8

Scaling your GTM team

Find your GTM motion

Tech startups end up focusing on one of two GTM approaches: they can be product and marketing-driven, or they can be sales-driven. Your overall approach to product distribution is known as your “GTM motion”.

Consumer-focused businesses generally rely on product-led growth (PLG) or marketing-led channels, as do SaaS products with a focus on SMBs. For example, Squarespace and Square both utilize consumer-style marketing, complete with viral product loops and Super Bowl ads.

Startups targeting major corporations (“enterprise” customers) and large companies (“mid-market” customers) need to develop a more complex GTM motion. To win contracts upwards of $100k and through to $1m+, you face multiple decision-makers (distinct from users), gated procurement processes, long sales cycles and thorny implementation challenges. You need sales professionals to navigate these challenges, often supported by sales engineers to address the concerns of technical decision-makers. Marketing drives awareness, credibility and leads in support of the sales team. Enterprise customers also expect handholding to ensure the smooth onboarding and implementation of your solution, and you will need to focus on continued customer success to expand usage and therefore the value of your enterprise accounts over time.

When your potential audience numbers in the thousands rather than millions, a test-driven approach to marketing is limited. Defining your messaging and positioning becomes more important.

Dominic Jacquesson, Index Ventures

The distinction between SMB and enterprise often isn’t clear cut in B2B, with startups targeting both of these customer types. They might combine self-serve customer acquisition for SMBs, with sales to address mid-market and enterprise opportunities. Marketplaces often straddle the two GTM motions, with self-serve user acquisition to drive consumer or SMB demand, and sales-led approaches on the supplier side. SaaS companies often move up the value curve over time, from an initial self-serve approach targeting SMBs at low price points, towards inside sales to acquire mid-market customers, and ultimately to solution-selling focused on the highest-value enterprise accounts. This reflects the progressive build-out of your product offering, and a pursuit of ever larger contracts to capture value. Some SaaS companies also follow a deliberate bottom-up strategy—a freemium offer to drive high-volume adoption by individual business users, which over time generates opportunities for monetization by selling to the overarching enterprises (e.g. Dropbox, Slack, Zoom and Figma).

Zendesk and Figma—Contrasting GTM motions

In 2009, I became employee #13 at Zendesk. I was their first hire who wasn’t either an engineer, or in CX—we had six of each. The founders’ view was, “If we’re selling CX, we better over-invest in it and be amazing!CX was the face of our GTM team, as far as customers were concerned, for many years.

When I joined, the growth motion was entirely through free trials, converting to self-serve paid plans. All our customers were tiny, and our product/market fit was really with SMBs. We hired no sales reps for another year, by which point we already had 10,000 SMBs using the product.

The move upmarket was accelerated by our customers’ trajectories—we had to grow with them. Twitter was already one of those “tiny” SMBs when I joined! But we also wanted to move in that direction strategically.

Our first sales hire allowed us to figure out that we could land higher new customer ACVs more than via self-serve credit card orders. We grew to four account executives before we hired our first account manager to focus on upselling. Marketing would feed them leads, and we monitored if Sales could convert these to higher revenues versus our self-serve channel. It was loosely A/B testing. These early AEs are in crazy learning mode. You don’t want to over-constrain them, but you also don’t want this phase to go on for too long. What can you learn in two quarters? The goal is to collect enough signal to decide whether, and how, to invest in a sales team. At this point you need to put more structure in place, to avoid weird habits forming. For example, you need to focus them on specific leads and segments to prioritize. In retrospect, we let the freeform approach go on too long at Zendesk, which led to Sales cannibalizing the self-serve business, which was uneconomic. You want to move into segmentation as soon as possible.

At Figma, I joined in 2018 as employee #60. We had some customers on paid plans, but were very early in monetization. Figma took a freemium approach, with very different marketing dynamics. It was much more of a bottom-up adoption approach—we had individual paying users at Microsoft, Airbnb and Uber already. Having proven that the product could appeal to enterprise users from the start, we had more flexibility to target and win them.

We had three salespeople when I joined, who were in that same learning mode I had experienced at Zendesk. It was all inbound, and mostly big brand-names. We set a group logo acquisition target per quarter, but with a focus on our top-tier plan. This segmented our “professional” (self-serve) from our “enterprise” (sales-assisted) tiers, reducing cannibalization risk.

These audience and sector differences should drive your approach, and therefore the team you hire. Who’s going to try your product? Who’s going to buy it? Do you need cross-organization deployment from the start, or can bottom-up deliver value to users? Figma users spread the word for us somewhat, across decentralized design teams in enterprises. This pattern was unlike Dropbox, which was a highly horizontal product and appeared on the radar of corporate IT teams much sooner. By contrast, Zendesk used free trial rather than freemium or bottom-up, because it needed adoption by entire CX teams to create value.

Amanda Kleha, Chief Customer Officer at Figma, previously SVP Marketing & Sales at Zendesk

Depending on the GTM motion that’s most appropriate for your business model and sector, you will need to build dramatically different GTM teams in terms of size, composition and capabilities: consumer-led models (B2C App and D2C) are marketing heavy, SaaS companies are sales-centric, and Marketplaces sit in between.

EXAMPLE AT COMPANY HEADCOUNT OF 50 EXAMPLE AT COMPANY HEADCOUNT OF 50

Scale your GTM team accordingly

In relative terms, as overall company headcount grows, GTM teams tend to shrink in PLG or marketing-led businesses, and they tend to expand in sales-led ones.

The reason for this reflects leverage. At scale, in-house marketers can oversee expanding external expenditures (paid digital channels, brand advertising, PR agencies, etc), without the need to add headcount. GTM teams for B2C Apps drop modestly in relative terms, from 24% of employees at 50 total headcount, to 22% by 1,000 headcount. On the other hand, individual sales quotas don’t grow that dramatically as you scale. As a result, you need to keep adding salespeople, as well as teams to support your salespeople. You also need to build a CS function, to support account retention and expansion. GTM teams for SaaS expand from 26% of the total at 50 headcount to 36% by 1,000 headcount, by which point your CS team could be nearly as big as your sales team.

Differences related to your GTM motion therefore have a dramatic impact on the size and composition of your GTM team as you scale.

Marketing

Appreciate both sides of marketing

Marketing probably encompasses more skill-sets than any other single function. The biggest tensions arise from the fact that you want marketing to achieve two distinct things:

  • Storytelling—defining a category with your brand at its core
  • Revenue generation—customer acquisition

Storytelling is a slow process, and it can take years of effort to turn into tangible results in terms of category and brand. Revenue generation is an immediate need, and can deliver faster and much more measurable results.

The challenge is that without storytelling, you can’t achieve brand differentiation. As a result you will hit a growth plateau: customer acquisition costs increase, and you lose ground to competitors. So the temptation to focus on short-term revenue generation needs to be kept in check.

This distinction leads to three core profiles in marketing talent:

  • Creative
  • Product-growth
  • Analyst

Very few individuals can achieve excellence across all three of these profiles, even after long careers. They reflect fundamental differences (left brain versus right brain) in how people approach problems. At scale, you’ll need a marketing team that includes all of them, and each of the three profiles will branch into further specialties. The precise sequencing and timing to reach this destination will vary by company, and as a founder, you need to navigate the “messy middle” to get there.

Make an early hire in growth

Once you’ve released an MVP, your immediate marketing priority is clear: growth and user acquisition. For the great majority of startups, this means product-led growth. (The small number of B2B startups that target enterprise customers from the outset won’t focus on PLG, but on sales-led customer acquisition.)

Focus on your PLG motion until your ACVs exceed $100k. Only introduce sales once your buyer and your user are different people.

Kipp Bodnar, CMO, Hubspot

Early growth efforts should be a whole team activity, not confined to individuals with growth or marketing in their job title. However, there can be two particular areas for a founder (or early hire) to focus around growth:

  • Product growth hacking—continuous A/B testing of variations to improve funnel conversion, and to optimize viral loops to drive further user acquisition
  • Testing the most promising marketing channels—leveraging specialists to identify which channels could really drive acquisition at scale for you. At very early stages, this typically boils down to either content or performance marketing.
Founders, particularly highly technical ones, often think they need a product marketer asap. They love their product, and they think all that’s needed for distribution is a clear articulation of what it does. No, no, no! You first need enough users to actually create a feedback loop— real users and customers, so that you can create cohorts for funnel and engagement optimization.

Kipp Bodnar, CMO, Hubspot

Over half (51%) of highly-successful startups appoint someone specifically in a growth or marketing role amongst their first 10 team members. This proportion is highest in D2C (69%) and lowest in SaaS (41%). When a hire is made, the profile is most often earlyto mid-career (two to five years of prior experience). This could be a growth marketer, a product manager with a passion for growth, or even an early engineer on your team with a flair for growth. You’re looking for a combination of two skill-sets:

  • Creativity—to constantly come up with test ideas
  • Analytical—so that creativity is directed towards the most promising avenues

This individual needs to closely collaborate with your engineers, as they’ll be constantly experimenting with the user journey and viral mechanics. But you also want to equip them with low/ no-code tools so that they can be as autonomous as possible. For example, creating new landing pages and testing minor alterations (copy, button styling and positioning, etc).

Growth hacking is the key to continuously improving your conversion of leads into users or customers. It could also unlock viral mechanics that generate new leads, which are really important, particularly when funding is tightly constrained. But in most cases, growth hacking alone is insufficient—you’ll also need to find a scalable marketing channel to drive high-growth. There aren’t many great direct response channels anymore, so you need to take a view on which feels more promising between content and pay-per-click (PPC). We then recommend that you contract a specialist around that channel, with sufficient budget to really test and optimize it.

You need to remove human error as a reason why a channel didn’t work. So the first time you test a channel, you need as hard an answer as possible. If you have a generalist run the test—be it Google Ads, content marketing, or TikTok videos— you’ll never know if they’re the reason the test failed. But you also don’t want to hire specialists before a channel is proven. Instead, hustle your network to find a specialist freelancer or agency.

Joe Cross, CMO (former), Wise

Give yourself a maximum of three months to find scalable traction with a given channel. You (and your growth lead) should work really closely with the channel specialist so that you move as swiftly as possible through defining and running tests. You’re looking for a combination of reasonable cost-per-lead (CPL) and customer acquisition cost (CAC), with high-volume potential. If this effort doesn’t work, move on and try a different channel, with a different specialist.

Pinterest’s core acquisition channel was Facebook. So was King’s. Airbnb used Craigslist (and then SEO). Squarespace used podcasts. GOAT used influencers. RecRoom was early into the VR app store. We’ve seen this more recently with OpenAI plug-ins. You need to figure out yours.

Damir Becirovic, Index Ventures

Until you’re much later in your scaling journey, you don’t want or need scattered acquisition channels. You need to find one core channel that can generate a significant volume of leads, and then ramp it hard and fast, aligned with the economics of your conversion engine and emerging insights into engagement and retention. Don’t get distracted into pursuing multiple channels unless and until you start to plateau on your core channel.

Strong retention is the number one priority for enabling your first real growth-phase. A sticky product opens the door to ramping up your marketing.

Antoine Le Nel, VP Growth, Revolut

Establish some brand basics

On the brand side of marketing with a purely digital product, early brand guardianship will typically rest with product design rather than with marketing. But this also depends on the skills of the individuals hired into each area. Typically, your product design team will refine your visual identity, which creates a palette that your marketers can then work with.

Many founders think they need a brand book and a great logo from day one. But basically, so long as your brand and logo aren’t actively detrimental, then they can wait. Your brand in the early days is simply your product experience. As you figure out what customers like, you can update a living doc which will become your version 1.0 brand book.

