The Four Pillars for Evaluating Your Next Sales OpportunityTommy McNulty
The market for sales talent is hotter than ever. The amount of interesting, engaging, and rewarding opportunities for salespeople and sales leaders is unprecedented. Many of us are interviewing and beginning the exploration phase of what our next role will be, and it’s important that we remain vigilant in our evaluations of people and companies, even as the market heats up. This article will cover the four main pillars of evaluation:
📖 Your information rights.
👯 Team evaluation.
📈 Upward mobility.
So, let’s begin with what information you have a right to know before taking any sales role. Unfortunately, most individuals we speak with get caught up by the charisma of a certain leader or connect deeply to a product they will be selling. These can be good surface-level signals but are not really indicative of what your life will be like in a certain job at a certain company. To get to a near accurate prediction, you have to dig into the nitty-gritty and find some real data on how the team is run and how they are performing. There are three pieces of information have a right to know before signing your offer:
🚨 The OTE distribution for reps
⚠️ The frequency of quota changes
🚫 The turnover rate
🚨The OTE distribution for reps
This is fairly straightforward, and the subtext is what % of reps beat, hit, and miss quota, and for the folks who beat or miss, what is the magnitude of the deviation. Many people will ask a form of this question that looks like “what is average attainment?” and although a good question, it lends itself to power-law dynamics where a couple of great reps can skew the average up. It’s important to know what % of the team is below quota, and specifically, how below. A healthy total is 25% missing and 10% missing by more than 20%. If these numbers are higher, it’s a good place to dig in and understand why. There may be some excellent reasons such as a high % of the team is ramping or a market change that hasn’t been adjusted for yet, but if there isn’t, and it’s chalked up to the way it is or “the high bar that has been set” (bullshit) we would have our cautionary antennas up.
In addition, there are two ways employers try and get around a bad answer to this question. They will either shrink the time aperture and say something like “everyone hit last month,” or shrink the rep aperture and talk about the renegade rep who is at 300% to quota. These are lovely tales, but you want to understand what the last 12 months looked like, not just last month, and you want to know about all reps, not just the one superstar.
⚠️ The frequency of quota changes
Quotas go up; it’s fairly normal and should be expected. That being said, quotas being sporadic and ever-changing is not. It’s important to dig into the history of how often quota has changed over the last 12 months, by how much, and what the plans are for the next 6 months. If the quota was changed more than three times, it could be an indicator that the company is disorganized, in a state of flux, or at its worst, has a disregard for the mental peace of the team. The size of the changes is also important. If they go up by more than 10% in single jumps without warning, that will meaningfully change earning potential and is something we would be digging into to understand better. The caveat to all of this is to understand the stage of your company. If it’s Series A or earlier, I’d be more forgiving on this point as it’s more normal to be still figuring out where to land on quota.
🚫 The turnover rate
You want to understand what % of the team is leaving the team annually. Sales attrition is normal, we all know this, and it will always be higher than other departments (for reasons to be discussed in another post), but there is a line where it becomes unreasonable. That line is 40% annually, and really if it’s over 30%, we would be asking a lot of questions as to what is causing attrition. Generally, causes will come in one of four forms:
Performance-based: Reps are missing quota and are either getting fired or leaving on their own due to earning potential.
Culture-based: The environment is rough or unreasonable.
Progression-based: Earnings or role don’t increase over time.
Cohort-based: A group of reps hired under former pretenses, or former leaders, leave at the same time.
It would be best to dig into which of these is the main driver in why people are leaving. We are generally OK with cohort-based, as it’s a signal of evolution and that the original thesis on what a rep needed to do at a company changed. We are less OK with the other three as they can be indicators of larger problems.
💡 We should note that you should ask for this information towards the end of your interview process, not the beginning. Your company may have to do some work to pull or format this information for you, and it’s best to have them do it once they are incentivized by wanting to hire you.
👯♀️Evaluating the team
The most important part of any career-changing decision is evaluating the team you are going to work with. The product, salary, office, sales process, etc., don’t mean much if you’re not working with a group of people you jive with and part of a larger ecosystem that reflects your values. Too often, especially in sales, we judge the team based on a series of 20-minute conversations with 5 or 6 people. Although useful, this can be insufficient in deciding as interviewers are generally trained to sell you on joining. To make a smart judgment, you have to break apart the team and look at each section individually. Those sections are:
👩✈️ Board and execs
👩💼 Department leadership
👨🍳 Direct manager
👯♀️ Peer group
👩✈️Board and Execs
Unless you are joining a company very early it’s unlikely you will meet a member of the board or executive suite. For that reason, we have to consider signaling in evaluating this group of people, and those signals are values and power. If you were enlisting in the military this group of people would be equivalent to the “nation” you represented. You probably wouldn’t enlist if you didn’t align with the values of the country or believe you had a reasonable chance of winning the war. The same is true of organizational leadership.
To determine values, you will have to do some homework. Starting with the board, you can read up on their investment firms, the types of investments they make, and any philanthropic endeavors they’ve contributed to. You can also look into other companies they are involved with and do a quick google search of the person's name.
