How To Hire Your (First) VP, Sales And Not Screw It Up Jason M. Lemkin Sales Hacker Conference ‘13 2. Finding the perfect VP of Sales position can be daunting, especially in the middle of a global pandemic. While much has been written about sales compensation, we have heard enough requests for help on these topics, that we thought it was worth putting together an in-depth discussion and “how-to” type guide. Train your team with our exclusive, automated content. With a tiered approach, the first-tier is set at a point where the majority of the company’s sales reps historically attained (i.e. In this blog post we will explore how to design sales compensation plans that help drive the right behaviors. In this article I interview Aaron Ross, co-author of a new book,... . VP Sales with little experience that are Alpha Reps are ok in the early stage; At about 10 reps, you need an A+ VP Sales who can train, onboard, and recruit. I worry allowing customers to… Continue Reading. And you want the least... Q: How do you structure a sales team when you’ve got zero experience doing sales? They are some of the SaaS industries’ best sales – and business – minds and we appreciate their contributions to this article. Matt Bertuzzi at The Bridge Group shared this graph showing the relationship between quotas and OTE: But, it’s worth noting that because many of the respondents to this survey were early stage startups, the numbers here are lower than you might expect and there is significant divergence. This is typically rewarded in the form of a commission paid on MRR (monthly recurring revenue) or ACV (annual contract value). If your plan is aligned with your objectives and your sales team knows what they need to do to earn a great commission, you will be well positioned to attract the best reps, and drive great performance from them. Tim Eades is the CEO @ at vArmour, the industry's first distributed security system that provides application-aware micro-segmentation. Sales compensation is a more complex topic for SaaS/subscription revenue companies. Here are the relative commission rates our survey found: (1) Same rate (or higher) as new commission sales. Just Use Comps. Therefore, the process should start with identifying your key business objectives. In a SaaS company the cost of goods sold includes not only the cost of running the software (e.g. But here’s the thing — term sheet are term sheets.... Ben Braverman explains how Flexport entered a competitive market with a unique model and continues to grow. Grab FREE eBooks with the top SaaStr content! When we’re designing sales compensation, the goal is to align sales behaviors with the desired business objectives. And the odds your first rep... Can an entrepreneur back out of a signed term sheet without damaging his/her reputation? High performing salespeople are very profitable for the company, and underperformers are usually expensive. In particular, a SaaS business needs to focus on selling to customers who will stick around for the long term, and have the ability to expand their contracts over time. But this can vary greatly from company to company, and your own situation needs to be thought through and commission set accordingly. The Official SaaStr Podcast: SaaS | Founders | Investors podcast on demand - he Official SaaStr Podcast is the latest and greatest from the world of SaaStr, interviewing the most prominent operators and investors to discover their tips, tactics and strategies to attain success in … I want to thank Marcus Bragg and Jennifer Jagusch at Zendesk, David McNeil at HubSpot, and Justin Roberts at Lever. Ep. Renewals are typically paid a much lower commission than new sales. Should Your VP Sales Start Off as a Player-Coach? The journey may not be simple, but hopefully the end result will be. As one of the early champions of “low-code”, Howie Liu, CEO and Co-Founder at Airtable, shares the lessons he’s learned building and scaling a company in an entirely new category. The goal is to reward behaviors that separate the top salespeople from the average ones. Do find customers that can scale as you scale if you want to reduce the risk of customers churning as your company evolves.. From ‘7 ½ [Hard] Lessons from My Second SaaS Unicorn’ with David A. Steinberg, CEO of Zeta Global; 3. Priced ... A Real Life SaaS Case Study: Eloqua. Mostly around VCs backing out, not founders. As a very rough guide, when your sales process starts to work well, quotas should be at least 5x the OTE (On Target Earnings), which includes base salary + bonus. Our goal is to help everyone get from $0 to $100m ARR with less stress and more success. Tim joined vArmour as CEO in October, 2013. ", "SaaStr is the undisputed thought leader in how to build SaaS businesses. We’ve talked in the past about the 48 Different Types of VP Sales, What a VP Sales Really… Continue Reading, Q: How can we estimate the lifetime value of a customer when the product is still in the early days? Drive a specific product mix: i.e. Always make sure you have checks and balances built into the compensation plan (i.e. of sales at a seed to B-round company, say 5-100 employees, would have a base salary a notch or two under what the C-level executives hold. Are you going for lots of customers, or a few big customers? Someone to build systems; Customer network is also important, specially in enterprise; Non-Scientific Study: 70% of SaaS First VP Sales Don’t Make it … You need to know 2 things to calculate lifetime value:… Continue Reading. Prior to that, he was the CEO at Silver Tail Systems until the company was acquired by RSA, the security division of EMC in late 2012. All of these questions will help hone the way your sales comp plan evolves. It creates the least friction. It Takes at Least 7 Years in SaaS: Can You Do The ... Got 100 Customers? 