Funding euphoria

Securing your first round of funding is a seminal (and often emotional) moment for technical founders as the validation and injection of capital from investors finally frees you up to pursue your dream of building a large commercially successful company.

Post-funding euphoria can easily turn into disappointment, usually at the point when you start to meaningfully engage with the market for your solution for the first time.

Even if you already have a handful of design partners, securing meetings with prospects at this early stage can often prove much harder than you had previously imagined, or worse, you have lots of inbound interest and a calendar full of great first meetings where you hear genuine excitement and enthusiasm for your superior technology, only to find that prospects subsequently become unresponsive.

If you are in a particularly “hot” technology space you may even be getting beyond first meetings only to find that no matter how many people you engage with at a prospect, revenue is still (frustratingly) not forthcoming.

The longer this continues, the easier it becomes for you as a founder to mis-diagnose the root cause of the problem and potentially lead yourself into very dangerous territory.

Post euphoria mis-diagnosis

Reflecting on a lack of progress with securing meetings or progressing deals, it is quite common for founders to reach one of two conclusions:

• They need to make it easier for prospects to try out their solution before engaging with them

Or

• Their lack of sales experience is the reason why deals are not progressing

This is completely understandable, but either of these conclusions is rarely, if ever, the real cause of why initial engagement with the market and trying to generate some early revenue is not working.

More critically, without proper consideration, either of these conclusions could lead to the start of a downward spiral or “doom loop” of continued sales failure that can cause serious or even unrecoverable damage to a founder’s cash runway.

Increasing distribution is very rarely the solution

On the face of it, Product Led Growth (PLG) is a very attractive option to consider if you are struggling to secure prospect meetings or if you feel you are lacking the necessary skills to progress deals.

The allure of making it easier for prospects to experience the value of your solution without you having to engage with them is often unintentionally reinforced by a tech media filled with story after story of AI companies securing valuations in the billions after signing up swathes of users on their free plan.

The harsh reality is that these companies are outliers, because their solutions all share these specific characteristics:

1. The problem their solution addresses is easily understood by anyone in the prospect’s company
2. It is easy to configure (or requires no configuration)
3. It can be deployed by individuals (or requires no deployment at all)
4. It does not require a change in behaviour or habits
5. The business value of the solution can be experienced very quickly
6. It is easy to share and promote the solution’s business value by inviting others to experience it for themselves
7. The business value increases as more users participate or more content is created or more data flows through the solution etc.
8. The business buyer as well as the user can easily experience the value of the solution too

Even if your solution just happens to share all of these characteristics, a good conversion rate from a free to the lowest tier paid plan is in the range of 3 to 5%, meaning you would need to attract millions of users in order to generate any meaningful revenue.

And this conversion rate is reflective of something rarely if ever discussed about PLG — that it is not a B2B sales motion.

PLG is a sales motion designed to help an individual user solve a business problem for themselves, and so any revenue generated from it is limited by what an individual can spend on their corporate credit card.

So unless you are able to attract millions of individuals to try the solution and then successfully convert 3 to 5% of them to a paid plan, you will need to find some other means to secure larger deals in the tens or hundreds of thousands.

Sticking with a product led approach you could try something similar but slightly different to PLG — a PLS or “Product Led Sales” motion.

PLS is a B2B sales motion where a free plan is constrained in such a way that it allows someone to make a sales intervention with an individual user in order to determine if there is a larger deal for the unconstrained solution to be done with their company.

The unfortunate reality with any product led approach, including PLS, is that no product, no matter how technologically advanced or viral (including those portrayed in the tech media as being so good that they “sell themselves”), is good enough on its own to tell the story required to bridge the gap between an individual user and everyone else in their company who needs to be involved to sign off a meaningfully large deal.

So even if you adopt a PLS motion, a sales intervention by a person is still required, and post your initial funding round, that person cannot be an external sales hire.

Hiring a sales person almost always makes things much worse (and it takes a long time to realise it)

Even if you have discounted PLG or PLS as a solution to your problems, making a sales hire at this early stage of your company’s life is pretty much guaranteed not to accelerate deals, but rather have the opposite effect and speed up the “doom loop” of continued sales failure.

This may seem counterintuitive or even illogical — after all if you feel your lack of sales experience is the problem, then surely spending some of your initial funding to hire the sales experience you are lacking makes complete sense?

The reason hiring a Sales person rarely works as a solution to securing more meetings or progressing deals, stems from a fundamental misunderstanding by many first time founders (and even some investors), of just what it is that a good sales person actually does and does not do, and more importantly what motivates them to join any company.

All good and experienced sales people are at their core motivated by the same goal -

To earn as much money as possible by consistently achieving or over-achieving on their quota.

At the very least, a good sales person will be looking for a guaranteed way to double their base salary.

And in order to achieve this goal, they understand that any company they work for (or are considering working for), needs to have already figured out these three foundational go-to-market elements -

1. An Ideal Customer Profile (ICP)
2. A basic sales process they can easily follow to consistently close deals with ICP prospects
3. A method of consistently generating high quality leads for this ICP market

Without these elements already being in place, a good sales person knows that they cannot satisfy their prime motivation of earning as much money as possible.

You might be thinking that despite not having these elements in place yet, you could still attract a good sales person to join, as surely they would jump at the chance to be an early employee at a “hot”, innovative, newly funded, cutting edge AI company like yours?

Or maybe the allure of the stock options you could offer for a “Founding GTM” role would be motivation enough for them to join and figure out these missing elements for you?

This is where understanding what good sales people actually do and do not do is vitally important for first time founders like you, as what they actually do is to -

• Refine and amplify things that are already in place and working
• Learn the existing sales process from you, and work closely with you to make it more repeatable
• Work side by side with you to make selling more predictable

What a good sales person cannot (and is not experienced in doing) is to figure out your -

• Ideal Customer Profile
• Your initial Sales process
• A consistent lead generation motion*

None of these things are in their skill set because they are not part of their prime motivation, and no matter how experienced they are, they will be relying on you to have already figured out at the very least, a v1 of these three elements so you can teach it to them.

*Even if you have figured out your initial ICP, a good sales person will only be able to generate a maximum of 30% to 50% of the leads they need to achieve their quota.

This is because every good sales person knows that -

• In order to achieve 300K in on-target-earnings (OTE) with a base salary of 150K they would need to earn an additional 150K in commission
• 150K commission at the standard commission rate of 10% would require them to close 1.5M worth of deals.
• 1.5M in deals requires at least 4.5M to 6M in qualified pipeline

And without a clearly defined Ideal Customer Profile and an initial sales motion already in place, there is no way to generate the volume of qualified pipeline they will need to make the mathematics work.

Accelerating the doom loop with a sales hire

Despite the fact you are missing these key foundational GTM elements, there are however some sales people (and even sales leaders) who will be willing to join you.

These candidates may position themselves as having experience figuring out these three missing elements, or if they have come from a similar solution or industry to yours, they may position themselves as having extensive industry expertise and a rolodex of prospects and connections that will help you to get deals closed quickly.

Because of your pressing need to find a “short cut” to sales success, it will be very hard not to be swayed by such persuasive experience.

The harsh reality is that these candidates are highly likely to be one of the following -

1.Poor to average performers

Joining a newly funded early-stage company like yours represents no real risk for poor or average performers because they are largely content to work for their base salary.

This is because they know there is a significant time lag before their lack of performance becomes readily apparent.

You may think that you will be able to spot poor sales performance in the first 2 to 3 months but taking in to account the time it takes to ramp up, build pipeline and work some deals, realistically it will take anywhere between 9 to 18 months to realise things are not working.

And during this intervening period they are hoping that they just might get lucky and your company turns out to be a rare outlier that has incredible product market fit.

These types of candidates will usually have several stints of 12 to 18 months or less in a series of companies, as this is the usual time period before their chronic poor performance starts to get noticed or addressed.

They are particularly hard for first-time founders to spot as they will often have had a longer stint at one or more established and successful companies earlier in their career.

2. Sales people (or sales leaders) who happened to be in the right place at the right time

This is often the case with middling performers who were lucky enough to catch the tailwind of a very successful company (often in a similar product space to yours).

These candidates know that technical founders like you are generally not familiar enough with what sales people do to be able to probe their experience in any significant depth, so they can rely on “success by association” to secure roles in companies like yours.

As with poor performers, they are often motivated to join an early-stage company by the promise of grandiose job titles like “Founding GTM” or “Chief Commercial Officer” — titles they can then use as a springboard in 12 to 18 months time to secure their next role.

3. Sales advisors / consultants (who were previously poor to middling performers)

Poor performers who were let go or managed out of a business can struggle to secure new roles so often re-fashion themselves as sales advisors or sales coaches.

They will usually have multiple advisory stints with early-stage companies on their resume which can be particularly appealing to technical founders like you, as on paper it looks like they have lots of familiarity and relevant experience with companies at your stage.

Often these candidates are using their advisory work as a Trojan horse for getting back into a permanent role, only this time they know they will be working for a founder who has less sales experience to hold them accountable.

Again, joining you at this early-stage represents no real risk for them.

4. Semi-retired sales leaders (who have often had a big exit)

These candidates are seldom a fit for your stage of business having usually spent years in larger more established businesses. It is very rarely the case that large company sales experience is “backward compatible” with an early-stage business like yours.

Even experienced sales leaders from the same industry or domain your solution is focused on will struggle if you do not have the three foundational go-to-market elements already in place.

Worse still, their solution to addressing your go-to-market gaps will be their “big company playbook” — a playbook which will involve large amounts of your cash runway being spent over 12 to 24 months on hiring and buying a tech stack.

By the time you realise this significant cash investment is not working, your runway is liable to be fatally depleted and your chances of raising another funding round will be non-existent.

Semi-retired sales leaders are also often bored, and although they may profess a desire to get “back to basics”, deep down they are no longer motivated to put in the really hard work required in an early-stage business like yours. For them, joining a company like yours can be more of a vanity driven lifestyle choice than a vocation.

Any one of these types of sales people will result in accelerating your doom loop of sales failure because the “blast radius” of their poor performance can easily eliminate enough of your precious time, cash runway, not to mention millions in missed revenue opportunity, to the point where you are unable to recover.

The solution is staring you in the face

The good news for you is that there is one person who has close to a perfect set of skills and experience to help you secure meetings and progress deals.

This person not only has detailed knowledge about the problem your solution solves, how it works and the types of companies and people where it will add the most value, they also possess the necessary commercial flexibility needed to get your early deals over the line.