The executive team is a bit different. You should still look these folks up, understand their backgrounds, and specifically try and get insight into the types of people they hire. Still, since your interview panel will be working for them, you can generally learn a lot by asking effective questions. We believe values stem from having a thesis on customer experience, employee experience, innovation, work-life integration, and inclusivity. This isn’t perfect, but we believe you can suss these out through five questions:
To your knowledge, what was the worst situation this company has had with a customer, and how did the team handle it?
What was the last crisis or major problem your company went through? Can you talk me through everything that happened and how leadership communicated?
What is the biggest idea the company is pursuing right now?
What time does the leadership team go home?
Can you provide an example of a recent initiative the company took to foster a more inclusive workplace or bring more diverse viewpoints to the table?
Power is a little bit easier to assess and is the sum of knowledge and resource availability on the company subject matter. At the board level, power comes from the availability to provide or facilitate follow-on capital, make strong introductions, and provide a viewpoint that is useful to the business. Run through Crunchbase to understand the history of these people and their firms, how big their funds are, how many investments they’ve made, and the outcomes of their investments.
On the executive side, you are looking for either relevant experience or a history of value creation. Relevant experience is easy to figure out - have these people done things in their past that give them a unique advantage in this business? Value creation is a little more nebulous, but the definition is whether these people have a history of leaving things better than they find them. It's important to remember, experience and value creation is more important in determining power than pedigree.
The next layer of evaluation happens at the department level. We would define this as your VP of Sales and any directors who aren’t frontline managers. When thinking about the chain of command there are surface-level things such as trust and respect that are incredibly important, but digging deeper you want to try and predict the types of decisions these people will make, as they will generally have authority over the structure of your role. SaaStr has a great read on this but there are four types of sales leaders: the evangelist, the dashboarder, the go-big, and the repeatability expert. In short, the definitions:
🤵 Evangelist: Fun, deep into the product subject matter, wants to be on the phone with customers. Known for micro-decisions every time they hear something on the phone.
🔢 Dashboarder: Analytical, looks at data all day, can provide good insights based on said data. Known for never speaking to the team but posting screenshots of dashboards in slack.
🦸♀️ Go-big: Visionary, thinking deeply about scale, and the opportunities to find leverage in the business. Known for putting the team at the focal point of growth.
📈 Repeatability: Solutions-oriented, working to take early-stage learnings and turn them into processes. Known for making sales rep's lives easier and helping them make more money.
You should try to work on a team led by a go-big or repeatability expert. This is not to say the evangelist and the dashboarder don’t bring great qualities to the table, but they are the polarized ends of the spectrum, and therefore will make polarizing decisions. Great questions to ask to determine what type of leader(s) are running the team:
How does the VP of Sales or director interact with the team?
How often do you see or hear from sales leadership?
Things to watch out for are incredibly high visibility and lurking on every call (evangelist), or incredibly low visibility and only talking about data in company meetings (dashboarder)
If you can, try and meet your direct manager before starting at a company. Sales teams shuffle around more than other departments, and therefore this might not be possible, but it’s always worth a shot. When evaluating a new boss, think of yourself as a sponge and them as a well - if you suck up everything the well has to offer, are you better for it? This will sound cold, but not everyone is fit to lead, and even fewer are fit to lead great performers. We can save ourselves a lot of agony by determining upfront if we will be capable of respecting the person managing us, and this respect will generally come from trust and utility - can I trust this person, and will they be useful to me?
Evaluating your ability to build trust with someone might sound abstract, but there is a formula you can use, called the drumroll….trust equation
Credibility represents how much someone knows or has done. Reliability focuses on whether this person has a history of doing what they say they will do. Intimacy is whether or not you’d enjoy having coffee or lunch with this person. Self-Orientation represents individualism and whether they are more focused on themselves vs. you (see a previous article here for more thoughts on that). So, credibility, reliability, intimacy = good, and self-orientation = bad. Rule of thumb if you want to be quantitative, assign each of these a number 1-3, and if the equation spits out anything less than a 4, there might be a problem. It’s not perfect, and it may be hard to suss this all out in the interview process, but I urge you to try and dig deep into whether or not you will be able to build a healthy relationship with your manager.
Utility is a little more straightforward, and I would define it as how much you will learn from someone, about the job and the world in general. The learnings you get from a great manager will extend well beyond your roles and responsibilities on the job. You can look at this person’s experience - what have they done? How did they do it? And if their experience is limited, how are they going about getting better every day so that they will pass those learnings onto you?
