The Top 6 Things to Look for to Ensure You Hire a Great VP of Sales
On the executive management team, the position with the most turnover is most often the VP of Sales. Hiring the right one is critical to success because business momentum starts with this position. And if you’re a startup hiring your first VP of Sales the effect, not to be too dramatic here, can be catastrophic.
It’s much more painful than hiring a bad VP of Marketing. Because a bad decision at the VP of Sales position causes you to lose so much momentum, and as they leave there is often so much confusion in the sales team that it can ruin your trajectory and plans to scale the business.
The average tenure in high-tech for a VP of sales is only eighteen months. That tells you that there are many bad hires at this position. If this role is so important, why are so many mistakes made?
If you need some help thinking of what questions to ask during the interview process of hiring your VP of Sales, read our post on The Top 7 Questions to ask to Ensure You Hire the Right VP of Sales.
I have a lot of experience hiring and helping hire great VPs of sales. The only way to hire the right one for you is to first describe what a good VP of Sales actually does. Let’s start there.
For a business that is between $1m and $20m in annual revenue the most important things to look for are:
1. Building a Sales Team
In the beginning, a VP of sales, particularly if they are your first VP of sales, will spend up to 50% of their time recruiting and hiring a sales team. Most individuals with the right experience and background have a group of loyal followers – a sales entourage if you will. Sellers whom they have worked with in the past, that know him or her and they all trust each other. And the loyalty usually goes deep enough that they will follow your new VP to your company. Any potential VP of sales that doesn’t have a loyal go-to team should be viewed as a red flag. Because you can’t build a consistent revenue-generating engine without finding great salespeople quickly.
Building a team and making them successful is the VPs number one job! Period.
It’s no secret that in college football recruiting is the most important factor in building a national championship contender. Alabama, Ohio State and Georga have been in the top 5 the last 5 years in a row. And who has played in the College Football National Championship final 4 all five years?
Texas A&M, has been number 1 in recruiting the last two years. My money is on Texas A&M this year to reach the final 4.
The right VP of sales for you will have been a great recruiter in the past, who demonstrates they put their team first above themselves because these are the individuals who are able to get a kickstart from their entourage.
Your First VP
And again, if this is your first VP they need to be able to personally take a deal from lead to close by themselves in order to teach others. They need to be able to close the largest deals and perhaps, at first even carry a personal quota while building the team and helping close their deals.
This is a talented individual who will command a compensation package with base and variable OTE between $250-$500k. If this is your first VP of Sales, the compensation can be less if there are stock options that provide future strong upside earning potential. The base pay, in the comp plans that I have helped write, is always about half of the OTE. And I recommend that the compensation ramps nicely if sales and profit goals are exceeded, providing your VP of sales with the ability to CRUSH it.
2. Getting Their Hands Dirty
The best ones create internal respect quickly so they can be great at working on the internal issues that get in the way of stacking up and closing deal after deal. They keep the internal issues away from their sales team, allowing sellers to focus on selling new logos.
Your VP of sales has to be great at helping reps strategize the next step, and the sequence of tactical and strategic steps to close business. And he or she should be great at crafting a win-win agreement with new customers. The best ones help their team sell deals with a collaboratively agreed-upon, with the customer, definition of success. This definition of success includes KPIs that the prospect executive sponsor will use to help get the purchase approved. Essentially the buyer promises their business what they will achieve by buying from you. And your VP of sales makes sure that every proposal and contract has everything that is needed to ensure those promises are met.
3. They Know How to Design a Sales Process That Identifies How to Sell to Perfect Fit Customers
They know that selling deals “the right way” leads to fewer after-the-sale problems and makes retention and expansion that much easier. Selling the right way also means they develop a sales process including an ideal customer profile (ICP). The ICP is used to evaluate all prospects and is followed by every seller on every deal. The process aligns with the way perfect fit customers buy. The VP makes sure that your entire management team understands the process and ICP.
This discipline is critical because we live in an “as a service” world. Almost anything can be purchased pay as you go. This makes it somewhat easier to acquire new business, but also makes it easier for customers to leave for competitors. Deals sold that aren’t to best-fit prospects cost you on all levels. They take longer and cost more to implement, require more resources to support, never become referenceable and they have a high rate of churn. They create sales debt that affects the organization’s ability to scale sales.