In fact this person is the only person your buyers want (and expect) to directly deal with because the reputational risk they are personally taking by purchasing a solution from a small, newly funded company like yours is far too great for them to deal with anyone else.

This person is YOU.

Whilst you may not feel like you know how to sell, or maybe the thought of selling makes you feel really uncomfortable, the truth of the matter is that there is no one, anywhere in the world, better equipped with the necessary detailed knowledge and passion about the problem, product, personas and market to get your early deals done.

The problem you are actually facing as a technical founder is not a lack of knowledge on how to sell, but rather it is not knowing where to start selling.

Figuring out where to start selling

Figuring out a narrowly focused entry point into your total addressable market where you can best spend your limited time and resources for the highest likelihood of repeatable revenue is the most common challenge newly funded founders like you face.

This challenge is rarely if ever communicated to founders, which is why mis-diagnosing a lack of sales progress and pivoting to a product led approach or hiring a sales person too early is such a damagingly frequent occurrence.

Figuring out where to start selling involves -

1. Formulating a series of hypotheses about what your initial market might look like
2. Testing these hypotheses (in parallel) by:
3. Building lists of companies and people that match a given hypothesis
4. Working to get introductions or reaching out “cold” to these people asking for a meeting
5. Meeting with as many of them as possible to conduct discovery on their high priority problems
6. Then after enough discovery meetings in a particular market, determining which parts of that market’s hypothesis (if any) are correct and which need adjusting or removing
7. And repeating steps 1 to 3 until you start to land on the right combination of market variables (e.g. company size, industry, geography, persona, tech stack etc.) where you know from talking with enough prospects that there is a high priority problem you can solve well

The primary goal with these discovery meetings is not to sell to them, but to learn from them.

Learning via deep discovery about what their high priority problems are helps you determine if your solution as it stands is a fit for addressing them.

This process of discovery yields valuable insights on any changes you may need to make to your solution or how you talk about the problems it addresses, insights a Sales person, no matter how experienced, is capable of uncovering or actioning.

The learning gained from testing market hypotheses allows for a continual refinement of your product-market-fit which in turn maximises your chances of repeatable sales success, because as you start to zero in on the right narrow entry point in your total addressable market, you will find that meetings are easier to secure, conversations with prospects begin to progress and early deals will start to close.

Getting help to run these experiments

Setting up and running multiple market experiments takes time and effort, and this is where it does make sense to hire someone to help.

The profile of this role is very different from a sales person — it is much more akin to a smart intern or recent graduate — someone who is smart, hardworking, intelligent and motivated to build a career in tech.

This “Commercial associate” will support you on all the background work required to run these market experiments, things like building lists of companies and people, doing initial outreach (using your email address or LinkedIn), booking meetings, creating content and supporting you on follow up actions arising from your discovery meetings.

Your focus is to do the “thinking work” about the market hypotheses, positioning, messaging and discovery questions. Their job is to do the “execution work” required to secure meetings and support you as you as your deals progress.

Over time as you learn more about progressing and closing deals, they will be able to take on more and more responsibility for other parts of your fledgling sales process so you are freed up to take even more meetings in your initial market and progress even more deals to a close.

There is no magic short cut

B2B sales is hard, difficult work, and no matter how good your solution is, no solution can “sell itself”. At this early stage, “outsourcing” sales to your product or worse still, hiring a sales person, is very unlikely to lead to commercial success and is fraught with existential risk.

By accepting the fact that you are the best person in the world to sell your solution, and that your problem is not learning how to sell but rather where to start selling, you will, together with the right junior resource to support you, eventually figure out the narrowly focused part of the market where you can repeatedly find your initial commercial success.

—

Rav Dhaliwal is co-author with Ben Wright of “Founder Led Sales Explained”, a practical guide for technical founders looking to win in the rapidly changing world of AI.

Like so many aspects of building and scaling a B2B software business, there is no industry standard answer to “who should be the commercial owner of existing revenue?” as it depends on a combination of factors including (but not limited to) -

• What stage your business is at: In the earlier stages, acquiring new customers is usually the primary focus, but as you scale, retaining and expanding revenue from existing customers is just as critical if your goal is to build and maintain a large commercially successful business.
• The nature of your solution: Is it a technically complex piece of middleware requiring a lengthy implementation project or is it an end user facing line of business SaaS application that is easily provisioned? Is the size and scope of the change impact of your solution large or does it only affect the way a small number of users work?
• Who your stakeholders are: Are your buyers and users in technical roles, are they front line staff or back office knowledge workers?
• How you expand revenue: Do you need to sell more licenses, drive more consumption or sell complimentary or additional products to grow existing revenue? Is it a combination of one or more of these? And does expanding revenue involve the same deal stakeholders or new ones?
• The characteristics of your renewals: Are the bulk of your renewals automatic or administrative in nature or do they require extensive re-negotiation?

Keeping these factors in mind, there are three main options to consider when determining who should own commercial responsibility for existing revenue.

Option 1 — Account Executives

Account Executives (AEs) close new deals with prospects and continue to act as their commercial owner once they have become paying customers.

This can work well when there is a continuity of stakeholder relationships and the same decision makers from the initial deal are also responsible for any renewal and expansion decisions.

This option can also be particularly effective when the bulk of renewals do not require re-negotiation and so require less time and effort, and when expansion revenue comes from increasing consumption of the existing solution rather than from having to identify additional business problems and stakeholders.

The main drawbacks are the potential impact on new revenue resulting from AE time and effort being split between new and existing business and the increased risk of lower customer satisfaction leading to revenue “churn” if AEs decide to only focus on those customers that have near term expansion potential.

Similarly, sales performance may suffer if AEs decide they can achieve their target more easily by “farming” revenue from a few existing customers rather than “hunting” for new logos.

Option 2 — Account Managers

This option involves AEs handing over commercial ownership for new customers to an Account Manager (AM) who carries a target for renewal and expansion.

This can work well when renewals are not automatic and require additional time and effort to re-negotiate and when expansion revenue comes predominantly from selling new and existing solutions to entirely new parts of a customer’s business.

As a result, AMs are particularly well suited for when your initial deals (no matter how modest) are with larger, more complex businesses that have huge expansion potential, but that require significant time and effort to nurture to fruition.

The main drawback of this option is that it can unintentionally incentivise short-term behaviour amongst AEs.

In particular, making unrealistic promises to get deals done or closing deals with “bad fit” prospects that have little or no chance of being successful with your solution are just some of the potential by-products when AEs know that the financial impact of revenue “churn” falls to an AM.

As a result, new deals require proper scrutiny and oversight to minimise the chances of short term behaviour causing longer term damage to the business.

Conversely, this option may be unfair (and demotivating) for AE’s who have put significant effort into closing an initial deal with a large complex prospect only to see the future financial benefit from this groundwork accrue to an AM.

For this reason, “rules of engagement” should be put in place that allow AEs to keep these kinds of customers for an agreed period of time so they have an opportunity to expand revenue before having to hand them over to an AM. These rules are especially important to put in place early if you operate a “land and expand” sales motion.

Option 3 — Customer Success Manager

This option involves AE’s handing over commercial ownership to a Customer Success Manager (CSM).

This option is increasingly finding favour with founders and executives as on the surface it makes economic sense — after all if you are already investing in a team that is working closely with customers, why not give them commercial ownership too?

The practical reality is that this option rarely if ever works for a number of reasons:

• Stakeholders: a CSMs primary mission is to ensure customers realise the business value they were promised during the initial deal. As a result they typically have to spend most of their time and effort engaging with end users, administrators and technical teams and rarely (if ever) have access to business decision makers and budget holders (see Figure 1).

This lack of access to and experience working with the stakeholders responsible for commercial decisions is a significant impediment to expanding revenue.

• Skills: Depending on the nature of your solution, a CSM may require specific industry, domain, product, project management or technical expertise to help customers realise the value they were promised. In addition, they also need to possess excellent consulting, communication, collaboration and stakeholder management skills.

Finding CSMs with the specific expertise required for your solution together with the customer facing soft skills that also have the necessary commercial acumen and experience is extremely rare and next to impossible if you have even a moderately complex solution.

• Scope: CSMs typically have a broad set of responsibilities ranging from managing implementation and onboarding projects, helping customers to configure the solution appropriately, driving adoption and integration, user and administrator training, managing support escalations and feature requests, delivering roadmap sessions and periodic reviews and so on.

Adding commercial ownership to their scope risks stretching them too thinly, impacting their ability to deliver on their primary mission of ensuring customers receive the value they were promised during the initial deal. This increases the risk of revenue “churn” and minimises the opportunities for revenue expansion.

Also, similar to option 1, performance may suffer if CSMs decide it is easier to prioritise one type of revenue over another in order to hit their target e.g. expansion over retention revenue or vice versa.

The outlier

The rare instance where Option 3 can work is when your solution is a simple consumer style service that requires no implementation or configuration, is intuitive enough that users require little or no training and where the bulk of renewals are either automatic or largely administrative in nature as opposed to requiring commercial re-negotiation.

In this scenario, CSMs are mainly focused on managing customer relationships, so with the requisite commercial training and enough time to gain the required commercial experience, they could potentially transition to being (in effect) AMs.

The ideal scenario for existing revenue

In order to build and maintain a large commercially successful business, every prospect and every existing customer requires two things.

Someone responsible for their:

• Commercial health

And someone responsible for their:

• Product health

For new revenue, these responsibilities are typically split between an AE and Solutions Engineer (SE) as it is intrinsically understood that the different stakeholders, skills and scope or responsibilities involved in closing deals at scale are difficult (and often impossible) to embody in a single individual.

To ensure alignment of their respective commercial and product health responsibilities, both AEs and SEs carry a target for new revenue, but with different commission rates and a different mix of base and variable pay.

For existing revenue, attempting to combine both sets of responsibilities into a single role (option 3) is fraught with risks, unless your solution is one of the rare outliers described earlier.

And even if it is one of the outliers, option 3 is not cost free as you will still need to make an investment of time and money on sales enablement if you are to have any hope of successfully transitioning CSMs to becoming, in effect, AMs.

As a result, applying the same approach of splitting responsibilities between a commercial owner (either option 1 or option 2) and a CSM (or another product health focused role like Professional Services) is the ideal combination for retaining and growing existing revenue.

And just as with AEs and SEs, ensuring both roles carry a target for existing and expansion revenue, albeit with a different mix of base and variable pay (with CSMs typically being on a bonus incentive plan as opposed to a sales commission plan) is the best way to ensure ongoing alignment.

