Hiring more people is typically the first thing you do to speed up growth in an up-and-coming B2B company.
Let me challenge your perspective for a couple of minutes.
What is really the easiest way to grow sales?
1. Increasing the number of sales reps
2. Or making your existing sales reps five times better
Before I give you the answer, I'd like to bring you back a couple of years in time.
Realising that scalability is a must to grow
Imagine yourself catching your breath on a muddy rugby field. You're exhausted, and on top of it all, the rain is provocatively smashing in your face. And all you can think is: how can it be so difficult?
This overwhelming feeling was a reality at Upsales five years ago. We were working hard but received little output. We grew steady at about 20 per cent per year. Yet, none of the efforts we tested worked out. Recruiting, marketing, sales... nothing flew.
Begin with the end in mind
We had a clear vision of what we wanted to achieve - faster growth. Our conclusion, at the time, was to sell to larger customers. That would, in turn, result in a higher average income per customer.
Or so we thought.
In reality, we took way too many projects upon ourselves. Where most required tailor-made solutions. And the result?
Almost all new sales reps we hired during this period failed. The sales process was too complex for anyone without Upsales experience to handle.
Besides this, our clients became very unhappy. It turned out that people aren't great at setting requirements when purchasing custom tech solutions. Most companies didn't know what they needed. (And the number of hours we had to spend on supporting these clients, later on, was ridiculous).
We realised that there was something to do before scaling - improving our scalability.
Incorporating scalability in your business
A major issue that hindered our scalability was pricing. We had different bundles at the time, as many SaaS companies do. But there was one problem. If a client wanted a specific feature in the premium bundle, they had to double their spending. That didn't only raise irritation from upset buyers. It lost us deals.
We understood that bundles created problems. So we looked at the data to figure out what to do about it.
It turned out that all of our highest paying customers today started as small customers. Their annual spending initially was around €5.000-€10.000. A couple of years later, they generated revenue up to €50.000-€100.000 per year.
Our learning from this exercise was that we shouldn't bring in big customers as we thought. Instead, we make our customers big.
These insights gave rise to our land-and-expand strategy. We've been working with it over the last couple of years and have seen great results. In practice, this meant increasing the price competitiveness of our user license fee. We also enabled customers to pick and choose features from a standardised set of add-ons.
So what happened after the pricing change? Well, new sales reps weren't failing anymore. In fact, they managed to close their first deals within 3-4 weeks.
Nailing the scalable delivery
Next up was reaching a scalable delivery. To do so, we needed to create a predictable and rock-solid process of making customers happy. For us, this meant cutting out the tailor-made solutions.
It just wasn't possible for new hires to keep track of everything custom made. So we looked at the most common problems our customers had. Then we created add-ons that addressed those specific problems. That speeded up the learning curve for our sales reps a lot. They could now, also, install changes with a click without any prior technical knowledge.
Everything improved after that. We had fewer bugs and our NPS increased since the new hires provided value for our customers faster. It was also easier for sales reps to sell since they could demo the product immediately.
Throwing money at a problem doesn't make it easier
So, what is really the easiest way to grow?
I mean, yes. We could've brought in capital and focused on hiring a bunch of people who could've consulted our big customers. But it would've been extremely inefficient. The model that we had didn't have scalability built in itself.
And throwing money at something that's not optimal would just have enlarged our problems.
Increasing headcount more than necessary actually leaves you with a double-sized problem. You become more inefficient as a company. And solving the problem is more challenging with 50 people rather than ten in the team. Besides, you're very likely to be less profitable than you could be due to the increased costs.
The best prerequisites to grow long-term come from streamlining operations and improving effectiveness. At least, in our experience.
So, nail the details first, and scale after that. It's definitely the best way to grow (according to us). You'll be better off trying to coach your sales reps to become five times better in the beginning. Your hard work will have a ripple effect. That’s a promise.
/ Daniel Wikberg
CEO & Founder of Upsales