Read this before scaling your sales team globally
By Georgina Turner, Bailador Investment Manager
At Bailador, we help build and grow global technology businesses. One of the biggest challenges our companies face is the profitable scaling of an international sales team. In Bailador’s portfolio, seven of our 10 companies have a globally dispersed sales team, with either Inside Sales/SMB or BDM/Enterprise structures (or both).
Prior to working at Bailador, I was an Enterprise Sales Rep at Rackspace. Now in the investment team at Bailador, I work closely with our portfolio companies as they pursue aggressive growth strategies around the world.
I’m often asked: what’s the secret sauce? Scaling a sales team globally (and profitably) is hard. There is no hurdle more frustrating than the hiring, ramping and retention of quality sales reps. Consider these lessons learned from our team before you hit the ‘multiply’ button on your sales function:
Can you scale efficiently?
How much revenue does your sales rep need to acquire before they have paid back their own salary and on-costs? How long does it take for your sales rep to acquire this revenue? These may seem like simple questions, but there are many factors that affect the payback formula: speed of sales rep ramp-up, sales rep attrition, commission structures and customer churn are a few.
As a rule of thumb, sales reps should drive enough revenue to pay back their salary, commission and overhead costs within 12 months before going on to become a cumulative generator of profit for the business. If you are looking to raise venture capital funding, proving that your sales model can scale profitably on a global stage is crucial.
Location really matters
Before you go and open your much-anticipated US office in Silicon Valley, consider the following:
- Cost: Consider ‘second tier’ cities that offer great talent potential without the high price tag
- Customers: If a face-to-face sale is important, proximity to customers is as well. Also, you might be able to service multiple target markets from a single time zone (e.g. US and Europe from a US East Coast location)
- Talent: Consider who can poach from you and who you will poach from, and whether your best and brightest will be interested in relocating
Levers for growth
Managing the performance of a sales team of 10 is very different to managing a sales team of 100:
Where possible, make data informed decisions. Set up systems early on and collect every piece of data you can manage on your funnel activity and customer behaviour, so you’re armed to make better decisions
What percentage of sales performance (or underperformance) is due to productivity (sales per rep) versus sales attrition (reps leaving)? We have often found that the secret to scaling globally is keeping sales attrition in check and building up a strong base of tenured reps
Consider this formula as a simple way of communicating performance to your management team and board: “Sales growth = steady increase in productivity * increasing headcount.” Your goal as you grow is to keep productivity the same (or better) while increasing headcount
“We need more leads..!”
This is a typical sales force war cry. It’s best to determine how you will feed your sales reps with leads before you start to scale up. Putting some science behind this will help:
- Based on cohorts data and conversion metrics, how many leads do you need to service a closed won target in Month 1, Month 2 and after 60 Days?
- Are you chasing opportunities that are never going to close?
- Set some Pipeline funnel goals for your marketing team to ensure your new sales reps can hit the ground running
- Close the feedback loop so your sales team can communicate what a good lead looks like
Transferrable culture
A healthy sales culture prevents poorly qualified customers (leading to churn issues), poor sales behaviour like sandbagging and hoarding leads, and rep attrition. Culture comes from the top and that’s why it’s important to carefully select the right leader when scaling sales teams. Keep this front of mind when hiring your sales leaders as with all hires you make into your growing business.
Scaling sales teams is a tricky balance of art and science, especially with the added complexities of global markets. Taking the time to think through some of the items above can help lay the right foundations and ensure your global sales team becomes a powerful engine for growth.