Summary

With so much emphasis rightly placed on new revenue, responsibility for existing revenue can be easily overlooked until a problem arises with unexpected revenue churn or flatlining / declining Net Revenue Retention.

Avoiding the temptation to embody all the responsibilities for existing revenue into a single role by mirroring the roles and incentive structure used for new revenue provides a simple and effective model for building and maintaining a commercially successful business for the long term.

In the previous article in this series, we looked at the serious financial implications for early stage founders of mis-hiring a single Account Executive.

Specifically, how the typical time lag of 6 to 18 months before poor or middling performance becomes apparent can fatally damage your runway to the point where the resulting lack of commercial progress means you are unable to raise another round.

Selection failure

Despite the serious implications of mis-hiring commercial roles, the failure rate of Sales hires in early stage companies remains consistently high, with some of the most common reasons being the founder -

• Prioritised speed of hiring over thoroughness
• Outsourced much of the hiring and interview process to others
• Accepted the candidate’s (on paper) experience at face value
• Over-indexed on marquee company names on the candidate’s resume
• Was “dazzled” by the candidate’s confidence / charm / authority / air of credibility / apparent “culture fit”
• Succumbed to investor pressure to hire quickly (or to hire a specific candidate)
• Relied on “gut instinct” to make up for a lack of experience hiring commercial roles

Data collection

Putting together a Hiring Scorecard is the first step in minimising selection failure, because unlike a job description which lists the activities you want a candidate to do, a Hiring Scorecard defines what measurable outcomes a successful candidate needs to achieve, and more importantly how you want them achieved.

The how or behaviours you are looking for are critically important to define before you start meeting candidates because people whose behaviours do not fit the role, team or company ultimately fail.

A Hiring Scorecard also helps to minimise bias and subjectivity as it provides every interviewer with a clear definition of what they are required to test and a standardised way to collect and rate the data they have gathered about the candidate.

Going slow to go fast

Despite being a powerful tool to help minimise the chances of mis-hiring, the effectiveness of a Hiring Scorecard relies on it being paired with a structured interview process.

Early stage founders regularly trace the root cause of mis-hiring to not having put in enough time and effort to define a properly thought out interview process, opting instead for speed (which invariably involves cutting corners and an over-reliance on their or their team’s collective gut instinct).

Given the serious financial implications of mis-hiring commercial roles, spending a few days upfront putting together a Hiring Scorecard, defining how many interview stages there will be, what scorecard competencies will be tested at each stage and who will being doing the testing, not only minimises the financial risks of mis-hiring, it also saves that other rare and precious founder commodity — time.

A structured interview process

The combination of a Hiring Scorecard paired with a structured interview process allows founders to filter out unsuitable candidates much earlier in the hiring process, saving both time and effort for everyone involved.

This combination also helps introduce reliable and scalable hiring practices early, ensuring that as the company grows, hiring managers are not relying on self-taught or inconsistent approaches such as sticking with their favourite pet questions, aggressive or trick questioning, logic problems, hypothetical scenarios, irrelevant chit chat, constantly selling or any of the other myriad hiring “techniques” they may have picked up along the way.

Example: Hiring an Account Executive

For the remainder of this and the next two articles in this series we will demonstrate this combination in action by taking our example Account Executive Hiring Scorecard and pairing it with the following structured interview process -

1. Screening stage
2. Skills stage
3. Career deep dive stage
4. Simulated work exercise stage
5. References stage

These are the minimum number of stages founders should consider if they want to ensure they are gathering the right amount of data for an Account Executive hire.

As most hiring scorecards will have anywhere between 7 to 9 different skills and behaviours to test, it is unrealistic for all of them to be meaningfully covered in a single interview.

For stage 2 in particular, founders should break down the hiring scorecard into groups of 2 to 3 competencies and assign them to different interviewers to cover in a series of competency focused interviews.

To balance thoroughness with speed, founders should conduct the first interview of stage 2 focusing exclusively on the first competency in the Account Executive hiring scorecard — the candidate’s “Track record of sales success in an early stage start-up”.

If the candidate looks promising after this first skills interview, only then should they be moved forward in the hiring process to the remaining competency focused skills interviews.

We will cover the interviews that make up Stage 2 in more detail in the next article in this series.

For the remainder of this article we will look at Stage 1, the screening stage, in particular -

• The goal of the screening interview
• Who should conduct it
• The screening interview format and duration
• Questions to ask
• What to look out for in the candidate’s responses

Stage 1: Screening interview

Done well, a good screening interview acts as an effective filter for qualifying out unsuitable candidates as early as possible in the hiring process.

The aim of the screening interview is to check that the candidate’s expectations match the role you have on offer and to test their intrinsic motivation to join an early stage company like your

Candidate expectations may include things like compensation level, job title, span of responsibility, or pace of career progression. Depending on your jurisdiction, it may be possible to ask for things like their compensation expectations when they first apply for the role.

The example questions in the screening interview template below are designed to elicit the candidate’s expectations so you can see if they are a match for the role you are offering.

These questions also help you understand if they are intrinsically motivated to join an early stage company like yours which is the other critically important goal of the screening interview.

Poor or middling performing Account Executives like to join earlier stage companies because there is usually less sales process, rigour and oversight to keep them in check and the relative lack of product & market maturity of an earlier stage company also offers them more ways to excuse any lack of results.

These types of candidates will often have multiple short stints at early stage companies, or if they’ve been fortunate enough to catch the tailwind of a breakout company that scaled significantly such that they stayed there for several years, they will usually have left at the point that that company’s sales organisation became more professionalised.

In the screening interview you are therefore looking for valid career reasons from the candidate as to why they want to leave their current role for a less commercially mature organisation where there will almost certainly be more obstacles for them to overcome in order to hit their quota.

Valid career reasons may include (but are not limited to), lack of professional development opportunities, limited or no career advancement opportunities, compensation requirements, wanting a faster paced, less hierarchical, less bureaucratic work environment, desire to be in an emerging or growing technology sector or redundancy.

The following template provides questions and tips for conducting a screening interview.

Screening interview template

Who: Founder (or a recruiter if you have one)

Format: 30 min call (20 mins asking & listening / 10 mins for their questions & selling your start-up if needed)

Goal: Save time and effort by eliminating unsuitable candidates quickly by aligning on the candidate’s career goals, salary and role expectations.

Questions: Ask these same questions to every candidate so you can compare data -

• “In your next role, what career goals are you looking to achieve?”
• “What are you really good at professionally?”
• “What are you not so good at professionally? What still needs work?”
• “Is there anything you are not interested in doing professionally?”
• Who were your last 2 bosses and how would they rate your performance on a scale of 1 to 10 when I ask them?”

What to look out for:

• Do their career goals match what you have to offer in this role?
• Do they have valid career reasons for wanting to leave and join you?
• Are the things they say they are good at listed in the hiring scorecard? If so, can they provide examples?
• Are the things they are not good at or do not want to do requirements listed in the hiring scorecard?
• Are their answers really strengths in disguise?
• Do they speak with enthusiasm about professional skills that match ones in your hiring scorecard?
• Do their salary and career progression expectations match what you have to offer?
• Are they parroting back what is on your website?

Interview tips:

• Spend 80% of the time listening and 20% asking questions
• Always give the candidate the first word. If you speak first about your company / role they may subtly parrot it back to you and appear to be a better fit than they actually are
• Similarly, leave any “selling” of your company / role to the end of the interview. You can weave any “selling” into your answers to their questions
• For any discussions about their previous managers, make sure to use “When I speak with them…” as opposed to “If I speak with them…” This is a subtle way of getting across that you will be validating everything they are saying

Drilling down

The most important aspect of any interview is to always follow up every answer a candidate gives by drilling down further.

Effective questions to drill down begin with one of the following -

• What — e.g. What is an example of that? What did you do? What happened next? What did you do next? What was your role? What did your boss say? What were the results? What do you mean by that?
• How — e.g. How did you go about it? How did the team react? How did you deal with it? How did that feel? How so?
• Tell me more? — this is a simple and highly effective open ended question designed to get the candidate to elaborate and share more detail about their initial answer

Another way to think about drill down questions is that they help you to elicit real stories from candidates about the things they have actually done.

The resulting additional detail not only helps to determine the veracity of their answers, it also reveals more about the candidate’s behaviour and how they do things — behaviours you can then compare with your hiring scorecard.

Poor or middling performers generally struggle with drill down questions, often finding it challenging to provide real examples or detailed rationale. As a result they will often resort to pivoting back to the achievements listed on their resume, going off on a tangent or trying to deflect the drill down question by answering a different question.

This is why it is very important to get into the habit of using a “What…”, “How…” or “Tell me more” follow up question after every answer.

The next stage

In the next article in this series we will look at how to use the hiring scorecard for the skills interviews that make up stage 2 of our structured interview process.

In the meantime, if you have any questions about conducting a screening interview, please leave them in the comments.

Hiring for roles outside of your area of expertise is one of the biggest challenges founders like you will face.

This is especially true if you and your co-founders have engineering or product backgrounds and are looking to make your first commercial hires.

After all, bar a job title, how do you know what to look for, what “good” looks like and how to test for it if you don’t have any first hand experience?

Frankenstein’s Job Description

The usual approach in these situations is to search online for relevant job descriptions, copy the parts you like from a few different companies that seem like a match, pad it out with details about your company culture and benefits, and then share this “hodge podge” job description with a recruiter or the wider world in the hope that great candidates come flooding in.

The problem with this approach is that a job description is nothing more than a list of activities you want someone to do and even if a candidate has experience with these activities, that is in no way a predictor of success in the role, team or at your company.