👯♂️ Peer Group
If it’s not already part of your interview process, you must ask to spend time with at least three reps informally or do a “day in the life” shadow session. This is important to understand a) if you will jive with this team and, more importantly, b) what type of bar has leadership set for hiring salespeople. This should go without saying, but you want to be part of a team with an extremely high bar, as you will naturally get better through osmosis. Alternatively, if you join a team with a low bar, you may see your own habits become shells of their former selves as you integrate with your surroundings. I can’t stress this enough - there is no glory in being a giant fish in a small pond; eventually, you will drown
🔝Evaluating upward mobility
The most common reason tech companies fail is market size. You may have heard this referred to as the total addressable market or “TAM.” TAM is generally the first stop for any venture capitalist in evaluating a company because it is important in predicting future success. When we are interviewing for sales roles, we aren’t going to run TAM analyses, but we can do some homework on the market opportunity. This is important because of the potential for equity value and the company's ability to unlock potential energy that creates forward momentum. When companies have forward momentum, so do their employee’s careers. For example, in my last business, we grew from 9M to 17M to 30M in a three-year span. That growth required more salespeople, which required more sales managers, more sales directors, more sales support, and more sales enablement - most of which came from internal promotions. So joining a company that has the ability to scale up directly correlates with the ability to scale up your own career. There are a couple of easy ways to suss out potential market size:
🧮 Ask for the calculation
💰 Find where the money is coming from
🖥️ Evaluate if technology can expand the market
🧮 Ask for the calculation
The most senior person in your interview process should know the potential market size of the business (if they don’t = red flag). Companies and founders will have different ways of calculating this, but this one is simple, the bigger, the better. Ideally, you are looking for a market opportunity north of 50B. I know it sounds ridiculous that something with a 25B opportunity is not interesting, but the truth is most businesses will only penetrate a small % of their total market. Companies in small markets will have moments of stalled growth, which can lead to career stagnation for folks in sales positions.
🕵️ Interview Qs: What is the total market opportunity for this business? How did you arrive at that number?
💰Find where the money is coming from
Businesses will generally have revenue coming from new and existing customers. The best businesses have positive “net revenue retention,” which means their customers spend more money with them year over year. Understanding how residual revenue is growing is significantly more important than new bookings when going through your interview process. The reason is that if residual revenue continues to grow, new bookings only have to grow linearly for the company to grow exponentially. Exponential growth = forward momentum = career opportunities.
🕵️ Interview Qs: What % of your revenue is from existing customers vs new customers? How has revenue from existing customers grown over the last 12 months? What % of customers churn annually?
🖥 Evaluate if technology can expand the market
Last but not least, does the technology the business is developing have the potential to change the situation in the market. Uber is the perfect example of this. The ease of use and simplicity led many of its users to greatly increase the number of times they use an alternative car service, increasing the size of the taxi market dramatically.
🕵️ Interview Qs: How does the product serve customers better than what exists today? How does it make accessing the service easier?
💡 Choose the most senior person on your interview panel, and dig into the market. It’s the best proxy for what “up” looks like, and “up” is the best proxy for what your career can look like.
🧤Evaluating your fit
The last frontier to cross in thinking about your next opportunity is evaluating your own fit for a role. In other words, can you and will you be good at it. This is not a plea to have you shy away from exciting or challenging opportunities, but a recognition that there is a difference between what is hard and what is wrong. Getting this right requires deep introspection and coming to terms with the things you aren’t great at. It also requires thinking deeply about whether or not you care about the problem your company is solving and how that impacts customers. I find the “most days” framework helpful here. It’s not possible to be excited on all days, but on most days can you be excited by:
🏗️ Solving your customers’ problems
👷♀️ Engaging in your sales motion
🗣️ Interacting with your team
🏗 Solving customer problems
This is a proxy for the “meat” of what your company does. Is the industry interesting to you? Is the buyer the type of person you would be excited to help? Would you be proud to become an expert in the subject matter? When we sell, we live and breathe the industry we sell into. If you find it uninteresting, you will probably miss the nuanced details that separate good from great.
💡 Rule #1: If it’s not interesting to you, you probably won’t be good at it.
👷♀️Engaging in the sales motion
This is a proxy for how deals are done at the company. Is it transactional or consultative? Is it a two-week, two-month, or two-year deal cycle? Is it call heavy or email heavy?
This is the work we will do every day and is where “fit” breaks down most often. Sales is unique from company to company, and understanding the motion is key to understanding if you will have the will to do it. For example, if you enjoy small pipelines and building deep relationships, transactional is not for you. On the flip side, if you enjoy the immediacy and lack of ambiguity in deal closings, it might be.
💡 Rule #2: If the motion makes you uncomfortable, you probably won’t be good at it.
🗣 Interacting with the team
This is a proxy for your at-work community. Can you see yourself meshing with the people at the company? Does leadership’s communication style resonate with you? Would you be excited to have a coffee or lunch with someone from your interview panel?
Contrary to popular belief, the number one source of sales burnout is not workload but breakdown in the community. We are capable of remarkable outcomes when we feel supported and are equally incapable when we are not. You have to enjoy the team.
💡 Rule #3: If you leave your interview unenthused about the people you met, you probably won’t be good at it
There is a lot to evaluate when considering a new role. It can feel overwhelming, but it is necessary. We spend most of our time at work and with the people we work with. To the best of our ability, we need to stack the deck to get these decisions right, and the best way to do that is with information. If you'd like access to more information similar to what's presented in this article, please visit our Knowledge Center, our Blog Page, or, sign up to speak with a member of our team!