Don’t Make the $100k Sales Person Mistake

Don’t Make the $100k Sales Person Mistake

Shoot The Moon
Shoot The Moon
Don't Make the $100k Sales Person Mistake

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In this episode, the team talks through:

  • Why sales people are important
  • What a company needs to think about before hiring a sales person
  • What you need before hiring a sales person
  • The costly mistakes that can be present when hiring sales people and what to look for in your hire



Mike Harvath  00:03

Hello and welcome to this week’s Shoot the Moon podcast, broadcasting live and direct from Revenue Rocket  headquarters in Bloomington, Minnesota. As you know, if you’re regularly tuned into this podcast ready to rock it is a world premiere growth strategy and m&a advisory firm for tech enabled services companies. Today, I’m pleased to have my partner Ryan Barnett with me in the studio Ryan, welcome.


Ryan Barnett  00:30

Hey, good morning, Mike. Thanks for having me here. today. We have been getting a lot of questions lately about sales teams and sales teams effectiveness and putting sales teams in place and, and Mike, you’ve been selling things for I think all of your life going back to way back way back to the Apple days and distribution days, and you’ve learned a trick or two. Today, I was hoping that we could pick your brain a bit on once you’ve hired a salesperson or even taking a look at should you hire a salesperson, we just recorded a podcast on that it’s out there on your favorite podcast platform. But we titled this one kind of the don’t make the $100,000 salesperson mistake, and how hiring a salesperson won’t fix your sales issues. And Mike, just let’s get started on this topic. Why is it important for or what things do companies need to think about before hiring a salesperson?


Mike Harvath  01:33

Yeah, thanks, Matt. And it’s a it’s a very interesting topic, one that I’m really passionate about, I think, you know, when you think about, if you’re an entrepreneur that started an IT services company, you know, you had to figure out how to sell work, right, as a founder, and what it was only you, you had to sell some work in order to kind of get the ball rolling in the business. And, you know, maybe have continued to do that all along. Or maybe you’ve hired some salespeople and stub your toe a few times. But bottom line is you have to build an infrastructure ahead of and around a sales person for them to be successful. And oftentimes, we hear particularly from technically oriented business owners, that either they feel they’re not very good at sales, or they don’t want to be selling, or it’s just something they’d prefer to be doing something else in the business versus selling. And I think as much as you know, that may be the case, you’re probably were the first salesperson for your business. And probably even today, the best salesperson in your business, even though you may not see it that way. But What’s critical is that, you know, having a clear understanding of your ideal prospect profile, being able to build some marketing and lead gen, infrastructure, and execute on that plan. As well as having a strong sales process, and a profile of what a successful salesperson looks like, are all prerequisites to hiring a salesperson. We’ve certainly seen many, many folks kind of in our orbit, if you will, or people that we’ve worked with that have hired us to help them optimize their growth strategy. hire salespeople prematurely. I call it the $100,000 mistake, right? Because none of those, none of that infrastructure was actually in place. And if they have taken that, you know, $100,000 and invested in building that infrastructure at a time, when they did hire the salesperson, they would have been able to, you know, at least lay the foundation for a successful hire. And, you know, I think a lot of folks just think hiring, that salesperson is gonna solve the problem. And the point here is that that’s not really the case, you have to have all these other components to really be successful at building a sales organization.


Ryan Barnett  04:03

Yeah, I think that’s a good start. I think one of the things that we run into oftentimes is there are such intimate client relationships within the technology world, that oftentimes, sales can almost be perceived as a dirty act or a dirty word. And I’d like to say that’s a first line of thinking is that the having a sales motion throughout the company, whether it’s someone opening a door in business development, rep, someone who’s working in in farming accounts or someone who’s finding new business, it’s critical for those functions to be engaged and actually embracing sales as a function that is important in a company. A lot of firms that we deal with referral is the number one channel and if you’re looking to grow the company, you’re going to have to break through just referrals and working through people Now that you already know, and start to embrace sales is something that is actually a critical and vital to the, to the growth of the firm.