The other, arguably much bigger problem with starting your hiring process with a cobbled together job description is that it increases your chances of relying on one or more of the following interviewing “techniques” -

• Gut instinct — relying on your ability to “read people” is one of the most common mistakes founders make when hiring for roles outside their area of expertise. Belief in your gut instinct as an accurate predictor of success can unintentionally be reinforced if your early technical hires have worked out well. The fact that you intrinsically have a much deeper understanding of “what good looks like” for technical roles and have probably drawn candidates from a pool of trusted connections can be easy to overlook.
• Sponge — in an attempt to hedge against your gut instinct, another common technique is getting as many of the current team as possible to speak with a candidate after your initial chat with them has left you with a “good feeling”. Beyond a vague brief of “assessing culture fit”, team members rarely get asked to drill deeper and test specific areas of a candidate’s background (and almost always don’t get enough time or support to properly prepare). As a result, feedback tends to be of the superficial variety — “she seems nice” or “I think he’ll fit in”, resulting in you ending up with a collection of “gut instinct” feedback.
• Always be closing — spending too much time “selling” a candidate on joining is an easy trap founders often fall into. After all, you are a small start up with an urgent need to hire GTM experience and candidates are likely coming from more mature, better capitalised businesses than yours. The more time you spend “selling” a candidate, the less time you have to learn anything useful about them. More importantly, a poor to middling performer will absorb everything you are “selling” them and reflect it back to you in subtly different ways so they appear to be a much stronger fit than they really are (especially if you start the interview with your sales pitch). A good rule of thumb is that you should be talking 20% or less of the time and to save any “selling” for the end of the interview, and only then if you have learned enough about the candidate that you are confident you want to progress further with them.
• Hypothetically speaking — asking candidates too many questions about what they might do in one situation or another is also a common mistake founders make. Asking for real examples of things they have actually done is a far more effective way to assess their real experience as that allows you to drill deeper and check the veracity of their answers.

These are just a handful of the interviewing pitfalls that can arise when you don’t have first hand experience of the role you are hiring for and have nothing more to help you than a partially copied job description.

More importantly, these pitfalls can have profound or even fatal consequences for your company, especially when it comes to hiring GTM roles.

The blast radius of mis-hiring

Unlike with other roles, where a hiring mistake may become apparent in the first month or two, mis-hiring GTM roles often involves a time lag of 6 to 12 months (or more if you’re doing Enterprise sales), before poor or middling performance becomes apparent.

Whilst the damage of a mis-hire in other roles may be limited to a particular team or function, the scope or “blast radius” of mis-hiring say, your first Account Executive can be company wide.

Because of the time lag, the cost of missed Sales opportunities, mistakes, loss of productivity, and additional management overhead begin to silently accrue. Add in the hard costs of recruitment, compensation and severance and founders often realise too late that mis-hiring this one role has fatally damaged their runway and their business is no longer viable because the lack of commercial progress means they are unable to raise another round.

A blueprint for hiring

An effective way to avoid these pitfalls and minimise your chances of mis-hiring is to begin your hiring process with a blueprint.

Just as you wouldn’t set about building a house without a blueprint, you shouldn’t set about hiring without one either, but as we have seen, your Job Description is not a blueprint — it is a list of activities.

A hiring scorecard on the other hand, is a much more comprehensive and structured way to start your hiring process as it is designed around two key principles -

• Hiring is the process of gathering candidate data
• The biggest predictor of success in a role is past and present behaviour

People are inherently complicated and it’s hard to see them for who they really are so you need a structured way for every interviewer to gather relevant data about them.

Most hiring approaches focus on testing what a candidate can do, which is why starting with a job description is such common practice.

Whilst candidates definitely need to have their experience tested during the hiring process, it is how they do things that is actually the bigger determinant of whether they’ll be successful in the role and at your company.

Or to put it another way, even if they have experience with all the required activities, people whose behaviour doesn’t fit the role, team or company, ultimately fail.

Scorecard structure

A hiring scorecard is designed for internal use by each interviewer and is made up of three parts.

Part 1: Mission

This first part of the scorecard describes why this role exists in your company.

This “core purpose” should be concise, written in plain language, avoiding buzzwords, acronyms or industry terms so that anyone inside the company can understand it.

Here’s an example of the mission for an Account Executive -

“Create & close opportunities in an assigned sales territory containing companies with up to 500 to employees”

Part 2: Outcomes

The next part of the scorecard lists what a top performer needs to achieve in the role.

A “top performer” does not necessarily mean a long tenured, highly paid person, but rather it is someone who has the relevant skills and experience for the role but also demonstrates the behaviours you believe are required to be successful.

Ultimately, you are looking to hire someone in the top 10% of applicants that you believe has a 90% or better chance of achieving the outcomes listed in this part of the scorecard.

For that reason the outcomes in your hiring scorecard should not be impossible, but should be a stretch to achieve.

Try to limit the number of outcomes to a maximum of 3 or 4, rank them by importance and make sure they are either measurable (e.g. a specific target or KPI), or observable (something you can see has or has not been delivered within a specific timeframe).

Here’s an example of some outcomes for a top performing Account Executive -

• “Close $800k in new revenue in the first three quarters of the financial year
• “Generate at least 40% of their qualified pipeline every quarter”

Part 3: Competencies

Arguably the hardest, yet most important part of the hiring scorecard is defining how you want someone to achieve the mission and outcomes of the role.

For example, there are many Account Executives who can consistently hit or exceed their target, but if they are not interested in collaborating with others, avoid working transparently, or regularly cut corners to get deals done, they may not fit your company’s culture and end up dragging down everyone else’s productivity or even cause you to lose customers in the future.

The competencies section of the hiring scorecard therefore defines two things — the skills and behaviours you require for the job.

Somewhere in the range of 7 to 9 competencies works well. Any more and it becomes difficult to test each one effectively without adding a lot of additional interviews and time to the hiring process.

These competencies act as a checklist for individual interviewers who should be assigned a maximum of 2 or 3 specific ones to focus on in their interview.

Here’s some example competencies for a top performing Account Executive -

Going slow to go fast

More than 50% of hiring decisions are a mistake with the average cost of that mistake being 15x their base salary.*

For that reason, taking some time upfront to think through why a role exists at your company, what it needs to achieve, how you want a successful candidate to achieve it and documenting it all in a hiring scorecard, not only minimises the considerable financial risks of mis-hiring, it will ultimately save you time and effort and speed up your hiring process because a scorecard is a very effective tool for screening out unsuitable candidates much earlier in the hiring process.

In the next article in this series, we will take a deeper dive into how to use a hiring scorecard as part of a structured interview process for an Account Executive together with behavioural interviewing techniques to test the competencies.

*Source: Peter Drucker

Early Hires

In the early days of your start-up, both you and your co-founders will likely have hired technical, engineering and product people that you have either worked with before or that have come to you via trusted connections in your network.

This makes total sense, as in amongst the chaos of building your product and company, you need people you can trust to get on with whatever is needed with minimal supervision and management.

GTM Hires

All being well, you will eventually become increasingly busy with sales activities and this is where founders like you often hit a problem — you get to a point where you need additional help and resources to support you with your sales work but you don’t have a network of GTM talent to tap in to in the same way you can for technical and engineering hires.

The temptation at this stage can be to advertise for an Account Executive (or even a VP of Sales), but this is fraught with significant risks -

• If you do not have an Ideal Customer Profile that you are already repeatedly selling to, you will not be able teach an Account Executive enough about your sales motion to make them successful
• If you do not have enough pipeline and qualified leads yet, an Account Executive will struggle to hit target, resulting in them not getting paid well enough to stay
• If there is no consistent way for an Account Executive to make money closing deals at your start-up, you will likely only attract poor to middling performers. Or to put it another way, why would a high-performing Account Executive who is consistently hitting or exceeding target in their current role take the financial and career risk of leaving their current job to join you?

These risks significantly increase if you do not have first hand experience of “what good looks like” for an Account Executive and unlike other roles where poor performance may become apparent in a month or two, poor performance in Sales is lagging, taking a minimum of 6 (but more likely 9 to12 months) before you realise your Account Executive is not working out.

The missed revenue opportunity and burning of time and runway during this period is often un-recoverable and can ultimately prove fatal to your start-up’s viability.

Find Juliana

If you are approaching the liminal space of needing help with sales but not having enough repeatability or pipeline to risk hiring an Account Executive, a profile that can work very well and that is materially far less risky for you to hire is -

• Someone earlier in their career who is highly motivated to learn how to sell your solution, and who, with your help can steadily move from doing the “leg work” of supporting you on sales activities to eventually leading on some deals. For simplicity, let’s call this person Juliana.
• Juliana may not be in a commercial role now, and is not someone you are likely to find by posting a job description, however she is likely to be someone you already know directly or via mutual connections. She may even be someone already working in your company in a different role.

The key is that Juliana needs certain motivations and behaviours to successfully support you with sales work, specifically she’ll need to be -

• Highly motivated to work in tech especially the GTM side of tech
• Intelligent — tech savvy and hungry to learn everything there is to know about your solution and how to sell it
• Hard working — be willing to come in early, stay late, work weekends — whatever it takes to learn and further her GTM career, whether that is generating pipeline, doing product demos, researching prospects, making cold calls or building sales decks
• Confident — not arrogant, but with enough self confidence that you would be happy to put her in front of prospects, initially alongside you and eventually on her own
• Resilient — sales involves a lot of obstacles, rejection, disappointment and failure so being able to move forward with positivity and drive would be key to success
• Organised — with a level of professional experience where she knows how to organise her time, prioritise, and keep track of and on top of things
• Competitive and driven — sets a high bar for herself with an innate desire to push herself to learn and do more
• Mature & collaborative — this is not about age but rather about having a sensible, level head with the ability to communicate clearly, work well with others and to call out early if there is a problem

Always Be Hiring

If you are struggling to identify a person like Juliana, then that is a sign that you and your cofounders may need to invest time in building your GTM network.

And “investing” is exactly how you should look at it, because even if you are 6, 12 or 18 months away from shipping a MVP, doing the work to make connections and build relationships with potential GTM talent long before you may need them ensures you do not become the bottleneck to revenue growth.

Building your GTM network starts with one simple question that you and your co-founders should get used to asking everyone you know and meet -

“Who do you know that’s smart, hardworking and motivated to learn that I should speak to?”

In particular, get into the regular habit of asking this question to your -

• Existing network
• Peers
• Advisors
• Current employees
• New hires
• Investors (both current and prospective)

This simple question is one of the most effective ways to start building a network of GTM talent that you can tap into when needed — and the earlier you start asking it the better.

Once introductions are made, be sure to track them in a simple spreadsheet (your “talent pipeline”), and be disciplined about setting aside time every week for an informal 15 minute chat with them, noting down if they are worth keeping in touch with, and if so putting a reminder in your calendar for when you will next reach out to them.

As a significant added bonus, not only will investing time to do this early help you to find someone like Juliana, it will also help you build a pipeline of potential Account Executives and Sales leaders that you can engage with at speed (and with no recruitment costs) when you are ready to move on from founder-led sales.

The performance of any business can be dramatically increased by improving the quality of talent in its workforce, but talent is always in high demand.

Investing time to build your GTM network early and making hiring a “habit”, even when you don’t have an immediate need will ultimately pay dividends for you in the long run.

