Sales traction is one of the biggest issues that founders struggle with. How do they build a sales team, set up repeatable processes, and scale a sales team to have predictable revenue?
“Whether you’re trying to lower your cost of capital or trying to increase your enterprise value, the most important thing that you can do is gain sales traction,” says Ken Lundin, a sales veteran and the founder of Ken Lundin and associates.
In this episode of The Orbit Shift Podcast, we talk to sales expert Ken Lundin. He talks about how sales processes have changed and how sales teams and sales talent need to pivot themselves; how founders can go about building a sales team and an incentive model for their salespeople, and he breaks down the Sales Alpha Roadmap, a model that allows companies to get to product-market fit, set up repeatable sales processes, and gain level flight.
Q. What is the need for sales teams to continuously pivot themselves?
Ken: It’s funny because we only want to think about the big events. We want to think about COVID or something as tragic as 9/11 that changed the landscape of business throughout the world.
But every single year, there are companies that are starting up and going out of business based upon their inability to pivot and to continually evolve. In any given industry, at any given time, you can see the market shift. You can see the importance of something for corporations shift; you can see that the government was once buying a lot of something, and now they’re not. And now companies are. You can see that somehow you’ve gotten pushed down the line, and the once unique solution that the CEO wanted to talk to you about is now being bought by a director of engineering.
Unfortunately, what happens with many companies is that they end up in this position where they’re only growing at what the market rate is growing. And that’s because they haven’t continued to pivot and evolve because they haven’t been able to get the processes in place to communicate the messaging about the problems they solve to the people who most care about solving them.
The truth is that most founders think sales is this black box that you just pour resources in and then hope a client comes out the other side. But you have to take more control of those things. Because whether you’re trying to lower your cost of capital or trying to increase your enterprise value, the most important thing that you can do is gain sales traction.
Q. How has COVID impacted the sales process?
Ken: The specifics on how things have evolved for sales have been overplayed a little bit. We have clients that have been selling virtually for years, and they’ve been positioned the entire time for this.
One really massive difference is because so much of the sales process is now virtual and because you can’t make up for that with personal relationships. It puts the relationship builder salesperson who gets deals just because people like hanging out with them and having lunch in trouble. Because it’s much more difficult to build those relationships virtually and not face to face or belly to belly.
Companies now have to lean into having a sales process that is absolutely aligned with how their buyers buy things. And it has to be aligned with that in a way that provides value to the buyer every single step of the way. You can no longer get away with following up and catching up to get a deal done.
Q. How do the sales talent pivot during COVID? Previously they might have been used to traveling, and now a lot more sales are being made online.
Ken: There’s a little shake-up on how sales talent is managed. Historically, you could have had a road warrior who traveled for half the year or three-quarters of the year, and they hit a really big revenue number. You left them alone, and you didn’t care how they did it. Now all of a sudden, they’re sitting in front of a computer, and they can’t do it the way they’ve always done it.
Sales talent as a whole, the number one thing they can lean into is putting some discipline into becoming more efficient. Because in general, we haven’t looked for ways to be efficient and effective with sales. We may have looked for ways to be efficient to get through something quickly. For the sales superstars, it’s prospecting and everything else, whereas what I find with most average salespeople, they let everything else get in the way of prospecting.
Q. What approach do you prefer for prospecting? Do you prefer casting a wide net or a spearfishing approach?
Ken: You want to continue to niche down. Pick the one industry where you can make the most impact, then go ahead and look at all the different personas who may be influenced by your solution in that industry, the CEO, the VP, the director, then pick the one that you make the biggest impact for on a problem that they’re being measured on fixing.
Q. What kind of value can an external consultant or sales coach bring to a founder with a founder-market fit who is solving a deeply technical problem?
Ken: They’re an expert in their product. But they’re not an expert in building the processes that are repeatable. One of the places from our Sales Alpha Roadmap that we find a lot of people coming to us is between our launch and our lift phase. The launch is getting the product-market fit, and lift is the idea of adding process to sales.