Joe Cross, CMO (former), Wise

If your business model is D2C (or certain marketplaces), your immediate brand touchpoints will include physical product and packaging, as well as e-commerce channels. This requires deeper early attention, probably including the use of a third-party agency to help with brand design and identity. But in these cases, you should be leading the project directly as the founder.

Early branding also encompasses your tone of voice—in your UI, and in any customer communications such as emails, social channels and customer support. The focus should be on product delight as a free way of building brand differentiation. Getting your product noticed and talked about is essential early on. The tone doesn’t have to reflect your personality as a founder, but it needs to be clear and consistent. You need to buy into it, and you have to figure out who’s best placed to develop it.

WISE (PREVIOUSLY TRANSFERWISE) FINDS ITS BRAND VOICE AT SEED STAGE IN A NEW LANDING PAGE HEADLINE
Wise
Wise—Uncovering early brand identity

Joe Cross joined Wise as the first marketing hire, following a seed fundraise. He had prior experience as a copywriter. After reviewing the headline on the landing page copy, he tested amending it from, “Send money for cheap” to “Bye Bye Banks. You’ve had your fun.” The following week, the image was picked up in an article by The Economist. The message became a key element of the brand’s identity as a customer champion and disruptor, through to today, with Wise being a post-IPO fintech valued at over $7 billion.

Gauge whether you’re a natural at media

Paid marketing channels have become increasingly challenging. Comms and PR have therefore become a more important way for startups to generate awareness and even to drive acquisition directly. Media coverage also boosts your credibility with investors, customers, talent and other stakeholders.

Invest in comms, and over time everything will become easier: hiring, signing up customers, getting inbound interest from investors, etc. It’s one of the best investments you can make, but it doesn’t happen overnight.

Vojtech Horna, Index Ventures

You need to find the comms approach where you feel most at home. For some founders, that might be media and conferences. For others, it may be through building a close-knit community of advocates and specialists (e.g. open source contributors), or as a writer posting thought leadership pieces through your own and other channels. You can’t choose to ignore comms entirely, but the most important thing is for your approach to be authentic and to play to your strengths.

PR is only ever as good as your spokesperson. If you have a founder who loves media and is great at it, awesome! Leverage that. If you don’t, then just don’t do media for a long time. You can teach people not to suck at it, but you can’t teach anyone to be awesome at it. Reallocate money and time to where you can do better.

Kipp Bodnar, CMO, Hubspot

Invest early in comms if the founder has a natural affinity with the media, or if you’re operating in a market where you need to shape your messaging and story early on.

Ana Andreescu, Index Ventures

If you’re a natural at media, you need to keep a tight lid on the amount of time it absorbs, and set a high bar on the engagements you commit to.

There’s also danger in becoming a “celebrity founder.” You’ll have to manage your profile all the time, and the media will want to knock you down eventually.

Comms and media take little mental space, but significant actual time. Yesterday I did two hour-long podcasts, and another the day before. I hate traveling so I avoid in-person conferences, which at least wins me back some time.

Job van der Voort, CEO & Co-Founder, Remote

I warn founders of the dangers of LCS— Local Celebrity Syndrome. They can feel overly excited and validated after a successful fundraise, so they do a local tour talking to VCs, media, and speaking at every conference that asks. But this is taking victory laps before anything substantive has been accomplished. Don’t fall into the trap!

Danny Rimer, Index Ventures

Even if you’re not a natural, you can’t avoid comms entirely. It’s part of the job description of a CEO: internal comms (e.g. all-hands), key milestones (e.g. fundraises), and moments of crisis (e.g. layoffs). We highly recommend investing in some media training.

Founders who join our media training and communication workshops comment that just a few hours of dedicated time on these topics provides a huge payback.

Vojtech Horna, Index Ventures

Unless you’ve already made waves with your product—for example, if your company is building on a successful open source project, or if your launch made a splash on Product Hunt—it’s tough to break through in the early days. As a consequence, your funding announcement is likely to be your first opportunity to connect with the media. The essential step is to be clear and consistent in your messaging. This gets repetitive and you may be tempted to riff and come up with something new, but repetition is the key to success.

If you and your co-founders give different answers to the question of what you do and why what you do matters, you know you need to focus on comms. Consistency starts with you!

Vojtech Horna, Index Ventures

Draw on your investors’ comms team to help you develop your messaging, together with a point of view on your sector and evidence to back it up. You can also reverse engineer comms tactics by studying startups with a strong media presence in adjacent sectors.

For pitching media to secure coverage, work with a hungry freelancer (e.g. someone building their own client list after leaving an agency). Pay them in bursts for specific projects like fundraising announcements or product launches. Avoid big brand agencies—they’ll charge a hefty retainer ($10 k/month is on the lowest side) and you’ll still be a low priority for them.

Initial success in developing a reputation in your market will lead to more conference speaking invites and requests to comment in the media. At this point you need to shift to a more regular cadence of proactive engagement and publicity. By this stage, you may be able to leverage someone hired internally in a “storytelling” role (e.g. a community, content or product marketer) to coordinate your comms activity. Only retain an agency if you find someone who really “gets you” and shows enthusiasm for championing your cause.

The timing to hire a dedicated in-house comms specialist depends on several factors:

  • Your media profile—the more effective you have been to-date with comms, the more you can amplify your efforts with in-house support
  • Sector and market—the more complex your business (e.g. regulated sector or three sided marketplace), the more you’ll benefit. B2C startups are also more likely to benefit from an early comms hire relative to B2B, as press coverage is more important.
  • Competitive pressure—If you operate in a highly competitive sector, you need to work harder for your voice to be present in conversations and places that will be seen by your customers.
  • Time pressure—if you’re being drawn into a lot of comms management
  • Opportunities missed—Are there major shifts in your sector that you could be commenting on? Are you sitting on proprietary data that could be turned into media releases?
I would generally suggest bringing in an in-house comms person after Series B, and possibly after Series A in B2C. Companies are more likely to make the hire too late rather than too early, and it then takes much longer to catch up.

Ana Andreescu, Index Ventures

Prioritize passion for your mission and belief in your product ahead of comparing candidates’ experience. Comms people tell stories, so they have to feel inspired if they are going to inspire others. They need the ability to build relationships externally with media partners and also internally, particularly with product and marketing, but also people and legal teams. The preferred profile is someone with five to 10 years of experience from an agency or in public policy, although you may have to flex to widen the candidate pool. In-house experience in a pre-IPO company is also valuable, but be wary of candidates with corporate or big tech backgrounds—they can find it hard to adjust to a full-stack comms role.

In-house comms should report to the CEO (or other co-founder who is a public face of the company) until the point where you have a true CMO with a strategic outlook. Putting them under an analytically-oriented marketing lead is a mistake, as their mindsets and priorities will clash.

With greater scale, expect your use of agencies to widen, even when you’ve hired in-house. Agencies may be used for strategic advisory, such as in public policy, to extend your team during busy periods, or if you’re entering new and unfamiliar geographies.

Scaling B2C marketing

Optimize core channels, hunt for new ones

Once you prove the potential of a marketing channel, be sure to hire in-house specialists to run it, rather than continuing to rely on external agencies or freelancers. As this “core” channel matures and enables you to scale, focus even more on optimization. When volumes are large, even small improvements in conversion can make a significant difference.

We all remember Usain Bolt. But he only won his races by hundredths of a second. It’s similar in growth—you optimize your funnel by tiny percentages, with hundreds of small ideas that collectively make you the best.

Antoine Le Nel, VP Growth, Revolut

When acquisition through your core channel starts to plateau, you need to find new ones to sustain growth. Do this by carving out time and budget for broader experimentation. Split your marketing budget between 70% for the core, and 30% for testing new channels and campaigns. This split may also be reflected in your marketing team, with a separate growth-oriented generalist focused on these experiments, but who can then draw on outside specialists. With further scale, this role might evolve into a separately staffed growth team. Alternatively, you may rotate high-potential team members through this growth team to drive learning and development.

It’s extremely important to incentivize word-of-mouth. Virality is built, it doesn’t simply happen. At Revolut, we use referral programs, while Candy Crush (where I used to be VP Growth) was built on Facebook invites.

Antoine Le Nel, VP Growth, Revolut

When you’re getting signs that a second scalable channel is working, rinse and repeat the approach taken with the first: ramp it hard, hire in-house specialists, focus on optimization, and re-balance your budget and effort allocation to experiment with fresh approaches.

Throughout these cycles, it’s critical to document and give broad access to a “testing bible” to avoid wasting effort and resources repeating the same experiments that failed previously.

Invest in marketing analytics

With more user cohorts, acquired through more sources, at different costs, and with varying profiles in terms of virality, retention and lifetime value (LTV), you can become overwhelmed by marketing data. But you can’t set or allocate a marketing budget without granular LTV models that indicate how much you should spend on acquiring each new customer (cost per acquisition, or CPA) through each source. You will therefore need to hire a dedicated marketing analyst early, before you hit $1 million of run rate marketing spend.

Once you go multi-channel and start investing in brand building through advertising, you’ll need to build sophisticated attribution models, making the most of your data warehouse. These should be closely integrated with financial models so that you can forecast growth, and optimize marketing budgets within cash flow constraints. This will require a marketing analytics team that works within a broader analytics and data science function.

Widen attention from acquisition to retention

It’s easier (and cheaper) to keep an existing customer than to find a new one. As your customer base expands and diversifies, you need to put more effort into retention. This includes investments in CRM systems and hiring around customer and community marketing.

Product marketing is about helping customers to understand your products and features, and to engage with them. It’s therefore more focused on existing customers than on acquiring new ones.

If your product portfolio is complicated, think about product marketing earlier. A product can be complicated for many reasons: maybe it involves a new UX concept, or the pricing may be new to the market, or it may require more from the user upfront before value is unlocked.

Joanna Lord, CMO, Spring Health

HOW AND WHEN TO HIRE FOR PRODUCT MARKETING HOW AND WHEN TO HIRE FOR PRODUCT MARKETING

Product marketers tend to get hired in B2B companies (especially enterprise-focused B2B) sooner than in B2C, as these products tend to be more complex and technical. However, as you scale, and add further features or launch additional products, the product marketing challenge in B2C will become more pressing. You’re more likely to bump up against competitors and need to differentiate yourself, and you’ll have more internal teams that communicate with customers: Product, Growth, Customer Marketing, Community, CX, Customer Operations, etc. These teams need aligned and tailored messaging that describes how your product works and what benefits it offers. The challenge of crafting the right messages with appropriate materials for each team increases, but so do the financial and reputational costs of shortcomings. These factors will nudge you towards dedicated product marketers, and eventually to forming a product marketing team.

Bring in marketing specialists

Keeping generalist marketers in the team is important. They provide flexibility as well as opportunities for developing talent internally. However at scale, internal specialists will end up running each channel (e.g. PPC, SEO, podcasts, influencers, affiliates, email marketing) and each major activity around brand (social, advertising, events, community, comms/PR).

I’m a strong believer in marketing specialists. When you’re early, hire junior specialists, which is a double win because they’re more hands-on. Senior specialists come later, but they create leverage by managing big budgets, so you can keep your headcount tight. I only use generalists for building multi-channel marketing plans, such as for individual geographies.

Antoine Le Nel, VP Growth, Revolut

Using outsourced talent initially (freelancers or agencies) allows you to move faster, while building conviction around the ideal specialist profile you want to eventually bring in-house.

