Process is something that people associate with structure and bureaucracy—but I see it as a liberator and creativity enabler. Why is there such a difference in thought? One of the things that is interesting about process is that, in my opinion, it's meant to create the flywheel for repeatability so that you are free to work on important, high priority, and nonrepeatable “things.”

My third and fourth jobs were as a network administrator. I fell in love with UNIX and the concept of making a world of processes that just worked so that I could focus on the real problems that need a solution. My first business, Net Daemons Associates, was named in support of process. A daemon is a program (kind of) that runs in UNIX whose only purpose is to keep things working. My business partner lived by the philosophy that if you were going to do something more than once, you should write a program for it so that you could just push the button the next time.

Sales is an art and much of it is a formula. There is a beginning a middle and an end to every sale. If you are doing sales correctly, you are using strong brand and messaging which needs to be repeated and amplified so that every person that is being sold is getting the same message. The art is making sure that there is a strong core of process—how do you pitch, what tools do you use, what stories do you tell, what is your pricing, how do you negotiate—with a personal and emotional wrapper that humanizes and engages. If you don't have the process, you will spend less time on that bespoke, emotional element, and, as a result, sell less.

I think one of the most important parts of business is listening. With sales, you need to listen to what your customer is in pain over so that you can propose the right solution for them. You have time to be focused on listening when you have the ordinary and the day-to-day delivered by the engine of process.

Process is a liberator. It lets you put definition and reliability, accountability and efficiency around things that should happen in a repeatable and accountable way and then lets you use the rest of your time to be creative, innovative and work on big picture issues.

—Jenny Lawton, COO Techstars

Why Having and Knowing Your Sales Process Is Important

It took me a little while to get started on writing this chapter. There are a number of reasons for this; first of all, writing (or reading) about process isn't typically very exciting for many founders and sales leaders, who prefer to be in the real world, creating and doing more faster. Process can sometimes feel very boring and tedious (or what big companies do, not startups). I'm personally not one to create process simply for the sake of having a process, however, my experience (and the experience of almost any sales leader in a well-run sales organization) is that one of the keys to selling more faster is a well-defined sales process (Figure 3.1).

The other reason that this chapter took me a little while to get started is because there are so many resources out there already that discuss “the sales process.” If you Google “sales process” there are 2.4 billion results. If you Google “books on sales process,” it narrows your search to 393 million search results.

I don't want to waste your time providing the same information you can get in literally millions of other places; however, I do recognize how crucial your sales process will be to your ability to scale your sales organization and your company. Instead, what we will do in this chapter is to use the work we've done up until this point and start to tease out the first iteration of your sales process.

I also want to stress “first iteration.” Creating your sales process is a lot like being at the beach and digging a hole near the water. Once you hit water in your hole it's nearly impossible to make much progress because the hole keeps filling up with water, caving in the sides, and you don't make nearly as much progress as you think you should. Getting to the point (at some time in the future) where you have a truly repeatable sales process will feel a lot like digging that hole. You'll have many iterations of your process as you learn more about the sale and what is important to your customer relative to your company. You'll have iterations as your product matures and starts to fill in gaps where you previously needed process. And you'll also have iterations as you hire more salespeople and learn how different people and selling styles inform the process. Finally, you'll have sales process iterations as you define (and change) what is important to the company in terms of selling and reporting. This chapter deals only with your first sales process iteration, but without this first iteration you'll have nothing to iterate on (and no path to your repeatable sales process).

Now I realize there are people out there who love and thrive on creating process. If you are one of those people, then this chapter should be a quick read and affirmation to your thinking.

If you aren't a process lover, however, I want you to rest assured that I've done my best to keep this chapter interesting while also giving you very tangible steps to teasing your (first crack at a) sales process out of the work you've done from the book up to this point.

I also want to reiterate that this is not a chapter about “what a sales process is.” While I'll provide you with a simple definition shortly, this chapter is about taking the work from the first few chapters of this book and using it to begin building your sales organization on the road to finding YOUR repeatable sales process. The reason this is important is because without a repeatable sales process, you don't have a repeatable sales process. Yes, you read that correctly, that's not a typo. Stop and think about that for just five seconds.

It is impossible to build a scalable sales organization without a repeatable sales process because there isn't any sale to (knowingly) repeat, which means you don't have a product that can scale to many organizations. You won't be able to hire and retain salespeople because they won't know what it is that they are selling, how to sell it, or to whom. Additionally, having a repeatable sales process gives you the ability to model out sales growth so you know how your hiring will affect revenue and cash burn. And finally, without a repeatable sales process, which enables all of the above, it'll be much harder to win the confidence of your investors (or future investors).