Mike Harvath  05:09

I would also add on that, Ryan, that ahead of that, more importantly, is understanding who your ideal prospect profile, if we’ve talked to countless firms that say, you know, we kind of work with these kinds of companies, but you know, when pushing them to found anybody who’s willing to hire we’re gonna work with. And that is a mistake, at the end of the day, it takes very takes quite a bit of discipline, to align the business to focus on a particular target market. And once you do that, and figure that out, all of the follow on marketing motions get much easier. I think where a lot of firms get stuck, is they again, we generally do this function, let’s see accustomed development or managed services for small businesses or this or that, but they don’t really fully think about, you know, what is their ideal prospect profile? How would they reach them? Where are those folks this, and because of that, they can’t effectively market because they’re just too thin on marketing abroad. They’re trying to market their technical competency and their functional competency, and they’re not aligned vertically. You know, we’ve obviously recorded a lot of podcasts on some of these topics. But at the end of the day, if it’s a shotgun, you’re not going to be very effective. It’s got to be a rifle approach on the m&a side, or I mean, on the customer acquisition side, in order to be effective in marketing and effectiveness and marketing or having consistent marketing motion is a prerequisite to really being effective in sales. And so I think when you think about your sales problem, it sort of manifests itself maybe as a sales problem. But really, oftentimes, it’s a, it’s a problem about more of a bigger problem and more of a growth strategy problem, which is, whose our IPP. Are we effectively marketing to our IPP and creating interest? And then if we are, how do we then translate that into a strong sales process? One that’s, that’s discipline, one that is organized, like what we call a flywheel or an assembly line, meaning that all of the components have been sort of baked, and that you could sell sort of a limited set of services that, you know, your IPP will want. Those are all the things in order to lay the foundation for having successful sales in a tech enabled services business.


Ryan Barnett  07:43

Mike, I think you touched on something that we’ve worked with, where a company really needs to specialize in something that you do. So you can’t do application partnering, application development and cybersecurity, managed services, rpa, and everything else it expect a salesperson to understand or even find a qualified account without some specialty. So out of all those that acronym soup, you have to ideally pick one or two that you’re really really good at, and enable your sales team or person to look for opportunities that fit that specialty. You’ve also alluded to the vertical market focus. Once you specialize on a technology that specialized that technology has to be adopted for the needs of a market who have really very niche concerns. We’ve seen some very interesting companies that have found very niche businesses in which they can grow the business, actually through referral, once you get into the vertical, but first, they had to understand the critical needs of that industry and execute well on it. And the third one, and this is probably the part where most companies really start to fall down is that it’s very easy to look at every solution is something that needs to be custom built. And as a CEO and owner, you can often walk into a firm, realize I can buy here’s the problem, here’s all the tools, I can solve it and I can go solve that. transferring that knowledge to a new salesperson is nearly impossible, unless you give them some narrowed set of offerings to execute upon selling. So it’s critical that you productize your offerings in a way that allows the salesperson to identify the need, apply the specialty that you’re at, target the industries that you’re looking for, and within that the size of the industry and the geography of the companies that you’re dealing with. And then sell them a finite level solutions that help open the door and then move to your to your offering. It’s that we work with many firms that to institute that In this process to develop those offerings to take hit those compelling needs that reasons to buy and to go execute campaigns, that helps make salespeople actually have something very discreet to sell, instead of selling the impossible of a services type sale.