Deal fatigue

As the founder of an early stage software company, you know just how much effort it takes to close deals, but what is easy to overlook is just how much effort the buying process can be for your prospects too.

So much so that once contracts are signed, buyers often suffer from what I like to call “deal fatigue” — immediately disappearing back into their (already busy) day job and becoming unresponsive.

You’re probably wondering why this would be a problem? Surely once the contract is signed, everyone’s job is completed and you’ve taken one more successful step in building your company?

This is only partially true.

Whilst closing deals definitely helps to build your company, it does not help you sustain it for the long term. For that you need to ensure you can consistently -

• Retain this hard won revenue
• Expand it in the future

And the only sure fire way to achieve both is to deliver on the value you promised they would get in the sales cycle — as quickly as possible and preferably with a minimal amount of effort required by the customer.

Speed is an important consideration here because the risk of not being able to retain your revenue increases the longer it takes for a customer to see the value of your solution.

The amount of effort required by the customer is also another vitally important consideration because prospects and customers do not live and breathe your solution like you do.

They are busy being a bank, insurance, tech or engineering company etc. and even though they may have paid you a substantial amount of money to address serious pains in their business, it does not automatically follow that they will put in the required time, effort and resources to get your solution deployed and adopted quickly.

The Buyer — User gap

This is because there is always a gap between the buyer of your solution and all the other people at the customer that are required to deploy and adopt it, and without their active involvement and participation you will not be able to deliver the value you promised the buyer.

As they were not involved in the deal, these other people will usually have different priorities and little knowledge about or interest in your solution and to make matters worse they are almost always -

• Overworked
• Time poor
• Resource constrained
• Lacking in authority to make necessary decisions
• Resistant to any kind of change

The bigger the customer, the more of these people there are likely to be, and some of them may even be motivated to completely block your ability to deliver value.

It is important to remember that even though your solution should make their working lives better, these people are effectively being asked to take on the additional work of deploying your solution and changing the way they work by adopting it, so to have any hope of securing their active participation someone needs to answer the perfectly reasonable question they will have — “what’s in it for me?”

And this is where buyer “deal fatigue” becomes a real issue for you because your buyer is the one person with sufficient credibility and authority to successfully answer this question for them.

Common mistakes founders make here is to think that they have the credibility to answer the question, that the question only needs to be answered after the deal has closed or that the value of their solution is so overwhelmingly self-evident that the question does not need to be addressed at all.

None of these is true, and if you wait until after the deal has closed and your buyer is no longer actively involved with you, you will (at best) find yourself stuck at a much lower level in their organisation spending additional time and effort trying to ”re-sell” your solution to lots of busy uninterested people who will not move quickly (if at all).

The answer to closing this “buyer — user gap” is not to wait until after the deal has closed to figure out who these people are and then try to convince them to take on the extra work your solution represents, but rather to do the necessary discovery and engagement with your buyer during the sales cycle so your buyer is the one closing the gap with them.

Thankfully there exists another “gap” you can exploit to your own advantage here — the gap between finalising the contract and marking the deal as closed-won.

Closing the gap

This gap is the perfect window of time to do the necessary discovery with your buyer, as during the bureaucratic step of finalising contract terms nothing else is required to get the deal done and so there is no risk of slowing the deal down or introducing any new deal blockers.

In fact, if done right, this discovery can help drive more urgency with your buyer to speed up getting contract terms finalised as they increasingly shift their thinking from closing the deal to getting their high priority pains solved with your solution.

The specific discovery you will need to do with the buyer during this gap in the sales cycle will depend on the nature of your solution, however these are the kinds of things you are looking to understand from them -

• How are new software solutions typically deployed at your company?
• When does the solution need to be live and fully adopted?
• Who needs to be involved for the deployment project?
• Who do they report to?
• Who will need to adopt the solution once it is deployed?
• How many of them are there and what departments / teams are they in?
• Who are their managers?
• How much of a change in the way they work does the solution represent?
• What communications channels work best when you roll out new software?
• How do you normally train people on new software at your company?

The goal of these discovery questions is to understand how they run software projects (and what their track record of success is), who needs to be involved for the deployment and what their priorities are, what the size and scope of the change impact will be for different people and groups, who has credibility with each of these groups to get them to adopt your solution (usually their direct manager), the company’s familiarity and experience with change management processes and tools, and where there is likely to be resistance or outright blockers.

It is unlikely that your buyer will know the answer to all of these questions, but what they will be able to do is to navigate the organisation and connect you to the right people so you can dig deeper and start building a positive working relationship with them.

By making these introductions for you, the buyer is effectively conferring their credibility on to you and your solution and acting as your executive sponsor. Should you encounter any blockers or resistance when engaging with these people, you can then go back to your buyer and explain the impact this will have on realising the value they want your solution to deliver. The buyer is then best placed to use their authority to engage directly with any resistors or blockers and get the deployment and adoption work required for your solution prioritised.

It is also a good idea to provide your buyer with some messaging that they can use when making these introductions. The messaging should include why the solution is being purchased, what value it will deliver to the individual they are introducing you to, the high priority and importance the buyer is placing on the solution and the risks for the company and this particular individual in not embracing it.

Minimising your revenue risks

As a founder it is vitally important you understand the risks “deal fatigue” can have on your ability to retain and grow your revenue so make sure you continue working with your buyer during the natural gap in the sales cycle when contracts are being finalised so they can introduce you to anyone else that needs to be involved to realise the value of your solution.

Using this natural gap in the sales cycle, rather than the traditional approach of waiting “post sales” should minimise the time and effort it takes for your solution to deliver value which in turn will maximise your chances of retaining and expanding your revenue.

The key thing to remember is that it is your buyer, not you, who has the necessary credibility and authority to close the “buyer-user gap” and get your solution prioritised but if they have disappeared on to the next thing, exhausted and unresponsive from closing the deal, this gap will stand in the way of delivering the value you promised them and jeopardise your ability to sustain your company for the long term.

The drive for efficiency

As start-up boards continue to look for greater efficiencies, Customer Success (CS) teams have borne the brunt of company restructuring and layoffs over the last 18 months.

Headcount and budget reductions, prolonged hiring freezes and letting go of (sometimes high profile) Customer Success leaders has become increasingly common, as have discussions on utilising AI to engage customers as a means to reduce monthly “burn” and extend financial runway.

The hidden opportunity

Whilst ongoing constraints in both the macro-economic and tech funding environments continue to present existential challenges for Customer Success teams, it also affords them a unique opportunity.

Specifically, the opportunity to alter the ingrained perception held by many start-up boards and investors that Customer Success is not an integral part of the start-up’s revenue generation engine and is therefore a less risky part of the business to target for any round of cost-cutting.

With this in mind, the following practical steps, which importantly are completely within the control of both individual Customer Success practitioners and their leaders, should prove valuable in helping to alter this long held perception.

The practical steps

Step 1: Speak the (internal) language of revenue

By the nature of their work, Customer Success teams are outwardly focused, meaning their activities, language and general frame of reference are predominantly external to the business that they work in.

This makes sense, but it can lead to the perception internally that Customer Success is only focused on helping customers to achieve their goals and is not fully aligned or contributing to the start-up’s own revenue objectives.

Treating their board, investors and senior leadership team as their “internal customer” and communicating with them in a language they are familiar with — the language of revenue, is a simple and effective way for Customer Success practitioners and leaders to better demonstrate their alignment to revenue goals. For example -

CS language vs Revenue language

• “I have 20 customers” -> “My territory is $3.1M ARR in size”
• “Customer X upgraded to module Y” -> “We grew revenue from Customer X by 12%”
• “We have 2 new case studies” -> “We contributed to top of funnel growth by closing 2 new references”
• “We have 8 customers in onboarding” -> “We are forecasting 8 new customers live by quarter end”

Step 2: Territory planning, reporting and forecasting

Boards, investors and senior leadership teams often perceive Customer Success in the same way as they do Customer Support — as an inherently reactive and transactional function that is not directly linked to revenue.

Territory planning, reporting and forecasting are practical ways individual Customer Success practitioners and leaders can operate and communicate differently to combat this misconception. Specifically -

• Organising, tracking and reporting on their “assigned territory” as opposed to their “assigned customers” given the formers stronger association internally with revenue
• Setting, tracking and reporting on the progress of quarterly targets for their territory, including month-on-month and quarter-on-quarter comparisons.

Examples of quarterly targets to track in a CS territory plan that would resonate with the board and investors include (but are not limited to) -

• Licence activation growth
• Product and/or key feature adoption
• Consumption growth
• Deployment / onboarding completion
• Gross Revenue Retention*
• Net Revenue Retention*
• Referenceable customers

* Regardless of whether Customer Success is officially measured or compensated on revenue, setting, tracking and reporting on revenue targets for a given territory is a subtle yet visible way for CS to associate its work with metrics that are materially important to the start-up’s leadership.

• Forecasting is the critical process by which businesses make decisions. By developing a quarterly forecasting and reporting “muscle” for their territory targets (especially in relation to gross and net revenue retention*), Customer Success can actively demonstrate its proactivity whilst further strengthening the association of its work to the start-up’s revenue generation engine.

Step 3: Get connected to the sales pipeline

With its place at the tail end of the go-to-market production line, Customer Success is often partially or completely disconnected from the sales process, with little or no understanding of the critical contextual information it needs to drive fast time to value, for example -

• What pain the customer is looking to solve
• The impact of the pain and how they are dealing with it now
• The objections they raised in the sales process
• The competitive alternatives they considered
• The stakeholders involved in the purchasing decision
• Their buying / procurement process

This disconnection can reinforce board and investor perceptions about Customer Success not being integral to revenue, however the following actions can help to minimise this view and most importantly do not require any formal approval or mandate -

• Reviewing the Sales forecast regularly, both individually and as a team, and using it as a key input for CS territory planning, targets and forecasting
• Informally assigning / attaching team members to key deals to uncover critical contextual information via informal 1:1 discussion with sellers
• For CS leaders in particular, organising to be an observer at Sales forecast calls and offering to help accelerate deals if appropriate with customer use case examples or customer introductions

These actions foster closer alignment to revenue and over time, hopefully crystallise into Account Executives, Sales Engineers and Customer Success Managers working more closely together for mutual benefit in formalised “pods”.

Step 4: Refine and develop common Sales skills

Commercial aversion in Customer Success often results from having been at the receiving end of poor sales practices.