Joanna Lord, CMO, Spring Health

B2C APP EXAMPLE B2C APP EXAMPLE

Your precise mix and sequence of marketing hires will hugely depend on your category and product. For example, developer relations could be extremely important if you roll out an app platform (e.g. Roblox), but is irrelevant to most consumer-facing companies. The mix is also shifting due to changes in the world of marketing. For example, Apple’s policy changes in 2020/21 undermined the effectiveness of paid channels, encouraging earlier investments in comms and content. Likewise, influencer marketing has now become a major channel in B2C.

Step up your marketing leadership—B2C

As your marketing team grows and includes a broader set of specialists, you will need to adjust your marketing leadership. Typically this will shift from a Director of Marketing to a VP Marketing. With further scale, you are likely to appoint a CMO or other C-level executive responsible primarily for growth

MOST SENIOR MARKETING LEADER BY HEADCOUNT STAGE—B2C APP EXAMPLE (%) MOST SENIOR MARKETING LEADER BY HEADCOUNT STAGE—B2C APP EXAMPLE (%)

TeamPlan—Explore our entire library of 210 highly-successful startups for more detailed insights into their marketing team composition and leadership by headcount stage.

Our recommended profile for a Marketing Director:

  • Hire by 50 headcount
  • Six to 10 years of relevant experience
  • Execution-focused
  • Functionally T-shaped—deep in one aspect of marketing but with an appreciation of others
  • Capable of building and leading a team up to 15 headcount

Our recommended profile for a VP Marketing:

  • Hire between 125 and 250 headcount
  • 10 to 15 years of relevant experience
  • Analytically-focused—interprets data to effectively allocate resources across channels, and between shortand long term objectives
  • Functionally M-shaped—deep in two or three aspects of marketing
  • Capable of building and leading teams up 50+ headcount—an effective “manager of managers”
I’ve seen founders who hire a CMO early, and then expect too much execution from them. But I’ve seen others who hire a director and expect too much executive leadership or abilities to operate across the company. It’s all about expectation setting.

Joanna Lord, CMO (former), ClassPass

Our recommended profile for a CMO:

  • Don’t hire before 250 headcount
  • 15+ years of relevant experience
  • A “pragmatic creative”—blending both left and right brain thinking
  • Organizationally T-shaped—deep across marketing but also some understanding of product, engineering, finance, etc.
  • Oversees comms and brand as well as growth
  • Represents the brand at executive level— willing to take unpopular but principled positions, and highly attuned to the zeitgeist
  • Experience relevant to building a challenger brand

We’ll return to looking more closely at CMO hiring (across both B2C and enterprise models) later in this section.

Scaling enterprise marketing

Balance product marketing and revenue marketing

Since most B2B startups will have started with a product-led growth model, the shift to sales-led growth for larger customers tends to be layered over the existing PLG approach and team. Therefore some of the guidance offered earlier around B2C and SMB marketing still applies. However, once you have clear evidence of PMF, and founder-led sales is landing early customers, you will need to introduce additional marketing activities which support sales.

You’ll have two priority areas for your enterprise marketing efforts:

  • Product marketing: generating awareness— messaging and storytelling
  • Revenue marketing: generating demand— inbound, qualified leads

There is virtually zero overlap between product marketers and revenue marketers when it comes to great talent. So your first two enterprise marketing hires are likely each to be strong in one of these areas. The ideal situation is that your first hire is a Head of Marketing—someone particularly strong in one of these areas, but who also knows what they need to look for in a second hire.

Product marketers are storytellers. They craft a compelling message and positioning, and orchestrate the GTM motion accordingly. They operate at the intersection of Product, Marketing and Sales, but they dive deep into understanding customer needs and competitor activity. Product marketers bring user personas into focus, create decks for internal alignment, collateral for sales, content for your website and media campaigns, and messages for you as the founder to keep hammering home. Their key goal in the early stages is to generate awareness in the market.

Product marketers take all the technobabble and turn it into messaging and collateral that potential customers will understand and be attracted to.

Robin Daniels, Advisor and Former CMO, WeWork, Matterport, Salesforce

Revenue marketers’ key goal is to generate demand and leads for your sales team. They take the messaging you have and put it in front of the right people at the lowest possible cost. This can involve many channels, from white papers and events to search engine marketing (SEM). In the first instance, revenue marketers are analytical and numerate, experimenting with channels to find ones which are cost-effective and scalable for lead generation.

The trick for effective growth is to balance your efforts between the short-term need for leads for your sales team (revenue marketing), and the longer-term objective of defining a category and being trusted by your user community (product marketing).

It’s a predictability versus magnitude challenge. Sales want predictability, but success requires magnitude.

Kipp Bodnar, CMO, Hubspot

BALANCE LONGAND SHORT-TERM MARKETING GOALS TO MAXIMIZE GROWTH BALANCE LONGAND SHORT-TERM MARKETING GOALS TO MAXIMIZE GROWTH

Besides strength in either product or revenue marketing, the ideal profile for your Head of Marketing is someone with a sense of where it’s best to place bets based on past experience—an up-and-comer, mid-level profile. In the Bay Area, where B2B talent is densest, this might be someone with eight to 10 years experience, a director-equivalent profile. In other US (or non-US) hubs, with less availability of B2B marketers, it might be closer to six to eight years experience, a senior manager equivalent. Either way, you’re looking for a rapid career trajectory, with evidence of past success plus ambition. That doesn’t necessarily need to come from big-name startups. Remember that you want someone who can help build a challenger brand. Domain experience is less important, and some B2C marketing profiles may also be worth considering. Regardless, candidates must express passion for your product.

For me, the story is foundational. Otherwise you can spend ages tweaking digital channels without getting good results. We’re in a golden age of storytelling given the range of channels we can use to communicate, but getting cut-through has also never been harder. You need to keep investing time in defining and refining your message, and turning this into the copy, messaging, tone-of-voice, design, and other elements which bring it to life. Marketing candidates therefore really need to be excited about your product. It just makes them more motivated, and therefore more creative.

Robin Daniels, Advisor and Former CMO, WeWork, Matterport, Salesforce

Align metrics between Marketing and Sales

The critical short-term (quarterly) objective for marketing is to generate leads which convert to revenue. The metrics to track are:

  • Sales accepted leads (SAL) provided by marketing
  • Pipeline-generated from these SALs (weighted $ value, and % of total pipeline)

The actual revenue generated from your SALs is useful to understanding overall funnel conversion. However, once there is a recognized opportunity, responsibility shifts to Sales to convert it.

As you establish your enterprise marketing team, it’s critical to have a framework for setting and tracking these metrics, via tagging of leads and opportunities in Salesforce, Hubspot, or other CRMs.

Lead-scoring needs to be a transparent and collaborative process between Marketing and Sales, otherwise you run the risk of marketing wasting effort generating leads which are then rejected by Sales. With scale, lead-scoring will become increasingly sophisticated, as you learn which lead sources and behaviors are predictive of quality, and can embed these into new leadnurturing activity. For example, an attendee from a webinar you host will generally have higher scores and sales potential compared to a website visitor from organic search. Time is also super sensitive with leads, so you need to align capacity between marketing campaigns that generate leads and SDRs who can qualify them, together with a real-time notification system.

When your marketing and sales teams use different definitions for lead-scoring and measuring success, conflict is never far behind.

Shardul Shah, Index Ventures

Early on at Plaid, despite a ton of effort around tracking ROI and conversion through the pipeline, we didn’t have the tooling or capacity to get clever around attribution. The reality is that PPC, content, business development etc are all complementary and reinforcing. So the key was a culture that focused on working together rather than being individual superheroes. Too often I see individuals working on a particular channel or source of leads who are incentivized to claim all the credit they can, which leads to conflict and mistrust.

Paul Williamson, CRO (former), Plaid

Alignment starts at the top, between the CRO and CMO. The best marketers are primarily interested in bookings, using metrics that Sales agree to be reliable leading indicators of bookings. The worst are only interested in top and middle funnel metrics.

David Perry, VP EMEA (former), Confluent

Look out for when you need more storytelling

The metrics for longer term storytelling activities are harder to quantify. However, product marketing feeds directly into effective sales en ablement, developing great sales collateral, and educating the sales team on it, which helps with pipeline conversion and upselling. Ultimately this should show through in increased win rates and net dollar retention (NDR). Conversely, if you see these metrics slipping, it suggests that you need to work more on storytelling and awareness-raising activities.

Even if more ethereal marketing activities can’t be directly attributed to lead generation, you’re looking for upward trends in terms of clicks, downloads, retweets, YouTube channel subs, etc. If these are heading in the right direction, you can trust that they are helping. Loads of other startups were copying Plaid’s branding collateral, designs and styling, which I took as a signal we were getting noticed!

Paul Williamson, CRO (former), Plaid

Develop enterprise marketing sub-teams

Over time, you’ll hire more specialist profiles, with distinct competencies, to cover specific elements of your broadening marketing mix. But always look for collaborative specialists: individuals who think about marketing in a joined-up way, across different disciplines.

Examples of specialties that can become dedicated marketing roles with scale:

  • Digital marketing—SEM, affiliates, display
  • Organic marketing—SEO, content, podcasts, PR, analyst relations
  • Community marketing—word-of-mouth and evangelizing: events, forums, developer relations, partnerships
Marketing teams at Figma

Our marketing team structure at Figma has been pretty stable since I joined five years ago. We have six sub-teams, covering product marketing, growth & demand generation, brand design, content, community, and international. But roles inevitably branch with scale. For example, we now have separate individuals on the hook for product sign-ups versus marketing-qualified leads (MQLs). Some sign-ups also became MQLs. But one marketer collaborates more with product growth, while the other works mostly with sales leadership.

Likewise, we now have dedicated employees for affiliate marketing, partner marketing, copywriting, talent branding, internal comms, and localization. We previously shared these tasks around, or used freelancers and agencies.

Amanda Kleha, Chief Customer Officer

SAAS COMPANIES EXAMPLE SAAS COMPANIES EXAMPLE

Hire a VP Marketing

As you build out this larger and more complex marketing function and team, you’ll also need more experienced marketing leadership. You want someone who can operate at the VP level, with likely 10–15 years experience, with evidence of thriving in high-growth environments and nurturing challenger brands through this stage.

They need to be capable of operating at the executive level, inspiring their team and creating clarity of strategy. They are unlikely to come from an internal promotion. While there will still be a lot of experimentation, the focus is on rapid execution to match needs, particularly around revenue marketing. Your VP Marketing may report to the CRO, otherwise to yourself as CEO.

MOST SENIOR MARKETING LEADER BY HEADCOUNT STAGE (%) MOST SENIOR MARKETING LEADER BY HEADCOUNT STAGE (%)
I like to ask marketing executive candidates, ‘What is the most epic thing you’ve achieved before?’ This tests for storytelling skills, plus it allows me to gauge their level of ambition about what ‘epic’ means. Explore what they did, the impact it had, and the learnings it generated.

Robin Daniels, Advisor and Former CMO, WeWork, Matterport, Salesforce

Decide if you need a CMO

The final step in marketing leadership, whether in B2C or in enterprise, is a CMO. This is likely to be someone with deep experience from bigger companies, although probably still brands that have VC-backed roots. Candidates should have an established reputation in the industry, enabling them to bring in senior leaders in various marketing sub-disciplines who might not otherwise be prepared to work for your incumbent marketing leader. You should have a solid revenue generation engine by this point, and should be clearly winning the product contest. The strategic prize, and focus for the CMO, is to create a path to winning in the category contest. So the CMO reports directly to the CEO. In enterprise they could report to your CRO, but most of these have a sales background and are focused on revenue generation. The CMO needs to have a seat at the executive table, to ensure the organization is aligned around the positioning message.

