As part of our ongoing commitment to helping startups grow and scale their business, we will be sharing the inside stories behind of some of the most successful, fast-growing companies on everyone’s radar – deep dives into the strategies that propelled their business forward.
To kick off this series, we talked with Pete Caputa, VP of Sales at HubSpot, about how the company successfully scaled its sales team. Founded in 2006, HubSpot evangelized the inbound marketing movement with incredibly intuitive software loved by marketing and sales professionals around the world. Pete shed some light on the path taken by HubSpot and its sales team, how they structure hiring and training, and what they would do differently if they could. Let’s dig in.
VENTUREAPP: How did your sales operations change over the three phases: 0-100 customers, 100-1,000, 1,000+? What strategies have remained the same since day 1 to IPO?
PC: I remember the 100 customer party fondly when there were only six of us in sales. We ordered some pizza and we had to figure out where to buy beer. At 10,000 customers, we rented out a ballroom and the beer was certainly provided. Seriously, though, we were quite informal about everything back in the pre-100 customer days. We barely had a documented sales process. No prospecting playbook. Nothing about qualification. No customer onboarding process. We were basically given a phone, a login to our CRM and a notebook to take down credit card numbers.
But, we got serious about building process and systems well before 1,000 customers. As Mark Roberge, HubSpot’s CRO, details in his book, the Sales Acceleration Formula, we documented every process. We didn’t create scripts and expect every sales rep to be a slave to them. But, we did create lots of playbooks which gave suggested questions and suggested stories with guidance on what to do in different scenarios. We also got very serious about metrics. We measured every salesperson’s attempt and every time they moved a prospect from one step in the sales process to the next. Then, we’d compare the metrics from one salesperson to another, one team to another, month after month. Of course, we measured our salespeople on the outcome they produced, but we gave a lot of guidance on the activity metrics needed for success. Back then, if a rep did 20 demonstrations per month, they were likely to exceed their target. So, we rallied around that. But, more importantly, we looked at the metrics every month to make sure every salesperson and every team was doing enough.
At 1,000 customers, we launched new channels and new verticals. In the beginning, every salesperson received all types of leads. One lead they received could have been a CEO of a 1,000 person company, the next could be the owner of a 5 person marketing agency, or the marketing manager for an ecommerce company. We realized this was suboptimal, so we organized the team by what we call “personas.” We have a team focused on selling to marketers at companies with less than 200 employees and one that sells to executives at companies with 200-2000 employees. We also created separate teams to work with marketing agencies, media companies and ecommerce businesses, to name a few. This focus allowed us to set up every salesperson for success, and also allowed us to attack new markets and channels.
How were your recruiting efforts/training different by phase?
From the beginning, we’ve had to build our own talent. There wasn’t and still isn’t a ready supply of consultative, high-transaction-volume inside sales professionals in Boston. And, that’s what we need since we have to inspire our prospects to change their marketing and sales processes. But we also sell a product at a relatively low price point to small and mid-market companies, requiring our salespeople to close a large number of deals every month. Therefore, our sales team must work fast, but be thoughtful and thorough.
We’ve had to build our own talent because our needs don’t match the experience of many salespeople. Most salespeople are either consultative enterprise sales reps who close a few big deals per quarter or year. Or they are transactional sales reps who sell a high volume of relatively simple products at very low priced points. So, we’re less focused on finding salespeople with the right experience, and much more focused on finding people with the right strengths and attitudes. I’d much rather hire someone who wants to learn and never makes excuses when they fail, than a salesperson with the right rolodex or resume.
Our hiring process has changed pretty significantly since we began. We’ve invested more time into sales managers and more recruiting resources into our sourcing efforts. We’ve also added several steps in our interview process that were key in helping us assess talent. One of those steps was to implement the Objective Management Group sales candidate assessment. Before we actually invest time in interviewing, this helps us quickly find the high potential candidates. Another big change was adding a role play exercise where we give candidates some training on our sales qualification process and then record a call where they play the salesperson. This tests their willingness and ability to learn our sales process. These tweaks have improved our ability to assess a candidate’s likelihood of success.
How important is culture to scaling sales, or any team for that matter? Does the sales team’s culture vary at all from the umbrella HubSpot culture?
Culture is critical. The free food and beer, the month-end celebrations and president’s club are certainly things that most of the sales team appreciates. But, the team is much more focused on working hard than playing hard. So, that’s what defines our sales culture. As you might imagine, most of the salespeople on the team are very ambitious professionals. So, they value learning opportunities, opportunities to increase pay rates, new challenges and career advancement opportunities. But, I’d say that’s not very different than the rest of the HubSpot culture.
