricing contracts, and implementation. It is a loose framework and thereafter when you recruit an excellent VP of Sales, he/she can build over it. So when you get out of the start-up mode and get into the ramp-up mode, you start hiring a sales team around you who will build on top of that framework. It’s just like a software platform where you build the platform but need a good team to configure and customize it.
On the process of hiring
Scott Sambucci: Hiring can be a tricky job and a lot of us fail at it. Even I have failed in the past. I personally have been a sales manager and I’ve hired people that have failed at their job, so we can all identify with this problem. Whether it’s hiring somebody who doesn’t have a ton of experience but talks a good game or somebody who is, Mr. Rolodex and has been in the industry for 20 years, its a gamble. Also, an established person coming in doesn’t mean that the person’s a good fit for our start-up, because he might be used to having all the marketing and customer support around them. I divide sales hiring into four steps:
1. Define the job:
Mention clearly what exactly the job is that needs to be done so there’s clarity about what kind of talent we need and also the experience. It also helps us in defining the metrics for success and establishing the incentive program in the correct manner. Ensure that you align your incentive program with the behavior that you want because whatever incentive program you set up is exactly the behavior, you’re going to get.
2. Define the process:
How are you identifying good candidates? Hiring should be made a priority. It is like raising capital. If you wait until the time where you need money it is too late and you will be stuck with the capital that is available. On the other hand, if you’ve developed a pipeline of candidates and built out a whole network of potential salespeople when it comes time to hiring you will get the best. There’s a lot of competition around good people so it’s important to target them much earlier and keep a rapport with them even if you hire them at a later stage. Always be hiring even when youre not actively hiring.
3. Define an interview strategy:
Have an effective interviewing strategy and also an objective way to measure the person’s abilities and their behavioral tendencies. Use behavioral assessments as part of your interviewing process.
4. Define your onboarding experience:
It is as critical to the hiring process as recruiting and defining the job. You should have a plan in place for the recruit’s setting in. It does not mean that the CEO or the founder has to do all the spade work. It’s important that you pull in your teammates from the engineering team as well as product teams and chalk out a plan so the new employees know that they joined a company that has focus.
On hiring the right kind of people
Scott Sambucci: If you’re at the early stage of your startup and have your first 10 customers as a co-founder you can make an initial framework for sales. Based on this you can give your sales team target numbers on a spreadsheet. For e.g., you must tell them that it took us 18 months to get our first 10 paying customers and now looking forward we need to get three $20K/year customers per month. Tell the new sales reps that it’s their job and you will base your commissions on the salesperson hitting these numbers.yourself
Having had done initial sales, founders will have evidence on what the growth path is and what the market demand for the product is. To start your incentive programs, consider this market demand dynamic and think of targets in three to six-month deliverables. You tell the sales team that let’s figure out where you as a salesperson fit into those outcomes and let’s work out strategies like phone calls or conferences or whatever else that it takes to help us reach those outcomes. Also, base the bonus or incentive around those activities and hitting those metrics over the next three or six months and then after three or six months you build a new plan that may fundamentally shift the incentive. You need to have salespeople with a certain kind of personality who are alright with a shifting compensation plan and on-board with the vision and direction of the company. They must be willing to work even in a somewhat ambiguous environment and doing a lot of sales work as well as customer support work or marketing and product work.
About the time frame given to sales employees to prove their worth
Scott Sambucci: I think less is better. I think you know in the first 100 days if the employee is a good fit or not and if it is not a good fit, let’s not pretend and have him/her leave. In the first couple of weeks, things might be a little choppy so you can see how to adjust and get calibrated. In a start-up, one year is like a dog year so every one year is actually seven years. It basically means that the amount of work you are trying to get done in one year is what most companies try to get done in seven years. So a quarter of the year is like two years of time. Are you willing to hire somebody and work with that person for two years and then decide whether or not they’re a good fit? Of course not so it’s pertinent to make that decision as quickly as possible. I’ve let people go within three weeks. What needs to be done is to have a conversation with the person and make the exit as easy and as smooth as possible. Also, introduce the person to your friends where they might be a good fit. Basically be human about this and move on and make the next best decision that we can.