Less than half (38%) of the B2B companies in our analysis had a CMO by the 500 headcount stage, rising to just over half (53%) by the 1,000 headcount mark.

Where a VP Marketing is an excellent marketer, a CMO is a business leader who happens to have marketing skills. Where a VP Marketing has a tough time jumping out of their rail lines and dealing with context switching challenges, a CMO brings strategic breadth.

Kipp Bodnar, CMO, Hubspot

When your marketing leader sits under the CRO, it can turn marketing into a sales service bureau with a 90-day time horizon—‘Give us more leads now!’

Robin Daniels, Advisor and Former CMO, WeWork, Matterport, Salesforce

By contrast, less than half the B2C companies in our research had CMOs during their pre-IPO journey (40% at 250 headcount, dropping to 33% by 1,000 headcount). Instead these companies opted for a CCO (Chief Customer Officer) or CRO. These roles typically focus on growth, and often also customer experience. This setup recognizes the challenge of finding a single individual who can simultaneously drive both revenue and storytelling. Instead, comms and brand may be carved out, with a different executive owner who reports directly to the CEO.

Modern marketing is about more than just resource allocation. You need a balance with creativity. Ex-McKinsey types will fail as CMOs, but so will ex-agency creatives. But I do believe the CMO should be the coolest person in the executive team, with an understanding of popular culture and willingness to take a stand.

Kipp Bodnar, CMO, Hubspot

CMOs have some of the shortest tenures (2.5 years median) of all C-suite executives; only Chief People Officers are shorter. Why is this?

  • Thin talent pool—There is probably a wider breadth of skills required in marketing than in any other role. Very few individuals can master a sufficient proportion of them to make the cut
  • Misaligned competencies—Given the breadth of skills in marketing, it’s critical to identify the ones you really need in your CMO, and to assess and hire against these. Otherwise you’ll end up with the wrong tool for the job
  • Exceptional communication—This is essential for CMOs, and they can shine in the hiring process. But this can also create high expectations around execution that aren’t backed-up once candidates get going in the role
  • Fuzziness in measuring performance— With a shift in emphasis towards higher level and longer term strategic goals, it can be hard for CMOs to prove their value or success
There’s a palette of maybe 30 skills that a marketing leader can have. You probably only need to focus on three or four. But if you make a mistake about which of these are your priorities, you will mis-hire. Work with board members and advisors to help you clearly articulate which skills you need.

Kipp Bodnar, CMO, Hubspot

When assessing CMO candidates, you need to dig into the impact they really made in their previous roles, rather than relying on what they tell you. More involved case studies are very useful, so that you can get a better sense of how they might approach your company’s situation. You’re looking for astute questions and a first-principles approach, as opposed to a “rinse-repeat” of what they might have seen or done before. References are also extremely important, to get a more objective read of prior impact.

Sales

Start off with founder-led sales

For the first year or two after you decide to start selling—$0–1m annual recurring revenue (ARR), at least—founders should be personally and heavily involved in sales activity, for four reasons:

  • Evangelizing—When you have almost zero brand-recognition, the founder is the most effective spokesperson
  • Senior buying audience—Amplifying the first point, buyers in large companies will expect to speak to you as the founder
  • Learning—There’s a huge amount of learning that comes from first-hand experience of how prospects respond to your proposition: product gaps, competitor insights, key objections raised, price resistance, buyer persona profiles, etc.
  • Lack of alternatives—You may be limited in the caliber of sales talent you can attract. Delegating precious customer leads to an unproven salesperson is ill-advised
We, the founders and early product team, sold $2 m of ARR before making our first sales hire. You can’t outsource the sales challenge, relying on an ‘ex machina’ solution by hiring a hotshot AE.

Assaf Rappaport, CEO & Co-Founder, Wiz

I spent nine months convincing 10 target companies to take part in beta trials. They weren’t paying close to what they pay today, but it was still tough given that they were committing to using a product with daily usage when we were so early. I was supported by a highly committed employee who a friend had introduced, and he really helped, even after two earlier experienced sales hires didn’t work out.

Eléonore Crespo, Co-CEO & Co-Founder, Pigment

Roles in your sales team will eventually be distributed between:

  • Sales development representatives/ business development representatives (SDR/BDRs): responsible for finding new customers and generated leads
  • Account executives (AEs): responsible for closing sales, and managing the relationship with an existing customer or customer
  • Area or Regional VPs (AVP/RVPs): responsible for managing a pod of AEs
  • Sales engineers (SEs): responsible for helping to close sales with technical assistance and assurances
  • Sales operations (Sales Ops): analysts and planners who optimize sales effectiveness by doing tasks such as territory planning, quota setting, commission calculations and funnel analysis
  • Sales enablement: staff to provide your sales team with the training and collateral it needs to succeed

Just over half (52%) of highly successful SaaS companies make a sales hire during the 1–10 headcount phase. The large majority of these early sales hires were SDR/BDR profiles as opposed to full-cycle salespeople. However, by the time headcount hits 50, almost all (98%) of these SaaS companies hired someone in a sales role. In Marketplaces (where this may be either a sales or biz dev hire), the proportions are similar: 58% by 10 headcount and 94% by 50.

I’ve yet to see a successful SaaS company where at least one founder isn’t heavily involved in sales for a very long time. You desperately need early market feedback to achieve PMF, and layering people between you and potential customers is just compounding your risk.

Seth DeHart, Startup Sales Advisor

As a result, we’ll provide a framework for founder-led sales before discussing how to transition from founder-led sales to early sales hires, and then how to successfully build and structure sales teams at scale.

If you’re focused on a sector where you have personal experience, you can leverage your own network initially. These are likely to be beta customers who worked with you as you built your MVP.

We ran our beta in partnership with twelve companies, all drawn from our network. Within a year of our commercial launch, these had all converted into paying customers. After that it was all about demand generation to drive more sales leads.

Amit Bendov, CEO & Co-Founder, Gong

Experiment to find your ideal customer profile (ICP)

If you feel anxiety about becoming a salesperson, reframe your mindset: You’re running a set of experiments, not selling. You’re looking for evidence that will help you move closer to PMF, by testing hypotheses about:

  • Who are our ideal customers?
  • Where and how can we find them?
  • How can we pitch them most effectively?
  • What matters most to them?
  • What benefits are they willing to pay for?

In this context, even negative evidence is extremely valuable, as it allows you to tighten your focus on your ideal customer profile (ICP).

Your ICP isn’t your total addressable market (TAM). It’s the true group of companies who will love your product now. This may be a very short list, and that’s fine. Starting very narrow and expanding over time to include a wider pool of prospects is the only way to be successful.

Seth DeHart, Startup Sales Advisor

To run your experiments, start with existing and engaged customers or users—beta customers, free trialists, freemium users, self-serve paying customers, etc—even if this is a small sample. Also look at churned users or customers. What can you learn from all this evidence about the types of profiles that do or don’t constitute your ICP?

Having crafted your starting ICP, create a shortlist of ideal prospects to target, at the company level, and also the potential decision-makers/ buyers at these companies. Find ways of connecting with them through your network or via your existing user base. Otherwise contact them via cold outreach with a personalized message.

Early on, lean on your network for customer leads. The warmer the intro, the higher your chances of success. This may be your personal network, or else leverage intros from investors, angels, and advisors. Meanwhile when prospecting cold, you want to make your outreach as personalized as possible, drawing on all available sources of information.

Jacob Jofe, Index Ventures

We had about five European beta cus tomers (banks), but nothing in the US. So we sponsored relevant industry conferences, sending team members from Belgium to attend and to generate leads. We added 10-12 new paying US clients this way.

Felix Van de Maele, CEO & Co-Founder, Collibra

With cold outreach to prospects, your first objective is engagement—you just want a reaction. Once you get this, you can work on converting engagement into meetings. Test different outreach messages to see which works best. Once you find initial success in booking meetings, you have a signal on how you can add leads into a sales funnel.

You’ve had this incredible career, built an amazing product, and raised funding from top VCs. Now you get to be an SDR! You have to embrace rejection and being ignored.

Seth DeHart, Startup Sales Advisor

With sales meetings booked, you can now test hypotheses about what your sales process might look like. But this is actually secondary to your first objective of creating a repeatable process for generating leads. This is the signal you need to pivot your focus to hiring someone to help you ramp and refine the lead generation process, which will allow you to further refine your sales process, leading to customers and revenue.

If you’re able to sell when you’re actually not very good at sales, that’s an even stronger signal of PMF.

Seth DeHart, Startup Sales Advisor

If you have a strong point of view on your target industry, you can also experiment with early content marketing, writing and posting insight pieces on social channels to generate interest and followers, which may mature into inbound leads. However, even if you have some early success with this approach, almost all B2B companies need to demonstrate a repeatable and scalable outbound lead generation motion.

Find a sales mentor

We also recommend that founders formalize an advisor or mentor relationship in sales. If you have prior experience with selling, this could come later. But otherwise, the earlier you can find an advisor, the better. At this stage, you want someone who can help you tactically, and who has sufficient capacity to get to know you, your product and your audience. Otherwise they’ll just be offering generic advice of limited value. Their ongoing and deepening engagement will yield compounding value, and you should be prepared to properly incentivize (with cash plus equity) the right person who commits time to supporting you, and to feeling like a quasi-team member. As you scale, you’re likely to need to switch to a more strategic GTM advisor. Once again, you should leverage your network and investors for recommendations on sales advisors.

The most common lesson for founders is to focus on business value, not on your product itself.

Jacob Jofe, Index Ventures

Once you’re generating leads, recruit a sales pioneer

Once you’ve uncovered a lead generation motion to engage your ICP, your ability to personally sustain it, let alone to follow through the whole sales cycle, is likely to be at breaking point. You will just have too many other demands on your time. Instead, you need to hire a “sales pioneer” to accelerate your path to an effective overall sales process.

A sales pioneer isn’t a VP or Head of Sales, and isn’t just any AE. They are top 5%, full-stack, entrepreneurial AEs who are willing to do everything, from building lead lists and cold calling to managing and closing deals.

Seth DeHart, Startup Sales Advisor

Ideal sales pioneer profiles are individuals combining a year or two as an SDR/BDR, plus two to four years as an AE. This has given them hands-on exposure to the full sales funnel from lead generation to closing sales, and recently enough that they know exactly what each step involves. They should have experience in a high-growth company, embracing the chaos and uncertainty that goes with it. The opportunity you offer them is a chance to build something from the bottom-up, to work closely with an entrepreneur (you), and to accelerate their career progression.

Note: Acknowledgement and gratitude to Seth DeHart for his framework and insights around early-sales which are embedded in these sections. Refer to our Reading List for more of his resources.

Target an experienced and proven AE who is motivated by maximizing their equity stake at this early stage, indicating ambition, mission-alignment and risk appetite.

David Perry, VP EMEA (former), Confluent

Domain familiarity is less important for the sales pioneer role, except in highly technical areas such as infra or security.

Your sales pioneer should first concentrate on building an SDR playbook—a repeatable and scalable process for lead generation (i. e. booking discovery calls and sales meetings). Initially, you will continue to lead these meetings, with the sales pioneer shadowing you. Over time, as they become more confident and knowledgeable, you can flip roles, with the sales pioneer leading meetings while you focus on the more technical questions and concerns of decision-makers.

