My $335k Mistake: Lessons on Building an Effective Sales TeamOct 09, 2023
I lost over $335,000 before figuring out how to build a sales team.
Back in 2002-2005, I built the sales team for a fintech venture I co-founded.
I was a complete novice when it came to recruiting and leading a sales team.
I was pretty good at sales and spent 2 years teaching solution selling. But I’d never worked for a sales manager or led a sales team. I had no idea what I was doing.
But I knew that if we wanted to scale, I needed to build a team.
I made classic mistakes in those early days that cost us a lot of time and money. We learned the hard way that there are no shortcuts to creating an effective sales organization.
Attempt #1 - Hire Outsourced Sales Team
My first move was to contract with an outsourced sales firm. They claimed to have strong relationships with our target customers. They had worked with our most direct competitors and had a “rolodex” full of prospects ready to take meetings.
I was naive enough to buy the hype and hired them. For $10,000 a month I got an account manager and a biz dev rep.
But their supposed contacts didn't pan out. They struggled to even get in the door with most companies on their list. And the few meetings they did land went nowhere, because those prospects didn't have a need for our product. They just took the meetings as a courtesy.
After 6 months and $60k invested, all this team produced was 10 lame intro meetings.
In the end, the "rolodex" I paid for was ineffective at driving real opportunities. And the team couldn't adapt or hustle to open new doors.
Trying to help them succeed, I sourced a hot opportunity myself and did all the work to tee up the deal. In the end, I did 90% of the work to close that deal, but I still had to pay a $5k commission on the $50k sale.
We fired the firm.
Attempt #2 - Hire Experienced Salespeople
For my second attempt in building our sales team, I decided to bring sales in-house and hire some seasoned pros. I figured experienced sales reps could hit the ground running without much ramp-up.
One of the reps I brought on came highly recommended from an existing client. He had been the top seller several years in a row at one of our competitors.
The other salesperson also had an impressive track record of results. She knew our target market and had worked for a couple of our competitors.
On paper, they both looked like absolute rock stars.
Because of their experience, I didn't feel like I needed to train them much. Frankly, they should have known the market better than me. I gave them a basic orientation to our product, target market, and sales process and turned them loose. I figured they'd be self-sufficient.
Once again, I had miscalculated.
The veteran seller I brought on from a client recommendation was much older than me. I have to admit I was a little intimidated by his age and experience.
When he got a foot in the door with NASDAQ, I didn't manage the opportunity tightly. I let him take the lead, and he immediately started discounting our pricing before even determining if there was a real need.
Throughout the sales process, he kept dropping our price, eroding our margins significantly. By the time we closed, the deal was barely over $100k - a fraction of the value it should have had.
The other seller in that team was a flirtatious woman who used inappropriate behavior to get in the door with our mostly male audience in the financial services industry. To be honest, these old-school techniques worked in the 1990s. But it was not the kind of brand impression I wanted. And while she did get in the door with some prospects, she never closed a deal.
After a year, we let them both go.
Attempt #3 - Hire Another Sales Team + Hands-On Sales Coaching
I made a huge change in strategy on my third attempt to build our sales team. This time was all about intense coaching and control. I still hired salespeople with experience in our target industry. But this time, I looked for people who were coachable.
After the last failure, my partner and I realized we’d need to invest serious time training, managing and overseeing every deal. No more handing over the reins.
Every week we spent hours talking about our customers, their situations, and their business and technical needs.
I developed a sales playbook to help them gain a deeper understanding of clients. I gave them questions to ask and tips for probing. I provided detailed buyer personas. We had them shadow our customer support teams to get a better understanding of what the clients were trying to accomplish.
I invested time reviewing their prospecting process and refining their outreach messaging. I listened to their cold calls and helped improve their positioning, questioning and objection handling.
Before any big prospect meeting, we had extensive prep sessions. I wanted the reps to know how to do solid discovery so they could fully grasp the prospect’s needs. Then I helped them properly position our solution.
After each meeting, we would debrief everything that was said and adjust strategies as needed. I helped shape demo plans and sat in on every major presentation.
I also edited every proposal before it went out. I wanted to ensure the deal structures and pricing properly conveyed value. (no more discounting!)
Coaching and managing the team this closely became over 50% of my job. But it was the only way to ingrain in them the knowledge and skills to succeed long-term.
There was still a ramp-up period. It took the better part of a year before the new reps really hit their stride. But eventually, they were able to consistently deliver results.
Those early missteps taught me that sales execution can’t be outsourced or abdicated. It requires leaders to roll up their sleeves and actively invest in their people.
Had I understood that from the start, I could have saved ourselves a ton of money and lost opportunities. But eventually we figured out the right model by committing to hands-on coaching.
The lessons from those early failed attempts heavily influence how I advise companies today. Know that while sales tools and systems are important, they don’t replace diligent coaching and management.
Our LinkedIn Prospecting Accelerator will help them get their foot in the door with ideal prospects. But they’ll still need your help to understand who to pursue, what to say, and how to do an effective discovery call.
If you want your team to succeed, they need leaders who will work in the trenches to help them develop. It takes a lot of effort up front. But once your reps are truly trained and equipped, that effort pays back tenfold.
Those early missteps taught me valuable lessons that still influence me today:
- Sales execution can’t be outsourced or abdicated. It requires leaders to actively invest time into coaching and development.
- Experienced hires still need strong training and management. Don't assume they can self-manage.
- Sales tools and systems don't replace diligent and consistent sales coaching. You need managers committed to working in the trenches to build skills.
- There are no shortcuts to building an effective sales organization. It takes intense effort upfront. But once your team is truly trained, results will follow.
- There will be a ramp up period. But a year of intense coaching paid off through consistent sales results.
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