Going from your first sales rep to 200 is no easy task. I've talked with a ton of Vice Presidents of Sales and Chief Revenue Officers over the past few years who have run successful sales team. Some have exited via acquisition, some are consultants and advisers now, while others are retired thanks to a company IPO. These are the elite of the elite.
When I interview people for The Prospecting Podcast, I always try to think of insightful questions to ask. Often when I stop recording with them, I'll get guests to open up with me without the little blinking record light on. I'll have conversations with people at conferences, networking events, etc. The point is, I always try to ask one private question off the record to get a more honest answer.
Even with their success, what would they do differently if they were do it again?
Sure I hear things about bad hires, mistakes with marketing alignment, too small thinking, etc, but there is one answer I've heard from over a half dozen former sales leaders that has been a real eye opener for me: the sales team's structure.
This is a write up about an outside of the box idea that I've heard several times from sales leaders who have taken a company to some sort of finish line. That means these companies either IPO'd, got acquired, or became unicorns. This is what you should do to setup your sales team's structure. If you already have a large sales team, this could be a creative way to restructure the whole damn thing.
It's called the School Bus Strategy.
I first heard about this strategy from a former SVP of Worldwide Sales, who told me they were advised by executives at the successful Boston based company, Black Duck Software (note: BDS was acquired a few years ago for north of $500 million). I've heard some of these things are sort of similar to some of the things in Predictable Revenue. However, there are few major differences I won't go into today.
I tried finding this strategy via a Google search but can't find anyone who has written about it. I want to be clear that I did not make this up.
I did not create this. I repeat. I AM NOT THAT SMART.
So here it is.
This concept is all about grouping different parts of sales team together, and you call each group of reps is a "school bus."
The reason for making these different school buses is because it creates accountable for all aspects of the sales teams. Organizing your pipeline, knowing where deals came from, hitting activity goals, and having your sales brothers and sisters in arms on your team produces a closer bond between different job functions. It also motivates team members to not let each other down, and allows you as a sales leader, revenue leader, or CEO to incentize the whole team to work together.
If an SDR fails to hit their activity goal, it's harder to see their impact when they hand deals to 20 reps. When an SDR is only working with one other AE, you are letting down your team.
When an AE fails to work an opportunity sourced by the SDR, they are doing the same.
Here's how you should setup your first bus.
Hopefully my art above would make my mom proud and she'd hang it on my fridge. I'd make it out of macaroni if I could.
What is the composition of School Bus #1?
SEAT #1: The Senior Account Executive (AE)
To start with, the core person on school bus number #1 is your Senior Account Executive (abbreviated as AE above). This Account Executive should be someone who is senior with previous experiences at larger companies. They can build up their own pipeline, but also understand all aspects of the business. This Account Executive doesn't work off inbound leads for their pipeline. They will work on deals they can source themselves plus deals sourced by the Sales Development team.
Occasionally, you'll have them work larger accounts that may stumble in from marketing for your team. Usually these are big logos or names you are trying to close.
For example, at LeadIQ, we have our reps split between less than 200 employees and more than 200 employees, headcount wise. The reason we do this is the sales process is sort of different for our customers and we want to optimize the buying journey to fit a company's situation.
The Senior Account Executive should be a master of their prospect's buying process. They should know how to handle even the hardest prospects. In fact, they may be the most important hire you'll ever do. To be qualified for this spot, they must have experience in not just closing business and managing pipeline, but creating pipeline too.
Yes they cost more, but it's worth it. These positions are long term roles at the company. The Senior Account Executive will be in this role for many years in some cases. Let's continue.
SEAT #2: The Inbound Account Executive (IAE)
This role is for a Junior Account Executive. It's usually designed for a first time Account Executive. Maybe you recruit a Sales Development Rep ready to do the jump from their previous company, or you find someone with less experience.
Generally speaking, most outbound deals are harder to sell to, that's why you don't want your Junior Account Executive working outbound deals. This seat on the bus works on inbound sales meetings only. As the Inbound Account Executive works inbound prospects, they'll learn the lingo of how to sell. They'll gather stories from buyers and learn how to put someone through their buying process. Since they are junior, you want them focused on learning how to close, and not be too distracted with prospecting to start.
At the right companies, these Inbound Account Executives can still prospect. However, if you have enough inbound coming in, you'll want that to be their priority.
You can pay these reps less since they are just starting out, but the idea is they don't stay in this role for more than a year or two. We'll go into what happens next later in this post.
SEAT #3: The Sales Development Rep (SDR)
This rep is strictly hunting for new business. All outbound, all the time baby! So far you're probably thinking this structure seems normal. Here's the outrageous thing that most companies don't do. The SDR doesn't report to a Sales Development Manager. GASP!!!
