The Right Number of Reps?
The exact right number of sales reps for an early-stage tech start up is 5.
Early stage can mean lots of things but as a rule of thumb it's around the series A if the company is venture backed. There is a viable product subset being used by at least a handful of customers. The team consists of founders, developers, maybe a couple of customer success reps and maybe some early sales and marketing team members.
So why is 5 the right number of sales reps at this stage? Well, the fact is it’s the exact right number, unless it isn’t. Spoiler alert, the headline was just to hook you. Probably, and rightly you were thinking: “Wait, how does that work? The right number would have to depend on a lot of things.” If you were, give yourself and A+. There isn’t any one right answer and there are a lot of different factors that can influence setting up this team. For instance:
How much effort is required to gain a new customer?
How long does it take?
What is the initial contract value or sales price?
What are the company revenue goals?
Is the sales land and expand or full deal up front?
Is there a proof of concept and does it require lots of sales team interaction?
Is the sales team involved in helping with customer implementation?
Are sales reps responsible for finding their own prospects?
What’s the sales territory coverage?
What’s the skill set of the sales reps at this early stage?
Rainmakers
Hiring the right reps for this stage is important. If you take nothing else from this post, remember this: The types of skills needed during this phase are different from those needed to sell mature offerings. In their 2006 HBR article “The Sales Learning Curve” Mark Leslie and Charles Holloway dubbed these early-stage reps as renaissance reps, but I like to think of them as rainmakers. This is the team, whatever the size, that will move you from founders doing all the selling, to the first step in setting up a commercial go to market team.
According to Leslie and Holloway, rainmaker skills include: “a facility for communicating with many parts of the organization, a tolerance of ambiguity, a deep interest in the product technology, and a talent for bringing customers together with various functional teams within the company. [Rainmakers] must be resourceful, able to develop their own sales models and collateral materials as needed.” To that I would add that a key ingredient is a healthy dose of expertise in the relevant product domain, a deep commitment to the mission of the company and an outstanding fit with the company culture.
Communicating the Value
In his book Presenting to Win, Jerry Weissman coins the term WIIFY, what’s in it for YOU? The YOU of course being your target customer which accomplishes two important shifts as Weissman describes. The first is making sure the focus is on the customer and the second is making sure the subject is their benefit. Easy to say and harder to do than you might think. Rainmakers are the people that can successfully step in for founders to critically communicate value in a way that is likely to be embraced by prospective customers.
Conclusion
So, in the early stage company, the number of sales reps is less important, it’s the type of rep that matters. You could start with one, as I did with Agile Software in the early days of selling PLM. We were 100% focused on selling to electronics manufacturers which is something I knew because of my background in electronic design. After countless hours on the road with our technical founder, I had the value story down and was able to court prospects on my own. Our rainmaker team grew from one to two to four or so in the first 18 months – all with the skills discussed above. In those early days we dedicated ourselves to answering the questions listed earlier in this post to figure out our best next moves in going to market. The answers were not always right but the exercise was invaluable and set the framework for building a long-lasting high value company. Agile completed its IPO within four years of its founding.