Once you’ve established that you can progress opportunities through the sales funnel, you can hire a dedicated SDR, trained by the sales pioneer. If this works, you can repeat with a second SDR. More data and evidence will enrich your understanding of the sales process (i.e. conversion rates and cycle times from outreach to engagement to discovery calls to opportunities, and ultimately through to deals being won). This will reveal:

  • The economics of your GTM motion
  • Where you need to make improvements
  • Your optimal ratio between SDRs and AEs

As momentum builds, hire a Head of Sales

Once your sales pioneer is closing deals and can’t cope with the volume of meetings that are being booked, you have reached the point where you need a Head of Sales, who can lead and scale the overall sales team.

Your first Head of Sales may potentially be your sales pioneer. It really depends on whether you can see them stepping up from an IC role into being a team manager. However, the more conviction you have about your potential to rapidly scale sales, the less likely it is that your sales pioneer will be able to make this transition. In this case, you’re more likely to need an experienced Head of Sales, or even a VP Sales hire. It can be tough for technically-oriented founders to assess candidates for Sales, be it your initial sales pioneer, or the Head of Sales that you will hire later. By nature, salespeople can sound very convincing. Leverage your investors and sales advisors to help.

I had no idea how to select my first sales hires—all the candidates sounded great! I had a talent partner from A16Z interview eight of them. He made the decisions on two, and they were both great.

Matt Schulman, CEO & Founder, Pave

I spent six months pursuing a VP Sales candidate who I really believed in, and finally closed him. He was the perfect hire for us, a sales leader who has been able to build the team below him. I’d do it the same way again.

Eléonore Crespo, Co-CEO & Co-Founder, Pigment

Even at this point in building your sales activity, you should stay highly involved as the founder in closing sales, particularly for larger deals or more strategic customers.

I sent personalized Loom videos to every prospective customer, telling them what their partnership meant to me, and about the future of our product. The sales team would shout across the office, ‘It’s time for your emotional Loom, Matt!’

Matt Schulman, CEO & Founder, Pave

If your product is highly technical and the sales process is complex, you’ll eventually need to separate out SE from the role of the AE. This is generally associated with enterprise ($100k+) deals, but may also be required for lower value contracts—for example, if you are aiming for proof-of-concept (POC) deals. Even for more technical products, you don’t necessarily want to hire a dedicated SE ahead of embedding your first, or even second, salesperson. During this interim period you, a technical co-founder or a more experienced product engineer can take on the SE role in Sales. Alternatively, if you already have some promising account expansion opportunities (for example, from early beta customers) you might hire a hybrid Sales Engineer/Solution Architect to work across both preand post-sales opportunities.

Hold off on hiring your first SE until you’re finding it tough as a team to cope with the demands that Sales are making of your time to provide technical insight to prospects. These direct conversations are a valuable source of feedback in the early days for you and your engineering team.

Shardul Shah, Index Ventures

Segment your sales team to form pods

As your Head of Sales (or VP Sales) expands their team, you’ll reach a breaking point in terms of span of control. This is typically once you hit six to seven AEs. After this, you’ll need to split the team into specialties, with the first most commonly reflecting the size of customer accounts— e.g. SMB, mid-market and enterprise. Buying processes and sales cycles can vary dramatically between these, so focus your more experienced AEs on the biggest and most complex opportunities, with newer AEs handling smaller ones. With further scale, industry segments with specific use-cases might bud off with their own dedicated AEs (e.g. technology, banking, healthcare). Regional (geographic) segmentation doesn’t usually come until much later, when you have the scale to support separate sales offices. The exception here is international expansion, which almost always starts in Europe for US startups. Time zones, culture and language factors mean local boots on the ground are a no-brainer. Read the Index Ventures handbook on expanding into Europe for more insight.

These splits and specializations will be mirrored in your SDR and SE teams to create sales pods. The typical pod is managed by an Area or Regional VP (AVP or RVP), with oversight of six AEs (a pod at steady-state).

The trickiest promotion in sales is from AE to AVP (first-line manager). It’s almost a cliché now, but the best sales reps rarely make the best sales managers. Mitigate these risks by introducing transition tasks for AEs who are keen to step into management roles—for example, management reporting or new rep onboarding. Check if they do these tasks effectively, and if they enjoy doing them. You really need to dig into the motivation of the AE for moving into management. Remuneration potential shouldn’t be significantly different, so check that it’s not primarily driven by ego or status considerations.

Never put a first-time sales manager in charge of a new vertical or region. It’s a recipe for disaster. You’re better off hiring externally.

David Perry, VP EMEA (former), Confluent

Avoid personal quotas for sales leads

Avoid situations where your Head of Sales (initially) or AVPs (later) have any personal quotas. These will incentivize them to focus on their own-sales, when you need them to focus on growing team capacity. Avoiding personal quotas can be a challenge when you’re in the early stages of growing a pod, but hold to this guidance.

It’s better to double-comp than to give a Head of Sales or AVP a personal quota. If you’re still growing the sales pod, give the head a bonus (in lieu of commission), based on hiring and ramping the new reps, or on developing a sales playbook.

David Perry, VP EMEA (former), Confluent

Establish the right sales metrics

Sales metrics during scaling are particularly focused on the size, reach and quality of your pipeline, including pipeline coverage and re views. Clearly define the stages in your sales process to give you visibility over pipeline progression and timelines. This will allow you to get steadily better at predicting quarterly sales. Your sales lead should be constantly reviewing pipeline differences by rep, by team, by segment and by geography. This is essential or performance management, and for setting achievable but stretching quotas.

Sales leaders should be measured both on the sales target (ambition), and on the predictability of the target (execution).

Beware of hero deals that keep slipping, and check what coverage reps have on their quarterly numbers going forward.

David Perry, VP EMEA (former), Confluent

Managing AEs is primarily a function of measuring and coaching around the activities that drive sales: calls made, demos booked, follow-ups scheduled, and rating how closely these activities are aligned against key decision makers at target companies. Once you’ve hit GTM-fit, trust that if these activities are happening consistently and effectively, then sales will be generated.

The best performing reps have the highest output metrics.

David Perry, VP EMEA (former), Confluent

Invest in SDRs

The healthiest and most scalable model for growing sales teams is by internally promoting your SDRs to AEs, who then progress through different tiers of customers (SMB, mid-market, enterprise, and finally strategic accounts), with the alternative progression route into management roles. In high-growth you will inevitably also need to hire AEs externally, but this brings a greater risk of mis-hiring. SDR hires, on the other hand, are usually young, dynamic graduates whom you can coach for cultural alignment and product knowledge while offering a solid career pathway. With the right motivation and mentoring, SDRs can also successfully make the transition to become account managers, SEs or even product engineers.

This model requires a focus on SDR hiring, together with a nurturing style of management for your SDRs and inside sales teams.

Plaid—Supporting sales scaling with a university SDR recruiting program

Building an SDR engine is one of the most under-appreciated areas of a business to invest in. Most people view SDRs simply as a means of developing and qualifying leads. Yes, this is true. But the best AEs you’ll ever have in a company will also come out of your SDR team. They’ve shown the grit and passion to duke it out every day to get your product in front of potential customers, over a multi-year timeframe.

We introduced an SDR university recruiting program at Plaid when we were sub-200 headcount, driven by an exceptional leader who had done this previously at Twilio. We targeted Bachelor of Business programs in the UC system, but also beyond—Wake Forest in North Carolina became a big feeder. We started with a couple of juniors doing internships, and built this out into a full-blown program.

Y1 2 interns
Y2 4 interns
Y3 8 interns
Y4 16 interns

We invested heavily in making the program highly attractive to students, with a focus on onboarding and learning. The conversion from intern to permanent hire was excellent, and the promoted AEs that emerged from the program have stayed with us for 4+ years. We also encouraged internal mobility, with SDRs from the graduate program successfully moving into other roles across Plaid.

It was one of the best things we did, generating massive ROI.

Paul Williamson, CRO (former), Plaid

SDR metrics are also activity-driven: the number of calls made, emails sent, pipeline progression, promptness of follow-ups, and net new meetings booked.

It’s critical to show what success looks like. Share the metrics for your most successful SDRs, which will invariably show how much more productive they are in terms of activity levels.

Depending on your mix between inbound and outbound lead generation, you may also split your SDR team between inbound and outbound teams (some sales leaders distinguish SDRs handling inbound and BDRs for outbound). Newer or less experienced individuals are likely to start with inbound before moving onto outbound.

Be realistic about AE ramping

Onboarding AEs tends to get harder as you scale. Up to 20 reps, a three month ramp should be sufficient. But by 40 reps, it could take four or even five months, because a lot of the low hanging fruit has been picked in terms of prospective accounts. You also need to give more time to ramp AEs in newer regions, particularly in new countries where brand awareness and lead generation activity is likely to be weaker. Enterprise reps will also have a longer ramp-time than SMB or mid-market reps, reflecting longer sales cycles and more complex relationships to establish. These considerations all need to be factored into your planning, budgeting and forecasting.

During the ramp-period, avoid open-ended commission guarantees. Instead, tie these payments to the completion of activities critical to successful ramp-up: getting product training, building a territory plan, reviewing pipeline metrics, setting up an event, securing meetings with senior decision makers, etc.

AE ramping can be supported by buddying up with a high performing rep, letting the new hire sit in on calls, account planning meetings, etc.

Introduce Sales Engineering

In the early days of enterprise selling, someone from your product or engineering team can take on the SE role. But with scale, you need to staff up a dedicated SE team. In essence, the AE is responsible for getting the economic buyer’s sign-off, while the SE is responsible for technical sign-off (addressing concerns around privacy and security, hosting, or systems integration).

When the business buyer is different from the technical buyer, you need sales engineering.

Paul Williamson, CRO (former), Plaid

Managing the effectiveness of AE and SE activity should focus on deal reviews through this lens. Was the loss due to a failure to get the economic or technical decision-makers onboard, and why?

The best SEs also act as pseudo sales managers to the AE, pushing back against all activities that waste time.

David Perry, VP EMEA (former), Confluent

For highly technical sales, such as in infrastructure SaaS, a buddying approach is common, with a dedicated SE per AE. This level of dependency creates a question of where Sales Engineering should report into. They could report directly into the Sales function, but are also often a part of Customer Success, since SEs also contribute to post-sales implementation and account expansion, and their career development and progression intersects with professional services teams. Over time, you are likely to create distinct teams reflecting these objectives. But during the “messy middle” phase where individual SEs need to wear multiple hats, some degree of tension is inevitable regardless of how the reporting lines are set up.

Introduce Sales Operations

Sales Operations (Sales Ops) is about giving your sales team the support and coordination to ensure that it’s working as effectively as possible. It’s getting higher profile recognition now, with a dedicated Sales Ops hire coming earlier in the scaling process. The scope of Sales Ops includes territory planning, quota-setting, commission calculations, pricing and discounting guard-rails, forecasting, pipeline hygiene, contract approvals and end-to-end analysis of sales funnels.

In the early days before you have a dedicated Sales Ops lead, responsibility for these activities is split out, with a BizOps generalist or Chief of Staff often taking the lead. Once you’re ready to split into multiple sales pods, make a dedicated Sales Ops hire.

Sales Operations is a cornerstone of success as you scale.

David Perry, VP EMEA (former), Confluent

Salesforce is the anchoring software, but we have so many different sales tools now. Getting the data flow right is hard: lead-scoring, tracking through the funnel, attribution …

Amanda Kleha, Chief Customer Officer, Figma

Sales Ops activities sit between Sales and Finance. They need to work closely with both, but can report to either. There’s also a trend towards broadening Sales Ops into “Revenue Ops”, with the role encompassing top-of-funnel lead generation activities in Marketing plus down stream expansion activity in CS. This integrated approach can make it easier to surface pipeline metrics and insights.

