Could your salesperson be your most undervalued asset?

Good salespeople can be very expensive. But I would argue they are your most valuable asset–even in spite of (or because of?) their high cost.

I work with technical founders every day. Some “get it” and invest in sales and marketing once we have figured out channels that work and can scale. They will almost literally back the truck up and pour money into a funnel they know 1.5-3x the money they put in comes out at the other side.

Others still ask why salespeople are so expensive to hire. If that’s you, this post is for you.

Like engineers, all salespeople are not created equal. Some salespeople barely cover their overhead and salary–or don’t, and are a net negative to the company. Effective salespeople deliver many times their cost in value–new customers, revenue, profit.

What makes sales people so valuable?

Salespeople manage the customer on their purchasing journey. From the company’s perspective, this is the sales funnel–but we like to look at things from the customer’s point of view. It’s the customer’s journey.

Lousy salespeople create more problems than they solve–we’ll get to that in a minute. Great salespeople are effective because they take responsibility for the journey, look at things from the customers’ perspective, and are able to sell on value.

Salespeople are valuable because…

1. They close deals faster than without salespeople. Optimizely’s first salesperson challenged the founders that he could upsell customers faster than the product’s upsell funnel would–and within 3 weeks he had paid his salary for the quarter, from a cold start. The reason why all successful SaaS companies (including Google!) have large, well compensated sales teams is because they speed up sales.

2. They save deals that would have died. It’s that simple. A great salesperson can take a deal that is headed towards closed-lost for many reasons and turn it into closed-won.

3. They set expectations so the rest of your team can succeed. One of the biggest mistakes early stage companies make is not managing expectations. Technical founders love promising to build new features–but when those features are deprioritized or don’t ship on time, customers are upset. Great salespeople can manage these expectations–or avoid making promises to begin with.

4. They directly create growth. Many companies are looking to cut headcount in the current, cash-crunched market. But would you cut the people that, if you’re doing it right (see below) return $3-4 on each $1 invested in them?

5. They bring feedback to your product team. Engineers take customer requests very literally. Product managers think strategically. Salespeople live with customers 24/7 (or, so it seems sometimes). Great ones can help your product team prioritize requests, find new markets, expand TAM–because they’re listening to your customers in a way that others aren’t trained to do.

All of this assumes we are talking about an effective salesperson. What if your salesperson isn’t selling?

For founders new to the game, it’s important to recognize that–unlike engineers–you can and should measure return on investment (ROI) of your sales people. For enterprise SaaS sales, a salesperson should absolutely be generating 4x more than they cost by the time they are fully ramped up. Typically that ramp should be 6-12 months, though it might vary by product, market, or company stage.

What if they haven’t gotten to a 3-4x ROI in that timeframe? Fire them. Maybe it’s your fault, maybe it isn’t, but the easiest variable to test is the salesperson. No great salesperson would go a year without hitting their quota. Or even six months (depending on your sales cycle).

Our next post will cover what effective salespeople actually do–things that perhaps even you as founder can do yourself, if you want.

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