Roberge: Prioritize deal size experience over domain expertise when hiring sales reps
Mark Roberge · Mark Roberge: The Framework for How Startups Should Scale into the Enterprise -Stage 2 Capital|E1176 · 20VC with Harry Stebbings · Jul 12, 2024 · at 8:28
Mark Roberge, Managing Director at Stage 2 Capital and former CRO at HubSpot, answers whether early-stage founders should prioritize domain background or deal-size background when making their first sales hire.
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“I have strong conviction that deal size has a higher weight. In correlation to success. Let's just say we sell million dollar deals to banks. And I have two candidates. One candidate sells 10,000 dollar deals to banks. And one candidate sells million dollar deals to hospitals. The skill necessary to get a million dollar deal done It's just like, there's so much in there in terms of like, how do I identify and build a good champion? How do I understand the political dynamics? How do I differentiate between an economic buyer, a technical buyer and end user, a coach and a champion? How do I like understand medic as a sales process? How do I like deal with procurement? How do I deal with legal? My million dollar seller that sells to healthcare has all those skills. My person that sells to banks, but they sell 10,000 our deals has none of those skills. So I'm much better. I'll be much easier for me to teach the million dollar seller about banks Than it is for me to teach a 10,000 dollar transactional seller how to do all that other stuff.”
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More from Mark Roberge
Roberge: Startups Seeking Product-Market Fit Should Avoid Commission Plans
“I don't like commission plan salespeople in the journey to product market fit. Like I just want pure equity people.”
HubSpot rejected a $3M Facebook deal at $3M ARR to maintain focus
“I mean, I think we're at two, three million in revenue at HubSpot and one rep brought Facebook to the table as a customer. It was like a three million dollar contract. It would have doubled our revenue. And he said, no, we were being pulled, said no.”
Roberge: Hiring sales reps based on domain experience correlates with failure
“10 years of experience selling a product like mine to a customer like mine. And there's tremendous research that shows that that mindset correlates with lack of success, like doesn't work out.”
Roberge: Sales Commissions Should Be Split to Reward Customer Retention
“I'm gonna give you half of the commission when the customer pays, and half the commission when they hit their leading indicator of retention, which usually happens in the first 30 days.”
Roberge: PLG sales reps should earn higher commissions on expansion revenue
“I would do something like this, Harry, you're a salesperson, your job is bringing customers. I'm going to pay you know, three percent. Rate on the first ACB from a customer and five percent on any expansion revenue. So now it's like, oh, sweet. Okay. I get it.…”
Roberge: SaaS CAC payback periods longer than 12 months signal flawed economics
“So if someone pays us 10,000 dollars a year, And it costs us 10,000 dollars to acquire them. We get paid back in 12 months, right? Anything above that, you start to question whether your economics work, anything below that, it's really good.”