More specifically in this chapter we will discuss two basic methods. First, we will learn how to tease out your (first iteration of your) sales process from the work we did with W3 and through the customer development process. Within that, we'll talk about the importance of a customer relationship management (CRM) system, which I strongly encourage, to make your job easier. Next, we will talk about and start to do some work around sales modeling so that you can begin to put all of this work together and start growing your business. In the final part of this chapter I've included two exercises so that you can build out your sales process and build an early sales model.

Defining the Sales Process

So what is a sales process? A sales process is a repeatable set of steps your sales team takes with a prospect to move them from early stage to a closed customer. A good sales process helps your reps consistently close deals by giving them a framework to follow. Figure 3.2 is a visual representation of a sales process:

In Figure 3.2 I've intentionally used the visual of a funnel. The list of “steps” is what's crucial here, but I'm killing two birds with one stone. You see that aside from understanding the steps of your sales process, your sales process will also inform your sales funnel, which are the steps your prospects move from lead to closed customer. In each step some prospects will fall out and others will move on (hence the narrowing funnel). Understanding both why prospects fall out as well as move on is critical to growing your business, coaching your salespeople, and understanding what is working and what is not on your path to building a repeatable sales process.

Teasing Out Your First Sales Process

In chapter 1 we talked about developing a strategy so that you can start the customer development process. Then in Chapter 2 we took that work and applied it to the customer development process with the goal of being able to move from customer development to sales by firmly identifying our ICP. The other byproduct of the customer development process we haven't discussed yet is the sales process.

My experience has been that, although there are many similarities between sales processes, no two are really alike and it takes a solid customer development process and a clear understanding of your ICP before you can define the process that optimizes for your business.

In this section, we will talk about how to tease out your sale process, through understanding your sales funnel. In that process we will also touch on some basic tools to build and manage your team. Then in the “Building Your Sales Model through (Not) Guessing” section, we will take that information and build an early sales model.

What I avoid as a pro CRO, and you should, too, if you want to scale fast: The “strategy of convenience.” Meaning doing something because it's obvious and easy. It's a method of decision making that is a necessity in the under $1 million tipping point and therefore a darling of many founders.

At later tipping points, however, and especially post A, if the path you're on happens to be the easiest one to execute in the moment (a.k.a. the strategy of convenience), it's probably wrong for high growth. Growth is always hard and high growth takes a lot of hard work plus flawless execution. That's not easy, so the strategy of convenience is likely going to lead you away from high growth, not toward it.

Likewise, how things were at previous tipping points, however nostalgic they might be for the founders, mean little for the new players, whose incremental ideas and efforts are levered exponentially to scale up to future tipping points. Looking backwards distracts from cementing the vision of where the company is going, and the changes that need to be made to get there. Historians inadvertently rally the more tenured teammates against the massive and frequent change that scaling up requires, usually with phraseology like “This is how we did it when we started the company.” Scaling up is about making the new people succeed quickly, never perpetuating the status quo.

—David Loia, chief revenue officer at ScaleFactor

Building Your Sales Model through (Not) Guessing

As an entrepreneur I was always comfortable with uncertainty and always felt that it was a necessary trait of a successful founder. But I now realize that while it is impossible to plan the trajectory of an early stage company, that you can remove a lot of uncertainty with a great financial model.

Let me be specific. I am not talking about “projections”: the only thing we know for sure about projections is that they are wrong. I am talking about a bottoms-up financial model that has assumptions as inputs and attempts to create a mathematical representation of how your business works. If each sales rep can make X calls and close Y percent of them, then if you know the number of reps you have each month and the size of the average sale, you can calculate the sales, salaries, and commissions fairly accurately.

If you want more sales, then you need more reps. In this model will come more expenses and more revenue—it represents what actually will happen. Contrast that with a “model” that just shows a consistent rate of growth (10 percent month over month, for example), but does not account for any of the expenses or work that it takes to get that growth.

Once you have a model, you should update it each month, updating your assumptions first to reflect reality more closely and then tweak the formulas if you need to make it even more accurate going forward. If you do this consistently it is almost like having a crystal ball into your business's future.

—Troy Henikoff, managing director, MATH Venture Partners

The final part of this chapter is building an early sales model. A sales model is a general framework that defines an organization's high-level approach to selling and is a mathematical representation of what you project your sales to be using historical data layered with future/new expectations (ideally also based on data).