Regular exposure to a company’s best sellers however would (no doubt somewhat surprisingly to many in CS) reveal a great deal of commonality in both activities and skills. Specifically -

• Problem and pain discovery
• Identifying success criteria
• Building ROI cases
• Project management (e.g. of deals)
• Handling objections
• Influence and negotiation

Seeking out their company’s best sellers and asking to shadow them at different deals stages (or listening to recordings of their sales calls if available), would not only help Customer Success practitioners to sharpen and refine these skills, it would also expose them to valuable additional ones such as -

• Opportunity identification, logging and qualification
• Gaining access to & managing multiple stakeholders
• Effective cold outreach
• Gives & gets
• Driving urgency

Developing these additional skills, especially in opportunity identification and logging, should help Customer Success to gain much greater internal recognition as a meaningful contributor of high-quality opportunities to the sales pipeline whilst also increasing familiarity with the internal language of revenue.

In addition to informal shadowing and learning, Customer Success leaders should also consider having their teams “piggyback” on any existing or planned Sales training, especially in the aforementioned common skills areas.

Combining the training of Sales and CS teams this way should provide greater economies of scale (especially in times of constrained budgets) and can be further justified by the increase in qualified opportunities that should result.

Step 5: Ring the “Sales bell”

Good sales leaders continuously shine a light on the impact their team is having on company goals through regular internal communication across multiple different channels.

Whether it is through sales dashboards, charts, presentations at company town halls, board meetings, quarterly kick-offs, or utilising the myriad of company-wide internal communication tools, good Sales leaders habitually share the outcome of their team’s work.

This regular cadence of communication serves to continually reinforce how their work is directly aligned to the company’s goals and objectives and is best exemplified by “ringing the sales bell” — a company-wide post or message that Sales leaders share every time a new deal is closed.

There is nothing preventing Customer Success leaders from mirroring their Sales counterparts with regular communication across internal channels when CS territory goals are met or exceeded, in particular -

• GRR and NRR*
• Renewals closed**
• Upsells closed**
• Churns that are prevented
• New references closed
• Consumption goals

** Even if Customer Success is not responsible for transacting renewals or upsells, sharing these positive results (along with credit to any other roles involved), reinforces how their ongoing work with customers has created the conditions for these renewals and upsells to occur.

Additionally, Customer Success leaders should collate their quarterly territory data (including quarter on quarter comparisons) into 2 or 3 succinct slides with an explanatory narrative to be included in the board pack, and if needed they should push to present these slides in person and take questions at the board meeting.

Summary

A common refrain amongst Customer Success leaders is that unlike their sales counterparts they “do not have a seat at the table”.

By embracing the language of revenue, operating in terms of territories, proactively connecting to the sales pipeline, refining common sales skills and developing valuable new ones, wrapped up in a regular cadence of internal communication, Customer Success can not only begin to alter some of the long-held perceptions that put it at risk, it can also strengthen its case for representation at the all-important decision making table.

Introduction

As a founder, a strong indicator that the time is right to start testing an outbound sales campaign is when you are unable to generate enough opportunities from either your inbound leads or your bottom up motion.

Defining “who”

The first step when embarking on any outbound sales campaign is to define your target market.

This is a list of companies and individuals that you want to get meetings with so you can try and validate your Ideal Customer Profile hypotheses.

Including companies of different sizes in your target market is a good idea as it helps with this validation and also maximises your chances of hitting your revenue goals.

Once you have compiled your initial list of companies, the next step is to identify potential Economic Buyers and Champions using something like the Miller Heiman model.

Aim to identify multiple people per company to get meetings with, with 200 to 400 individuals being a realistic amount to compile without needing much additional help.

A typical outbound campaign will contain a much larger number of individuals than 200 to 400, but for an initial outbound test, this number should be sufficient.

The campaign “how”

Having compiled your target market and the list of who you want to get a meeting with, the next step is to work out how to get in front of them.

This stage of an outbound campaign can be frustrating for founders as it often feels like they are hitting a brick wall of unresponsiveness. This is quite common, so the first type of outbound campaign we will look at is one designed to address this common frustration.

The power of introductions

The goal of an introduction campaign is to replace the brick wall of unresponsiveness by asking for introductions from people in your (and your co-founder’s) network who have direct connections to your targets, or at the very least to someone who might be able to get you in front of the target person.

As with every other part of the sales process, getting an introduction needs to be a managed activity, with message personalisation and follow ups being tracked and measured. To make this more manageable you might want to consider starting with just the top 50 most important prospects from your target list.

Whilst it is by no means a “silver bullet”, an introduction campaign can be an effective shortcut to getting meetings with the right people and closing some early deals.

However, you should keep in mind the following tips to ensure that the campaign has the best chance of success -

1. Ask for specific introductions from specific people. The main reason introduction campaigns fail is because founders ask potential introducers something broad like “do you know someone at this company or in this industry?”. The key to success is to ask for introductions from specific people to specific people. As you will likely be using LinkedIn for your preparatory work, keep in mind that potential introducers are often connected to people they do not really know so try to identify several people to ask for a particular introduction.
2. Send them some sample text they can use. If someone in your network says that they can make an introduction for you, be sure to send them some sample text, making sure the text is clear about -

• What your ask is
• What the benefit would be for that person to speak with you

Avoid filling the sample text with what you do. Instead, describe the problems you are looking to solve. Also ask the introducer to keep you copied (cc’d) into the introduction from the start.

3. Keep the introducer in CC. If the prospect responds to the introduction, put the person who made the introduction into CC (not BCC) until the meeting has been booked. This may sound counterintuitive but our experience shows you will get better and quicker responses this way.

4. Make use of your investors for introductions. Investors are often very well connected but underutilised by founders as a source of introductions. Using part of every board meeting to go through a list of introductions, allocating approximately 10 per investor can be very effective (so long as you make sure to follow up with them regularly).

5. Ask existing customers for introductions. If you plan to ask any of your existing customers for an introduction then it is important to do this in person as these introductions are much more valuable but also more sensitive to ask for.

Example emails

The following example can be used as a template to ask for an introduction. Be sure to include LinkedIn profiles of the people you want introductions to to make things easier for the introducer -

Hi <name>,

I noticed you’re connected to the people below and I’m hoping you might be able to introduce me?

- Person 1 <LinkedIn profile link 1>

- Person 2 <LinkedIn profile link 2>

etc…

We’re trying to get introduced to as many people in the roles as we can to ask them for 15 minutes of their time to get feedback on what we’re building.

Do you think you’d be able to make an intro to any of these people? I can provide some text about us if you’re happy to make any intros.

Many thanks

If they are open to making the introduction for you, you can then send them something like the following. Again, make sure it is not a description of what you do, but is a succinct and compelling summary of the business value you deliver to the person you want to meet with.

Hi XXX,

I hope you’re doing well.

One of the companies I work with / <or description of how you know them> has asked if I can make an introduction to you.

They have a solution in your space aimed at solving <problem X> and delivering <value Y> and would like to get some feedback on it — they’re asking for 15 minutes of your time.

I thought you might find it interesting to hear about what they do and have included a short paragraph describing it below.

Let me know if that would work for you?

Many thanks

<<DETAILS OF VALUE YOU DELIVER TO THIS PERSONA>>

Introductions tend to deliver much higher rates of meetings than any other outreach method so it is worth trying to drive as much value out of your and your co-founder’s networks as you possibly can.

Cold outreach

A cold outreach campaign is when you are trying to reach people that you do not have any connection with.

Email, LinkedIn, webinars, events, direct mail, online communities and phone calls are just some of the myriad of channels available for cold outreach.

We will focus on two of the most common and readily accessible ones for this kind of campaign — email and LinkedIn, but you should expect that a given person will need several prompts across a number of different channels before they respond.

Regardless of the channel and number of prompts, the most important thing for making any cold outreach campaign successful is personalisation.

Keeping it personal (emails)

When crafting a personalised cold outreach email, keep the following tips in mind to maximise your chances of getting a meeting -

• Subject line. Personalisation begins with the email’s subject line. If your recipients do not like the email subject they are very unlikely to open your email. There is no way of telling what subject line will work until you start testing options so it is important to be able to measure email open rates using platforms like Hubspot, Apollo, Salesloft, Outreach etc . Ideally, you are looking for a minimum open rate of 50%, with 60% or above being ideal.

Emails with generic subject lines tend to get deleted without being opened, so personalising it to the particular persona and keeping it short (5 to 6 words at most) tends to lead to better results, as does picking out a short phrase from the body of your email and using it as the subject.

• Email body. As with the subject line, everything about the body of your email needs to be tested and iterated on to find what really works. The following guidelines perform consistently well and should help you to get started -
• Keep the email to 3 short paragraphs followed by a clear call to action
• Get to the point quickly and keep the total length of the email to 150 words or less
• Paragraph 1. Many email clients preview the first few lines of an email, so your opening paragraph, together with the subject line, has additional work to do in order to get their full attention such that they open and read the entire email.

The best way to get their attention is to personalise the opening paragraph to the specific person you are contacting. However, try and avoid this form of generic personalisation -

Hi <name>

I can see that you’re <Role> in <Company Name> so I’m sure you care a lot about <This Problem>.

This type of opening paragraph will likely result in no replies (and may very well end up getting filtered as spam). Instead, try to focus on creating something truly personal to the recipient -

Hi <name>,

Congratulations on the merger with ACME. You and William have built a great company and it’s good to see XXXX becoming the largest <their industry> company in Europe.

This type of personalised first paragraph has clearly been written specifically for the recipient and demonstrates the sender has done some research about them and the company they work for.

• Paragraph 2. If the first paragraph is designed to get your prospect’s attention, then the second paragraph has to tell them what is in it for them.

You can do this either by highlighting the pain that you solve or by showing the value you provide to the person you are emailing.

Again, this should not be a description of what your company does, it should be what’s in it for them specifically to engage with you further in order to find out more.

• Paragraph 3 is about showing the relevance to them and their company along with some “social proof” — real examples of the value you provide that demonstrate you can deliver what you say you do.
• Call to Action (CTA). The final part of the email should be a clear call to action which in most cases will be a request for a quick call.

Tying it all together

Subject: Your Recent Merger With ACME

Hi <Name>,

Congratulations on the merger with ACME. You and William have built a great company and it’s good to see you becoming the largest <their industry> company in Europe.

When I talk to operations leaders like yourself, there is one question that ALWAYS comes up: how do I make sure that all my onboarding, claims and maintenance processes are on track and completed on time, with excellence?