Most CROs would say they want to own Sales Ops. I disagree. I want a Sales Ops team that focuses on rigor, and which will call me out on my BS. And certain Sales Ops tasks, around pricing and contract approval, absolutely need to be separated from me, to avoid a ‘fox in the henhouse’ risk.

Paul Williamson, CRO (former), Plaid

Introduce Sales Enablement

Sales Enablement (or revenue enablement, when it spans all GTM teams) refers to the collateral, tools, data and training needed to ramp new reps and to optimize sales productivity and performance. Training collateral is fundamental, such as for competitive positioning. Collateral material supplied by product marketing often needs further refinement to suit the “on-the-ground” needs of your sales teams. Tooling is getting increasingly valuable and sophisticated too—for example, Gong’s product suite which uses AI to identify what your best salespeople are doing and saying to drive success.

SAAS COMPANY ANALYSIS SAAS COMPANY ANALYSIS
The more product complexity you have, and the more competitive the space, the earlier you need to create an enablement team. I’m advising a $15 m ARR company in a hyper competitive space at the moment, and telling them to massively invest in sales enablement starting now.

Paul Williamson, CRO (former), Plaid

Business Development

The basic distinction between Business Development (BizDev) and Sales is that BizDev involves forging long-term partnerships with third parties to generate benefits, rather than upfront commitments to pay for a specific product or service. While Sales is only usually relevant in B2B, BizDev can be valuable for both B2B or B2C companies. However, BizDev can mean very different things in different companies. A distinction can be made between three broad objectives of business development in a tech company:

  • Product partnerships: enriching your customer value proposition through integrations with products that are adjacent to your own
    | For example, your HR software could integrate with third party finance software, enabling new data insights for your users.
  • Distribution partnerships: growing your user base or generating new sales by leveraging the audience and reach of a third party
    | For example, you might offer an affiliate commission on sales of your product generated by an influential blogger. Or you might give a large systems integrator the training and rights to implement your software solution across their customer base (channel sales).
  • Platform partnerships: Where your product exists entirely within the distribution ecosystem of one (or a few) larger platforms, you want to cultivate strong and strategic relationships.
    | For example, mobile apps are almost entirely distributed through the iOS or Android ecosystems, so Apple and Google are critical partners.
Both integration and distribution partnerships really matter for us, especially with accounting firms. Early on, I noted that 30–50% of the sales pipeline for businesses adjacent to us was generated through partners, so I leaned into this approach. All our BizDev now sits under our COO, who decides on resource and time allocation splits between pursuing integration or distribution partnerships.

Michelle Valentine, CEO & co-founder, Anrok

Given the range of activities that can fall under BizDev, it doesn’t necessarily make sense to have a single team covering them all. Product partnerships will work closely with Product or Product Marketing; affiliate sales usually sit within Marketing, while channel sales form part of the Sales function.

We started at Revolut with a centralized BizDev team. When you’re early, success is as much about how quickly you close your failures as it is about trying new approaches—and central teams are better at killing ideas! I now have my own BizDev team focused on growth opportunities. This is real growth hacking—creating zero cost opportunities for cross-selling, PR, or revenue sharing with influencers. They sell the dream and are tough negotiators.

Antoine Le Nel, VP Growth, Revolut

Business development and partnerships can sit anywhere in the org, it just depends on your company. I don’t think it really matters so long as you have strong operational cadences: How do you set OKRs, are they shared, and are incentives aligned to drive cross-functional efforts?

Joanna Lord, CMO, Spring Health

As with Sales, early BizDev efforts will tend to be founder-led and experimental. You will need to figure out which partners have the strongest overlap of interests with your own, and whether there’s a mutually beneficial financial framework that can form the basis of a partnership agreement. This is very similar to defining your ICP in sales, but for an “ideal partner persona.” Initially you may need to structure bespoke deals, figuring out the commitments and legal terms on a case by case basis. Only once you have a repeatable and scalable partnership “playbook” does it make sense to hire someone dedicated into a BizDev role. Over time, this might turn into an outbound partnerships team which is almost indistinguishable operationally from more traditional inside sales.

It’s hard to identify in advance the clinicians that will prove to be most engaged and therefore valuable for us. So our partnership team needs to have the drive and smarts to sustain intensive outbound prospecting. We’ve found that hiring quite junior salespeople works best, one to two years out of college. We’ve also had to figure out a commission incentive structure that rewards clinician acquisition, but also the engagement growth generated over time through these clinicians.

Charmaine Chow, CEO & Founder, GetHarley

The return from investing in BizDev hires is generally longer-term than is the case for Sales: closing partnership deals tends to take more time than for Sales, and you then need to factor in the partnership ramping up before delivering a financial return. For this reason, quotas and commissions are less suited to BizDev than to Sales, although this can change if a repeatable and scalable BizDev “engine” is identified. Instead of tracking pipeline and pipeline coverage, BizDev metrics involve:

  • Opportunities identified
  • How large these opportunities are
  • How tight they are to your “ideal partner persona”
  • How they map on to pre-identified strategic partner target lists

There’s some overlap between great BizDev talent and great Sales talent, particularly in enterprise sales. The best BizDev profiles will tend to be thoughtful problem solvers who are willing to get involved in the legal, financial, and operational details of how the partnership will work. They often have a consulting or legal background. However, they share with Sales the motivation and drive to source, pursue and close deals.

Customer Success and Customer Experience

At the start, look for a customer generalist

Customer engagement at scale is typically separated across three separate functions and roles:

  • Customer Experience (CX): reactive user support, addressing and solving problems; measured on user satisfaction and customer retention
  • Customer Success (CS): proactive user/ customer outreach to drive product adoption, onboarding and engagement, associated more with B2B than B2C; measured on logo retention and growth in account value
  • Community (sitting within marketing): engagement with users through online channels (e.g. social media) and events, to generate goodwill, converting your users/ customers into brand advocates

When you first acquire users, you can’t afford to hire dedicated individuals for each of these three roles. It’s another case of navigating the “messy middle”. Your overriding focus is on moving swiftly from MVP stage to PMF, which depends on rapidly identifying and resolving product gaps and bugs.

You therefore want someone in the team with a CX orientation to respond promptly, professionally and efficiently to user feedback and issues. But as the pivotal contact point with your early users, they also need an analytical mindset, collating and analyzing user feedback into tightly defined and priority-ranked issues that can be fed back to your engineering team for action. You’re looking for someone who cares as much about your product effectiveness as they do about customer happiness.

Our first CX agent brought so much passion and was a force of nature. She made every member of the team spend time speaking with customers. She had an outsized and positive impact on our culture and values.

Tom Leathes, CEO & Co-Founder, Motorway

The more data savvy they are the better. This will enable them to contribute to the design of growth marketing experiments, as well as being a key channel for feedback when you run them. This will allow you to iterate more rapidly when testing viral mechanics, price plans, or new features.

Past experience is much less important than these other attributes. You’re looking for a highly motivated jack-of-all-trades rather than a specialist. We recommend aiming as high as you can in terms of intellect and drive. This could mean a junior VC, management consultant or invest ment banker who’s keen to get into startups. There is no settled job title either: Customer Advocate, Community Manager, Customer Success Lead, etc.

The more rapidly your user base grows, the more urgent the need to hire into this role. This is particularly true in freemium or free trial models, but it also applies generally to Marketplaces and D2C, where delighting early customers is crucial and where you need to identify shortcomings in physical processes (e.g. delivery failures, supplier errors, etc) as much as in software. In all these scenarios, we recommend that you hire someone who wears the “customer-facing” hat within your first 10 team members.

In sales-led models, your user base will grow more slowly. You are likely to have a small number of early beta customers, plus potentially some early meetings with prospects. But given how closely involved you and your engineering team will be with these users, the need for a dedicated customer-facing hire tends to arise slightly later.

Establish a CX team as your user base expands

As your user base grows and your headcount creeps up towards 50, you’re likely to need multiple dedicated CX agents to deal with customer support issues. The feedback loop between CX and your Growth, Sales and Product teams needs to remain tight, but will be less critical day-to-day

As you scale, CX feedback is more about ‘what’s broken’ versus ‘what’s missing’.

David Apple, Head of Customer Success (former), Notion

The size of CX teams can increase rapidly. To some extent you need to accept this, as your focus will be on building out new product features to drive growth, more than on solving for every edge case that could lead to user confusion.

You will inevitably build up some product debt on the CX side in your early days.

Dominic Jacquesson, Index Ventures

However, you should think from early on about ways of improving CX efficiency. Give your early CX agent (or agents) projects focused on “one to many” support. This might include a Help Center with “how to” videos addressing FAQs, and social media channels to share product and service updates. Over time, this can spin out into an education team. Another early project could be to set up NPS monitoring as an overall metric of customer health.

When you have up to five to seven CX agents in the team, you should aim for every one of them to have the potential and hunger to progress and grow. You’re not optimizing for call center style efficiency and stability. Your CX team should remain part of your overall customer organization, with career progression opportunities for talented CX agents into CS, Sales, BizOps or Product roles.

CX HEADCOUNT RELATIVE TO TOTAL HEADCOUNT AND BUSINESS MODEL CX HEADCOUNT RELATIVE TO TOTAL HEADCOUNT AND BUSINESS MODEL

Build a multi-tiered CX team as you scale

In the early days, it makes sense to focus on hiring highly ambitious people into CX roles, knowing that you’ll need individuals you can rapidly promote. But as you grow further, it’s unrealistic to fully staff CX teams this way. You need an increasing proportion of the team who are happy in their current position, which likely also means a lower proportion of graduate hires.

It’s almost inevitable that CX is seen as the “poor relation” in tech companies, at least compared with Engineering and other functions that readily lay claim to being “core”. This needs to be mitigated as far as possible, for at least four reasons:

  • 1. CX remains an important source of insights into customer requirements for product development
  • 2. CX effectiveness is a key determinant of customer NPS, impacting engagement, customer retention and therefore topline revenue
  • 3. Prioritizing internal tooling and automation is important to prevent CX teams from ballooning in size as you scale, which can dramatically damage margins and economic viability
  • 4. CX teams can be a valuable source of talent for internal promotion into other functions across the company

The relevance and importance of CX should be reflected in executive reporting lines. Particularly if kept in-house, CX should report to either CRO or CCO, rather than CFO, to avoid it being seen purely as a cost center.

Metrics at scale for CX:

  • Customer satisfaction (CSAT) scores
  • Customer wait times
  • Contact rate
  • Cost per interaction
  • Paying customers per CX agent (and by segment)
  • Expense: revenue ratio
  • Team attrition and internal engagement
  • Benchmarking of these metrics is mostly internal, tracked over time, but also with non-competing peers. Vendors such as Zendesk can be great connectors to establish benchmarking groups.

All companies want to be customer-centric, but CX team growth over time can severely dent your margins. You need to focus on efficiently delivering a beneficial customer experience. For example, you want to push towards one-to-many solutions to customer issues, but you shouldn’t hide or deflect customers from being able to access one-to-one support.

With scale, CX teams develop multiple tiers for escalating more complex or technical issues. This naturally also offers a career development pathway for CX agents. More experienced agents can develop one-to-many CX resources such as the Customer Help Center and social channels, plus self-serve webinars and videos. This also extends to quality monitoring and training of newer agents, as well as digging into CSAT metrics, auditing chats and calls for tone of voice and accuracy of advice offered. Your most highly experienced CX agents will work closely with technical teams to, for example, develop training on new product releases and features.

