A really useful book for someone trying to figure out their sales process for the first time. As someone who knew (and still knows) very little about sales, this book helped a lot in figuring out a framework.
Uncovering the Characteristics of a Successful Salesperson
“World-class sales hiring is the most important driver of sales success.”
When the unique strengths of the salesperson align with the company's sales context, it is a beautiful thing. When they do not, it becomes an uphill battle.
The ideal sales hiring formula is different for every company…but the process to engineer the formula is the same.
Step 1: Establish a Theory of the Ideal Sales Characteristics
I listed the characteristics I thought would correlate with sales success. For each characteristic, I documented a clear definition. What did I mean by “intelligence”? What did it mean to be “aggressive”? My intention was to score each candidate on a scale of 1 to 10 for each characteristic.
Step 2: Define an Evaluation Strategy for Each Characteristic
What behavioral questions could I ask? Would I use role plays? Should there be an exercise for the candidate prior to the interview?
Step 3: Score Candidates against the Ideal Sales Characteristics
I simply filled out the Interview Scorecard after each interview.
Step 4: Learn and Iterate on the Model while Engineering the Sales Hiring Formula
Which characteristics do these top performers have in common? Are these characteristics predictors of success here at HubSpot? Once I identified them, I increased the weight of these characteristics.
Which characteristics do not seem to matter? Which characteristics do not predict success?
What am I missing? I had to think beyond the scorecard and reflect on these top performers. Was there another consistent, meaningful characteristic to be found among them?
After about a year of hiring, I had accumulated enough data points to run a formal regression analysis, correlating the hiring characteristics with post-hire sales success.
“Statistics suggest salespeople who are intelligent and helpful, rather than aggressive and high-pressure, are most successful with today's empowered buyer.”
Five Traits Great Salespeople Have and How to Interview for Them
There were five traits that correlated most significantly with sales success.
Coachability: the ability to absorb and apply coaching.
Curiosity: the ability to understand a potential customer's context through effective questioning and listening.
Great salespeople are naturally curious. They ask great questions, listen intently, and probe into points of interest.
Great salespeople seek to understand customer goals, aspirations, fears, and struggles—all through tactical questioning.
The first test of curiosity happens the moment I meet a candidate in the lobby. “Hello, Jess. My name is Mark Roberge. Thanks for coming in today.” Does the candidate start with a question? Does the candidate ask me about my day? Did the candidate research my background and does she take the opportunity to reference an observation from her findings?
Prior success: a history of top performance or remarkable achievement.
Evaluating prior success becomes more challenging when the candidate does not come from a reasonably sized sales organization or does not come from sales at all. In these cases, I evaluate prior success through other activities in the candidate's life.
Intelligence: the ability to learn complex concepts quickly and communicate those concepts in an easy-to-understand manner.
at the end of my first phone screen with a candidate, I would send her training materials on the concepts of inbound marketing, SEO, blogging, and social media. I would ask her to learn the material before our next interview.
Then, I would be sure to reference the materials in our next role-playing session.
I am trying to understand two things here: first, how well did she understand the concepts to which I had I exposed her? Second, how well did she communicate those concepts back to me in a simple manner?
I would always ask follow-up questions until I eventually stumped the candidate. The deeper I was able get on a topic before her responses suffered, the better it meant she was performing.
Work ethic: proactively pursuing the company mission with a high degree of energy and daily activity.
A lot can be learned by simply observing a candidate's mannerisms and behaviors during the interview process. This is especially true for assessing work ethic. How quickly did she return phone calls? How quickly did she turn around deliverables (such as her resume, her assessments, or her feedback from the interview)? Did she push the pace of the interview process or were we pushing her?
“Here are four characteristics that may describe a candidate: coachability, curiosity, intelligence, and work ethic. Could you please rank those characteristics from strongest to weakest for this candidate? Why did you rank these characteristics in the order you did?”
“Please tell me about your typical work day or work week. What are some of your must-do activities?”
Finding Top-Performing Salespeople
Great salespeople never have to apply for a job.
Reflecting back on hundreds of sales hires, I can't think of a single person who came to us from a job board or who was actively seeking a new role. Great salespeople are passive candidates, meaning they are not being proactive about changing positions. Shaping a passive recruiting strategy that caters to this demographic is a necessity.
Don't hire a recruiting agency. Don't build a corporate recruiting team. Build a recruiting agency within your corporation.
I went out and found a talented agency recruiter who was thinking about starting her own firm and I said to her, “Why not start the firm within HubSpot?” We paid her and her team as if they were agency recruiters. Instead of a flat base salary, we opted for a lower salary with meaningful performance bonuses that amounted to a higher overall earning potential.
Find Quality Passive Sales Candidates on LinkedIn
It was not until my team had grown to 10 salespeople that I was allowed to hire my first recruiter. In short, sourcing the initial team was on my shoulders.