I’m asking because we recently helped <competitor>, in the first month, to automate 9 out of 10 steps of what used to be an entirely manual process, dramatically decreasing turnover time and improving the quality of their operations.

Do you have 15 minutes to explore this further in the next week?

Personalisation and outreach volume are inversely proportional, so this level of personalisation should ideally take no more than 5–10 minutes per email, otherwise you will not be able to send enough emails to be effective.

It is also why it is important to continually run rapid iterative outbound tests to identify the right level of personalisation and message content that delivers the greatest response rates with the minimum of effort.

Keeping it personal (LinkedIn)

In our previous article on managing inbound sales we recommended sending LinkedIn connection requests without a note.

Although this sounds counterintuitive, especially in light of the importance of personalising messages, we generally see higher acceptance rates when the connection request does not contain any additional information.

If the connection request is accepted, then the same personalisation for emails applies to your follow-up message and, as with emails, if the follow up message is not relevant to the person or their role you are unlikely to get any responses.

Personalisation is more challenging with LinkedIn as your message needs to be very short, ideally no more than 50 words (or about a third of the length recommended for a personalised email).

This is why you may want to consider experimenting with LinkedIn Voice Notes and include a 30 second voice recording to your outreach sequence for your follow up message.

Cadence

Whether you are running an introduction campaign or doing cold outreach, it is important to define what your outreach sequence or cadence will look like.

The “Agoge” sequence pioneered by Sam Nelson is a great way to track your outreach cadence as it is designed to maximise your response rate while minimising the personalisation work required.

A full Agoge sequence includes 15 outreaches or “touches” over a period of 27 days so is best suited to larger companies that have dedicated lead generation teams.

A reduced Agoge sequence like the one in Figure 2 is therefore much more appropriate for an earlier stage business as it only requires 3 personalised messages, two of which can be based on the research conducted for the first personalised email in the sequence.

There is no ideal outreach cadence, so just as with every other aspect of running an outbound campaign, as a founder you will need to track and test different aspects to see what works. For example, over time you may realise that you need to have different sequences for different priority prospects.

Metrics that matter

For any personalised outreach, founders should aim for an average open rate of over 50%. Anything below indicates you need to start testing different subject lines or the initial 10 to 20 words of the first paragraph.

If you are seeing open rates of 20% or lower, then it is highly likely that some of your emails are getting filtered as Spam.

In terms of getting responses to your personalised outreach, a response rate per sequence of over 10% (with the majority of these being positive responses) and a meetings booked average of over 5% per sequence is what you should be aiming for.

And to reiterate, in order to get anywhere close to these metrics you will need to personalise your messages and use multiple channels.

A final word: enrichment

Once you have compiled your initial target market and identified an initial 200 to 400 people, you may need to do some additional enrichment to gather more complete information about them to support your personalisation efforts.

Tools like Zoominfo, Cognism, Apollo, Lusha and Hunter along with a multitude of others are available, all at various different price points. Our experience has been that a single tool is rarely enough and a combination is usually required to get a complete set of information about your potential prospects.

Introduction

As a founder you will almost certainly need to employ a variety of different sales motions throughout the lifetime of your start-up, so in this and the following article in this series we will be covering how to manage the most common ones, starting with an inbound sales motion.

Sales repeatability recap

In our previous article we covered why, regardless of whatever sales motion you adopt, the key to sales repeatability lies in a founder being able to identify an initial beachhead ICP market.

As you embark on finding this market and establishing your initial go-to-market motion, you can be fairly certain that any early hypotheses you have developed on who is most likely to buy from you and be successful will either be partially or completely wrong.

This is very common and part of the normal process of establishing product market fit.

It is also the reason why, as a founder, it is important to embrace the idea that identifying markets that you can sell into successfully is a never ending process of iterative testing.

Even if you happen to get lucky and establish some early sales repeatability, it is very unlikely that that initial motion will work the same way in six or twelve months’ time because as your start-up evolves, so does the market.

This is why the process and steps described in Figure 1 continue to apply even when you scale to tens of millions in revenue.

• Step 1: You develop a hypothesis about who is most likely to buy from you and test it by getting as many meetings as possible with prospective customers.
• Step 2: You test every part of this hypothesis rapidly, from your outreach messages and communication channels, call scripts, meeting agendas, discovery questions, demos, stakeholder engagement, value proposition etc.
• Step 3: You rigorously measure the effectiveness (or not) of every aspect of your testing, such as email open and response rates, the number of meetings booked, through to the number of demos delivered, how you have gained access (or not) to important stakeholders and ultimately the number of won and lost deals.
• Step 4: You review what you’ve learned, keeping what works, and stopping what doesn’t and then go back to Step 1 to begin testing your next hypothesis.

And most importantly, you should embed this process into the way you operate right now, even if you are the only person doing the work, because it will ensure that your Go-To-Market (GTM) motion continues to be fit for purpose as you scale.

The goal of every sales motion

Whatever sales motion you begin with or adopt over time, the goal of each of them is the same: to generate meaningful revenue*, with the first and most important step to achieving this goal being to secure meetings with the right people.

Personas

As a founder, you are likely to encounter a variety of different people or personas in your sales meetings, so being able to identify them and understand their role in the buying process maximises your chances of securing meaningful revenue.

Understanding buyer personas also helps make effective use of your (and their) time and effort.

The Miller Heiman model provides a simple way to categorise four key personas you are likely to encounter in these meetings -

• Economic buyer (EB) — this is the person who actually owns the budget to pay for your solution and will normally have the final sign off. The level in the organisation hierarchy where you will find your Economic Buyer depends on the price of your solution, as budgetary sign-off authority varies from level to level, and from company to company. A common mistake is to assume that the person you are speaking to in a sales cycle is an Economic Buyer, when the true EB is actually higher up in the management hierarchy.
• Champion — a Champion is not just someone who is enthusiastic and will advocate for purchasing your solution, they also need to have sufficient authority and / or influence to get you in front of the Economic Buyer. Your goal when meeting potential Champions is to build trust by helping them understand the value you can bring to their company, department and to them individually. If done correctly, they will become a Champion and actively advocate for your solution internally, bringing or introducing you to the right people. Common pitfalls to avoid are believing your Champion is the Economic Buyer when in reality it is likely to be their boss (or even their boss’s boss), and to assume their enthusiasm means they also have the necessary authority or influence.
• User Buyer (UB) — this is typically the person or group of people who will use your solution day to day and evaluate it based on their user experience. User Buyers often contact you directly (“come inbound”) as they are actively looking for something which makes their own work easier. If you offer an open source, freemium or free trial version of your solution it will invariably be User Buyers that download it or sign up. A common pitfall with User Buyers is to mistake them for a Champion because they are often very enthusiastic about your solution. No matter how much they love what you do, if they lack the authority or influence to help you navigate the business and get in front of the Economic Buyer, they cannot be considered a Champion. User buyers are also the persona most likely to visit your website and although you will have to work hard to navigate from them to a Champion and then to an Economic Buyer, engaging them can often be a great source of learning and information for you (assuming they are willing and able to introduce you to a potential Champion).
• Technical Buyer (TB) — this person or group evaluates whether it is feasible or safe to implement your solution. They can be from IT or Information Security, or could also be from Legal, Finance or Procurement. A Technical Buyer could veto the purchase of your solution for any number of reasons so it is important for you to understand who the Technical Buyers are and to engage them at the right time in the buying process.

Now that we have covered the kinds of personas you are likely to encounter in a sales process, for the remainder of this article we will take a look at managing an inbound sales motion**.

Capturing details

An inbound sales motion is one where prospective customers have contacted you, usually by interacting with your website in such a way that you are able to capture details about them and their company.

Downloading gated content, asking to be added to a waitlist, requesting a demo or signing up for a free trial are just some of the ways to capture details on inbound leads.

With your limited capacity and resources, capturing the following details allows you to efficiently prioritise inbound leads for further engagement, with any leads that are a match (or close match) to your ICP hypothesis being the highest priority -

• Name
• Company
• Work email address
• Phone number (optional)

Whilst most inbound leads will not leave their phone number, any that do are likely demonstrating that they have a high degree of interest in your solution. Once you have done some research on the person and their company, if they turn out to be a match or close match to your ICP, you should not hesitate in picking up the phone and speaking with them.

Also, depending on your solution you may also want to consider capturing their role and/or department, however it is the company they are from that is the most important detail needed for prioritisation, hence why you should mandate a work email address.

Without knowing what company they are from, it will be impossible for you to prioritise your inbound leads which increases your risk of spending precious time and effort on leads that are unlikely to yield any meaningful revenue.

Figure 2 describes the flow and steps of a typical inbound sales motion with the ultimate goal being to maximise your chances of generating meaningful revenue by securing meetings with the right people.

• Step 1: Examine the details captured to determine if their company is a match/close match for your ICP, and use the company and person’s name to determine their role, using the Miller Heiman model to categorise them as either a User Buyer, Champion, Technical Buyer or potential Economic Buyer.
• Step 2: Having compared the inbound lead to your criteria for an ideal company and persona, triage it into High, Medium or Low priority.
• Step 3: For anyone you have determined to be a low priority lead you can send them an automated sequence of emails focused on helping them get the most out of your solution. If they have signed up for a free version or free trial then directing them to more online content may work better then sending emails. Low priority leads might include people you cannot identify or people who work at companies that are not a fit for your solution.
• Medium priority leads could be people from a company that matches your ICP but the person is not necessarily your ideal persona. In this case putting them into an automated “nurture” sequence of emails and LinkedIn messages where you send them product details interspersed with an occasional personal outreach asking if a meeting might be of interest works well. If you do not have many high priority leads it is also worth considering doing a more personalised outreach instead.
• High priority leads are a match/close match to your ICP. If you offer a free signup or download, check to see if other people from the same company have also signed up / downloaded as that could be an indication that a broader evaluation of your solution is taking place. Regardless, for anything you have determined to be high priority, you should spend some time researching the company, person and any mutual connections so you can send them a highly personalised outreach email or LinkedIn message suggesting a meeting. You also want to reach out to them as quickly as possible because there is a strong chance they will also be looking at your competitors and the company that engages with them first will often set the agenda for everyone else.

If your volume of inbound leads is low you may want to consider a broader set of prioritisation criteria to optimise for more meetings.

Conversely, if you have a high volume of inbound leads you should consider stricter prioritisation criteria to make the best use of your limited time and resources.

The important thing to note is that the key to making an inbound sales motion work is to have a clear strategy for how you want to prioritise, categorise and engage with each inbound lead.

