SaaS CEO Interview Series: Tony Zingale on hiring and managing sales leaders
If you’re the founder/CEO of a SaaS business, you know that very early on in the company’s trajectory, hiring and managing the right sales leader is hugely impactful to the company’s success. A great sales leader can not only sell well, but also inform the rest of the organization on how the customers are receiving the product, where it’s still lacking, the competitive positioning, and when its time to double down on growth. And a bad hire here can derail even a good story. So what should you look for in your first VP of Sales? How do you know when a string of bad quarters was because of sales execution or something else? How do you know its time to change your sales leader? In the second episode of my chat with Tony (first episode here), we touched upon some of these topics here:
Let’s start with the VP of sales hire. What qualities do you look for in the first VP of sales?
I believe it is one of the most important hires you will ever make as the CEO and you’ll likely make again and again over the company’s history. It’s a very tricky one because sales leaders, by nature, are very engaging, gregarious, articulate and of course sell themselves extremely well as you would expect. There are a few, probably obvious, traits that I look for when hiring the sales leader.
First and foremost, is their track record. Where have they been, what have they accomplished, how did they perform in that job both in terms of the numbers as well as “leading” the organization? Either they “starred in the movie” or they “saw the movie” up close and personal from companies that are known for their selling organization, selling prowess, and overall selling culture. Are the people at those companies known to be super aggressive, not taking “no” for an answer, strategic selling skills vs. vanilla product selling, closing and winning deals, setting the ground rules for evaluation, etc.? So, first and foremost with sales leaders, their track record matters most.
Second, they have GOT to be hungry. This cannot be their 10th sales job in the last 10–15 years, which is a big ole red flag and must give you pause, why did they move around so much? Why couldn’t they stick anywhere? Why did their title stay the same or only marginally change when only the company name changed? They must be hungry, they must see the market opportunity, be able to find and sell the early adopters or customer advocates/champions. Early on (0-$10M) they must be a deal oriented leader, meaning they must be great at the “art of the deal” versus the” art of running a sales operation”, which comes much later. The leader needs to love the art of the deal. They want to be out in front of the customer, they want to be out selling, they want to be out overcoming customer objections, they want to negotiate the contract. Why? Because they want to CLOSE and WIN the deal, that’s their high, that’s what they love to do. It’s just like an athlete winning the game, match, etc… it’s what motivates them and obviously generates compensation.
Next is WHO do they know? Experienced sales leaders are all about networking and relationships. Who have they worked with in the past? Who would they bring along with them? Who followed them into past companies and why? Who have they worked for and is that person known as a very successful sales executive or not? You’ve really got to dig into where did they learn their current skillset? I have found that sales leaders really are products of their environments where they learned how to sell, what process did they use, and what approaches made them successful. Try to look past the product or service they sold.
Then lastly, WHO have they sold to? The last thing you want to do is hire someone that comes from the consumer world if you’re tackling the enterprise, and be wowed by their resume of selling consumer products. If your target and the product/market fit that you either have achieved or are about to achieve is about selling to large enterprises, or selling SMBs, then your first hire must have trained those “muscles” and have done that in the past. Don’t get wowed by the person who’s sold to SMBs very successfully, if you’re selling to the enterprise or vice versa… you will be disappointed.
What about the ability to go early and establish sales processes, hire and ramp the first 2–3 reps?
You might find this surprising, but I think in the $0–10m initial growth phase, damn the sales process!! I think at that stage, you need to understand if you’ve got to product/market fit as measured by winning deals. The assumptions about the product/technology, it’s fit with the target customer, the various use cases, the target pricing model, you’ve got to figure all that out. First things first, I want to know can we sell this in its current form or not?
The first 2–3 sales people must be ones that initially say, “Hey, we’re going into IT and we’re going to sell this product to them” and they may have to figure out “No, we need to go sell it into HR or marketing or some other function. That’s where our champion is, that’s where the need and the budget is, that’s where our value prop is most applicable”. You need to figure that out from those early sales campaigns. If you spend a ton of time and money the first 6–9 months setting up the ancient and pricey Marketo system and have it feed into an equally dusty and pricey Salesforce system and then have your website automatically feed into the lead gen process/system, and on and on and on … All super important stuff, but not the focus this early on. I want to know; can we sell this use case to this customer in this market or not? Can we get money for what we built? How much and why? What are the objections? What other product features did we miss? What is the competitive landscape? The only way you learn that is to go out and sell and get bloodied, and come back to live to fight another day.