Step 1: Leverage the Search Capability within LinkedIn to Source a List of Qualified Candidates
Here are a few filters I played with that improved search results:
Step 2: Screen the Search Results Using the Details in the Candidate's LinkedIn Profile
Indicators of sales excellence:
Step 3: Engage with the Prescreened Candidates
Email Subject: Yahoo!/Boston College
Email Body: John, Congrats on all your success! I run the sales team over here at HubSpot. Our current team can't keep up with the inbound lead flow so we are expanding the team. Your background is similar to those of our current top performers. Are there any folks in your network who are in the job market and have a background similar to yours? Best, Mark Roberge
Find Quality Passive Sales Candidates through Your Team: The “Forced Referral”
“I am going to set a 20-minute meeting with you tomorrow. Tonight, I will go through your 275 connections on LinkedIn and look for salespeople in Boston to whom you are connected that look like they may be a good fit for our team.”
Understand the Sales Talent Pool in Your Area
I developed a list of all the companies with inside sales teams in Boston. It was not long before I had interviewed at least one person from each of those teams.
Here are some examples of questions I asked during these interviews:
The Ideal First Sales Hire
The entrepreneur (candidate 3) is my most desirable candidate.
Part II The Sales Training Formula
Setting Up a Predictable Sales Training Program
“Every top-performing salesperson succeeds in her own unique way. Heavy reliance on ride-alongs during the training process jeopardizes a new hire's ability to shine using her unique strengths.”
Defining the Three Elements of the Sales Methodology:
Starting with the buyer journey increases the likelihood that the buyer's needs will remain front and center during all aspects of the selling process. It also allows the sales team to take a step back and reflect on how the buying journey can be accelerated or streamlined.
The qualifying matrix defines the information needed from a potential buyer in order to understand whether we can help the prospective buyer and whether the buyer wants help.
A very common qualifying matrix that has been used for many decades is BANT. BANT stands for “Budget, Authority, Need, and Timing.”
Create a Training Curriculum around the Sales Methodology
Start with a training session on the buying journey. Dive deeply into examples of the questions buyers are exploring at each stage of the buying journey.
Adding Predictability to the Sales Training Formula
I added an exam and several certifications to the training process. The exam was focused on factual information, such as product knowledge. New hires were subjected to a 100-question exam at the end of training to ensure they left the program with a satisfactory level of product acumen.
Constant Iteration on the Sales Process
Six-Month Feedback Forms: Once a hire was on the job for six months, we asked him to complete a review of the sales training program.
Correlations between Training Performance and Sales Performance: Just like the analyses we ran in Part One, exploring correlations between hiring characteristics and eventual sales performance, the same set of analyses were conducted to correlate training performance to sales performance.
Manufacturing Helpful Salespeople Your Buyers Trust
Providing our salespeople with an in-depth understanding of our buyers' day-to-day existence became a key goal of my sales training formula.
New sales hires did not spend their first few weeks in sales training, memorizing scripts and discussing objections. Instead, our new sales hires spent their first few weeks at HubSpot developing their own website, writing their own blog, and creating their own social media presence.
I just joined the company six months ago. Like you, I do not consider myself to be a technical person. I used to sell insurance before coming here. I knew nothing about blogging, SEO, or social media. But this stuff works! Look at this blog I developed in training. It literally took me a few days of effort. Do a Google search for ‘best Italian food in Boston.’ That is my website right there. The first listing in Google! Now try searching for ‘cupcakes in Boston.’ There I am again! You can do this. I can help you do this.”
“Social media presents an opportunity for all salespeople to be perceived as trusted advisors by their buyers. Salespeople should take some time normally spent prospecting and reallocate it to social media participation. The rewards are greater.”
Part III The Sales Management Formula
Metrics-Driven Sales Coaching
“A common sales management mistake is to overwhelm the salesperson with coaching too many skills simultaneously. Pick one skill and focus.”
reflecting on your qualitative observations and the metrics that we ran through, which skill do you think we should work on this month, and what's the best way that I can help you with that skill?”
“Use metrics to diagnose which skill development area will have the biggest impact on a salesperson's performance. Customize the coaching plan to that skill area. Execute ‘metrics-driven sales coaching.’”
Motivation through Sales Compensation Plans and Contests
In thinking back to the critical strategic shifts HubSpot made as a business, most of them were executed via changes to the sales compensation plan.
In the first six years of HubSpot's growth, we utilized three different sales compensation plans, each of which was appropriate for the stage the business was in at the time.
Plan 1: The Hunting Plan
The first plan paid each salesperson $2 upfront for every $1 of monthly recurring revenue they brought on. For example, if a salesperson closed a customer on a $500 per month subscription, the salesperson earned a one-time $1,000 sales commission for that deal.
To protect the company from customer churn, we implemented a four-month claw-back on the commission.
As you might expect, customer churn exploded to an alarming, unsustainable level. Guess which month in a customer's life cycle had the highest churn. Month five, of course, right after the claw-back had expired.
Plan 2: The Customer Success Plan
Across the sales organization, there was more than a 10-fold difference between the salesperson with the lowest churn rate and the salesperson with the highest churn rate.
I stack-ranked the sales team from the salesperson with the best churn rate right down to the salesperson with the worst churn rate. I then segmented the team into quartiles. The top performing quartile (top 25 percent) that used to earn $2 per $1 of monthly recurring revenue now earned $4 per $1 of monthly recurring revenue.