Personalisation

The goal with high priority inbound leads is to engage them in a meeting for deeper sales discovery, so it is important to reach out to them with a highly personalised message as quickly as possible (within 2 hours is a good target to aim for).

Research their company and the person and try to find something that will demonstrate your request for a meeting is not a generic message, and that you are a real person reaching out to them specifically.

If you offer a free trial or freemium product that they have already signed up for, then including some details on their usage can also be a very helpful way to personalise your message.

You should also consider using a variety of different channels to engage your high priority leads. As previously mentioned, if they have provided a phone number then you should aim to call them right away, otherwise connecting and messaging them on LinkedIn as well as sending a sequence of personalised emails works well (counterintuitive tip: sending a LinkedIn connection request without a note tends to have a higher acceptance rate). If they accept your connection request, think about sending a LinkedIn voice note as part of your outreach as they are intrinsically personal and often very effective.

If you are targeting developers, emails are unlikely to be successful, but LinkedIn and engaging them in Slack or Discord developer forums should yield better results.

Even though they have “come inbound”, do not be surprised if it still takes multiple outreaches across different channels to elicit a response from high and medium priority leads (we recommend trying a minimum of 4 outreach attempts).

Depending on your volume of high and medium priority leads, multiple outreaches across multiple channels could be a lot of work so if you are getting a 100+ high priority inbound leads a month, engaging a team member or hiring an intern to help filter or “rinse” the inbound leads can work very well.

The important thing to remember if you elicit someone’s help is that any outreach must look like it is coming from you the founder, so you should consider setting up an additional email account and grant them access to your LinkedIn to send messages on your behalf — just remember to always approve the content they are sending.

Summary

In the next article in this series we will look at building and managing an outbound sales motion along with examples of effective outreach messages, but for now, the four key steps to successfully manage an inbound sales motion are -

1. Capture: as much as detail as you can about your inbound lead
2. Compare: that detail to your ideal customer profile
3. Prioritise: triage, prioritise and engage each inbound lead based on a clear strategy
4. Personalise: research your high priority leads and reach out to them quickly with a highly personalised sequence of messages across multiple channels

*Meaningful revenue = in the tens or hundreds of thousands per deal

** An outbound sales motion will be covered in the next article in this series

The counterintuitive “why”

As the founder of an early stage start-up who has raised, or is looking to raise an initial funding round, a large total addressable market (TAM) worth billions of dollars has no doubt been a part of your pitch to investors.

Post securing initial funding, the natural inclination of many founders is to try and concurrently sell into as many different companies, industries and geographies as possible within that large TAM.

This seems logical, especially if your product is applicable across multiple industries, companies and personas.

The reality however is that the software industry is littered with thousands of start-ups who tried this approach and failed because they ended up spreading their limited resources too thinly and ran out of money before they could develop any kind of sales repeatability.

A lack of sales repeatability is one of the most common reasons start-ups fail to raise their next funding round and / or ultimately fail as businesses.

This is why the approach of nearly every successful start-up has been to avoid trying to sell to everyone and anyone in their TAM, and instead (somewhat counterintuitively) begin by focusing on a small subset of the market before expanding further.

The foundational “what”

Founders who have successfully built sales repeatability did so by relentlessly working to identify this small subset or Ideal Customer Profile (ICP) market.

In practical terms, identifying this ICP market is a process of working out -

Who is most likely to buy from you and be successful, so you can focus all your resources on selling to them

The answer to this question invariably involves a lot of hard work, testing and iteration, but remaining relentlessly focused on it has immense benefits which we will cover in more detail later.

The iterative “how”

As an early stage founder, you probably have some initial ideas about who is most likely to buy from you, however don’t be surprised (or disheartened) if your initial hypotheses turn out to be partially or even completely incorrect.

This is very common, so the goal is to test your hypotheses quickly to determine if your proposed ICP market contains -

1. People who have a real “hair on fire” pain, and are willing to pay in order to solve it. This is the single most important part of identifying your ICP market.
2. A single, identifiable economic buyer who has access to a budget (and sufficient authority to divert some or all of it away from other areas if needed).
3. People who are happy with a “complete enough” solution, i.e. one that addresses the immediate pain sufficiently, without necessarily having all the functionality of a “complete” solution.
4. No dominant incumbent. Competition in any given market is to be expected, however if your prospective ICP market already has a de-facto owner, you are unlikely to find much success here unless your product is demonstrably 10x better and/or 10x cheaper.

The next step in testing a potential ICP market is to secure as many discovery meetings* as possible with people you believe match these criteria, using each meeting as an opportunity to discover more about their specific pain and your ability (or inability) to address it.

It is important to keep in mind when meeting that it is not your definition of the pain that matters, but rather the prospective customer’s. If there is a mismatch, or if they are unaware or do not care enough about it to pay to solve it, then this is unlikely to be a successful ICP market for you.

A pattern should emerge relatively quickly from these meetings about whether this proposed ICP market is a suitable candidate, or if it’s better for you to concentrate your limited time and resources elsewhere.

Beachhead benefits

A useful way to think about your ICP market is as a beachhead — a secure foothold in part of the larger market where you can build some initial success before expanding further.

Even with seed funding you are still likely to be resource constrained, so this beachhead needs to be small enough for you to have a chance of winning, but large enough to service your short to medium term revenue needs**.

Focusing on a beachhead brings significant operational benefits that would not be available if you were attempting to address the entire market at once. These include -

• Increased network effects — in a beachhead market, people tend to know other people working at similar companies. This makes referrals and introductions easier as word of mouth amongst peers speeds up the process of getting in front of the right people.
• Increased expertise — a beachhead helps you develop specific expertise about what potential buyers really care about, and more importantly what their specific pains are. This learning means you are able to demonstrate a deeper understanding and competence with prospective buyers which should help you to close more deals.
• Improved content — content creation and targeting becomes simpler as it is tailored for specific buyer personas, resulting in better quality leads. Similarly, product marketing materials, case studies, and other sales collateral can be tailored for the beachhead to achieve maximum effectiveness.
• Improved outbound campaigns — a beachhead allows you to focus on quick A/B tests of outbound messaging, landing on what works in a much shorter time frame than if you were trying to address the whole market.
• Improved digital marketing and events — marketing campaigns and events can also be more targeted and effective as they are now based around messaging that is specific to the prospective buyer’s pain.

These benefits make the best use of your limited time and resources and compound over time, resulting in your sales process becoming increasingly efficient and repeatable and eventually leading to a more stable and predictable revenue footing.

Finding the beachhead

The following variables provide a good starting point to narrow down from your large TAM to an initial beachhead or ICP market -

1. Industry — are there particular industries where you believe there could be a significant pain that you can address? An industry focus has advantages because if you are able to secure some initial deals, other prospects should prove easier to engage as they will only really be interested in what their industry peers are doing.
2. Geography — are there particular geographies you believe could have a significant pain or a better understanding of the pain? Or, where competition is weaker or non-existent? A geographical focus does have practical considerations, including time zones, language, business culture and travel requirements so focusing closer to home until your ICP is better understood may make more sense.
3. Company profile — is one the most common variables used to find a beachhead. This could include the size of the company by revenue or number of employees.

Whilst these provide a starting point, it is really important that you also consider any specific variables that are relevant to your solution, such as -

• Use case — are there specific business problems or workflows that repeatedly resonate because of the pain they cause?
• Technology stack — are companies that are using (or not using) particular technologies more likely to be experiencing a pain you can solve?
• Regulatory requirements — are specific companies or departments subject to regulatory pain? And are there particular geographies where that regulatory pain is more acute?
• Specific departments — are companies with (or without) a specific department more likely to be experiencing a relevant pain? Or, are departments of a specific size relative to the overall company size an ideal target?

Finding the right mix of specific variables is your ultimate goal, and the more granular you can be, the greater clarity you’ll have about whether the ICP market is suitable and which types of people and companies to target.

Company size considerations

Company size is a particularly important facet of the company profile for you to consider because the buying processes, complexity and length of sales cycle vary greatly between companies of different sizes.

Segmenting companies by size is particularly helpful in determining where you may have the best chance of initial success. For example -

1. “Rabbits” — are the smallest size of company you would consider selling to. Whilst the deals may not be large, they will typically have shorter sales cycles and fewer people involved in the buying process. Rabbits can usually go-live and demonstrate your product’s value quickly, providing valuable feedback and insight. Some companies in this segment may also punch above their weight in terms of brand recognition, providing more credibility with other prospects.
2. “Deer” — are mid-market companies which have the potential to deliver larger size deals than rabbits. These types of companies can have huge variability in terms of early adoption, so it’s important to assess if there is early adopter behaviour amongst individuals involved in the buying process. As deals will likely take longer in this segment, assessing how “hair on fire” the pain is becomes even more critical.
3. “Elephants” — are larger, often global companies that have huge revenue potential but are typically harder (and take longer) to win because they have complex approval processes and multiple stakeholders who need to be convinced. For example, it is not uncommon for a $100K deal in this segment to take a year, which is why it is vital to ensure that there is a genuine hair on fire pain and that all the stakeholders involved are aligned on the need to solve it. In this segment it is also worth considering if landing an initial smaller “deer” sized deal e.g. $25K, and expanding to something bigger over time is a faster option (although deer sized deals may still take just as much time as a $100K one in this type of company).

Segmenting by company size is relative to your product, for example, a 1000 person company for some start-ups will be a “rabbit” whereas for others it will be an “elephant”.

Regardless, segmenting is important because of the different needs, buying processes and length of time and effort involved, and because a good balance of different company sizes in your sales pipeline gives you the best possible chance of hitting your revenue goals.

Metrics matter

As with any type of testing, recording and reviewing your learning and tracking key measures is the key to success.

The learning from discovery meetings will help you to refine your ICP hypotheses and variables, and key measures such as -

• How many discovery meetings are being attended by prospective customers
• The conversion rate of meetings to qualified opportunities
• The conversion rate of qualified opportunities to closed deals

Will help you to determine whether it is worth focusing more effort and resources on this part of the market or if it is time to move on and test another.

The pain is worth it

The process of finding an ICP market is often frustrating, requiring persistence and intensive effort.

However, founders that persevere, testing their hypotheses with discovery meetings, tracking their metrics, recording learnings and refining their mix of variables, will eventually be rewarded with a secure beachhead that will put them on the ideal path to sales repeatability and that all important next funding round.

*Techniques for securing meetings will be covered in the next article in this series.

**Paraphrased from Geoffrey Moore’s “Crossing the chasm”