One of the biggest mistakes I see B2B founders make
"We need to increase sales. Lets hire an A+ sales person"
B2B companies that hire sales people to increase sales don't have a grasp of growth economics
I recently watched a company make this mistake and set £3m on fire
Today I'm going to tell you why it's such as bad idea, and what you actually need to do to increase sales
Why Listen To Me?
I have helped over 2,500 B2B companies scale their business. I have used the same playbook to build and scale several B2B companies of my own, and invest in several more.
I have hired and trained over 20 killer sales people, who averaged a close rate of 27%
What Do Companies Get Wrong?
Twenty years ago, the way to grow your B2B business was by hiring a sales person who would cold call, network and sign new customers
The hit rate on cold calling was great. They got leads. They made sales. Everyone followed suit
The issue is, sales is a numbers game, and the numbers no longer stack up
The story goes something like this..
Company A wants to increase their revenue.
They put a job post out for 'Senior Sales Director', with the goal of hiring a A+ sales person.
They pay £70k OTE for their new gun.
The sales director has tonnes of experience with B2B lead gen. The company says "That's exactly what we want. Someone who has fresh ideas about how to generate leads and grow sales".
In their first week the new sales director asks for budget to invest in automated email campaigns and LinkedIn automation software.
"I'm afraid company policy states that we can only use pre-approved tools. Plus, we don't like the spray and pray approach. We want you to do personalised outreach".
They expect the sales person to sit there making cold calls, connecting with people on LinkedIn and sending cold emails.
But no matter how good they are at doing that, the numbers don't add up.
The best cold caller I have ever worked with would get one meeting for every 200 dials. And I've worked with a lot of cold callers.
Then there is cold email. No matter how good your cold emails are, you will not get more than one meeting booked per 200 cold emails sent.
And LinkedIn? They have a connection limit of 200 connection requests per week. Your sales gun can only message the 60 or so prospects that accept your invite to connect. And even the best crafted message will only get you one meeting for every 100-200 LinkedIn messages.
Here's how this plays out..
Your sales person wants to make a good impression, so they work hard to make 25 cold calls per day, send 25 highly personalised emails per day and they connect with 40 prospects on LinkedIn (plus send 10-15 messages).
Each month they are making 500 cold calls, sending 500 emails and 240 LinkedIn messages
Assuming they are world-class at it, they might book 7 meetings in a month.
5/7 will show up to the meeting.
The average sales cycle will likely be 3-6 months.
With a 15% close rate, they might sign one new every month, from month 3 onwards.
After 12 months they have barely covered their own costs.
Management are frustarted the needle has barely moved.
The sales person is frustarted they aren't hitting their commission thresholds.
They go find a new job.
Your business remains stagnent.
No one understands what went wrong.
What Went Wrong
Lead generation and sales are two completely seperate endevours.
You should not hire a sales person until you are drowning in leads, and you need a good sales person to nurture them and get them over the line.
Hiring good sales people does two things:
- Increases the percentage of leads you convert into paying customers
- Frees up more of your time to work on the business
Do not fall into the trap of thinking a sales person will solve your lead gen problem. They won't.
You need to learn how to build a consistent lead generation machine before you hire a sales team.
Go get it!
Lee