“For the fourth and worst-performing quartile, your earnings are cut to $1 per $1 of monthly recurring revenue.
Within six months, churn had dropped by 70 percent.
Plan 3: The Customer Commitment Plan
Our customers who paid month-to-month were less committed to the overall HubSpot service and were far more likely to churn. Those who prepaid annually were more committed to the service and were ultimately more successful.
As a result, Plan 3 was designed as follows: Salespeople would earn $2 per $1 of monthly recurring revenue The commission would be paid out as follows: 50 percent on the first month's payment 25 percent on the sixth month's payment 25 percent on the twelfth month's payment Under this plan, if a customer signed up paying month-to-month, the salesperson would need to wait an entire year to earn the full commission from that customer. If the customer signed up paying a year in advance, the salesperson would earn the entire commission immediately.
Before rolling out this plan, the average prepayment commitment was 2.5 months. When I rolled out this plan, that average jumped to seven months.
Criteria to Evaluate a New Commission Plan
Evaluate a sales compensation design through the lens of three factors: Simple. Aligned. Immediate.
Simple: Salespeople should not need a spreadsheet to calculate their plan. If too many variables are included, salespeople may become confused about which behaviors will drive the largest commission check.
Aligned: Look ahead to the next year and ask yourself, “What is the most important goal the company needs to achieve? Customer count? Profitability? Customer success? Market share? New product distribution? New market penetration?” Then ask yourself, “How can the sales compensation plan be aligned with this goal?”
Immediate: When salespeople succeed, they should see that success reflected in their paycheck immediately. When they fail, they should feel the pain in their paycheck immediately. Any delay between good (or bad) behavior and the related financial outcome will decrease the impact of the plan.
Involve the Sales Team in Compensation Plan Design
Promotion Tiers: Removing the Subjectivity from Promotions and Compensation Adjustments
A common career goal for salespeople involves the movement from inside sales to outside sales.
According to Figure 8.1, the entry-level sales title is “sales associate.” To get promoted to the senior sales associate, an entry-level salesperson needs to accumulate an install base of $60K in monthly recurring revenue (MRR), acquire an average of $5K new MRR per month, and sign up new customers with an average of six months paid up front.
One important observation here was the fact that tenure was not a criterion for promotion.
Using Sales Contests to Motivate the Team
I ran a sales contest almost every month, especially in the early years of team development.
Align the contest with a short-term behavior change desired for the majority of the team.
For example, you may fear a summer slump and want to boost activity in June. This desire would be difficult to pull off through the commission plan. However, an activity-based contest in June would do the trick.
Make the contest team-based.
If there are 12 people on the sales team, form four teams of three salespeople and have the teams compete rather than have every man for himself.
Make the prize team-based. In addition to making the contest team-based, choose a reward that the team experiences together.
Send out updated contest standings every night. At least once per day, the contest standings should be published to the entire sales team, if not to the entire company!
Choose the time frame wisely.
Monthly contests are ideal.
Avoid contest fever.
Run one contest at a time for a given group of salespeople.
Developing Sales Leaders—Advantages of a “Promote from Within” Culture
“Focus on leadership skills, rather than general sales management skills, when developing future managers internally.”
The 12-week sales leadership course curriculum is listed here.
Managers need to be patient with their salespeople. As a manager, it is painful to hear a salesperson mishandle an objection and not speak up, but it's essential to that salesperson's development. He needs to skin his knees. The coaching will come afterwards.
But often, the “weak” salespeople just need some effective coaching and someone to believe in them for a few months before everything starts to click.
Part IV The Demand Generation Formula
Converting Inbound Interest into Revenue
The Most Common Mistake: Don't Pass All the Leads to Sales
Regardless of whether you are coaching your salespeople to leave three voicemails or 12 voicemails, the final message should always be the “going negative” voicemail. “Hi, John. Mark at HubSpot. I left you a few voicemails with suggestions and best practices on Facebook marketing. I have not heard back from you. I am going to assume that Facebook marketing is no longer a priority for you this year. Give me a call if it ever becomes a priority again.”
For whatever reason, the “going negative” voicemail has the highest callback rate.
We had one team that called the inbound leads exclusively. They got really good at using specific tactics to engage with these inbound leads. We got really good at sizing this team in order to optimize the lead flow per salesperson and the time spent on each lead. We had another team that had to get to goal by cold calling.
Part V Technology and Experimentation
Running Successful Sales Experiments
A successful innovation culture requires all employees to feel like they are “CEO” of their functional area. To be CEO, they need a full picture of the happenings within their business. As such, all of the monthly financials were made available to every employee.
The tactical priorities of the overall business as well as those of each executive were published on the wiki and reviewed at company meetings.
Monthly updates on progress against the operational plan were reported to the entire company.
Then consider joining the 30,000 other people getting the Monday Medley newsletter. It's a collection of fascinating finds from my week, usually about psychology, technology, health, philosophy, and whatever else catches my interest. I also include new articles and book notes.