3 Secrets to Help You Sell Upmarket Faster, How to Bootstrap to $5M ARR in Less Than a Year, How to Win When There are 1000 Players in Your Market. What do you require as experience before you hire? The SaaS sales compensation plan has a base pay of $50K and an accelerator such that the payout is $100K at $750K ARR and $150K at $1M ARR, and again with unlimited upside to motivate your top sales performers. I Never Lost a Customer I Actually Visited. The exercise is: “How would you run your business… Continue Reading. Why? Readers of this post may find the following survey questions of interest. SaaStr CEO and Founder Jason Lemkin catches up with Therese Tucker, Founder, and CEO at Blackline about her SaaS journey, going long and surviving black swan events. In the latter situation, you may consider paying lower commission on low margin products such as professional services, or simply paying commissions on the gross margin dollars, instead of the total booking. Our SaaS survey shows that it can be about five times cheaper to get expansion revenue than new revenue, which would mean you can pay a lower commission rate for expansion revenue. Creating champions requires detailed focus on the journey. I’m going to say Yes, probably. If you’re in the market for a VP of Sales role at a SaaS company, take a look at the top companies hiring right now. As you have probably realized while reading this, your business objectives are going to change as new challenges emerge and priorities shift. The plans are IDENTICAL except for the scale of the performance measure on the x-axis (swapping license price with ARR). It’s earned it. These are guidelines we’ve observed based on empirical data from a number of successful companies we’ve worked with. Reward sales reps that don’t discount too much to win deals. A balanced approach is important, you don’t want to create a plan that shifts the focus too quickly. Going Long: The 20-year Journey of Being a CEO + Founder with BlackLin... A Founder’s Guide on How to Secure Your Company Like a Unicorn. The 3 Types of Day 1 Pricing: Low End of Normal. We've talked in the past about the 48 Different Types of VP Sales, What a VP Sales Really Does, and even given you a Script to Use When Interviewing a VP Sales. SaaStr 369: How to Hire an A-Player VP Sales and Scale Your Team with SaaStr CEO and Founder Jason Lemkin and the Co-founder and CEO of HireSweet, Robin Choy Success in the Enterprise means ensuring consumerization is a part of your strategy. If You Go Small, You’ll Never Have a Legacy. If you are able to identify a particular segment that has these characteristics, and it doesn’t cost too much to sell to them, then they are your optimal segment. Managing the journey through parenthood and children as a woman in sales. Unlike traditional software sales, the job of sales doesn’t end when a new customer signs a contract. It’s a great community of people trying to build companies and learn from one another. We put together a basic 50/50/25 VP of Sales comp plan early on at SaaStr, and it seemed time for an update. In the early days while you are still refining product/market fit, you may discover that your product is not sticky unless the customer implements a specific feature/module. SaaStr 173: Lemkin’s Lesson on What To Look For In Your First Sales Reps, How to Approach Variable Compensation, The Right Way To Acquire Customers When Starting Paid Marketing and more with Jason Lemkin, Founder @ SaaStr This post looks at how sales complexity impacts the cost of customer acquisition (CAC) in B2B... 345shares 110-125%), and the third-tier target at a point hit only by a small percentage (>125%). And Anchor High. For example, paying a 2x rate on a new product that is not ready to sell could impact core product growth, or paying commissions on up-sell could slow down new business acquisition. The complexity and difficulty of your sale will determine the ratio your business can support. SaaStr Annual 2019 has 4 exhibitors including, Augmania, and SaaStr. Collect as much cash upfront as possible. Don’t ignore the impact sales has on customer success. The classic way to do this is with accelerators – i.e. While you are still searching for product/market fit, you’ll need “first-in” salespeople who can help you figure out the sales process, rather than just maximize the number of sales. So naturally you would incent your salespeople to optimize sales to customers who purchase and implement that module. The world's largest community for business software. In this case, customers who purchase that additional module will be far more valuable over their lifetime than the other customers who will likely churn faster. Jason Lemkin (Co-founder & CEO, Echosign, SaaStr) - How To Hire Your VP Of Sales 1. This means you will want to adapt your sales comp plans to keep them aligned. Or, you may be launching an additional product, and want to get your salespeople to shift some of their efforts to selling this in addition to the existing product. The SaaStr Annual conference was delayed this year, but Jason & crew know that the show must go on. There is no right or wrong here – it will depend on the nature of what you are selling and the best way to get it sold.
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