“How much should my sales reps be prospecting?”
We get asked this question all the time. And it is an important one. The right answer will open up a path to full pipeline coverage and selling success. The wrong answer makes a startup vulnerable to missed quarters and costly rep attrition.
New startups are looking for ways to be efficient. With limited resources, they need to place bets strategically. Therefore, the notion that a sales rep can generate pipeline while also closing deals is attractive. Why not kill two birds with one stone?
Unfortunately, it is not so simple. This is where our story begins.
Prospecting and selling are not the same thing
Prospecting (generating pipeline) and selling (closing deals) are not the same things. Yes, they are related, but each requires its own mindset, time, and energy. Startups hire sales reps to sell. Their job is to close deals.
In general, startups deploy other resources to generate pipeline, including field marketers, business development reps, performance marketing agencies, etc.,
If startups completely merge prospecting and selling into one function by tasking both to a sales rep, then they are directing a sales resource to spend time on non-selling activities.
This move is intended to be efficient and actually has the opposite effect. The startup is asking a selling resource to spend time not selling. Not to mention, sales reps are expensive. Sales reps prospecting costs the company a premium relative to other pipeline generating resources.
Suffice it to say, startup sales reps should not be entirely decoupled from prospecting. Startup leaders simply need to accept that selling and prospecting are not the same, and sales reps should spend as much time as possible selling.
The ideal startup sales rep
The previous section may have painted sales reps like race cars; very good at one thing, somewhat high maintenance, etc.,
The truth is that startup sales reps need to offer more utility than a race car. Like every role at a new company, sales reps should be able to wear multiple hats, be flexible, be resilient, be a team player — you get it.
In fact, if in an interview a rep scoffs at the idea of prospecting then do not hire them. Seriously, this is a major red flag.
The best sales reps, not only at startups, will generate some demand of their own. Analyze any software business, find the top reps, and you will see that they spend some amount of time and energy on pipeline generation.
So, what is the “right” amount?
Allocation of sales reps time
As is always the case, the proper allocation of a rep’s time depends on the business and the market. As a general rule, a startup sales rep should source about 20% of their own pipeline and spend no more than ⅓ of their time on pipeline generating activities.
This level of effort will allow a rep to spend most of their time on the highest value activity — selling. However, spending some time prospecting is valuable in a few ways.
- It helps diversify a startup’s demand portfolio, giving the company (and the rep) more chances to be successful.
- It accelerates rep’s ability to understand the customer, refine messaging, and learn; all are critical in a new company where some of the finer go-to-market details are still fuzzy.
- It’s good for culture. It helps team members to understand that everyone is in this together
Even as companies grow, many revenue leaders elect to build some rep prospecting into the demand generation plan. It may look more like 10% of the pipeline or even less, but the benefits still remain.
And, as stated, some of the very best reps will do more than what you ask. They may prospect on the weekends or get smart about automation. I have even heard of a rep spending her own money to hire an outsourced lead generation resource! If you find one of these, hang onto them with everything you have.
The other 80%
If a sales rep is expected to source 20% of their own pipeline, then where does the other 80% come from? Again, this depends on the business, but here is the important thing.
Startups can get upside down when they rely too heavily on a single resource (sales rep) to prospect and sell. For a rep, this can be frustrating. When they are successful prospecting, they then spend lots of time selling. They may close deals, but then they fall behind on prospecting. It’s a constant see-saw that causes “lumpy” growth for the business and stress for the reps. In today’s ultra-competitive and ultra-noisy world, it’s simply too hard to do both.
Worse, they may not be successful prospecting. In that case, the startup has an expensive resource that is not selling (and not earning commission checks). This is a huge recipe for rep attrition. On top of that, sales reps are some of the most expensive hires to get wrong if you include both real and opportunity costs.
So, the other 80%? It has to come from somewhere. This means if you start to build out a sales team, you must also build and invest in pipeline generation to support the reps.
Even better, start to flex your pipeline-building muscles before you hire sales. There are several key things that a sales team needs to be successful, and pipeline has to be near the top of that list.
With the right reps, the right goals, and the right support, startup sales can be one of the most rewarding and fun jobs in software.
Sales reps should be required to source some of their own pipeline, but only in conjunction with other demand channels.
The exact right mix will depend on the business, but generally, if a sales rep is spending more than 30% of its time and sourcing less than 20% of its own pipeline, a startup has not allocated its go-to-market resources in the best possible way.