The idea is the SDR is part of this team, and they strictly are handing deals to only one account executive, which is the Senior Account Executive in seat #1.
They may occasionally plug inbound channels in their outreach to help the Inbound Account Executive, but the main focus is outbound.
The reason this is a good idea is because when an SDR is handing deals off to 10-15 other AE's like most companies do, it becomes hard for the SDR to manage up in the pipeline. Do you ever have SDRs who think certain Account Executives don't work the deals they hand them?
This makes accountability a full time effort for everyone on this bus to work together. If the Senior Account Executive wants to hit goal, they have to work the SDR's opportunities since they aren't distracted by inbound leads. If the SDR doesn't hit their activity goal, or sends bad prospecting messages on phone, email, and social, they'll directly impact the Senior Account Executive.
It also creates an opportunity for the Senior Account Executive and the SDR to strategically prospect into a named account together.
In the video above, I as an BDR worked with Tom Denniston, a senior Account Executive to prospect into this account. We made this video together to break into Hulu. Yes, they responded =).
This SDR should be in this role for about 1.5-2 years to really learn the trade, and can be someone new to sales. You'll see why soon. Maybe you'll find them out of college, or someone looking to do a career change. The big thing is find someone who is.
SEAT #4: The Sales Engineer/Implementation/Solution Architect (SE)
You guys know what this is. Most companies need a support like role to help with technology questions as prospects go through the buying journey. This is pre-purchase/pre-close, and may include the first year of implementation.
In the school bus sales structure, this person is acting a support person just for the pipeline on that school bus. I don't need to go into this one too much given our audience here.
SEAT #5: The Driver (Sales Manager of the Team)
Not pictured above is the driver of the bus. Each bus needs to report into a Sales Manager. This manager is the person hiring for the bus, coaching everyone, and representing the bus with other departments at the company.
The first school bus you setup should be someone who has managed people before with leadership skills. They know how to close, build pipeline, and navigate a company's grueling bureaucracy. When your team needs to get something from legal or dev, this person takes you there. When you don't know who is going to do something, this person is the last backstop. They are the coach.
At some companies that are smaller, the CEO will be this person to start since they don't want to spend a ton of money on having middle managers. That's ok too!
The Driver is maybe the most important part of the bus.
Often times, when you like your Senior Account Executive, you may want to feel out if they could potentially be the driver of this department someday. How do they deal with adversity? Are they empathetic with not just customers, but with team members? Can they inspire people, and are they willing to lead the team with a why?
Drivers are all about helping talent and developing talent.
How do you compensate people on the bus?
With the bus sales team structure, each rep has their own quota and their own commission based on your comp plans. The only wrinkle to compensation is you pay the team out with three bonuses: A team meets quota bonus (this should be a revenue number), an exceeds quota by 10% bonus, and a smashes quota by 20% number.
If you are trying to figure out your reps compensation, I recommend checking out this blog on Saastr.
If your teams hit their number, and the accounting works out correctly, it's important that you don't change their goals for the upcoming years or it will destroy morale. You want your team to exceed goal every year.
Okay! I have/need to add more reps though. How do I setup other buses?
Here's the real key to the school bus expansion plan. You only hire new SDRs and inbound AEs.
EXPANSION SEAT #6: Sales Development Rep #2 (SDR2).
With this seat, once you get about six months to a year in, you can now hire another SDR join your first bus. This SDR prospects and hands deals to the Senior Account Executive, similar to the other SDR.
After successfully on-boarding your SDR2 (let's say they hit quota for an entire fiscal quarter), it's now time to shake things up and expand to another bus.
This is hard to diagram, but try and follow this:
KEY: Pink= Former Bus #1 members. Green = new hires!
So here is the make up for school bus #2:
SEAT #1: Senior Account Executive (former Inbound Account Executive from Bus #1) (AE):
The idea behind buses is to always bounce seasoned veterans on your sales team with people who have been there for awhile. Bus #2's main Senior Account Executive is the former Inbound Account Executive from Bus #1. Now that they are familiar with the closing process, they are ready to build their own pipeline and work the outbound deals handed to them by their bus riding teammate, SDR #3.
SEAT #2: Inbound Account Executive (this is the first SDR you hired on Bus #1) (IAE):
Your SDR has been killing it the past year and hitting their number. They have shadowed the Senior Account Executive on Bus #1 for nearly a year. They are now ready to learn how to close on their own. You move the most senior SDR from Bus #1 over to the Inbound Account Executive spot on Bus #2, and let them work the inbound leads to learn how to close.
The pressure will be on marketing to increase spend to bring in more inbound leads for this Inbound Account Executive since there are now two Inbound Account Executives. This SDR doesn't prospect anymore. They are focusing on learning the buying process, and closing.
