Recruiting for sales: Your first hire in a tech startup

For most tech startups, one of the first critical decisions is how to approach sales. The outcome of this decision can make or break your success.

Follow these key steps when recruiting for sales and putting together a sales team plan designed to sustain your startup over the longer term:

Step 1: Know your sales goals before recruiting for sales

Your goals for your startup’s sales team may be to drive adoption, create a footprint and establish relationships.

Before you embark on hiring your first salesperson, consider:

  • Have you determined the amount and timing of revenues required in your business plan? (Has it changed?)
  • Do you have something to sell? Is the product ready?
  • Is there a loss leader product?
  • Do you need partnerships or a sales team, or both?

Step 2: Understand your tech startup’s selling ecosystem

You will also need to understand your market and the selling ecosystem. Consider:

o   Create demand but not buy your tech product
o   Influence demand through technical standards and industry regulations
o   Buy your product but only through partners or resellers, not directly from your startup

Step 3: Figure out what sales DNA makes sense for your tech startup before recruiting for sales

Create a sales job description that reflects all of the considerations from the Steps 1 and 2. Ensure that the job description includes the attributes or sales DNA you seek in your salesperson.
Consider the following descriptions of the “hunter,” “farmer,” business development, and channel management sales roles:

The hunter salesperson

  • Will sell the product you have now
  • Will sell what is easiest
  • Will drive to close deals
  • Will use and overuse every lever available
  • Will continually hunt out new business
  • Will not focus on post-sales activities
  • Will place lots of demands on your team to respond to customers’ wants and needs

Compensation features for the hunter:

  • Higher “at risk” pay—the portion of pay that is variable or dependent on specific targets and/or goals
  • Incentives based on quotas
  • Revenue or margin targets

The farmer salesperson

  • Will seek and secure additional sales from existing accounts
  • Will not seek new accounts
  • Will use levers to drive repeat sales
  • Will operate more autonomously
  • Will have more focus on post-sales support
  • Will values ongoing customer relationships

Compensation features for the farmer:

  • Lower “at risk” pay
  • Incentives based on quotas

o   Revenue or margin targets
o   More support and service revenue targets

Business development role in your tech startup

  • Will focus on early engagement and teaching
  • Will usually have a more technical background or extensive sector experience
  • Will be focused on building relationships and influencing strategic decisions
  • Will be selling product and ideas at multiple levels
  • Will not be driven to close a deal (is relationship-focused)
  • Will usually pursue a target list of customers or partners

o   May focus more on the “big fish”
o   Will not uncover every stone for new accounts

Compensation features in the business development role:

  • May have no incentive, or low “at risk” pay
  • Incentives based on pre-sales milestones that are strategic and qualitative in nature and that have an indirect effect on revenue

o   Memo of Understanding (MOUs)
o   Trials
o   Partnering agreements

Channel management role for sales

  • Will focus on developing sales through third-party channels
  • Will not be focused on direct sales

Compensation features in channel management role:

  • May have no incentive, or low “at risk” pay
  • Incentives based on revenue quotas achieved through channel partners
  • Layered commission results in payments to channel manager and to the channel partner

Step 4: Match the sales DNA to your startup’s business goals and the selling ecosystem

Once you have reviewed the different options for your sales DNA and understand the ecosystem that you will be selling in, develop a hiring strategy that includes a strong sales compensation plan.

Step 5:  Consider where the salesperson should be located

Evaluate where you’d like the salesperson located. You may prefer them to be:

  • Close to the customer
  • Close to a regional hub
  • Close to head office

It can be very difficult to find one individual with multiple sales DNA styles. And, remember that as a startup’s sales needs change, they may require different sales DNA.

Once you have a plan to hire your first salesperson, the focus will be on measuring results. Ensure that you leave lots of opportunity for trial and error in order for your sales team to evolve with your overall company goals.