Sales process comes later, once you’ve established you have product/market fit. Once you’ve found your Champions/Early Adopters. Use cases that people will pay you for. Once you have $10m of ARR (that’s why I broke it up between early and later VP of Sales), maybe this is a good segway to what to look for in a growth stage sales leader.
Yes, once you have 8–10 salespeople. You’re on rev 1.5, or even 2.0 of the product, you’ve got paying customers, you know where the top one or two use cases are, target markets/buyers, their profiles, the value prop that people will pay for. Now, yes, your go-to-market needs to be built around that experience to scale it. Now, yes, sales process. What is the pipeline? Who are the target customers in that pipeline? What’s the target for the sales rep? Making calls and taking cold leads from the website, or cold leads from the demand gen process and turning them into hot leads. Then, yes, sales process matters and therefore your sales leadership profile changes as well.
I still believe $10 to $50m, the sales leader still must have many, if not all, of the same characteristics, has to have a track record, has to be hungry, has to be a deal person, has to be like, “I’m on a plane tomorrow, I’m going to meet this customer.” Should be able to sit in a deal review and vet out is that going to happen or not.
What I want from the growth stage sales leader is one thing and one thing in particular: PREDICTABILITY of the forecast. If you tell me we’re going to do $5 million in the quarter, and then you tell me two weeks before March 31st that we’re going to do $4.8, and you come in at $4m, we have a problem. Not just because we came in lower, but because you didn’t see it coming. What changed in those last two weeks?
By the way, this dynamic that I just described is very important. Whether you’re doing $5 million quarters or $100 million quarters. Predictability and judging the forecast based on your experience is the most important thing. That’s why process matters. When it becomes repeatable it essentially does become predictable. The number one thing that the CEO hates is what Boards and Wall Street investors hate, being surprised. Nobody wants to walk into that meeting at the end of the quarter and go, “You know what? We’re not going to make it.”
A lot of times it speaks to your pipeline. You’re not going to make it because you needed 95% execution on the deals you were working in the quarter. You can’t run a growth business like that. Most of the time, particularly in the larger enterprise software companies, deals fall out of the quarter because of a variety of good reasons and they have to be made up from other deals that, maybe, were in the upside set of opportunities, such that your forecast is still achievable in the quarter. If you don’t have any upside, or you’re counting on all the deals in the forecast to close, you have a problem.
What about the ability to hire, coach, manage reps? And let go of under-performing sales reps?
First and foremost, predictability, which means having a repeatable sales process. Two, absolutely you must be able to have a network of individuals to draw from. You must have a group of individuals that have either followed you from company to company that you can count on, or through your network, or a sales rep specific recruiter where you can be very crisp about the profile of individual you’re seeking.
Then yes, of course, you need to bring them up to speed quickly. There’s this huge dynamic about the learning curve. You have three to six months for people to get productive in the selling organization. If you hire more effectively, why can’t it be three? Effective sales enablement and investment in sales enablement needs to happen for this. Organizations blow this all the time by the way, hire a bunch of new sales reps (very costly) and under invest in marketing and sales enablement to make them successful, it’s a huge blind spot that I see all the time.
Then to your point, if they’re not making quota it how long do you stick with them? It’s a mistake to hang on too long. You think they’re going to ultimately become productive, and why? Because you’ve invested so much. This is where I think you must apply judgment, and judgment comes from experience, track record and having seen the movie.
Do you really see attributes in this selling person when you watch them in the deal, when you watch them in terms of how they approach their pipeline, managing their geo, managing their account base, how they overcome objections, which always come up when selling. You’ve got to be able to maneuver and overcome objections, set ground rules for evaluation that bring out the best in your product versus the competitors. All those things. You’ve got to be able to judge will this person be able to make it through? If your judgment is, “No, they’re not,” then act. Don’t hang on. You’ll be sorry later.
How do you know if somebody, who has been doing well for the last 2–3 years, is no longer the right leader for the next 3 years?
The first thing is, do they continue to be predictable? Meaning, are their forecasts of high quality? Are they making the numbers or getting close to the numbers? Or if they’re going to miss, do they see it and let you know well in advance, not the day before or two weeks before? Can they effectively diagnose why the miss and come up with an action plan? Obviously, they must be predictable. One clear sign of the leader plateauing is salespeople start to leave because they lose hope. They lose hope/confidence that they’re going to be able to make money. Make no mistake, the average salesperson goes to a company to make money.