Where I think we may be a bit different, compared to other teams at HubSpot, is the balance between competition and collaboration. All of HubSpot is very collaborative, but we’ve set the sales team up for friendly competition too. In sales, every activity and outcome is tracked and reported back to the whole team. Every salesperson wants to be at the top of the charts, not only because they get paid more when they sell more, but because they all want to win. The competition drives team performance, of course.
Even though we’re very focused on driving individual performance, we also reward collaboration and teamwork as well. Much of this is through recognition at team meetings and privately from executives. When a salesperson goes out of their way to help a teammate move a deal forward, or they create a training course that they deliver to other team members, we make sure we recognize those contributions. For individuals interested in managing a team, we weigh these types of contributions heavily when they apply for sales management positions. This further reinforces the culture of collaboration.
What were your biggest set-backs or challenges and when did you hit those roadblocks?
In the early days, we had customer retention issues. After doing some analysis, we realized that the variable that impacted retention rates the most was the salesperson who closed the deal. We ended up changing the compensation plan to reward salespeople partially based on the retention of customers they acquired – even though they had no account management responsibilities. We also enabled the sales team with the right training and guidance so they could focus their sales efforts on the right prospects, and set expectations better. After six months of effort, we drastically improved retention. But, they were challenging times as the fate of the whole company was on our shoulders.
Another challenging time was about a year after we had segmented the sales teams by persona and markets. We created a tangled web of rules that governed which teams could work with which types of prospects under what scenarios. We had so many conflicting rules allowing for too much interpretation. As a result, different salespeople interpreted the rules differently and used it to justify their behavior. It became difficult to enforce any rule because they often conflicted, leading to many sales reps doing what they thought they could get away with. Trust eroded between teams and it became a fairly miserable culture. A few years back, we fixed the problem by simplifying the sales team structure and implementing a much smaller set of “black and white” rules. We also enforced the rules strictly, so that the team knew that we were serious about creating a fair and level playing field for every rep, team and segment.
How beneficial was it that HubSpot is in the business of lead-gen – did it make the sales team’s job easier?
Very beneficial. It made the sales team’s job possible. I give a speech to every new hire class. My first slide talks about how sales could have never scaled if marketing didn’t scale our inbound lead generation results. I wrote a chapter for Aaron Ross’s Predictable Revenue book back in 2008 that details how marketing fed us with more leads than we could call. Many of the marketing tactics we used seven years ago work even better today. And of course, our marketing team has innovated to produce results that are an order of magnitude bigger. Additionally, inbound marketing helped us acquire several thousand partners over the years. In turn, those partners bring us deals, too. We would have never been able to sell to the mid-market at our relatively low price-point without the lead generation support we get from our marketing team.
How do you measure the sales team? What are they accountable for?
We measure pretty much everything. We don’t micro-manage to every number, though. In some sales organizations, they scorn you if you don’t make enough calls before lunch. In our culture, we use the numbers to guide our salespeople’s activities. Salespeople who exceed their targets are trusted to do the right thing. If a salesperson isn’t performing, though, we’ll provide recommendations.
At the end of the day, we set clear expectations for performance and that’s what our salespeople are held accountable for. Although we are very involved with guiding them on activity recommendations and coaching them on deals, it’s their job to make it happen.
We also have salespeople who contribute in other ways. At HubSpot, all employees are encouraged to think like founders of the company, take ownership over challenges and contribute in other creative ways. For example, we have salespeople who write content for our sales blog, reps who mentor new hires, and a multitude of other projects that individuals are passionate about. At the end of the day, sales is responsible for meeting short term sales goals, but we value salespeople who contribute to building our future success too.
Regarding the past nine years, what would you replicate if you were to start over? Would you do anything differently?
Of course–we made a ton of mistakes along the way as we grew at HubSpot. Like I mentioned above, we should have focused on customer success and retention way before we did. We also should have anticipated that our sales team structure would have caused team conflict a few years back. But, as a company and a sales team, we recognized our challenges pretty quickly, and made changes to fix things. That ability to lead our team through change has served us well. Our cultural focus on continuous improvement, empowering individuals, competitiveness and teamwork have allowed us to make changes quickly. These traits allow us to adapt to internal challenges, but more importantly, allow us to serve our customers and partners effectively. Of course, we feel we have lots more work to do… As Brian Halligan – a diehard baseball (i.e. Red Sox) fan likes to say, “It’s early innings. We’re just getting started.”
Interested in working at HubSpot? They’re hiring in sales and elsewhere – check out their job openings today!