We haven’t offered phone support for years now. Our biggest CX channel is live chat.

Raphael Fontes, SVP Customer Operations, Squarespace

We introduced a self-serve, in-app support experience last year and it cut our contact rate in half. This allowed us to invest even more into one-to-one CX support, especially for larger, more complex customers. While we optimize for customer satisfaction, we aim for improvements in ARR per full-time employee for our non-quota carrying, customer-facing teams.

Jonas Rieke, Co-Founder & Chief Operating Officer, Personio

If your CX team grows above 100 headcount, you may benefit from a CX-enablement squad made up of more experienced members, focused on onboarding and training newer CX agents. This squad can also offer general product training for new hires across other functions in the business. Get new CX agents into customer-facing work as soon as possible, as this is the best way to assess if there are likely to be issues. Ramp-time shouldn’t be more than three months.

All new employees are offered time with CX as part of onboarding, including ‘shadowing’ an agent helping a customer via live-chat. Many take it up, and in functions such as product, it’s just so valuable.

Raphael Fontes, SVP Customer Operations, Squarespace

However, if you develop a richer product offering, with multiple modules requiring distinct expertise and training, you might struggle to maintain a full-stack CX team. The pain point is likely to present itself in slow onboarding of new CX agents: if it’s extending much beyond three months, you’ll suffer in terms of NPS metrics and you’ll also be distracting your more experienced CX agents as they help out the newer hires. In this case, you’ll need to split your CX team between product modules. You can then offer a tour of duty for CX agents between these specializations as part of their career progression.

You can also experiment with upselling through your CX teams. This can be tricky from a customer perspective, as they will be focused on solving their immediate issue, and also from a staffing perspective, as the skill-sets are different. It requires careful monitoring of the trade-offs between customer satisfaction and incremental revenue generation. Factors such as price point, adjacency of product modules, and complexity of decision-making will all feed into whether it generates sufficient return and whether it fits with your overall ethos and culture. It might be better to have a separate inside sales team to which relevant queries can be routed by CX team members.

Our CX approach at Squarespace has no sales targets or incentives which can damage customer satisfaction. This is totally different from some of our competitors, where CX is heavily focused on upselling.

Raphael Fontes, SVP Customer Operations, Squarespace

The natural CX career pathway should also extend to other parts of the company. In B2B companies, this will typically include Customer Success or inside sales teams, but it can also go beyond these.

We see our CX team as an important local talent pool for internal mobility, and celebrate our promotion metrics. More recently, we have also partnered with our technical team to offer a ‘coding camp.’ This has helped our technical hiring efforts, also becoming a big part of our diversity, equity and inclusion efforts.

Raphael Fontes, SVP Customer Operations, Squarespace

We’ve developed a product expert role that acts as the liaison between productbuilding and customer-facing teams. This also creates a career path for customerfacing [CX] roles into the product organization. We have nurtured a number of product managers this way.

Jonas Rieke, Co-Founder & Chief Operating Officer, Personio

Some of our best GTM people came out of CX, and it was a pretty significant flow.

Paul Williamson, CRO (former), Plaid

The nature of CX and other operations functions means that certain HR practices are prone to failure, such as unlimited vacation policies. At scale, though, there’s a tendency for HR policies such as these to become more clearly articulated, which helps to reduce the gaps between CX and other teams too.

Try to be as aligned as possible in your HR policies between CX and the rest of the company, such as benefits. But accept some flexibility and specifics. For example, the nature of the CX role might limit attendance at company off-sites and events.

Raphael Fontes, SVP Customer Operations, Squarespace

CX teams are optimized in pods, with eight to 10 agents and a team lead. Beyond this, team leads can’t effectively develop and performance manage their agents.

In my experience, CX team leads are generally too nice and might need ongoing coaching and training to ensure that, besides being great advocates for their teams, they are also keeping them accountable, and having challenging conversations when needed.

Raphael Fontes, SVP Customer Operations, Squarespace

CX team attrition is typically higher than in other teams. This can be mitigated by following the guidance above around hiring and career pathways. But it also means you should track attrition gross or net of internal mobility, and closely monitor leaver reasons. It’s a red flag if CX agents go on to similar roles at another company.

Once your CX team grows beyond about 50 agents, there’s a lot of insight to be gleaned from data about structuring your CX team, and identifying opportunities for automation. This is critical to controlling CX headcount growth, and you might consider a dedicated CX data analyst at this stage.

Insights are also valuable from a product perspective. Top CX agents can be paired with relevant product teams to provide a direct customer voice, and to anticipate potential pitfalls with new products or features. This can avoid situations where a product launch is followed by several cycles spent fixing confusing features.

Technical teams are intrinsically happier doing new stuff than fixing bugs. Over time, the bugs list just grows and grows, and you need a strong CX voice to keep priorities in balance, and to provide the data to support this.

Raphael Fontes, SVP Customer Operations, Squarespace

Your CX system should include a tagging system for all tickets and feedback. This will drive a quarterly Customer Voice report aligned to the product cycle, which in turn shapes roadmap priorities as well as providing valuable feedback following major product releases.

There’s a danger that CX teams feel disempowered from challenging the status quo on policies, like around cancellations or refunds. It’s important that the right internal feedback channels exist, and that CX team members are celebrated and rewarded for pointing out workflows that no longer make sense or might provide a poor customer experience.

Raphael Fontes, SVP Customer Operations, Squarespace

Tooling such as Zendesk play a critical role in CX scaling and automation too, such as running a smart help site and effectively routing queries to the right team. Always use third-party tooling for CX.

CX tooling should extend to CS and even sometimes to Sales. Your CSMs will benefit from the visibility of tickets for specific accounts. It can be embarrassing if during a QBR, a customer references a support interaction that the CSM was not aware of. In enterprise, dedicated Slack channels including the customer admin to report on CX issues can also inform expansion opportunities for AEs to pick up on.

David Apple, Head of Customer Success (former), Notion

We’ve constantly worked at CX automation, process improvements and self-serve tools for our continuously growing customer base and more complex product suite. Our CX team is roughly the same size today (200 people) as it was when we started implementing many of these initiatives eight years ago, despite our customer base growing from 200,000 to four million!

Raphael Fontes, SVP Customer Operations, Squarespace

Over the next few years, we expect to see significant deployment of AI tools in CX to drive automation and therefore efficiency.

In B2C, outsourcing CX to a third party can make sense at scale for the sake of efficiency and flexibility, or to more effectively cope with seasonal peaks and troughs. In B2B, CX needs are more technical and we recommend that you don’t outsource.

Scaling Customer Success—B2B

Start by hiring a Customer Success Manager

In high-velocity sales, growth soon creates a significant number of customers, who need to be onboarded and supported. This leads to a first Customer Success Manager (CSM) hire, who fully inherits customer relationships post-sale. Their role may also include CX, with a core retention remit, plus any modest upsell opportunities that these small accounts can offer. With continued growth, you’ll soon split this into separate CX agents (reactive support) and CSMs (proactive support, including onboarding and training).

When focused on SMB customers within a huge market with short sales cycles, we’ve learnt to direct Sales exclusively towards acquiring new customers, while CS drives expansion. Otherwise, it’s harder to align incentives and plan capacity.

Jonas Rieke, Co-Founder & Chief Operating Officer, Personio

The “land-and-expand” motion becomes more critical to growth if you’re targeting enterprises, where the opportunity to grow account value is much greater. In enterprise, AEs usually retain primary account responsibility and quota ownership during this earlier phase of growth. You might hire a CSM to focus on onboarding, product training and engagement. Alternatively, for more technically-oriented products, sales engineers might initially fill the post-Sales role (as a hybrid SE/CSM), supporting account expansion opportunities from a product and technical perspective.

Enterprise accounts need much more handholding and training. Unlike in PLG, these are users who didn’t personally choose to adopt your product. It may have even been imposed on them. You need to prove the benefits to these users to drive engagement.

David Apple, Head of Customer Success (former), Notion

The nature of the CSM role will also vary by customer segment. In smaller accounts, the focus will be on building one-to-many content such as training videos, which can be made available to cater for common use-cases underpinning product engagement and upselling. In enterprise settings, more personalized engagement will be more effective. The focus is on ensuring that the customer implements and adopts the product as quickly as possible, and therefore starts to see value.

Never assume that the customer will figure out themselves how to use any feature of your product. You need to hold their hand, either via direct engagement (for large accounts) or through effective training resources (for smaller accounts).

David Perry, VP EMEA (former), Confluent

The break point between these distinct SMB and enterprise approaches comes somewhere around the $100k ACV point. Mid-market accounts might sit around this breakpoint. You might have to experiment with different approaches in the early days, to discover what works best for you and where the exact breakpoints are. For example, you might introduce a post-sale period (e.g. three to 12 months) for mid-market client relationships to transition from the AE to a CSM.

Once you’ve settled on an effective route for transitioning accounts from Sales to CS, the decision to hire additional CSMs will reflect capacity. When your first CSM gets overloaded, you hire another. Over time, you will get better at forecasting pipeline and account growth, and can plan additional CSM hires in advance.

Build a multi-tiered CS team

CS teams start out smaller than sales teams. This isn’t surprising, given that you have to acquire customers (i. e. Sales) before you can focus on retaining and expanding their value (i. e. CS). However, in our analysis of successful SaaS companies, CS teams reach nearly the size of sales teams by the point company headcount hits 1,000 (158 Sales compared to 140 CS).

CUSTOMER SUCCESS TEAM SIZE RELATIVE TO OVERALL HEADCOUNT—SAAS EXAMPLE CUSTOMER SUCCESS TEAM SIZE RELATIVE TO OVERALL HEADCOUNT—SAAS EXAMPLE

The CS function tends to group together SE, CSM and CX together with two or three additional teams that may be carved out as you scale further:

  • Implementation—configuration, migration, onboarding, training and education
  • Account management (AM)—post-sale account expansion, with net dollar retention (NDR) goals and incentives
  • Professional services—In certain sectors or verticals, it might make sense to add a paid-for service offering, potentially including consulting. This could be a profitable team, and should at least be priced to break even. Since service revenues are valued at a lower multiple than software revenues, VCs are generally wary of founders who want to push towards professional services, unless there’s a clear case that they are supporting onboarding and upselling into larger accounts

The need for account managers is clearest in SMB settings, where there’s a transition of account responsibility from Sales (AE) to Customer Success (AM). As such, they are quota-carrying. They might each look after a portfolio of clients totalling ARR of $1–2 m, with NDR targets of 115– 125%, depending on seniority. This incentivizes them to figure out how to balance their time between “churn-avoidance” versus upselling and cross-selling.

I recommend incentivizing AMs on NDR metrics with a 50:50 split between personal and team portfolio performance. This encourages collaboration, and recognizes that accounts may shuffle around quite a lot.

David Apple, Head of Customer Success (former), Notion

In enterprise segments, there’s a difference of opinion with respect to introducing quota-carrying AMs. The choice is ultimately driven by whether you believe that the skill set required for acquiring new accounts is different from that required for expanding existing accounts.

Where an AE has taken many months building client insight and trust before any deal is signed, it doesn’t make any sense to transition the relationship to an AM post-sale.

David Perry, VP EMEA (former), Confluent

It’s very tempting to say, ‘Our AE landed this F500 client, so let’s keep them on it to drive expansion,’ but not for us in the early days. Initially landing this logo required one set of skills; expanding the account involved distinct but important operational skills. For instance, getting the client onto single billing, or finding the right procurement lead for payment. Most AEs would prefer the rush that comes from securing new logos rather than navigating optimal billing arrangements.

