Early B2B GTM — Enterprise Sales Learning Curve
I find Mark Leslie and Charles Holloway’s article (The Enterprise Sales Learning Curve) a very useful analytical framework for early B2B GTM strategy. I recommend buying their article.
The Sales Learning Curve
They divide the early GTM into three phases.
Phase 1: Staffing for Learning “begins at the start of the GTM phase and lasts until a fully effective sales rep can … cover the fully loaded costs of a sales rep.” The authors note: “At the time of successful beta test, young companies are typically configured with a large fixed cost consisting of engineering and G&A…. The key question then becomes how many sales reps to hire and how quickly…. The usual first step is to hire a VP of sales from a larger company in a related business who will generally employ a Capacity Planning Model to help answer this staffing question. In that prior company, the sales process was mature and the proper assumptions were established based on recent past experience. In this new company (or new category product) where there is no recent past experience, the VP must establish his best ‘rational’ assumptions…. Unfortunately, this [CPM] model is profoundly flawed, as it does not take into consideration the Enterprise Sales Learning Curve…. The reality for these companies is all too often a [bad] result…, which typically leads to a crisis in the company.”
The authors recommend hiring a “Renaissance” sales rep. “During the early part of the learning phase, the company should view the principle tasks of the sales organization as being the clearing house for all learning, helping the startup team to interface with customers and improve the product, and developing marketing and sales strategies consistent with learned needs…. This requires a culture that encourages reps to convert mistakes and miscues into value adds to the learning curve.”
Usually, the CEO and execs are actively involved with potential customers along with the sales rep.
Phase 2: Transition Phase, “lasts until the sales yield reaches a point where company management can see that the product will be successful… It is during this phase that the company typically gains visibility into the ultimate sales yield level.
Phase 3: Execution Phase. “This will signal that a repeatable sales model has been developed. At this time, sales reps can be hired as rapidly as possible given the company’s management and financial constraints.” The authors recommend hiring a “Coin Operated” sales rep.
Marketing during the three phases: “Learning about the product is the primary focus of product marketing during all [three] phases… Once beta testing is complete, the company must decide when to launch a marketing campaign. There can be pressure to launch a marketing campaign early to support the sales effort. But, when the company is in the early stages of the Enterprise Sales Learning Curve, where the main focus is on learning, launching a marketing campaign can not only be an expensive use of scarce cash resource, but it can also distract the organization from its primary learning goal and set false expectations among the sales and engineering groups… During this period, marketing communications should work on developing a flexible launch schedule and lining-up production capacity for collateral materials once they have been developed to support the final product and sales strategy.”