Mike Harvath  10:19

I would also add, Ryan, that, you know, what’s really interesting here is, as we’re kind of coming up to Super Bowl for 2023. Yeah, we’re looking at that coming in a few weeks here. You know, there’s the whole concept of playing offense and playing defense, a lot of what we’re talking about here is creating a platform so that your salespeople can play offense effectively, it is required in a tech for tech enabled services business that you play offense, certainly, you can play defense, and you probably have that doing that pretty effectively. Meaning that you can respond to a lead or referral, and then have a conversation with someone and then determine how you might be able to help them. And the reason is, you probably have some implied credibility with that buyer, because someone they trust has probably made a referral or connection, someone that they know, or someone that they have a relationship with has made that referral. So you have some implied credibility, some goodwill, if you will, to be able to utilize if you play offense, the only way you get that is if you have the very narrow niche that you’re targeting, as it relates to productized, offering and vertical and the intersection of those productized offerings on vertical. Because that particular buyer wants to wants to perceive you as a low risk option, you get a little bit of that with a goodwill in the referral. Even if you don’t have it all bait, you don’t get any of that, if you’re sort of doing Greenfield lead development lead generation, or sales to someone that’s never heard of you. So you have to create an environment where you can do that. And you do that by having a very narrow intersection of the solution where you’re an expert, or the offering and the vertical market, because that buyer looks to say, Where have you done this work in companies like mine, so that I can have confidence or I can trust that you know, what you’re doing in my business. And so, you know, that’s just more food for thought, I think a lot of you know, technical services on it push back on the concept of verticalization. Because they say, Well, I don’t want to say no to anybody. Again, this is a hint that you’re probably playing defense. If you’re effectively playing offense, and you want to be, you know, the number one or number two firm in your market that services are particularly narrow, niche and vertical solution. You don’t worry about that stuff. You know, you’re effective at creating demand and conversations. And then because you’ve positioned yourself credibly, you can move the sale along. And I think that’s something that needs to be certainly thought about as you go to market. You know, have we historically played defense? How do we pivot to playing offense? And you can certainly change your thinking about that. I think from our perspective, you know, I’ll play a little commercial, we certainly do a lot of that kind of work and our growth strategy advisory team here, and helping firms to become much more focused on where they have the highest likelihood of being successful. And part of doing that helps you also eliminate competition.


Ryan Barnett  13:40

You’re absolutely right, and it gives marketing an opportunity to go execute as well. If I look at before you hired a salesperson what things do you need, you need a target market you’re going after. And by the way, it’s could be someone that’s got a great Rolodex, but oftentimes most it’s unless it’s a Rolodex in a in the vertical markets that you go after, introduce a brand new introduction to random firms won’t help you any farther than anyone who has a more specialized offering. So the other part, once you have that Prospect Profile found out, it certainly helps to have some kind of air cover from marketing. Marketing shouldn’t be able to provide a list of leads for you, and a number of companies that need proactive outreach. It should be reaching out to those companies through advertisements and through marketing activities. So whether it might be a display ad, a LinkedIn ad or a Facebook ad or meta something on the metal property, you should be able to at least target companies and start to soften the shore. So when your sales team actually executes, they are there to target the right people who have already heard of you and have already have options. The other part is if you’re looking at this, and the marketing is in place and leads her to be in generated and leads or been following up on sales teams thrive when they have a bit of structure, they might grumble a bit about filling things out in a CRM, or a salesforce automation system. But the very least they need some kind of process. Mike, can you give us a little insight on what process are the tools the salesperson needs, or what a company needs before you hire a salesperson?


