Exec Spin: Scaling Sales
Thursday, April 25, 2019
Posted by: Kaylin Berg
Julia Kanouse, CEO, Illinois Technology Association
On Thursday, May 9th, we are hosting our third annual ScaleUp conference (if you don’t have your ticket yet, snag one here). The reason we’ve invested in this event and are committed to providing content that is relevant and actionable for our members, is because we know you all have so much to learn from each other. As a convener and aggregator, ITA is in a unique position to know where you, collectively, are struggling and where we, collectively, can help lift all boats.
One of the topics we hear the most about is sales – how to scale; when to scale; how to fund that growth. Jason Vandeboom, CEO at ActiveCampaign, has taken a smart and measured approach to scale his overall business, and, in particular, his sales team. I recently had the chance to sit down with Jason and learn a bit more about his philosophy and his journey.
Q: We hear a lot of companies today say that they need to raise capital to be able to scale sales and marketing. You didn’t do it that way and believe there are alternatives. What drives this philosophy for you? Why did you take a different course?
Many people think of funding as a form of validation. As a product-driven leader, I don’t think that’s the right way to think about it. If you build the right product, to solve the right problems, and continue to provide value for your customers, you can build a sustainable business. By creating a sustainable business, you can find ways to scale sales & marketing.
When businesses take on funding early on, that means they’ve possibly given up some level of control of their business. I believe in small businesses and had I taken funding early on, I likely would have had to give up some level of control or influence. Likely, I then would have been pressured to move upmarket for the potential of more revenue faster. I know there’s a huge opportunity in the market for small businesses and as a small business for the majority of my career, it’s not something I was willing to abandon.
Instead, I believe in creating genuine value from what you are selling and the opportunities for funding will come to you. This is when I believe the time is right to take on funding.
Q: When and how is the right way to scale a sales team? What are some lessons you learned along the way as you scaled your sales efforts?
As a founder, technically, you are also the first VP of Sales. Personally, I waited too long to ramp up our sales team. I think it is easy to overlook the value of sales when being truly product-first in mindset. At the same time, I believe you can remain product-first while scaling out your sales team the moment you have customer demand that could be influenced and expanded upon by the use of a sales team. The feedback loop you hear from prospects and customers are key insights to the problems your customers are looking to solve, having a direct impact on the product.
Based on my experience, I wouldn’t hire a VP of Sales too early. You are the sales rep to start. You are the VP of Sales to start. If you can’t figure out both of those (to some degree of success) I wouldn’t expect anyone externally to solve it all for you. So, start as a sales rep and then, once you have some degree of success, you can hire three reps. Work with them directly to prove things out further and then hire a sales manager to help manage the day-to-day and fine-tune things. This type of format can work up until 20 or so people. At that point, I’d look to hire a VP of Sales who can really scale out a sales team and have a big impact on your business.
Q: Do you think there is a magic inflection point for SaaS companies (ARR, transaction volume, etc) when it makes sense to ramp up an inside sales structure? How do you find the right balance between human interaction and automation in the sales process?
There’s not a magic inflection point for SaaS companies to ramp up an inside sales structure. Part of the reason is that you can’t just look at the initial ACV of a customer in regard to validating another sales rep. Over a customer’s lifetime, there are opportunities to increase ACV with new products and features.
Instead, I think about finding the balance of human touch and automation. This makes it possible to have a lower ACV to justify a sales rep because you can offer an automated self-serve option, supplemented with humans who can have an impact at the right time.
This is a unique balance and one that you might need to iterate on -- it’s something we tweak regularly.
Q: How did you find a balance between being product-first with building out a sales team? What mistakes do you see at other companies and how did you approach it at ActiveCampaign?
I’ve always been product-first and have been allergic to sales for most of my career. The biggest mistake companies make is building something people are asking for. You aren’t consulting. If you are building a product it should be to shift a market and solve a problem.
As I said before, as a founder, you are the first sales person and you need to sell the product first before you can build out a sales team. Once you start to build out a sales team, maintaining the product-first mentality is hard. It’s easy to let sales take over because the immediate opportunity for revenue is incredible.
What I’ve found, is companies that let their sales team take over - meaning they start to drive the product - will have a great couple of years. Then, a product-first company comes along with a product that shifts an industry and takes over. So, while it looks like you might be leaving money on the table by holding back on building a sales team, you are actually building for the long term and it will pay off.