On the positive side, win-win contracts sold to best-fit customers lead to lower cost of sales, faster implementations, lower support costs, faster and bigger expansion opportunities, and turn into customers for life.
4. Creating a Healthy Lead Generation Engine
Often the VP of Marketing owns lead generation. I like this structure because lead generation is measurable, and if measured properly, quantifiable. Too much of what we rely on marketing to do is esoteric and hard to measure. This makes it frustrating. This post isn’t about marketing, however. I’ll wrap this up to say that if marketing is responsible for lead generation, then the weekly KPI should be opportunity revenue that ends up on the forecast.
For example, if your lead to forecast conversion rate is 20% (leads to deals on the forecast) and you need $100,000 in new pipeline forecast every week to achieve your sales goals, then the KPI is — lead generation must generate $500,000 in opportunity weekly, which when qualified by sales, equals $100k in new weekly pipeline that appears on the forecast.
If the VP of Sales hire is your first VP of Sales, I like to have her/him be directly responsible for lead generation. The reason this works best is because they, unlike marketing, won’t make website visits, or even the raw number of leads the primary focus. They will make forecastable deals that match the ICP the focus. CEOs and founders prefer this metric because it’s a KPI that DIRECTLY leads to closed business.
A Good Stratagist
The VP of Sales needs to know how to create a penetration strategy for each type of lead persona. Personas included in the strategy are user buyers, stakeholders, and Power (Power is the decision-maker who can buy, even without a budget, when they are presented with a compelling value proposition).
The right VP of Sales knows that prospects buy differently today than they did in the past. The penetration strategy has to meet prospects where they are in their buying cycle. The buying cycle stages are different than your sales process. They include:
- Awareness that they have a problem
- Interested in gathering information
- Considering a solution
- Make a buy or not to buy decision
- Implementation and adoption
- Reporting on KPIs met
- Buy again
And the penetration strategy should target the various personas who are looking for a solution, at each of these stages.
Your VP of Sales has to be particularly great at creating penetration messaging that helps secure appointments with Power.
For enterprise B2B complex sales, your VP of Sales and the sales team have to be comfortable operating within the prospect’s executive management or even the C-suite because this is where they’ll find Power. Without early access to Power, deal velocity won’t match your desired growth trajectory.
5. Sales Identify and Solves Organizational Problems and Help Lead Management to the Right New Markets
A great VP of sales is one of the most respected members of the executive management team. They have 3 eyes (creates an interesting mind picture – doesn’t it). One eye is always on closing new and retaining existing business. Another eye is on internally removing obstacles so the sales team can devote 100% of their time targeting the specific ICP which will lead to closing 90% of the deals pursued, with great velocity, size and at high margin. And the third eye is on tangential markets where the already achieved sales success can be easily replicated.
6. Finally They Have to be able to Transition from Being a Great Individual Contributor, Managing Great Individual Contributors, to becoming a Great Delegator.
Once you’re a $20m business with aspirations to be $40m, 80m, or $200m, your VP of Sales will need to know how to hire and train sales managers who each in turn can hire and manage teams of 5 sellers each. To scale to $200m in new business each year you’ll need 250 sellers managed by 50 sales managers. The VP of Sales that has that skill set will then have evolved into your first Chief Revenue Officer (CRO), or first Chief Commercial Officer (CCO) or Chief Operating Officer (COO).
Hire well and you’ll be there!
Need Some Help Finding a Great VP of Sales
If you are looking to hire a VP of Sales and want to accelerate their and your path to success please email us at email@example.com. We know many great ones and will help you find yours (no charge, of course!)
We are the writers of the award-winning book, Selling to Zebras, HOW to CLOSE 90% of the BUSINESS YOU PURSUE FASTER, MORE EASILY and MORE PROFITABLY. And the creators of Zebrafi Software. Find. Close. Retain!
VPs of Sales globally use the Zebrafi selling system to help them scale sales. We have had 13 clients who have had great liquidity events by going public, or by being purchased for many times sales.