SEAT #3: Sales Development Rep #3 (this is a new hire)
Same as before. Find someone who can be in this role for a year or two.
SEAT #4: The Sales Engineer/Implementation/Solution Architect (this is a new hire) (SE)
Meh..this one is boring to talk about for me, but you know how it is. Same as Bus #1.
SEAT #5: The Driver (Sales Manager of the Team) (this is a new hire)
Just to clarify, your new bus is built around the Inbound Account Executive from Bus #1, and your first Sales Development Rep from Bus #1.
What happens to the slots on Bus #1?
Oh yeah! To backfill the positions on Bus #1, you hire a new Inbound Account Executive to take that spot, and move the second SDR hire you made for Bus #1 to the SDR 1 slot on that Bus #1.
Okay! I just raised money and I've been selling for two years now. What's next?
I think you see where this is going. Time to hire two new SDRs for each bus.
EXPANSION SEAT #6: Sales Development Rep #4 on Bus #1
EXPANSION SEAT #7: Sales Development Rep #5 on Bus #1
When you have your bus performing well, let's say 6 months in, you add a new SDR to each bus, and they feed deals to their respected Senior Account Executives.
This whole thing is to get your team into hyper growth mode. At this point you should be raising money, marketing's budget should be doubled for acquiring more inbound, and your team is looking for new SDRs and new Inbound Account Executives.
Once you get both buses hitting their goals in a fiscal year, you are ready to expand.
KEY: Pink= Former Bus #1 and #2 members. Green = new hires!
When you are ready to expand, you don't just go to one new bus. You go to 2 new buses. This is because you need to grow more than you did last time. If one bus got you to $1 million in revenue, and 2 buses got you to $3 million, you need 4 to get to $8 million.
So for promotions, you move the Inbound Account Executives from both buses over to become the Senior Account Executives on the new buses.
For the new Inbound Account Executives on bus #3 and #4, you pull in the most senior SDRs from Bus #1 and Bus #2 into those slots for the new buses.
This is what the team looks like now:
KEY: Pink= Former Bus #1 and #2 members. Green = new hires!
At four buses, this is the composition of your teams.
- Your sales team has four Senior Account Executives who close outbound deals they source themselves, plus deals sourced from their SDR. One of them was your first hire, another one was your original Inbound Account Executive, one of them was your second Inbound Account Executive you hired, and one of them was the first Sales Development Rep you ever hired.
- You have four Inbound Account Executives who only close inbound deals from marketing. Two of them were outside hires you brought in who were SDRs at their previous companies. Two of them are former SDRs from your team who you developed.
- You have four SDRs. Two of them are completely on-boarded and hitting their numbers, while two are on-boarding aboard their brand new buses.
Hopefully you are starting to see the pattern. Every time you want to start another bus, you hire new SDRs on your existing buses. That's the key here.
So once all four buses are comfortable hitting their numbers, you add SDRs to each bus.
And you are off the races. You'll be at four more buses in no time.
If you are an organization that doesn't sell something more technical, there are some teams that will hire two SDRs right off that bat and add a third before expanding to a new bus. This makes it so you never hire Inbound Account Executives, you just promote both SDRs to fill both vacant Inbound Account Executive seats.
So why should I do this for my team?
If your sales team already exists, this may not be a bad restructure for your entire team. Here are big pros:
- Leveraging existing chemistry: The only time a team will be completely new without familiarity with one another is when you start your first bus. Since SDRs and Inbound Account Executives get promoted at the same time, they'll have at experience together working on the same bus.
- More accountability: With smaller sub teams with separate goals, there is more accountability for everyone on the team to do their work and hit activity numbers. It also becomes easier to track where opportunities came from since it's a smaller amount of stakeholders working it. An opportunity owned by an Inbound Account Executive likely came from marketing, while the opportunities worked by the Senior Account Executive are outbound.
- More motivation for promotions: This motivates everyone on your sales team who have ambition. The Senior Account Executives could eventually manage more than one bus. You just back fill them with extra Inbound Account Executives as you plan these promotions out.
- Easier to add territories: When your team gets to the size where it introduces territories, it's easy to assign different territories to each bus.
- Isolate negativity and poor results: If a bus isn't working, it's easy to isolate morale being lower across your whole sales floor. You contain the negativity to a smaller group of people instead of having the negativity spread across all your reps.
- It encourages Account Executives to prospect: Every AE on your team will have prospecting in their history since they started as an SDR.
- More flexibility with hiring: As I mentioned earlier, if you want to hire SDRs only, you just adjust your hiring to start with two SDRs instead of one, and have three SDRs per bus instead of two when getting ready to expand. Move both SDRs in Inbound Account Executive spots, while the newest hire becomes the senior SDR.
In the words of the the weird ghost voice in Field of Dream, "If you build it, they will come."