Sales Learning Curve - How to Not Overhire For a New Product

Investing in Sales is Critical for New Products

The modern CEO has often heard the cautionary tale of how the attitude, “build it and they will come” will inevitably lead to underwhelming sales and delayed or even non-existent traction.

While ignoring sales is conventionally regarded as a bad strategy, hiring too large a salesforce can be equally damaging. The HBR’s sales learning curve describes the pitfalls of over-hiring salespeople and lays out a three-phase approach for the modern CEO to follow when hiring for sales.

Why Less is More For A New Salesforce

Over-hiring too early will burn more cash, dilute customer learnings, and misalign other divisions of the company.

For any new product, sales are hard to come by. The early adopters will be few in numbers and expect concessions, like free trials and pilots for their troubles. With so few dollars coming in, the more salespeople you have at this stage, the less likely it is that the total sales yield can compensate the sales staff.

In the very early stages, however, learnings about product improvements and GTM strategy modifications are more valuable than the sales you achieve in that period. Unfortunately, with a large sales staff, the ability to distill and communicate these learnings is also reduced as there are more points of potential friction between customers, sales, product, and marketing.

When other business functions, like product development and marketing, become disjointed like this, it can further confuse a business trying to understand how its new product fits in a potential market. Engineers might build the wrong features and marketing might target the wrong prospects.

If a big salesforce is counterproductive early on, what are the steps the modern CEO can take to build up to one?

Phase 0 - Admission

Before stepping through each phase of the “sales learning curve”, the first true step is admitting you have a new product. Once you do that, you can continue onto the next phase. If you don’t, well I’m afraid you might overhire.

Phase 1 - Initiation

This is where all new products start their journey, including those from mature companies, like GE or Microsoft. The initial customers will be few and require significant incentives for their commitment. Here is the product’s first exposure to reality, where it is not longer a diagram on a whiteboard or prototype on a pedestal. Through this initial exposure, there are big opportunities to learn how to improve the product and marketing for it.

To capture those learnings most effectively, you must hire someone who is willing to dig deep into customer adoption obstacles, market messaging, and product feature requests/bugs. This person is referred to by HBR as the “renaissance rep”, one who is adaptable, curious, and able to effectively connect various parts of the company, such as marketing and product development.

Oddly enough, a big no-no at this point is a heavily commission-based plan. But, why?

It turns out that if you incentivize your team to be laser-focused on commission outcomes, they will sacrifice short-term wins for long term learning, which can seem innocuous at first, but detrimental in the long run. Don’t do this. Instead, foster learning by hiring “renaissance reps” and keep them aligned with a healthy base pay and little to no commission.

Phase 2 - Transition

After some time spent learning from early adopters and modifying your sales recipe, you can begin the transition phase. HBR’s rule of thumb for beginning your transition phase is when revenue has ramped up enough that each new sales rep brought in can yield enough sales to at least pay for themselves.

Here, the focus shifts from learning to developing a repeatable process. While the customer is still important, the more important piece to nail at this point is how the sales rep spends their time and the payoffs related to changes in how they do so. The goal here is to cut the fat of a rep’s time enough that the marginal revenue per rep hits about 2X their cost to the company. Once you do this, it’s time for phase 3.

The best hires to make in this phase are known as the “enlightened reps”, those who can execute well in a mature sales structure, but who can also take the important learnings they make back to their team for further refinement every once in a while

Phase 3 - Execution

If you’ve made it this far, pat yourself on the back. You’ve found product-market fit and have honed your sales process enough that it is repeatable. HBR recommends that you can finally, “hire as fast as budget allows”.

Here, the best reps to hire are the “coin-operated reps”, those who thrive in a system and require nothing more than “territory, a sales plan, a price book, and marketing materials” to make sales. This is why you’ve created a repeatable process. For every dollar you put into this money-making machine, more than two should come out.

If this is the case, do not modify your sales process unless you see a drastic reduction in sales. You’ve crafted a process that works, so no need to reinvent the wheel. Just focus on execution and refined efficiency gains.

How to Streamline Sales Onboarding

One big thing to keep in mind as you begin to train sales reps at any stage is how effective they become at navigating sales conversations. While conventional methods, like in-person roleplay can be effective, they are neither realistic nor immersive enough to truly simulate prospecting, discovery, negotiations, objection handling, etc.

That’s where syrenn’s AI roleplay comes in. With syrenn, you can practice any sales conversation with a voice AI avatar cast as any buyer persona you’d like, with immediate feedback and scoring for you to track your progress improvements.

We’ve helped many sales organizations streamline their messaging and 10x their reps in way less time. Try it out for yourself by clicking the button below!