Scaling an organization is perhaps the most difficult challenge a business is taxed with. It can thrust a business into stardom, or leave it crippled at the seams. All of today’s esteemed companies have, at some point, struggled with the challenge of scaling. Internet darling Groupon grew rapidly, and experienced many growing pains in the process. From June 2009 to June 2011, it ballooned from an organization with 37 employees to one with 9,625 employees. Groupon hired sales rep after sales rep, failed to focus on sustainable growth and, in Q2 2011, reported a net loss of $102.7M. In a 2012 survey of 400 merchants, over 50% indicated they wouldn’t be running another Groupon deal in the foreseeable future. Starbucks faced a similar reality. In a very public email in 2007, with the subject line “The Commoditization of the Starbucks Experience”, Starbucks’ CEO Howard Schultz, confessed that the company had sacrificed customer service at the expense of cost efficiency. He cited the example of Starbuck’s decision to purchase automatic espresso machines to increase speed of service, not appreciating the fact that the taller machines hindered customers’ visual lines of sight such that they were no longer able to observe the barista’s beverage preparation process as part of the once-intimate experience.
Effects of scaling too quickly can also have far-reaching lethal implications. In the news of late, Chipotle Mexican Grill, has been criticized for growing too fast at the expense of quality. The Mexican food chain has quadrupled the number of restaurants opened in the past decade. In the process, it has been arraigned for sacrificing its safety standards, leaving customers susceptible to E. coli and Norovirus food contamination, and hampering the brand’s reputation.
When scaling an organization, one of the greatest points of friction is scaling the sales teams. In 2014, Bob Sutton and Hayagreeva Rao, published the bestselling book, “Scaling Up Excellence,” which details, in a no-nonsense fashion, how to grow an organization and “scale up without screwing up.” Through countless examples, it provides insights as to what is required to spread excellence in an organization, both in terms of mindsets and actions. Although the material is relevant for all organizations and not specific to sales teams, several of the tenants described in the pages of the book, are especially relevant for sales organizations. As your personal sales analyst, we’re here at Node to guide you, highlighting three of Sutton and Rao’s tenants that will help you ensure you scale your sales organization.
- Scaling requires addition and subtraction
In “Scaling Up Excellence,” Sutton and Rao explain that scaling is a challenge of more, as well as less. It’s counterintuitive: scaling involves “addition” and “subtraction.” Oftentimes, the processes, structures, and individuals that have been best for your organization in the past will not be best as you scale. Consider the common weekly “all-hands meeting,” for example. This practice makes sense for a small organization, but will likely need to be modified as you scale (perhaps by hosting multiple session for different office locations or scheduling multiple sessions specific to particular teams).
If you’re tasked with scaling a sales organization, use “subtraction” to eliminate disjointed processes and methods. For sales teams, the most important priority should be to set up your CRM system for streamlined scaling.It’s impossible for sales teams to succeed as they scale without deliberate, well-documented, and streamlined CRM processes. Get rid of “dirty data” and duplicative processes. Next, focus on “addition.” Create dashboards. Create automation, including automatic lead routing. By taking steps such as these, you’re sure to improve agility.
You can also use “subtraction” to help weed out ineffective sales tools. Oftentimes, sales reps find their efforts compromised by sales tools that are anything but streamlined. Too many tools that aren’t organized into a complementary sales stack impair their ability to have focus and direct resources effectively. According to TOPO, only 15% of sales technology purchases result in increased revenue. You’ll also need to consider “addition,” and think strategically about which tools you want to add to your sales stack. Prioritize the technologies that afford sales managers real-time insight into the performance of their sales team. By selecting the right technologies, you’ll be better able to monitor the effectiveness of selling efforts as you scale and immediately recognize if anything is going awry. You’ll see immediate results. In a study by Steve W. Martin at the University of California Marshall School of Business, 50% of individuals from high-performing sales organizations reported that they had sales processes that were closely monitored, strictly enforced, or automated, compared to just 28% of respondents from underperforming sales organizations.
The use of “subtraction” also relates to hiring. A study by HBR found that high-performing sales teams are more apt to fire underperforming sales members. Specifically, 18% of high-performing sales organizations terminate poor-performing salespeople after only one quarter, and 78% do the same within a year, compared to only 2% and 62%, respectively, across average-performing sales organizations. When scaling, ensure that you eliminate those members of your team who won’t propel growth.
- Spread a mindset, not a footprint
Scaling unfolds with less friction and more consistency when the players involved have a common vision and shared mindset. When scaling a sales team, hiring is critical. It’s tempting to hire as fast as possible, but this will lead to disastrous results. It has been estimated that 27% of US employer respondents believe that a bad hire costs a company upwards of $50,000. When hiring, focus on hiring for attributes not based on gut feelings. Richard Harris, Owner, Harris Consulting Group, cautions, “[When hiring reps] don’t confuse liking a person with cultural [fit].” You’ll do well to follow in the footsteps of Hubspot’s Mark Roberge (named Salesperson of the Year at the 2010 MIT Sales Conference). When hiring at Hubspot, he defers to a hiring system that encompasses 10 pre-defined criteria. Using this system, he ranks every candidate on a 10-point scale for each criterion. He has closely analyzed the performance of his team to pinpoint the qualities that lead to exceptional results. He’s found that, typically, the traits that seem most intuitive are not the correct ones. For example, many people think of aggression as a key trait of effective sales reps, but actually modesty has been found to move the needle more so in terms of closing deals. According to HBR, 91% of top salespeople exhibit medium to high scores of modesty and humility. In reality, ostentatious salespeople tend to alienate far more customers than they win over.
- Link hot causes to cool solutions
In “Scaling Up Excellence,” Sutton and Rao argue, “To change collective human behavior, you can’t just make a rational argument.” You need to “get people fired up about a hot cause, and then link it to a tangible set of cool solutions.” By “hot cause,” Sutton is referring to a problem or an issue that people will be passionate about. For salespeople, ambitious quotas often constitute a hot cause. By holding sales reps accountable to ambitious quotas, you can increase motivation and ensure that reps don’t give up on deals as easily as they otherwise might (44% of salespeople give up on a prospect after only one follow-up). The best sales teams consistently increase quotas. According to Martin’s study, 75% of high-performing sales organizations raised 2014 annual quotas more than 10% over 2013 quota levels, compared to 25% for average performing companies. By setting ambitious quota goals for your team, you’ll ensure that your sales team remains motivated as you scale.
If your organization is struggling to scale excellence, it’s likely you’ve overlooked the sales organization. Efforts to effectively scale sales team should prioritize both critical additions and subtractions. They should also focus on spreading the right mindset, as well as linking hot causes to cool solutions.
Scaling is not a numbers game. It’s been rumored that Chipotle has offered executives incentives to push aggressive growth, including doling out generous bonus plans for increased rates of restaurant openings. Incentivizing for a faster footprint does not make for effective scaling. Salesforce, a company that has scaled its business well, took a different approach. When scaling, it opted to say “no” to deals that required travel time to close, because these expended comparatively more time. They also prioritized leads that would close within 30 days, and deprioritized those expected to take longer to close, even if they were likely to bring home a bigger check. Slow down and take time to implement the right processes and you’ll be on the fast track to continued and sustainable growth.