On the business mindset to survive road-bumps
Scott Sambucci: There are going to be peaks and troughs in a business and as long as we know that we can recover from it, there is no problem. There are going to be hiccups in product development, engineering and also customer servicing but as long as it gets sorted and you are moving in the right direction, things are fine. If the situation is a returning up turning down kind and if you are taking stock of the situation, it is alright. There’s an interesting advice from Rakuten founder Hiroshi Mikitani, a Japanese businessman about the rule of three and 10s. It says that every time your company grows by multiples of three or 10 everything breaks. So if you are a three-person company, the systems that you build, the way you acquire customers and do other things, it works pretty well until you get to about 10 people. Once you are a 10 person team, all the systems and the way you work just breaks and you need to rebuild till you reach about 30 people and this process continues. So, it’s important to look ahead and prepare for growth so that when things dip or break the losses are not as much.
On the importance of sales processes
Scott Sambucci: From a purely selling standpoint, it was described to me that in this way if you don’t have a process for selling you’re at the mercy of the buyer’s process for buying. Most of us send emails or have meetings with buyers and also send a proposal. We hope that they really get back to us. But this is a pretty aimless way to run a business. Instead what we need to do is not be subject to their buying process. If they ask for a proposal, you say great would love to send your proposal but before we do that, let’s sit down and put together a work plan and implementation plan so I know exactly what you need from me and you know what I need from you in order for our work to be successful. Once we do that, I’ll be able to put down a cause and have a selling process and not be at the mercy of the buyer’s process. It is a really hard thing for entrepreneurs who want to make an impact.
Remember that at the end of the day that person is only buying this product once whereas you’re selling it every day. So you are better able to provide some clarity and hence, should have more of a control. In general, I think, it goes back to how you like your calendar determines your cash flow. Show me your calendar and I’ll tell you what your cash flow looks like. Try to have sales stand-ups every day and make sales an all the time thing. A lot of times people think that I don’t have a sales meeting therefore, I don’t do sales. No, you block off a time every week and fill it with sales work, whether that’s prospecting or calling up existing customers, looking at other other pricing models or working on some demo tape and look back at those recordings and say these are the things I did wrong. I could do better and work on making your demo better, even though you’re not talking to customers. This is called improving the sales process. So if you don’t have that time in your calendar, you’re not going to get the cash flow.
A book that Scott Sambucci would recommend:
Scott Sambucci: I’d recommend my book called Start-up Selling. You can download a free copy of the book on startupselling.co or buy it for $11 on Amazon.
Another book that has really impacted me over the last six months is a book that I got in Greg McKeown and it’s called Essentialism: The Disciplined Pursuit of Less. It is about focusing on the important parts of your day at work and forgetting about all the other mundane stuff.
It’s something I believe in as well – “Focus on now, now, and worry about later, later! ”
The author helps you structure that thinking and move closer to the impact that you want to make. If we’re trying to do a lot of things at one time you’re moving in a lot of different directions, it’s hard to make progress towards the end goal. So this book was was really useful for me, something that I had my team read and it’s something I recommend to my clients.
On scaling up:
Scott Sambucci: Talking about scaling, one needs to answer a few questions- Do I have a repeatable process and how do I sell my stuff. From a sales standpoint, think through your entire sales funnel,. All the way from the top of the marketing funnel to the point where paying customers are happy enough with you that you are getting an upsell. Think about what’s every little step along the way – it could be 20 steps or 50.
Oftentimes what you find is that the first places that you can hire are on the ends of that sales process. e.g., the first people that you can typically hire are sales development people who’s job is to find marketing qualified leads and then qualify them. Once that lead is qualified, move them into a sales funnel so that you as a company founder or a VP of sales are spending most of your time with leads that are already qualified. You can teach somebody pretty quickly about what questions to ask, how you prepare for those calls and how you run a 15-minute sales qualification call. Get them to do 100 of those every day.
Beside this, customer success is also something you could put a train to and scale. You as a company, founder and the people that are offering high value in your organization must focus most of your time on the high-value parts of the sales process – doing the product demos, answering the hard questions, making sure that you’re overcoming all objections. So oftentimes if you just if you hire out for the ends of your sales process that’s a way to scale your team quickly and get more out of the time.
On engaging with Startups
Scott Sambucci: We typically work with start-up founders, enterprises and companies selling to enterprise companies. Most of our customers are tech companies dealing in software, AI, Data etc.
We usually work with a large enterprise in places where they need to act more like a start-up. e.g., with sales teams that are releasing a new product line or entering a new market when these smaller teams are like a startup within the larger organization and we can provide value. It’s not about delivering a sales talk to a 100 person sales team but teaching you your sales process and providing value all along.
This was Episode 2 of the 20 Episode series themed on “How to get your first 100 paying customers” You can watch the unabridged recording of the webinar here – Scott Sambucci
Previous Episode: Sidney Minassian, CEO and Founder, Contexti