People start to leave because one of two things. One, they can’t make money because it’s become “too hard” to sell/win deals regularly or the product edge has run out and/or, they don’t like the “culture” so they don’t like the leader, they don’t like the way it feels. Like you said, there are so many opportunities for good salespeople they’ll just go on to the next one rather than stick around.
The other sign, as a CEO, that you want to watch out for is does this person start to lose the confidence from their peers? Does the marketing person who was working well with the sales leader say that they’re not working really well now. Same for Engineering, HR, Customer Success and Finance... you “see” it happening and it’s a yellow flag.
Coincident with missing the numbers has to do with what are you doing about it? What have you changed? Have you taken some people out? Are you bringing in some fresh blood? Are you changing your approach and your selling tactics? Are you targeting somebody different in the organization? This isn’t just on the sales VP, this one treads over into marketing and all of the org. Marketing should be totally dialed into what is it that’s working or not — our positioning, our messaging, our demo, our answering the objections, or our product road map. Is it all working or not? It’s the sales leader’s responsibility to come back and say, “It’s not working and here’s why”.
Then the last one is the obvious one. The person blames everybody else. “I don’t have enough pipeline. The product sucks. We don’t have the enough integrations with other systems”. They start blaming and yelling at everybody, so their behavior becomes different than what it was. Those are all the signs that I could think of. They want to blame the CEO for, “We need a new strategy and vision”. They start assigning blame elsewhere versus just looking in the mirror.
Let’s talk about sales targets. Obviously, missing targets sucks. When you miss a target, how do you assess what’s the real reason? Whether it’s sales execution, sales and marketing alignment, product, competitive landscape?
It’s a great question because the knee jerk reaction from the CEO and the board is it’s a sales problem. I think the answer to this question starts with first and foremost with the CEO. The CEO is still the chief salesperson. They must be intimately involved in the biggest deals in the quarter, product market fit, the competitive landscape, the selling process, the objections, the market dynamic shifting or staying static, which never happens. They must be the chief salesperson almost at any size.
I would venture to say that most CEOs don’t come into this question cold. If they do, it’s the wrong answer. If they’re starting from scratch that means they haven’t been in the field, they haven’t been in the customer situation and the dynamic, and to hear the customer on why we bought it or didn’t buy it, or why we didn’t renew, or a competitor has something better, cheaper, that more fits what they need to do. By virtue of the CEO being the chief salesperson, it allows them to assess the situation more directly and expeditiously. Absolutely I would always dig into what changed in the forecast. I would absolutely start with sales, because that’s their accountability. What changed in the forecast? Why didn’t those customers buy? Why did they slip? Who did we lose to? Why did we lose?
By the way, I think win/loss reports are complete bullshit. Salespeople are never going to be articulate on why they lost. They’ll be super articulate on why they won, because it’s all about them. When they lose, they’ll typically blame the product or price, or someone getting fired in the organization that was their champion. You’ve got to dig into what happened there first.
The second thing is you go to the bigger picture. Did the market move on us? Did the competitive landscape shift? Did an incumbent do something to slow us down or take us out? Did a smaller competitor that’s nimbler have something that we didn’t have? Who set the rules of engagement for this opportunity? Did we come in late or early? Were we aced out? Tactically, was it pricing? Was it our champion? Did it go up the food chain to procurement and they said, “We’re just going to buy this from Salesforce, theirs is good enough”?
Really vet out what happened here. This is fundamentally important, back to do we really have product market fit so I can hire the next 10 sales reps. If you still don’t know, don’t hire 10 more sales reps, you’ve got to figure this out. By the way, everybody gets involved in this. It’s incumbent on the CEO to make this a safe conversation across the exec team, not play the blame game.
Marketing should know that three new competitors entered the frame, spoke to Gartner, and Gartner said, “Yeah, you should look at these other products”. The messaging, the positioning, the demo, all those things are incumbent on marketing. The website doesn’t have any customer success stories on it. Why not? You must create a safe environment to really unpack what went wrong and why we missed. The natural tendency is, “Let’s go just fire the sales leader”. Chances are it’s more than sales execution. Dig into it. As a CEO, call a couple customers and say: “Hey, Mr. CIO at Verizon, why didn’t you buy our product? I’m just trying to learn, trying to make my company better. What could we have done better?”. You don’t have time to do 20 of those. What you want is the objective answer such that you can course correct.
By the way, full circle, if it came back to a sales execution issue then you know what to do. If what you came back to is a product issue, you know what to do.