Amanda Kleha, Chief Customer Officer, Figma

Reflecting the greater hustle involved in acquiring new customers than in retaining and expanding them, AEs typically have a compensation package split 50:50 between base and commission, while AMs are closer to 80:20 or 75:25.

Career pathways in CS teams often originate with promotions from CX, and progression involving taking on more, and larger, customer accounts, with bigger expansion opportunities. In general, the more technical your product, the harder it is to hire externally for these skills, and the more important nurturing talent for career progression between teams becomes.

Consider the consequences of your pricing model

Infrastructure platform companies are increasingly moving away from traditional SaaS pricing (i. e. an Annual Contract Value agreed upfront as part of the sale) to consumption-based pricing (i. e. billing corresponds to the actual usage of services in the period). This change has organizational impacts—for example, the focus changes from closing deals before the end-of-quarter, to influencing customer usage patterns at the start-of-quarter.

Growing account value in a consumption model is achieved through coaching and guiding clients to try new use-cases. This puts more revenue generation focus on CS teams, led by CS engineers (CSEs)—similar to SEs, with strong technical skills, but focused on post-sale account expansion rather than landing new customers.

CS metrics in the consumption model look pretty different:

  • North Star becomes consumption retention and growth; quarter-over-quarter and year-on-year
  • CSEs have consumption growth and metrics per account
  • Sales interface becomes messier than in SaaS, and value attribution is much harder

Reflect on whether CS team growth indicates a poor product experience

CS is undergoing an identity crisis at the moment. Frank Slootman, CEO of Snowflake, has gone so far as to claim that CS was invented to paper over cracks in business models with overly complex products and processes. Slootman advocates dissolving CS, and putting everything into Sales, Sales Engineering, and Product.

This feels like an overreaction, but it contains an important truth: as much as for CX teams, you need to constantly seek ways to remove friction from the user experience to drive adoption and engagement. The fact that SaaS companies by 1,000 total headcount have almost as many people in CS roles as they do in Sales underlines the amount of friction that builds up, and the margin improvement opportunity for companies offering more intuitive and delightful product experiences.

Figma—When Customer Success isn’t necessary

It wasn’t until five years into monetizing (more than 1,000 employees) that we felt there was a need for a CS-type function at Figma. I preferred hiring sales reps who could own the customer relationship through the entire journey, otherwise things could get complicated. It helped that our product isn’t particularly hard to start using or set up. In addition, we’re not in a new category—our paid users aren’t beginners needing design education. They’re motivated professionals who want to figure out how they can get the most out of what our product offers.

Now that we’re shifting into more top-down selling, we have to help clients figure out how to deploy purchased seats, in order to drive adoption.

More generally, I take the view that relying on humans to explain and onboard users into your product should be reserved for products that are challenging to set up. If it’s possible to create a selfserve product experience, you should do this from the beginning. Reverse engineering it later on is truly challenging, as you lack the organizational DNA. Instead, your product experience—onboarding, training, etc —becomes overly dependent on humans. This kills your margins, and is only economically viable if you have really high ACVs.

Amanda Kleha, Chief Customer Officer, Figma

Keep CS and Sales aligned

There’s always some degree of tension between Sales and CS, with Sales setting overly optimistic customer expectations which CS then struggles to meet. At scale, you can monitor the first year NPS as one indicator of this gap. You can also foster more CS involvement at the pre-Sales stage, and build a list of common implementation issues that might not appear on customer buying checklists. Another approach is to institute commission clawbacks from sales on accounts that churn within the first 12 months.

Sales always operate in a bit of a gray zone. The question is how much of this grayness you’re willing to accept. Too much, and the reality ends up disappointing customers versus what they were led to expect.

Anonymous GTM leader

The key is to align incentives between Sales and CS, so their goals are the same. The wrong system of incentives will inherently create land-grabbing and conflict. Use shared NDR metrics, with retention focus for small accounts, and expansion focus for larger ones. But credit both teams for overall success, even if they’re not both directly involved in all deals. Optimize for harmony.

David Apple, Head of Customer Success (former), Notion

Choose Between a CCO and a VP Customer Success

Responsibility for CS teams can sit with a Chief Customer Officer (CCO) executive. But more often, given the potential for friction between CS and Sales, companies appoint a VP or Director of Customer Success who reports to the CRO. In particularly technical products (e.g. infrastructure tools), some of these functions might also be grouped within the engineering team.

MOST SENIOR CS LEADER BY HEADCOUNT STAGE—SAAS COMPANIES (%) MOST SENIOR CS LEADER BY HEADCOUNT STAGE—SAAS COMPANIES (%)

Hire a CRO

In B2B companies, your revenue leadership has to move up a gear in lockstep with the complexity of your sales and CS organization. While you probably already have a VP Sales and a CS lead, you reach a point in scale where you need an executive to take ownership of the entire revenue engine—a CRO. Given that this remit also oversees 30–50% of your total headcount, the CRO is a critical member of your B2B leadership team.

Typically, we recommend that you hire a CRO when your sales and CS teams collectively reach between 50 and 100 people. The majority of B2B companies have hired a CRO by the time they reach 500 total headcount.

Scope of responsibility for a CRO:

  • Sales and CS functions
  • GMs who own specific products or region Business development teams focused on distribution
  • May also be responsible for CX
  • Avoid making them responsible for marketing
  • Becomes a trusted partner to the CEO, shaping company-wide strategic decisions, and often joining board meetings

By this point, you have probably established a GTM motion, which is being executed by a VP Sales. However, when considering the “ideal profile” for your CRO hire, you need to think about what your GTM motion is going to look like in two to three years’ time. For example:

  • You’re moving upmarket, from inside sales targeting mid-market prospects to solution-selling into enterprises
  • You’ve had early success in shifting from direct selling to channel sales (i. e. partnering with third parties such as systems integrators), and have decided to go all-in with this shift
  • You’re committed to maintaining a focus on SMB customers, with a primarily Product-led growth motion and minimal Sales or Customer Success. In this case, the profile and title might be better reflected as a Chief Growth Officer than a CRO

In each of these scenarios, the profile, experience and competencies of the ideal CRO candidate will differ dramatically. However, their profile will typically include:

  • 12+ years of relevant experience
  • Adopts a lifecycle perspective when it comes to customer relationships
  • Balances short and long term perspectives on growth
  • Almost always comes from a sales career pathway
  • Brings a repeatable and scalable playbook relevant to your GTM motion, with the intellectual chops to adapt it to your sector and product
  • Has a deep understanding of Sales Ops and Rev Ops; uses data to guide their decisions
  • Proven track record of building and leading a revenue team to drive high growth
  • May have specific sector experience, but otherwise the talent pool roughly divides between selling business applications versus technical applications; not many candidates successfully cross between these two pools
  • Partners collaboratively with marketing and product leadership, and is capable of deeply examining the question, “Why should customers buy from us?” and not just, “How can we persuade them to buy from us?

While our analysis indicates that 30% of SaaS companies have a CRO by 125 headcount, we caution against such an early hire. Wait until you have real proof of GTM-fit and sales momentum. Until you have reached this point, finding an excellent execution-focused VP Sales is more important. Founders running a search for a VP Sales can also be prone to offering candidates an inflated CRO title. By nature, salespeople are good negotiators. Avoid this pitfall.

If you’re experiencing particularly fast growth, companies might require two (or even three) iterations of the CRO on their road to achieving IPO-scale. This partially reflects the scale of the organization that they are leading, a typical split being between the $10–50 m, $50–200 m, and $200–1,000 m revenue phases. It can also reflect different GTM motions evidenced by increasing customer ACVs. The CRO capabilities for leading a $100k ACV business (mid-market) is very different from a $500 k or $1m ACV one (enterprise).

There are some specific requirements or challenges that tend to go along with hiring a CRO compared to other C-suite executives:

  • Willingness to travel: Salespeople by nature tend to be more extroverted. CROs therefore need to build relationships and motivate their teams in-person. These teams are likely to be distributed, so running sales kickoff meetings (SKOs) and quarterly business reviews (QBRs) is very valuable. This is amplified by travel requirements in order to spend time with customers, as well as time with other members of the executive team. It really helps if the CRO is co-located with the CEO and/other executives, although this shouldn’t be a hard constraint when looking for candidates
  • Scope of responsibility: CROs can have a tendency to ruffle feathers internally, jumping into problems (or opportunities) that might be outside their direct remit. You need to provide extra clarity on their boundaries, and how to arbitrate differences of opinion. The most common areas of friction are with marketing and product
  • Compensation structure: The CRO is the only C-level role where cash compensation is largely based on revenue outcomes. The typical structure is split 50:50 between base and variable pay, compared to maybe 80:20 for other C-suite executives. This partially explains the above point about ruffling feathers. The CRO, together with their team, is directly financially impacted if other teams don’t deliver (or are perceived to not be delivering) on, for example, a delayed marketing campaign or product launch

Operations

The size and composition of operations teams are heavily dependent upon your specific business model.

  • D2C—manufacturing, logistics, warehousing, fulfillment, photography, retail
  • Marketplace—supplier liaison, merchandising, logistics, photography, payments, fraud
  • B2C App—community safety and moderation, in-house professionals (entirely sector-dependent: for example, nutritionists, personal trainers, therapists, physicians, interior designers)
  • SaaS—payments, Know-Your-Customer (KYC) and Anti-Money Laundering (AML) verification (fintech)

Operations teams are larger in D2C and Marketplaces where physical products are being produced and/or delivered to customers, relative to pure software businesses such as SaaS and B2C Apps. Operations team size also correlates with customer and transaction volumes, so they tend to be bigger in B2C companies relative to B2B.

We discussed CX in the context of the overall customer organization earlier, although CX can also be considered part of Operations—there tends to be a strong cross-over of talent, leadership and themes between CX and broader Operations. For example, the need at scale to prioritize automation in order to stop these teams ballooning in size.

We expect the adoption of AI tools to significantly accelerate automation in Operations teams in the coming years, shrinking headcount requirements.

Given the extent of differences that exist between operations teams depending on specific business model, sector and decisions around outsourcing, we have left them outside of the scope of this handbook.

OPERATIONS HEADCOUNT RELATIVE TO TOTAL HEADCOUNT AND BUSINESS MODEL OPERATIONS HEADCOUNT RELATIVE TO TOTAL HEADCOUNT AND BUSINESS MODEL
Lunch time, crunch time - dabbawalas food delivery

Lunch time, crunch time

Every day in Mumbai, 5,000 dabbawalas rise before dawn to collect homemade tiffin boxes, and ferry them by bike and train to 200,000 hungry office workers. Fast as fast food but fresh as farm food, the success rate for deliveries tops 99.9%. Not only that, but the dabbawalas do it all again in reverse, returning the boxes to the kitchens they came from after lunch.

The dabbawalas' operation evolved organically over 100 years. It relies on teamwork, timing and a remarkable coding system using colors, symbols and numbers. Couriers run relays with bikes and trains. Routes adapt nimbly to traffic snarls, transport strikes and seasonal monsoons.

There’s minimal tech and no top-down control. Most dabbawalas are semi-literate, yet their operation is the envy of advanced logistics companies the world over.

Finding order in a frenetic megacity like Mumbai is no mean feat. The dabbawalas are a study in the value of flexibility and self-organization, as well as the power of focus and relentless iteration.

Stories of Chaos

Scaling your G&A team
10
Scaling your G&A team
10