In our last blog post, we discussed the importance of sales forecasting for a startup, with a focus on the sales funnel and its duration. Now that those basics are established, it’s time to look at your selling capacity. In order to do that, you need to think of your most valuable resource in the sales process – your salesperson – and how to best utilize them.
As we previously mentioned, sales forecasting for startups often requires using assumptions. The same is true of determining your selling capacity, which starts with defining how many accounts each salesperson can handle, and the time it will take him/her to “close” (i.e. seal the deal). Noting that in all cases, the most important sales person in either a start-up or early growth company is YOU i.e. the entrepreneur who is building the business.
In order to determine how to structure your sales force, and ideal portfolio of a salesperson (i.e. how many accounts they should be able to handle), businesses must take several variables into considerations. This begins with understanding you customer. Is your customer a large company or governmental organization? Then you will surely need a dedicated sales team to handle the account – a luxury which start-ups cannot afford.. Alternatively, targeting several specific accounts using a “territorial” approach might be more feasible. Keep in mind these “territories” are not only geographic, but can be based on industry, company size, or any other criteria that can delineate your target group.
To begin your sales strategy, identify a “territory” that includes between 50 to 100 accounts – bearing in mind that a startup requires flexibility and will often need to reduce or increase this number based on its resources. This is where the second factor of consideration must be addressed – the nature of your product/service and the corresponding account strategy.
Based on the nature of your product/service, and the ways in which the customer will interact with it, a salesperson would need to adopt a customized strategy. Examples of this include:
|Product/service is one that will likely be repurchased by the same client over and over again||
|Product/service appeals to multiple users within the customer’s company||
|TRANSACTIONAL||Product/service is a one-time transaction||
The third variable to take into consideration when assigning accounts to your sales team is the length and complexity of your sales process. How long will it take, and how easy/difficult will it be, for a salesperson to “close”?
While it is often difficult for a startup to answer those questions, it is important to keep the following in mind:
- Business owners and salespersons should be flexible during the startup phase. Don’t limit yourself to a set amount of accounts-per-salesperson, or else you might risk missing out on great opportunities!
- Complexity of sales is a tough one to crack, because it is not only related to the product/service you’re selling, but on your customer base. Take your time, and notice the nuances and urge continuous feedback.
- As mentioned earlier – a short, transactional sales process often means more accounts, while a longer customer management-focused process reduces the number of accounts per person. At times one client is like an institution and having him as the sole focus of a salesman/relationship officer is key to maintain.
- Not all stages of the sales cycle are created equal! The most critical stage – closing the deal – is of high value and requires the most attention. When assigning sales accounts, make sure your salespersons are not juggling too many accounts at this critical phase.
The fourth, and final, variable to take into consideration when assessing your selling capacity is your sales productivity. In layman’s term, this looks at how fast your new salesperson can “hit the ground running” and begin creating revenue for the company. This is extremely important for startups, which are often working with limited training resources and might not have established onboarding practices. Again, when in doubt, it is often helpful to turn to industry standards.