Mike Harvath  15:27

Yeah, I mean, I think at a very baseline, you know, you need to have a product size offering and pricing. And that sounds like a simple thing. But it’s not so simple, you can’t create a science project every time you do a deal. So the point that Ryan made earlier, you either need to sell a wedge, which we think is a good opportunity, oftentimes, those are assessments or early phase engagements to scope, a particular amount of work with a client, or a very easy to buy solution that has a good value proposition. And it can’t be something where you need to go spend a week with a client trying to determine what their environment is, what the situation is, and, you know, all singing, all dancing solution customized for every customer, if you do that, you’re gonna have a very challenging time trying to be successful. So salespeople need a very defined solution set to be sold to a very specific type of customer, that would typically have a very specific problem. And with that, you have to have some very easy to align pricing model. And there’s a variety of ways to do that. But you know, sometimes it’s based on the scope of the project. Sometimes it’s based on the client’s ability to pay crazy sounds, sometimes it’ll be more of a subscription, it just depends. But it needs to be a way that the client can easily understand your value proposition and make the buying decision. Most buying decisions are made emotionally. So if you haven’t made your offering easy to buy, you’ll sort of miss the window of opportunity for them to acquire or do business with your company. Because they’re not going to make an emotional buy over a period of weeks of you doing discovery, it’s usually something that is made at a particular inflection point in the sales process. So that’s pretty critical, right? To find solution for a defined market at a defined price. Also, you need an effective CRM system, CRM system should be connected with marketing, you should understand what marketing has been done to an individual target, where they are in the sales process, you need to understand the concept of a marketing qualified lead and a sales qualified lead. And once with sales qualified, how you’re going to move them through the buyer journey, as some some folks call it, and then what the disposition of that is, whether it’s a successful sale, or whether it’s likely to be successful later, or whether you’re just going to determine that they’re not qualified, right? I mean, there’s not too many doors to open here, right, it’s usually a good opportunity. Now, it could be a good opportunity later, where you’re going to turn it back to marketing for long term nurture, or you’re going to determine that, because of some reason, they’re outside of the bounds of the IPP, that they are, that they are not qualified. And, and then I think, you know, if those things are in place, and you can measure sort of the activity that gets aligned with what you determine is success, I think you’d be pretty surprised with the results. I would also argue, and this is a mistake that a lot of people make in our industry, they confuse hunting with farming, or you know, what’s involved with working with existing clients, or existing friends to the firm, about getting additional business versus hunting, which is finding new Greenfield companies and have never worked with your business. The skills that are required to do those two things are very, very different. And we recommend that most sales organizations have different people doing those two things. Now, it’s easy tendency, especially if you’re a small business to say, Hey, we got him or herself person to do hunting and farming. And, you know, understanding may not be effective at one or the other. They may have a tendency to be better at farming or better at something. But I think the more mature sales organizations realize that those are different roles and typically different people and their compensation plan should also be different in those roles. And both of those things are required for long term success in sales.


Ryan Barnett  19:45

I would add to that Mike that, I believe even that hunting needs to be into a bit of scouting and tossing the nets compared to the hunter who might make the final 10 marks To finish a deal, there is a personality type that is great at opening doors and getting to an opportunity. And there’s a different personality type that is there to get the deal done. And if you have the right processes in place and the right team in place, you should evaluate what you need in your sales process. Do I need someone to get more on my current accounts? I need someone to crack open a door? Or do I need someone to get a deal done once that door has been opened from marketing and business development?


Mike Harvath  20:35

I’ll add Ryan that I think if you’re kind of new to adding the sales function your business, you’re probably already doing farming pretty effectively, right? So you may do that through a project manager role or an account manager role or even as a leader in the business, I might be reused spend most of your time, right? Taking care of your existing clients looking for additional business, asking for referrals, those are all kind of farming activities, right? So I wouldn’t want you to read into Hey, you gotta go out and hire two sales guys, or, you know, you got to have a complete infrastructure around, that has to be built around farming and hunting, insists, don’t confuse sort of the role, responsibility and personality types. In those two roles, you may already have a complete ly effective farming function. And so by the business, you just have to understand what it is and how it works and sort of enable that function for success as well as sort of think about some of these things on the new company, new client, Greenfield acquisition of customers.


Ryan Barnett  21:42

Mike this has been a great topic here today, if I if I summarize a few things that I heard before you go and hire a salesperson, you need to have a specialty in the market, you need to be able to have a product focused on that market and your service are productized enough that a salesperson can actually go and sell. So things like an offering offering description and pricing are critical to finding an opportunity for your salesperson to go execute upon. You need some basics in place like it needs some marketing, you need some tools like CRM or Salesforce automation system. And you need ability for that salesperson to clearly track their work to help execute. I heard a bit about making sure you have the right roles in place when you do find a person. And that can be business development, or accounting account type reps. And oftentimes those those roles are vastly different. You know, we get this question almost daily, super critical for us to focus on and it helps out throughout your entire sales sales process to get these steps right before you start making some of those big hires. And once you do make those hires, they’ll be much more successful and executing. But that mic, I’ll toss it over to you for any final comments and bringing the show to an end.


Mike Harvath  23:07

Alright, sounds good, Ryan, thanks. You know with that, we’ll tie ribbon on it for this week. And hopefully you found these topics valuable and helping to enable growth and success of your tech enabled service business. Please tune in next week, unpack and explore more topics associated with growing your business and related m&a topics. Take care and have a great week.