Going from founder-led sales to team sales, where you have a sales team that can reproduce the results you’ve seen, is a massive undertaking. The most difficult thing is you don’t understand as a founder who’s been successfully selling some products and solutions already. What you’re doing is intuitive to you versus what can be retrained, repeated, and scaled. That’s the first component, how do you put an effective framework and process in place where you can scale a team.
The second component is most of the time; people rush through product-market fit. What you think is your product-market fit probably needs substantial work. That’s why people pay a good friend of mine, April Dunford, a preeminent positioning expert, a lot of money to come and help them with their positioning. We get so caught up with the way we view our stuff that we don’t realize how other people want our stuff, what they want it for, what problems they really need to be solved.
Q. Tell us a little bit about the Sales Alpha Roadmap which is a model created by your consulting group.
Ken: The Sales Alpha Roadmap serves as the pathway to maximize sales, maximize enterprise value, decrease the cost of customer acquisition, and be able to lead to a scalable sales force. We have four phases to it.
The original phase is Launch, which is about reaching product-market fit. The second phase is Lift which is about gaining sales traction and creating repeatable sales processing. Then we talk about Locate. As you get bigger, you’re trying to choose the right things to do, and oftentimes it’s what you say no to that’s more important than what you say yes to. The final stage is Level Flight, which is where we’re trying to seek balance, and make sure that the strategic advisory component of what you’re doing is in place.
If you miss one particular phase, for example, you don’t get the product-market fit right, and then you try to put the process of sales in and try to expand upon that with a team, what you tend to find is they have trouble. Their sales conversion rates aren’t what they’re supposed to be, they don’t set enough first meetings, and your cost of customer acquisition ends up being too high.
Q. How does a founder know when they’ve reached their true product-market fit?
Ken: There are a few things that they’ll see. Customer Acquisition Costs will tend to decrease. You’ll tend to see your sales cycle lengths become more predictable and will decrease as well. You’ll know that you’re talking in your customers’ language instead of the internal anecdotes and ways that you speak about your product. And you’ll start seeing that demand, whether it be inbound or outbound, is moving at a rate that you can start to forcibly predict when you need to hire more people.
Q. What’s your approach to hiring a sales team, and what kind of Key Performance Indicators do you put in place for them?
Ken: The first thing is we need to put in the right systems around the sales team so that they understand what daily success looks like. Too often, we don’t do that; therefore, it’s hard to measure and put KPIs in.
The fact is most founders believe that sales is a black box; they’re going out and trying to hire somebody who seems like they might be a really good salesperson. And then they say, ‘hey, Ann, just go be a good salesperson, but Ann doesn’t have the frameworks or the backup. And that’s not a scalable process.
If you’re in a position where you’re going out, and you’re saying, oh, I’m just going to go hire good salespeople, that isn’t going to work. That’s not a long-term solution.
Q. How can founders plan incentive programs for their sales teams?
Ken: Probably the single most important thing you can do is to clearly define and identify the behaviors that you expect out of your talent. The salesperson should be able to have that comp plan on their nightstand by their bed or next to their bed and roll over every morning, pick it up, read it, and know exactly what the most important things are that they should be doing.
From a sales incentive plan, there are a few rules that have to be in place. One is, it’s got to be very clear about the actual actions required of them. Two, the timing of the compensation should be targeted to as close to the actual event or the sale as possible. And three, we want to try to put in some plan that gives them a reason to stay long term.
If they know that you have the type of product or service that allows them to build an account base, they will be able to continue to grow their total sales and grow their income. And they’ll stay. If you put in a plan that doesn’t allow them to do that and become stagnant, then you’ll get a two-year or three-year run out until they feel they’ve maxed their compensation, and then they’ll go somewhere else.
You can also use accelerators like if they exceed quota, you can pay them more. Accelerators help push through quotas. Don’t use annual bonuses, though, because you cannot motivate them to act today based on a reward a year down the line.
Q. If our listeners want to reach out to you, how can they do that?