You likely don't have nearly enough data to fully understand the sales process and typical sales cycle, much less to create meaningful long-term revenue projections. That being said, now is the time to build discipline around being a metrics-driven sales organization. This is important for several reasons, for one creating that culture early on helps with hiring, training, and growing your sales organization. Another reason is that as you grow, your current and future investors and advisors will need this information to understand how they can be helpful and when to invest (more) money. The more you understand your process and can talk to your sales funnel that is backed up with data, the more confidence you build with them for future support. Finally and most important, it's the blueprint for how you will run your business so that you have a deep understanding of how to grow and make money.

In the previous section we mention that many startup people don't love process; likewise, most startup founders or sales leaders would like to avoid building sales models. That said, at the end of the day every business is a math equation and the best founders and sales leaders I know have all developed (if they didn't already have it) a love/hate relationship with digging in and building their own models. Over time as your company grows, you'll likely have staff to help with this task, but early on I believe it is critical for each department head to build their own models because it both forces and demonstrates a deep understanding of what is happening in your department and helps instruct the rest of the company on how to work together to grow.

Early modeling shouldn't be hard, especially if you've done the work to create a meaningful sales funnel that you follow in your CRM. Everything around modeling in this part going forward assumes you've done that work.

So let's get to it. Your company's size and how many customers you currently have will largely dictate the complexity and accuracy of your model. While you do want to be as complete and accurate as possible, it's more important to distinguish between what you know as fact (using data) and what you believe to be true (labeled as assumptions).

Let's step back and look at everything we've discussed so far. This is all the information you have, so far, that will help you develop your sales model.

First let's start with W3 and the customer development process. By now you should have a directional idea of who your customers will be and a very early idea of your sales process. Also, it should be pretty easy to identify all your expenses associated directly with sales. This includes ongoing costs like salary commission, materials, and potential travel and one-time costs like a computer. That is all the information you need to build the first pass on your first sales model.

For those of you who have never built a model before, here are some tips:

1. Even if you are not familiar with using formulas, the ones you'll need for this first model will be pretty simple. Wherever you are doing any math (within or between cells), take the time to learn how to use formulas. We won't go into this here, but between tutorials in any spreadsheet and Google, it should be pretty easy to figure out.
2. Next, build out models by month. Your columns will be months while your revenue and expense drivers will be in rows. Start by building out two years, but also know that each month further out will be less and less accurate, because we simply don't have enough information yet. The purpose here is not for accurate projections, but to build a model we can start tracking against to help us learn how to more accurately project in the future. The reason I say two years (versus one or three or more) at this early stage is simply because of the discipline in thinking into the future. Anything beyond two years (and really even just one year) is just a guess, but the mental exercise of starting to think about the future is what we're looking for here.
3. Then, lay out your framework on a spreadsheet. Label the months (starting at column B or C) at the top, then down column A put in what your revenue drivers are, followed by a line break and then your expense drivers. These are just the labels, the data will go in the cells by month.
4. Finally, make a pot of coffee, carve out four hours where you won't be interrupted, and get to work. Expect that you may have a couple of false starts (especially if you don't build models all the time). Don't let those frustrate you, they are a crucial part of the process in learning and figuring out how to actually manage your business.

At SurePayroll we had originally used benchmarks from Paychex, a public company that was also targeting small businesses, to drive many of our assumptions. One of the key assumptions is the number of employees per client company. You charge on a per employee basis, and so larger companies meant more revenue. We looked at the data from Paychex and assumed our average client would have 14 employees. It seemed appropriate.

As we started operating and building out client base, it quickly became apparent that our clients were skewing smaller, averaging just over six employees each. When we first realized this, we thought we were done. Revenue would be a fraction of what we had predicted and we would have trouble making ends meet. But, since we had a detailed, bottoms-up financial model, we were able to update the assumption for the average number of employees per client to 6.5 and immediately see exactly how revenue and expenses were impacted.

Sure, we had less revenue, but we also had lower expenses—fewer ACH fees, less customer support, and so on. In the end, the financial model gave us the confidence that in spite of the fact that reality was less than half of what we had initially predicted, that we still had a viable business, and we pushed forward. Ironically, 10 years later Paychex acquired SurePayroll for well over $100 million, and it became their solution of choice for the small end of the SMB market.

—Troy Henikoff, managing director, MATH Venture Partners

Your CRM Blueprint and Early Sales Model

There are two exercises for this section. The first is quick and is around building your first sales funnel and the first stab at your sales process. The second is building your first model. You won't be able to do this until you've completed the first exercise (and likely for a few weeks after).